EU macro-financial assistance to non-EU countries in 2016

SUMMARY OF:

WHAT IS THE AIM OF THE REPORT?

The report provides details of EU macro-financial assistance to Georgia, Jordan, the Kyrgyz Republic, Moldova, Tunisia and Ukraine in 2016 and into 2017. These countries were facing balance of payments* crises. The assistance was designed to help them restore macroeconomic and financial stability.
Articles 209 and 212 of the Treaty on the Functioning of the European Union provide the legal bases for the EU to provide economic, financial and technical cooperation to non-EU countries.
The EU also provides aid to non-euro-area countries with external financing difficulties.

KEY POINTS

Macro-financial assistance (MFA):

is available for candidate and potential candidate countries and those in the European neighbourhood or, exceptionally, to other countries that are politically, economically and geographically close to the EU;
supports recipient countries’ balance of payments;
complements an International Monetary Fund adjustment and reform programme;
consists of either loans (repayable to the lender) or grants (non-repayable);
requires beneficiary countries to respect democracy, the rule of law and human rights;
is released in stages according to the progress made in implementing reforms linked to a country’s long-term economic sustainability.

In 2016, the EU gave the following MFA:

Georgia: €13 million (grants) and €10 million (loans);
Jordan: €200 million (loans);
Kyrgyz Republic: €5 million (grants) and €10 million (loans);
Moldova: €40 million (grants) and €60 (loans);
Tunisia: €500 million (loans);
Ukraine: €600 million (loans).

BACKGROUND

Since 1990, the EU has implemented 26 MFA programmes with a total value of over €10 billion. The smallest was for Moldova (€15 million), the largest for Ukraine (€1.8 billion)

As part of the mid-term review of the 2014-2020 Multiannual Financial Framework, the Commission proposed enhancing the annual lending capacity of the MFA. This increase would be from €500 million to €2000 million and would be achieved by increasing the provisioning of the Guarantee Fund for External Actions.

For more information, see:

Macro-financial assistance to non-EU partner countries (European Commission).

KEY TERMS

Balance of payments: the difference in the total value of payments into and out of a country over a given period.

MAIN DOCUMENT

Report from the Commission to the European Parliament and the Council on the implementation of macro-financial assistance to third countries in 2016 (COM(2017) 321 final, 16.6.2017)

Consolidated version of the Treaty on the Functioning of the European Union — Part Five — The Union’s External Action — Title III — Cooperation with third countries and humanitarian aid — Chapter 1 — Development cooperation — Article 209 (ex Article 179 TEC) (OJ C 202, 7.6.2016, p. 141)

Consolidated version of the Treaty on the Functioning of the European Union — Part Five — The Union’s External Action — Title III —Cooperation with third countries and humanitarian aid — Chapter 2 — Economic, financial and technical cooperation with third countries — Article 212 (ex Article 181a TEC) (OJ C 202, 7.6.2016, p. 142)