Tuesday 10 May 2011
P7_TC1-COD(2010)0390

Position of the European Parliament adopted at first reading on 10 May 2011 with a view to the adoption of Decision No …/2011/EU of the European Parliament and of the Council providing further macro-financial assistance to Georgia

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 212(2) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Acting in accordance with the ordinary legislative procedure (1),

Whereas:

(1)

Relations between Georgia and the European Union are developing within the framework of the European Neighbourhood Policy. In 2006, the Community and Georgia agreed on a European Neighbourhood Policy Action Plan identifying medium-term priorities in EU-Georgia relations. In 2010, the Union and Georgia launched the negotiations of an Association Agreement that is expected to replace the existing Partnership and Cooperation Agreement. The framework of EU-Georgia relations is further enhanced by the newly launched Eastern Partnership.

(2)	The extraordinary European Council meeting on 1 September 2008 confirmed the Union's willingness to strengthen EU-Georgia relations in the aftermath of the armed conflict in August 2008 between Georgia and the Russian Federation.

(3)	The Georgian economy has been affected by the international financial crisis since the third quarter of 2008, with declining output, falling fiscal revenues and rising external financing needs.

(4)	At the International Donors' Conference held on 22 October 2008 the international community pledged support to Georgia's economic recovery in line with the Joint Needs Assessment carried out by the United Nations and the World Bank.

(5)	The Union announced that it would provide up to EUR 500 million as financial assistance to Georgia.

(6)

The Georgian economic adjustment and recovery is supported by financial assistance from the International Monetary Fund (IMF). In September 2008, the Georgian authorities agreed with the IMF on a Stand-By Arrangement of USD 750 million to support the Georgian economy to achieve the necessary adjustment to the economic crisis.

(7)

Following a further deterioration in the economic situation in Georgia and a necessary revision of the IMF programme's underlying economic assumptions as well as higher external financing needs, an agreement was reached between Georgia and the IMF for an increase by USD 424 million of the Stand-By Arrangement, which was approved in August 2009 by the IMF Board.

(8)	The Union intends to provide, in 2010-2012, under the European Neighbourhood and Partnership Instrument (ENPI), budget support grants of a total of EUR 37 million per year.

(9)	Georgia has requested Union macro-financial assistance in view of the deteriorating economic situation and outlook.

(10)	Given that there is still a residual financing gap in Georgia's balance of payments, macro-financial assistance is considered an appropriate response to Georgia's request under the current exceptional circumstances to support economic stabilisation in conjunction with the current IMF programme.

(11)	The Union macro-financial assistance to be provided to Georgia (hereinafter "the Union macro-financial assistance") should not merely supplement programmes and resources from the IMF and the World Bank, but should ensure the added value of Union involvement.

(12)	The Commission should ensure that the Union macro-financial assistance is legally and substantially in line with the measures taken within the different areas of external action and other relevant Union policies.

(13)	The specific objectives of the Union macro-financial assistance should strengthen efficiency, transparency and accountability. Those objectives should be regularly monitored by the Commission.

(14)	The conditions underlying the provision of the Union macro-financial assistance should reflect the key principles and objectives of the Union’s policy towards Georgia.

(15)

In order to ensure efficient protection of the Union’s financial interests linked to its macro-financial assistance, it is necessary that Georgia adopt appropriate measures relating to the prevention of, and the fight against, fraud, corruption and any other irregularities linked to that assistance. It is also necessary that the Commission provide for appropriate controls and that the Court of Auditors provide for appropriate audits.

(16)	The release of the Union macro-financial assistance is without prejudice to the powers of the Union's budgetary authority.

(17)

The Union macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Economic and Financial Committee are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the Union macro-financial assistance and provide them with relevant documents.

(18)

In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission's exercise of implementing powers  (2) , [Am.1]

HAVE ADOPTED THIS DECISION:

Article 1

1.   The Union shall make macro-financial assistance available to Georgia, of a maximum amount of EUR 46 million, with a view to supporting Georgia's economic stabilisation and covering its balance of payments needs, as identified in the current IMF programme. Of that maximum amount, up to EUR 23 million shall be provided in the form of grants and up to EUR 23 million in the form of loans. The release of the Union macro-financial assistance shall be subject to the approval of the European Union Budget for 2011 by the Union's budgetary authority.

2.   The Commission shall be empowered to borrow the necessary resources on behalf of the Union in order to finance the loan component of the Union macro-financial assistance. The loan shall have a maximum maturity of 15 years.

3.   The release of the Union macro-financial assistance shall be managed by the Commission in a manner consistent with the agreements or understandings reached between the IMF and Georgia and with the key principles and objectives of economic reform set out in the EU-Georgia Partnership and Cooperation Agreement. The Commission shall regularly inform the European Parliament and the Economic and Financial Committee of developments in the management of the Union macro-financial assistance and provide them with relevant documents.

4.   The Union macro-financial assistance shall be made available for two years and six months starting from the first day after the entry into force of the Memorandum of Understanding referred to in Article 2(1).

Article 2

1.   The Commission shall adopt, by means of implementing acts, a Memorandum of Understanding containing the economic policy and financial conditions to which the Union macro-financial assistance is subject, including a timeframe for meeting those conditions. Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 6(2).

The economic policy and financial conditions set out in the Memorandum of Understanding shall be consistent with the agreements or understandings referred to in Article 1(3). Those conditions shall aim, in particular, at strengthening the efficiency, transparency and accountability of the Union macro-financial assistance, including public finance management systems in Georgia. Progress in attaining those objectives shall be regularly monitored by the Commission. The detailed financial terms of the Union macro-financial assistance shall be laid down in the Grant Agreement and the Loan Agreement to be agreed between the Commission and the Georgian authorities. [Am.2]

2.   During the implementation of the Union macro-financial assistance, the Commission shall monitor the soundness of Georgia's financial arrangements, the administrative procedures and the internal and external control mechanisms which are relevant to such assistance and compliance with the agreed timeframe.

3.   The Commission shall verify at regular intervals that Georgia's economic policies are in accordance with the objectives of the Union macro-financial assistance and that the agreed economic policy conditions are being satisfactorily fulfilled. In undertaking such verification, the Commission shall coordinate closely with the IMF and the World Bank, and, where required, the Economic and Financial Committee.

Article 3

1.   Subject to the conditions of paragraph 2, the Union macro-financial assistance to Georgia shall be made available by the Commission in two instalments, each of them consisting of a grant and a loan element. The size of each instalment shall be laid down in the Memorandum of Understanding.

2.   The Commission shall decide on the release of the instalments subject to satisfactory implementation of the economic policy conditions agreed in the Memorandum of Understanding. The disbursement of the second instalment shall take place no earlier than three months after the release of the first instalment.

3.   The Union funds shall be paid to the National Bank of Georgia. Subject to provisions to be agreed in the Memorandum of Understanding, including a confirmation of residual budgetary financing needs, the Union funds may be transferred to the Treasury of Georgia as the final beneficiary.

Article 4

1.   The borrowing and lending operations related to the loan component of the Union macro-financial assistance shall be carried out in euro using the same value date and shall not involve the Union in the transformation of maturities, in any exchange or interest rate risks or in any other commercial risk.

2.   The Commission shall take the necessary steps, if Georgia so requests, to ensure that an early repayment clause is included in the terms and conditions of the loan and that it is matched by a corresponding clause in the terms and conditions of the borrowing operations.

3.   At the request of Georgia, and where circumstances permit an improvement of the interest rate of the loan, the Commission may refinance all or part of its initial loan or restructure the corresponding financial conditions. Refinancing or restructuring operations shall be carried out in accordance with the conditions set out in paragraph 1 and shall not have the effect of extending the average maturity of the loan concerned or increasing the amount of capital outstanding at the date of the refinancing or restructuring.

4.   All costs incurred by the Union which are related to the borrowing and lending operations under this Decision shall be borne by Georgia.

5.   The European Parliament and the Economic and Financial Committee shall be kept informed of developments in the operations referred to in paragraphs 2 and 3.

Article 5

Union macro-financial assistance shall be implemented in accordance with the provisions of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (3) and its implementing rules (4). In particular, the Memorandum of Understanding, the Loan Agreement and the Grant Agreement to be agreed with the Georgian authorities shall provide for specific measures to be implemented by Georgia in relation to the prevention of, and the fight against, fraud, corruption and other irregularities affecting the Union macro-financial assistance. In order to ensure greater transparency in the management and disbursement of funds, the Memorandum of Understanding, the Loan Agreement and the Grant Agreement shall also provide for controls, including on-the-spot checks and inspections, to be carried out by the Commission, including the European Anti-Fraud Office. Those documents shall, in addition, provide for audits, including where appropriate on-the-spot audits, by the Court of Auditors.

Article 6

1.   The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.

2.   Where reference is made to this paragraph, Article 4 of Regulation (EU) No 182/2011 shall apply. [Am.3]

Article 7

1.   By 30 June of each year, the Commission shall submit to the European Parliament and to the Council a report on the implementation of this Decision in the preceding calendar year, including an evaluation thereof. The report shall indicate the connection between the economic policy conditions as laid down in the Memorandum of Understanding, Georgia’s on-going economic and fiscal performance and the Commission’s decisions to release the instalments of the Union macro-financial assistance.

2.   No later than two years after the expiry of the availability period referred to in Article 1(4), the Commission shall submit to the European Parliament and to the Council an ex post evaluation report.

Article 8

This Decision shall enter into force on the day of its publication in the Official Journal of the European Union.

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(1)  Position of the European Parliament of 10 May 2011.

(2)   OJ L 55, 28.2.2011, p. 13.

(3)  OJ L 248, 16.9.2002, p. 1.

(4)  Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ L 357, 31.12.2002, p. 1).