2006/41/EC: Council Decision of  24 January 2006  providing macro-financial assistance to Georgia
Date: 2006-01-24
Institutions: Council of the European Union
Subjects: EU aid, Georgia, economic stabilisation, financial aid

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Official Journal of the European Union

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II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 24 January 2006

providing macro-financial assistance to Georgia

(2006/41/EC)

THE COUNCIL OF THE EUROPEAN UNION,

committed and paid under
assistance.

the exceptional

financial

Having regard to the Treaty
Community, and in particular Article 308 thereof,

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

(2)

(3)

By Decision 97/787/EC (2) the Council provided excep-
tional financial assistance for Armenia and Georgia in the
form of long-term loans and grants.

By Decision 2000/244/EC the Council provided excep-
tional financial assistance for Tajikistan and extended the
implementation period of the assistance to Armenia and
Georgia until 2004.

In case of Georgia, the objectives of the assistance have
not been fully met, owing to an unsatisfactory economic
policy environment in the country during most of the
implementation period.

(4)

Therefore, only EUR 31,5 million of
the total grant
component of EUR 65 million for Georgia was

(1) Opinion delivered on 15.12.2005 (not yet published in the Official

Journal).

(2) OJ L 322, 25.11.1997, p. 37. Decision as amended by Decision

2000/244/EC (OJ L 77, 28.3.2000, p. 11).

(5)

(6)

(7)

(8)

(9)

The present authorities of Georgia are committed to
economic stabilisation and structural reforms, supported
by the International Monetary Fund (IMF)
through a
three-year arrangement under
the Poverty Reduction
and Growth Facility (PRGF) which was approved on 4
June 2004 for a total amount of SDR 98 million. Subse-
quently, the Paris Club creditors agreed on 21 July 2004
to a restructuring of Georgia’s bilateral official debt on
the Houston terms.

The new Government of Georgia also received strong
the
international
support
donors’ conference held in Brussels on 16 June 2004.

community at

from the

The World Bank approved in June 2004 a USD 24
million Reform Support Credit, and will continue its
assistance to Georgia under a new Country Partnership
Strategy in the form of Poverty Reduction Support
Operations.

The Georgian authorities have expressed their intention
to pursue early debt repayments to the Community with
a view to improving debt sustainability.

As EU-Georgia relations are developing within the
framework of
the European Neighbourhood Policy,
which is expected to lead to deeper economic integration,
the government’s economic
Community support
reform programme is considered appropriate.

for

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(10) Making available an amount equivalent to the uncom-
financial
mitted grant component of
country’s
assistance, which would
economic reforms and help reduce external indebtedness,
is an appropriate contribution by the Community to the
implementation of poverty reduction and growth stra-
tegies in Georgia.

the exceptional
support

the

The Community macro-financial assistance shall be made
3.
available for two years starting from the first day after the entry
into force of
so
require, the Commission, after consulting the Economic and
Financial Committee, may decide to extend the availability
period by a maximum of one year.

this Decision. However,

if circumstances

(11)

(12)

of

to

order

efficient

the
protection
In
ensure
Community’s financial
interests in connection with the
present macro-financial assistance,
is necessary to
provide for appropriate measures by Georgia in relation
fraud,
to the prevention of and the fight against
corruption and any other irregularities linked to this
assistance, as well as for controls by the Commission
and audits by the Court of Auditors.

it

Article 2

1.
The Commission shall be empowered to agree with the
authorities of Georgia, after consulting the Economic and
economic policy and financial
Financial Committee,
conditions attached to this assistance, to be laid down in a
Memorandum of Understanding. These conditions shall be
consistent with the agreements reached between the IMF and
Georgia.

the

The Commission services, with the support of duly
mandated external experts, carried out in October 2004
an operational assessment of the financial circuits and
administrative procedures at the Ministry of Finance of
Georgia and the National Bank of Georgia to ascertain
the
sound financial
management.

existence of a framework for

During the implementation of the Community assistance,
2.
the soundness of Georgia’s
the Commission shall monitor
financial circuits, administrative procedures and internal and
external
to this
Community macro-financial assistance.

control mechanisms which are

relevant

(13)

The release of this grant assistance is without prejudice to
the powers of the budgetary authority.

(14)

The Commission has consulted the Economic and
Financial Committee before submitting its proposal.

(15)

The Treaty provides for no powers, other than those of
Article 308 thereof, for the adoption of this Decision,

HAS DECIDED AS FOLLOWS:

Article 1

1.
The Community shall make available to Georgia macro-
financial assistance in the form of straight grants up to a
maximum amount of EUR 33,5 million with a view to
country
supporting
improve debt sustainability.

and helping

economic

reforms

the

This Community macro-financial

shall be
2.
managed by
the Commission in consultation with the
Economic and Financial Committee and in a manner fully
consistent with the agreements reached between the IMF and
Georgia.

assistance

3.
The Commission shall verify at regular intervals that the
government’s economic policies are in accordance with the
objectives of
the agreed economic
policy and financial conditions are being fulfilled.

this assistance and that

Article 3

1.
The grant amount shall be made available to Georgia in at
least two instalments insofar as its net debtor position towards
the Community has been reduced, as a rule, by at least a similar
amount.

The first grant instalment shall be released on the basis of
the economic programme
the Poverty Reduction and

2.
a satisfactory implementation of
supported by the IMF under
Growth Facility.

The second and any further instalments shall be released on the
basis of a satisfactory implementation of the IMF-supported
economic programme and any other measures laid down in
the Memorandum of Understanding referred to in Article
2(1), and not before three months have elapsed since the
release of the previous instalment.

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The funds shall be paid to the National Bank of Georgia.
3.
The final recipient of the funds will be the Ministry of Finance
of Georgia.

Article 4

this assistance shall

The implementation of
take place 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 (1) and its implementing rules. In particular, the
Memorandum of Understanding referred to in Article 2(1) shall
provide for appropriate measures by Georgia in relation to the
prevention of and the fight against fraud, corruption and any
other irregularities linked to this assistance. It shall also provide
for controls by the Commission, including the European Anti-
Fraud Office (OLAF), with the right to perform on-the-spot
checks and inspections, and for audits by the Court of
Auditors, where appropriate, to be carried out on the spot.

Article 5

At least once a year, before September, the Commission shall
submit to the European Parliament and to the Council a report
including an evaluation of the implementation of this Decision
in the previous year.

Article 6

This Decision shall take effect on the day of its publication in
the Official Journal of the European Union.

Done at Brussels, 24 January 2006.

For the Council
The President

K.-H. GRASSER

(1) OJ L 248, 16.9.2002, p. 1.