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Document 52013DC0426
REPORT FROM THE COMMISSION on the implementation of macro-financial assistance to third countries in 2012
REPORT FROM THE COMMISSION on the implementation of macro-financial assistance to third countries in 2012
REPORT FROM THE COMMISSION on the implementation of macro-financial assistance to third countries in 2012
/* COM/2013/0426 final */
REPORT FROM THE COMMISSION on the implementation of macro-financial assistance to third countries in 2012 /* COM/2013/0426 final */
TABLE
OF CONTENTS 1........... Introduction.................................................................................................................... 3 2........... Background.................................................................................................................... 3 2.1.... Developments over the last years.................................................................................... 3 2.2.... MFA Framework Regulation.......................................................................................... 4 3........... Macro-financial assistance operations in 2012................................................................. 6 3.1.... Overview....................................................................................................................... 6 3.2.... Individual operations in the beneficiary countries in 2012.................................................. 6 ......... 3.2.1.
Bosnia and Herzegovina........................................................................................ 6 ......... 3.2.2. Armenia............................................................................................................... 7 .......... 3.2.3. Georgia................................................................................................................ 7 .......... 3.2.4. The
Republic of Moldova..................................................................................... 8 ......... 3.2.5. Ukraine................................................................................................................ 9 ......... 3.2.6. The
Kyrgyz Republic............................................................................................ 9 4........... Ensuring a proper use of MFA funds: operational
assessments and Ex-post evaluations.. 10 4.1.... Operational assessments............................................................................................... 10 4.2.... Ex-post evaluations....................................................................................................... 10 5........... Requests for assistance and future Commission
proposals; budgetary situation................ 11 REPORT FROM THE
COMMISSION on the
implementation of macro-financial assistance to third countries in 2012 1. Introduction The report provides a
general overview of the implementation of the EU's macro-financial assistance
(MFA) to third countries in 2012. MFA, as part of the EU's
external assistance framework, is an instrument designed for countries
geographically, economically and politically close to the EU, addressing
exceptional external financing needs in the form of balance of payments
support. Its objective is to strengthen macroeconomic and financial stability
in candidate and potential candidate countries and in countries in the European
neighbourhood, while encouraging the implementation of appropriate structural
reforms. It complements and is conditional on the existence of an adjustment
and reform programme agreed with the IMF. MFA takes the form of either loans,
for which the Commission borrows the necessary funds in capital markets and
on-lends them to the beneficiary country, and/or, in specific circumstances,
grants, financed by the EU budget. The year 2012 was
characterised by the continuous implementation of existing MFA operations,
while no new MFA operation was approved by the two co-legislators, the Council
and the European Parliament. At the same time, the co-legislators continued
discussions on the new Framework Regulation on MFA, which was proposed by the
Commission in July 2011, without however reaching an agreement. Eventually, in
May 2013, the Commission decided to withdraw its proposal, as the agreement
that was emerging between the two co-legislators meant that the objectives set
by the Commission in its proposal would not have been met. This report is prepared
in accordance with the various Council and joint European Parliament and
Council decisions regarding MFA operations. It follows the reports presented in
the previous years. 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. 2. Background 2.1. Developments over the
last years The global economic and
financial crisis of 2008-2009, which profoundly affected the emerging economies
of the European Union's neighbourhood, resulted in a surge of requests for
financial support from the EU, including in the form of MFA. Four such
programmes, in favour of Bosnia and Herzegovina, Serbia, Armenia and Georgia, were decided by the EU Council of Ministers at the end of 2009, and the earlier
approved MFA for Kosovo[1]
was extended by one year in 2009. In 2010, two more programmes, in favour of Ukraine and the Republic of Moldova, were decided by EU co-legislators – this time, following the
entry into force of the Lisbon treaty, jointly by the Council and the
Parliament. The operations for Georgia and Kosovo were finalised in 2010. In
2011 and early 2012, the Commission completed the implementation of MFA
programmes for Serbia, Armenia and Moldova, and continued the preparations for
the implementation of the programmes for Bosnia and Herzegovina and Ukraine. The overall economic
situation in 2010 and early 2011 improved significantly and somewhat eased the
pressure on the balance of payments position of MFA eligible countries.
Therefore, only two new proposals were adopted by the Commission in 2011: one
for Georgia in January 2011 and one for the Kyrgyz Republic in December 2011.
However, the
adoption of the decisions on these proposals has been delayed by disagreements
between Parliament and Council over the procedures to be used for their
implementation. More concretely, the two co-legislators disagree over the
procedure to follow for the adoption of the Memorandum of Understanding (MoU)
which, for each MFA operation, lays down the economic policy measures to be
undertaken by the beneficiary county of MFA (see Section 2.3). From the second half of
2011, financing conditions in global capital markets experienced a significant
deterioration, partly reflecting the effects of the euro area's sovereign debt
crisis. In addition, the Arab Spring and the resulting political and economic
upheavals in the Arab Mediterranean partner countries[2] put
heightened pressure on the budgets and the external positions in these
economies. These developments led to an increased demand for MFA in 2012. A
first case was the request by the Egyptian Government for a MFA of EUR 500
million; initially transmitted in June 2011 and renewed in February and
November 2012. A second case was the request by the Jordanian authorities
in December 2012 for MFA support in the form of loans for up to EUR 200 million.
After estimating, in liaison with the IMF, Jordan's residual external financing
needs, the Commission adopted in April 2013 a proposal for a decision by the
European Parliament and the Council providing MFA to Jordan of up to EUR 180
million in the form of loans, to be disbursed during 2013-14. In addition,
Armenian authorities also sent a request for a new MFA operation in February
2013, which has been followed up by the Commission with the possibility of
adopting a proposal later in 2013. 2.2. MFA
Framework Regulation As early as 2003, the European
Parliament identified the lengthy decision-making process – decisions on
individual MFA operations were taken on a case-by-case basis by the Council,
after consultation of the Parliament – as one of the main shortcomings
of MFA. Also, the Parliament stressed the need for a transparent
legal basis for the instrument of MFA as a whole. Since the entry into
force of the Lisbon Treaty on 1 December 2009, legislative decisions on
individual MFA operations have been taken by the Parliament and the Council
under the ordinary legislative procedure (co-decision), resulting in an even
lengthier decision-making process. This led to increased calls for streamlining
the procedure for adopting MFA decisions. As highlighted
by the financial and sovereign debt crisis, dealing effectively with
macroeconomic and financial emergency situations requires a crisis response
instrument that can be deployed quickly and efficiently. Responding to these
developments,
the Commission adopted on 4 July 2011 a proposal for a Framework
Regulation laying down general
provisions for Macro-Financial Assistance to third countries[3].
The main objectives of the proposal are: (i) to make macro-financial assistance
more effective through a swifter and more efficient decision-making process;
(ii) to align the decision-making process with that of other financing
instruments, mainly related to external relations; (iii) to formalise the rules
governing the instrument and give the European Parliament co-ownership of them;
and (iv) to update and simplify some of the rules. Since its submission by
the Commission in July 2011, the proposed Framework Regulation has been
extensively discussed both in the Council and the Parliament. The adoption of
the Framework Regulation by the two co-legislators has, however, been delayed
by disagreements over procedural issues. The Parliament and the Council
insisted on keeping the ordinary legislative procedure for decisions on
individual MFA operations. In the view of the Commission this meant that none
of the main objectives of the Commission proposal would have been met. In
particular, decision-making would have become slower, more burdensome and
unpredictable, instead of more expeditious, efficient and transparent. Also
there would have been no overarching set of rules as the co-legislators could have
deviated anytime from the Framework Regulation in subsequent MFA Decisions.
Finally, the Commission had important constitutional concerns. Therefore, the
Commission decided on 8 May 2013 to withdraw its proposal. 2.3 Overcoming the stalemate in the approval of new
MFA operations Since the entry into
force of the new "Comitology Regulation"[4] on 1
March 2011, the European Parliament and the Council have been in a dispute over
the Commission's proposals for providing MFA to Georgia and to the Kyrgyz Republic. While there is overall agreement on the substance of the proposals, the
two institutions have different views on the comitology procedure to follow for
the adoption of the Memorandum of Understanding (MoU). The MoU lays down the
economic policy measures to be agreed between the Commission and the
beneficiary country for the implementation of the MFA. The Parliament insists
on using the Advisory Procedure (non-binding opinion by Member States), while
the Council claims that the Examination Procedure (binding opinion by Member
States) has to be used. The Commission has proposed various compromise options and
the two sides have advanced towards a solution based on a threshold option. Discussions
have taken place both in the context of the MFA Framework Regulation and in the
context of the conciliation procedure for the MFA to Georgia. It can be
expected that the Parliament and the Council will come to an agreement on this
issue in the second quarter of 2013, which would open the door for the
decisions on MFA to Georgia and the Kyrgyz Republic, as well as other
forthcoming MFA operations. 3. Macro-financial
assistance operations in 2012 3.1. Overview In 2012, the MFA
operation for Armenia adopted in 2009 was completed. The loan component of the
second and last tranche amounting to EUR 39 million was disbursed to the
Armenian authorities in February 2012. The first tranche and the grant part of
the second tranche had been disbursed in 2011. This closed the EUR 100 million
MFA operation, comprised of EUR 65 million in loans and EUR 35 million in
grants. With respect to the MFA
to Moldova, consisting of a EUR 90 million grant, the Commission released the
third and last tranche (EUR 30 million) in April 2012. The implementation of
the MFA to Ukraine, approved in 2010, which, together with the funds available
from a previous operation approved in 2002, amounts to EUR 610 million in
loans, was further delayed in 2012 due to the need to agree with the Ukrainian
authorities on certain conditions of the Memorandum of Understanding (MoU) as
well as the fact that the IMF programme had gone off-track and then expired in
December 2012. An agreement on the MoU was reached in mid-2012 and the MoU was
signed in the framework of a Ukraine-EU summit in February 2013. However, the
first disbursement of this MFA operation remains subject to the Ukrainian
authorities and the IMF agreeing on a new financial aid programme. Regarding the MFA to Bosnia and Herzegovina, approved in 2009 (amounting to a total of EUR 100 million in
loans), the validity of the Memorandum of Understanding and the Loan Agreement
was extended by one year until November 2013. The first tranche of this
operation, amounting to EUR 50 million, was disbursed in February 2013. In 2012, the European
Parliament and the Council discussed two legislative proposals for new MFA
operations adopted by the Commission in 2011: the proposal to extend MFA to
Georgia for EUR 23 million in loans and EUR 23 million in grants; and the
proposal to extend an exceptional[5]
MFA to the Kyrgyz Republic for EUR 15 million in loans and EUR 15 million in
grants. The adoption of the decisions on these proposals has been delayed by a
disagreement on a procedural issue, as explained in Section 2.3. 3.2. Individual
operations in the beneficiary countries in 2012 3.2.1. Bosnia and
Herzegovina The macro-financial
assistance to Bosnia and Herzegovina of up to EUR 100 million in the form of
loans was approved by the Council back in 2009[6]. The
relevant Memorandum of Understanding (MoU) and Loan Agreement were signed in
November 2010, while - partly because of the lengthy government formation after
the October 2010 general elections - the Loan Agreement was ratified by the
Bosnian Presidency only in August 2011. No MFA funds were disbursed during 2012
as a result of the authorities' failure to meet the conditionality agreed in
the MoU. Following the agreement of a new Stand-By-Arrangement with the IMF and
the authorities' steps towards improving public finance sustainability, the
European Commission extended the availability period of the MFA to Bosnia and Herzegovina by one additional year, until 7 November 2013. The disbursement of
the first instalment under the MFA, in the amount of EUR 50 million, took place
in February 2013. The disbursement of the second instalment is foreseen to take
place in the second half of 2013, should the IMF programme remain on track and
all policy conditions as laid down in the MoU be fulfilled. After a mild recovery
from the initial effects of the global economic crisis (GDP growth reached 1%
in 2010 and 2011), the economy entered into negative territory again in 2012
with real GDP contracting by 0.7%, negatively affected by the worsened external
environment.
The
external imbalances are on the rise again with the current account deficit
reaching 9.4% of GDP. Against the background of rising macroeconomic imbalances
and growing concerns for macroeconomic stability, the authorities agreed in September
2012 on a new Stand-By Arrangement with the IMF of about EUR 400 million. 3.2.2. Armenia In early 2012, the
Commission completed the implementation of the MFA programme for Armenia, decided in late 2009[7].
Under this programme, the EU supported Armenia for a total of EUR 100 million
(EUR 35 million in grants and EUR 65 million in loans), which was disbursed in
two tranches. The assistance was extended in the context of an economic reform
programme supported by a three-year financing arrangement with the IMF under
the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF),
approved by the IMF Executive Board in June 2010. The first MFA instalment,
amounting to EUR 40 million, was released in June 2011, while the release of
the second instalment, amounting to EUR 60 million, took place in December 2011
for the grant element and February 2012 for the loan element[8]. In 2012 the Armenian
economy continued to strengthen. GDP growth rate reached 7.2% in 2012, after
4.7% in 2011. The strengthening of growth in 2012 was mainly driven by an
increase in private consumption (plus 10.2% in 2012, compared to 2.4% in 2011)
and net exports. Also, favourable weather conditions translated in a growing
agricultural production. On the negative side, investments, both domestic and
foreign, continued to weaken, pointing to slowing growth prospects for Armenia. In view of the economy's more negative outlook, the Armenian authorities submitted
to the Commission a request for a new MFA programme in February 2013. The
assistance intended to complement the funds provided under a new financing
arrangement with the IMF, under preparation. The request is being considered by
the Commission. 3.2.3. Georgia In the aftermath of the
August 2008 military conflict with Russia, the EU pledged at a donors'
conference a comprehensive package of up to EUR 500 million to support Georgia's economic recovery. This included two potential MFA programmes, amounting to EUR
46 million each. The first one was successfully completed in 2009-2010. For the
second part, the Commission adopted a proposal in January 2011. However, the adoption
of the legislative decision on this programme has been delayed by disagreements
between the European Parliament and the Council over the procedure to be used
for the
adoption of the Memorandum of Understanding (see Section 2.3). The main objectives of
the EUR 46 million MFA proposal (to be provided equally in loans and grants)
are to cover Georgia's external financing needs and to alleviate its budgetary
financial needs, while supporting the country's fiscal consolidation and
external stabilisation efforts and encouraging structural reforms. Even though
Georgia recorded another year of strong economic growth in 2012 (a preliminary
6.1%)[9],
its external vulnerabilities remain high, as evidenced by a double-digit
current account deficit-to-GDP ratio, high gross external debt and declining
FDI. These weaknesses, alongside an unsettled global environment, prompted the
authorities to seek another IMF programme. A two-year arrangement with the Fund
– a combination of a Stand-By Arrangement (SBA) and of a Stand-By Credit
Facility (SCF) – was therefore approved in April 2012. The precautionary nature
of the agreement implies that the MFA programme can be activated only if Georgia actually draws on the IMF programme. 3.2.4. The
Republic of Moldova In 2012, the Commission
completed the implementation of the MFA programme for the Republic of Moldova decided by the European Parliament and the Council in October 2010[10].
Under this programme, the EU provided to Moldova an MFA amounting to EUR 90
million, in grants, to be disbursed in three tranches. The assistance was
extended in the context of an economic programme supported by a three-year
EFF-ECF financing arrangement approved by the IMF Executive Board in January
2010. The two first tranches, amounting to respectively EUR 40 and 20 million,
were disbursed in December 2010 and September 2011. The payment of the third
MFA tranche (EUR 30 million) was made in April 2012[11]. Economic growth slowed
significantly in 2012 as a result of negative external shocks including weaker
export demand from the EU and adverse weather conditions - a harsh winter and a
summer drought - that hit the large agricultural sector. Negative GDP growth at
-0.8%[12]
was registered for 2012, which shows a significant slowdown compared to 6.8% in
2011. On the external front, the current account deficit decreased slightly
reflecting in part the slowdown in imports due to the weakened domestic demand,
but also the growing surplus in net income and net unilateral transfers, a
reflection of resilient remittances. Notwithstanding these positive
developments, the current account deficit is still large and will remain the
main source of vulnerability in 2013. Another source of vulnerability is the
high, and growing, external indebtedness, which edged up to 84.5% of GDP in
2012 from 77.6% at the end of 2011. These external risks were somewhat
mitigated by the central bank's market interventions in the second and third quarters
to replenish the official reserves. The final programme
review of the EFF-ECF financing arrangement with the IMF, originally planned
for January 2013 and later postponed to April 2013, could not be completed due
to the political crisis that started with the fall of the coalition government
in February 2013 and was postponed to July 2013. The prospects for a successor
arrangement were not clear at the time of publication. 3.2.5. Ukraine Against the backdrop of
a persistent external financing gap and in order to support the economic reform
process in the country, the EU adopted in July 2010 a decision providing up to
EUR 500 million of MFA to Ukraine[13].
In combination with the EUR 110 million still available from the MFA decision
adopted in 2002[14],
this implied a potential MFA package of up to EUR 610 million. The Memorandum
of Understanding (MoU) laying down the policy conditions for the disbursement
of the assistance and the Loan Agreement (LA) were signed in March 2013. The
MoU contains policy measures in the key areas of public finance management,
trade and taxation, energy sector reform and the harmonisation of financial
regulation. Disbursements of MFA in 2013 are conditional on the resumption of
drawings of funds by Ukraine under a new IMF support arrangement, which
Ukrainian authorities are in the process of negotiating with the IMF after the
expiration in December 2012 of the previous USD 15.4 billion SBA. For the
second and third tranches, disbursement will be conditional, in addition, on
satisfactory progress in the implementation of the structural policy conditions
laid down in the MoU. In 2012, real GDP growth
in Ukraine decelerated to 0.2% compared to 5.2% in 2011, mainly as a result of
a deteriorating external environment, a lower demand for Ukrainian metal
exports as well as low investment levels. Despite the slowdown in growth and deflationary
tendencies, the National Bank of Ukraine kept monetary policy tight in an
attempt to fend-off devaluation pressures on the local currency. The fiscal deficit
widened to an estimated 6% of GDP in 2012, after 4.2% in 2011, mainly due to
fiscal loosening ahead of the parliamentary elections and the rising level of
energy subsidies. External vulnerabilities are growing as the current account
deficit increased to 8.4% of GDP and foreign exchange reserves declined by
almost one fourth in 2012. Progress on structural reforms has been mixed, with
some progress in the field of energy policy, whereas public finance management
reform has stalled and the public procurement system still lacks transparency. 3.2.6. The
Kyrgyz Republic In the wake
of ethnic and political violence which resulted in a sharp drop in economic
activity and a sizable external financing gap, the EU pledged to support the
recovery of the Kyrgyz Republic at an international donor conference in Bishkek
in July 2010. This led to the adoption by the Commission of a proposal
for a decision to provide to the Kyrgyz Republic MFA of up to EUR 30 million
(EUR 15 million in loans and EUR 15 million in grants) on 20 December 2011. This
exceptional MFA operation, i.e. outside the normal geographical scope of MFA,
was justified by the strength of the pro-democratic political and economic
reform momentum in the country and by its position in a region of economic and
political importance for the EU. In parallel, the IMF agreed with the Kyrgyz
authorities in June 2011 on a three-year programme, supported by an Extended
Credit Facility (ECF) arrangement. However, the
adoption of the decision on a MFA operation to the Kyrgyz Republic has been
delayed by disagreements between the two co-legislators over the procedure to
be used for the
adoption of the Memorandum of Understanding (see Section 2.3). In 2012, economic growth
of the Kyrgyz Republic was limited to 0.9%, significantly below earlier
forecasts, as production in the gold-mining sector sharply contracted because
of geological issues. Excluding the gold-mining sector, growth reached about 4.8%
in 2012, driven by manufacturing, construction and services, gradually
recovering from the sharp slowdown in 2009 and 2010 caused by global recession
and internal political and ethnic conflicts. The
current account deficit widened to an estimated 9% of GDP in 2012,
reflecting a decline in gold exports and higher oil prices. Despite a tight monetary policy, inflation reached 7.5%
by the end of 2012 on account of rising international fuel and food prices.
The
overall fiscal deficit declined to an estimated 5.3% of GDP (excluding
energy infrastructure projects), mostly thanks to a stronger revenue
collection.
Progress under the ECF programme has been sustained so far, with Kyrgyzstan
meeting all end-June 2012 quantitative programme targets and all but one
structural benchmarks. 4. Ensuring a proper use
of MFA funds: operational assessments and Ex-post evaluations 4.1. Operational
assessments In line with the
requirements of the EU Financial Regulation, the Commission, with the help of
external consultants, carries out operational assessments (OAs) to obtain
reasonable assurances on the functioning of administrative procedures and
financial circuits of the recipient countries. The OAs focus on Public
Finance Management (PFM) systems, in particular on the procedures and the
organisation of the ministry of finance and the central bank and, more
specifically, on the management of the accounts receiving EU funds. In
addition, special attention is given to how external audit institutions
function, their independence, their work programmes and the effectiveness of
their controls. In the most recent OAs, an analysis of existing procedures in
the procurement agencies was also undertaken. In 2012, the Commission finalised
the OA in the Kyrgyz Republic. In view of possible new
MFA operations in Egypt and Jordan, an OA was conducted in these two countries
in February and April 2013, respectively. 4.2. Ex-post
evaluations In line with the EU
Financial Regulation, the Commission conducts ex-post evaluations of MFA
programmes to assess the impact of MFA. The main objectives of ex-post
evaluations are: (i) to analyse the economic impact of MFA on the economy of
the recipient country and in particular on the sustainability of its external
position, and (ii) to assess the added value of the EU intervention. The
conclusions of these evaluations are used to strengthen MFA management
practices. The two ex-post
evaluations launched in 2011 to evaluate the MFA operations with Lebanon and Georgia were completed in 2012. A new ex-post evaluation of the MFA support to Kosovo
was initiated and completed in 2012[15]. The ex-post
evaluation on the Lebanon MFA programme concluded that, while the objective of
macro-economic stabilisation of the country was largely met, the impact on
structural reforms had been limited, as a consequence of a particularly complex and
unstable political context. In terms of
impact of the MFA programme on Georgia's structural reforms, the ex-post
evaluation concluded that, while significant progress had been achieved in the
areas of budget preparation and execution, more work had to be done in the
areas of internal control, audit, and in general transparency and
accountability. The
conclusion of the ex-post evaluation on the Kosovo MFA programme was that its
most important legacy was twofold: (i) it provided Kosovo's authorities with an
additional tool to push for critically important reforms at home; and (ii) it
lent international credibility to the Government of Kosovo in its early days. The ex-post
evaluations for the three MFA operations for Serbia, Moldova and Armenia that were recently completed will be conducted in 2013. 5. Requests for
assistance and future Commission proposals; budgetary situation The pipeline
of MFA operations for 2013 includes: (i) two on-going programmes (Bosnia and
Herzegovina and Ukraine); (ii) two programmes proposed by the Commission in
2011, whose implementation would start following the expected adoption of the
decisions by the co-legislators (Georgia and the Kyrgyz Republic); and (iii) up
to three new programmes, based on requests received from ENP countries so far
(Egypt, Jordan, Armenia). Regarding the
implementation of the existing MFA operations, the release of the final
instalment under the programme for Bosnia and Herzegovina, if confirmed, will
take place not later than November. Under the programme for Ukraine, actual disbursements, including the release of the first instalment, are subject
to an agreement with the IMF on a new financing arrangement, as well as
compliance with MoU policy conditions. The
Commission also plans to start in 2013 the disbursements under the MFA
programmes for Georgia and the Kyrgyz Republic, following the expected adoption
of the corresponding legislative decisions by the European Parliament
and the Council. The current plan is to release the first instalments under the
programmes in 2013, and the second instalments in 2014. In the case of Georgia, as indicated, the release of MFA will only be possible if Georgia actually decides to draw
on the SBA-SCF arrangement with the IMF, an arrangement which is currently
treated as precautionary. As mentioned
above, Egypt renewed its request for a MFA of EUR 500 million in November 2012.
The Commission is considering the adoption of a MFA proposal, which would be
conditional on
an agreement between the IMF and the Egyptian authorities on an IMF programme.
The MFA is likely to consist of a loan of EUR 450 million coupled with a grant
of EUR 50 million. The MFA would help to support Egypt's balance of payments
and to strengthen reform efforts during a period of challenging political transition.
Depending on the timing of the proposal and the decision, a first tranche could
be paid in 2013 and the rest of the MFA in 2014. In December
2012, the Jordanian authorities requested MFA support in the form of loans of
up to EUR 200 million. In liaison with the IMF, the Commission has been
estimating the residual external financing needs of Jordan and is considering
presenting a proposal for MFA support of EUR 180 million in loans in 2013. In
this case also, a first tranche disbursement may take place in 2013. In addition,
a new operation can be anticipated for Armenia, as a request for MFA support
has been received by the Commission from the Armenian authorities in February
2013. It would follow the MFA programme completed in 2012 and would be aimed at
helping the country cover the residual external financing gap foreseen for
2013-2014, complementing the resources made available by the IMF under a new
financing arrangement, currently under preparation. Finally, the
current pipeline of MFA operations for 2014 includes a possible programme for
Kosovo should a financing gap be clearly established. After the expiration of
the previous programme in 2010, a new operation would respond to the
conditional pledge made by the EU at the June 2008 donor conference on Kosovo,
for an amount of up to EUR 100 million. Table 1 below provides
an overview of commitments and payments of MFA grants for 2011, 2012 and 2013
(indicative). The forecast for 2013 is of a very preliminary nature and will
depend on various factors which are outside of the control of the Commission.
The pipeline of grant operations for 2013 is broadly consistent with the
budgetary ceilings for 2013. With regard to loans, the total outstanding amount
for MFA lending operations was equal to EUR 545 million at the end of 2012.
This sum is covered by the Guarantee Fund for external actions[16],
which is maintained at 9% of the outstanding amount. The Fund covers not only
MFA loans, but also Euratom loans and EIB loans to third countries and is
provisioned from the EU Budget. For MFA lending operations foreseen in 2013,
this would correspond to a provisioning of the Guarantee Fund of about EUR 72.3
million. [1] This designation is without
prejudice to positions on status, and in line with UNSCR 1244 and the ICJ
Opinion on the Kosovo Declaration of Independence. [2] For background information on
economic developments in the Southern neighbours, see also "The EU's
neighbouring economies: coping with new challenges", Occasional Papers no.
86 / November 2011, DG ECFIN, European Commission. A new Occasional Paper with
the title "The EU's Neighbouring Economies: Managing economic policies
amid increased global uncertainty" is scheduled to be published in
mid-2013. (http://ec.europa.eu/economy_finance/publications/occasional_paper/2011/index_en.htm). [3] Commission proposal for a Regulation of the European
Parliament and of the Council laying down general provisions for
Macro-Financial Assistance to third countries - COM(2011) 396 final, 4.7.2011. [4] Regulation (EC) No 182/2011 of the
European Parliament and of the Council of 16 February 2011. [5] "Exceptional" in
the sense that it is granted to a country outside the normal geographical scope
of MFA, i.e. candidate/potential candidate and neighbourhood countries. [6] Council Decision 2009/891/EC
of 30 November 2009. [7] Council Decision 2009/890/EC
of 30 November 2009. [8] For a detailed account of the
implementation of the programme please see the Commission's Report on the
implementation of MFA in 2011 - COM(2012) 339 final, 28.6.2012. [9] The territories of Abkhazia
and South Ossetia are excluded from the analysis due to a lack of reliable
data. [10] Decision No 938/2010/EU of
the European Parliament and of the Council of 20 October 2010. [11] See footnote 5. [12] The data excludes the breakaway
territory of Transnistria for which reliable figures are not available. [13] Decision No 646/2010/EU of the European
Parliament and of the Council of 7 July 2010. [14] Council Decision 2002/639/EC of 12
July 2012. [15] All ex-post evaluations are
available on DG ECFIN website:
http://ec.europa.eu/economy_finance/evaluation/completed/index_en.htm [16] For more information, please
see the Report from the Commission to the European Parliament and the Council
on guarantees covered by the general budget (issued semi-annually).