Report from the Commission to the European Parliament and the Council on the implementation of macro-financial assistance to third countries in 2016

Macro-financial assistance, or MFA, is an EU financial instrument designed to address exceptional external financing needs of countries that are geographically, economically and politically close to the EU. Its objective is to restore macroeconomic and financial stability in candidate and potential candidate countries and in countries in the European neighbourhood, while encouraging macroeconomic adjustment and structural reforms.

MFA is a balance-of-payments support instrument, which complements and is conditional on the existence of an adjustment and reform programme agreed with the International Monetary Fund (IMF). It takes the form either of loans, for which the Commission borrows the necessary funds in capital markets and on-lends them to the beneficiary country, or, under certain circumstances, grants financed by the EU budget.

MFA is conditional on respect for human rights and effective democratic mechanisms in the beneficiary country. It is released in tranches strictly tied to the successful implementation of strong reform measures aimed at returning the beneficiary country’s economy to a long-term sustainable path. In this way, MFA complements regular EU cooperation assistance and contributes to the wider goal of preserving stability and promoting prosperity beyond the EU.

2016 was characterised by progress in the implementation of existing MFA programmes for Georgia, the Kyrgyz Republic, Tunisia and Ukraine, although a number of disbursements had to be delayed for reasons beyond the EU’s control. In addition, the continuing difficult political and economic situation in some of the neighbourhood countries triggered the approval of two follow-up operations in Tunisia and Jordan, and a new operation in Moldova, proposed by the Commission on 13 January 2017. The new operation in Moldova is included in this report because of the substantial preparatory work carried out on it in 2016.

This annual report is prepared in accordance with the Commission’s information obligations as laid down in the various Council and joint European Parliament and Council decisions on MFA operations. It is accompanied by a Commission staff working document providing more detailed information on, and analysis of, the macroeconomic context and implementation of individual MFA operations.

EUR-Lex: SWD(2017)233: Background analysis per beneficiary country http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2017:233:FIN

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