Proposal for a Council Decision providing macro-financial assistance to Serbia {SEC(2009)1311}
Date: 2009-10-08
Institutions: European Commission
Subjects: EU aid, Serbia, economic conditions, economic stabilisation, financial aid, financial cooperation

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 8.10.2009 
COM(2009)513 final 

2009/0145 (CNS) 

Proposal for a 

COUNCIL DECISION 

providing macro-financial assistance to Serbia 

{SEC(2009)1311} 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

11 

Grounds for and objectives of the proposal 

The  Commission  proposes  to  provide  macro-financial  assistance  (MFA)  to  Serbia  in 
the  form  of  a  loan  with  a  view  to  supporting  Serbia's  economic  stabilisation  and 
financing its external balance-of-payments and budgetary needs identified by the IMF. 
The  proposed  assistance  will  support  the  authorities'  stabilisation  programme  with  a 
view to ensuring sustainable fiscal and external accounts. It will contribute to helping 
Serbia to address the consequences of the global financial crisis. 

The  proposed  Community  macro-financial  assistance  will  complement  support  from 
the IMF foreseen under the stand-by arrangement's revision agreed by the IMF board 
on 15 May 2009, as well as World Bank support due to take the form of budget support 
policy  loans.  Community  MFA  will  be  exceptional  and  limited  in  time,  and  will  be 
conditional,  in  particular,  on  progress  in  the  implementation  of  the  current  IMF 
programme and on the successful fulfilment of economic policy conditions that will be 
attached to this assistance. 

In view of the financing needs identified for 2010, it is important that the Community 
macro-financial assistance to Serbia is disbursed before the end of 2010. 

120 

General context  

The global economic crisis started to increasingly affect Serbia as of mid-2008. Growth 
for the whole year 2008 slowed to an estimated 5.4% compared to 6.9% a year earlier. 
The slowing world economy resulted in a contraction of Serbian foreign trade during 
the fourth quarter of 2008. While imports declined faster than exports (11.7% vs. 7.3% 
year-on-year,  respectively),  the  trade  deficit  started  to  improve.  During  the  fourth 
quarter, the current account deficit narrowed to 13.8% of GDP, compared to 18.8% a 
quarter  earlier.  During  the  same  period,  capital  inflows  slowed,  in  particular  with 
respect to enterprise cross-border borrowing.  

In  early  2009,  advance  indicators  confirmed  an  aggravation  of  the  crisis.  Industrial 
production  declined  by  17.6%  year-on-year  in  Q1  2009  while  wholesale  and  retail 
trade fell by 14%. The slowdown of economic activity and decline in domestic demand 
led to a further decline of imports of goods by 25.3% year-on-year in Q1, and exports 
of goods decreased 22.4%. As a consequence of the economic contraction, the current 
account deficit improved and fell in Q1 2009 to 9.0% of GDP compared to 13.8% of 
GDP  in  the  previous  quarter.  The  outlook  for  the  current  year  and  beyond  remains 
difficult. Growth was already expected by the IMF in March to contract substantially, 
from  5.4%  in  2008  to  -2%  in  2009,  however  latest  data  suggest  that  the  economic 
downturn will be even more severe, and that GDP may decrease by several percentage 
points in 2009. 

In November 2008 the authorities agreed with the IMF a new Stand-By Arrangement, 
which was approved by the IMF board on 15 January 2009. The assumption at the time 
was that this EUR 400 million arrangement would remain precautionary. However, in 

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early 2009 it became obvious that the programme's underlying economic assumptions 
were too optimistic, in view of the impact of the crisis on Serbia's real economy and on 
fiscal performance, and that the country would need additional external assistance. In 
March,  the  Serbian  authorities  and  IMF  staff  agreed  an  overhaul  of  the  current  SBA 
programme  turning  it  into  a  EUR  3  billion  disbursing  programme.  The  Government 
agreed on  a 2009 budget rebalancing which was  subsequently adopted by Parliament 
on 29 April, targeting a fiscal deficit of 3% of GDP for 2009, instead of the 6% deficit 
estimated  in  the  absence  of  rebalancing  measures.  The  programme  revision  was 
approved  by  the  IMF  Board  on  15  May  2009.  Latest  indications  as  of  early  July 
suggest that that economic downturn is even more severe than foreseen in the revised 
March  assumptions,  and  revenue  performance  has  been  very  poor  in  the  first  five 
months of the year. As the public deficit is now expected to exceed the target foreseen 
under the programme for the first half of 2009, this situation will require further fiscal 
adjustments  in  the  form  of  additional  expenditure  cuts  and  revenue  enhancing 
measures.  

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140 

Existing provisions in the area of the proposal 

None  

Consistency with other policies and objectives of the Union 

•  The proposal aims at supporting Serbia's economic stabilisation programme 

at the current economic juncture. It is both complementary to: 

•  -  the  European  Economic  Recovery  Programme  agreed  by  the  Council  to 
foster  and  coordinate  EU  and  Member  States'  crisis  response  policies 
within the EU; and  

•  -  the  Stabilisation  and  Association  Process  with  candidate  and  potential 
candidate countries, aimed at supporting future member states in the course 
of  the  pre-accession  process;  in  particular,  the  economic  Copenhagen 
accession  criteria,  notably  the  establishment  of  a  functioning  market 
economy,  requires  the  relevant  countries  to  have  established  macro-
economic stability. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of interested parties 

219 

Commission  services  have  been  in  contact  with  the  Serbian  authorities,  the 
International Monetary Fund and the World Bank during the preparation of the present 
Commission  proposal  to  discuss  assistance  needs.  Before  submitting  its  proposal  the 
Commission  has  consulted  the  Economic  and  Financial  Committee,  which  raised  no 
objections to the present proposal. Following the adoption of the Council Decision, the 
Commission  services  will  negotiate  with  the  authorities  of  Serbia  a  Memorandum  of 
Understanding  and  a  Loan  Agreement  to  lay  down  in  detail  the  implementation 
modalities of the assistance.  

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229 

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Collection and use of expertise 

An  Operational  Assessment  assessing  the  quality  and  reliability  of  Serbia's  public 
financial  circuits  and  administrative  controls  is  being  prepared  with  the  support  of 
external consultants appointed by the Commission. 

Impact assessment  

Macro-financial  assistance  will  have  an  immediate  impact  on  Serbia's  balance  of 
payments and will in this way contribute to the alleviation of financial constraints on 
the  implementation  of  the  authorities'  economic  programme  and  to  financing  the 
budget deficit. Macro-financial assistance will further support the general objectives of 
the  stabilisation  programme  agreed  with  the  IMF,  which  in  particular  aims  at 
improving the country's fiscal sustainability in the short- to medium-term. 

Project  finance  and/or  technical  assistance  would  not  be  suitable  to  address  these 
macroeconomic  objectives.  When  delivered  as  balance-of-payments  and  budget 
support, as proposed in the case of Serbia, the disbursements contribute to the building 
up of reserves in the Central Bank as foreseen under the macro-economic stabilisation 
programme and can also be channelled to finance the budget deficit. 

EC assistance will also support the authorities' efforts to implement short- and medium-
term policies identified in the EU-Serbian European Partnership.  

LEGAL ELEMENTS OF THE PROPOSAL 

305 

Summary of the proposed action  

The Community shall make available to Serbia macro-financial assistance in the form 
of a loan. To this end, the Commission shall be empowered to borrow up to EUR 200 
million on the capital markets or from financial institutions.  

The assistance will be made available in two instalments. The maximum average loan 
maturity shall not exceed 15 years. The assistance will be managed by the Commission 
which  shall  agree  with  the  authorities  the  specific  economic  policy  and  financial 
conditions attached to the payment of the loan instalments. Specific provisions on the 
prevention  of  fraud  and  other  irregularities,  consistent  with  the  Financial  Regulation, 
will be duly taken into account.  

The  assistance  will  be  fully  consistent  with  the  macroeconomic  targets  already  set  in 
Serbia's  economic  policy  documents,  such  as  the  2009  Budget  Memorandum  and  the 
Memorandum  of  Economic  and  Fiscal  Policies  agreed  with  the  IMF.  It  will  be  also 
consistent with longer-term policy objectives contemplated in the EU-Serbia European 
Partnership adopted in December 2007. As regards specific economic policy conditions 
attached to the disbursement of the loan instalments, the Commission intends to focus 
on a limited number of areas, including in particular public finance management. Also, 
the Commission may consider targeting specific policies of particular importance, such 
as  priorities  identified  in  the  context  of  the  EU-Serbia  European  Partnership  and  the 
2009  Progress  Report  scheduled  for  adoption  in  October  2009,  or  measures  deemed 
appropriate following the above mentioned Operational Assessment. 

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310 

Legal basis 

Article 308 of the Treaty. 

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Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

Proportionality principle 

The proposal complies with the proportionality principle for the following reasons. 

The  amount  of  the  assistance  –up  to  EUR  200  million–  corresponds  to  the  residual 
financing needs of Serbia for the year 2010 in the context of the IMF programme, over 
and  above  macro-economic  support  provided  by  the  IMF  an  the  World  Bank,  and 
notwithstanding budget support under the Instrument for Pre-accession (IPA) expected 
to be released for the same year (EUR 50 million in 2010, following a first tranche of 
EUR 50 million in 2009). This high burden sharing by the Community takes account of 
the current exceptional juncture, as the unfolding of the global crisis is having a severe 
effect on Serbia's economy.  

Choice of instruments 

Proposed instruments: other. 

In the absence of a framework regulation for the macro-financial assistance instrument, 
ad hoc Council decisions under Article 308 of the Treaty are the only available legal 
instrument for this assistance. 

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BUDGETARY IMPLICATION 

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In  line  with  the  Guarantee  Fund  Regulation1  the  provisioning  of  a  EUR  200  million 
loan disbursed in 2010 would intervene in 2012 and amount to a maximum of EUR 18 
million.  

ADDITIONAL INFORMATION 

Review/revision/sunset clause 

The proposal sets a limited availability period. 

533 

E-11287 

1 

Article 5 of Council Regulation (EC, Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee 
Fund for external action (codified version). The provisioning is appropriated from "the provisioning of 
the Guarantee Fund" (budget line 01 04 01 14). 

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2009/0145 (CNS) 

Proposal for a 

COUNCIL DECISION 

providing macro-financial assistance to Serbia 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the Commission2, 

Having regard to the opinion of the European Parliament3, 

After consulting the Economic and Financial Committee, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Relations  between  Serbia  and  the  European  Union  are  developing  within  the 
framework of the Stabilisation and Association Process and the European Partnership; 
Serbia  and  the  Commission  signed  on  29  April  2008  a  Stabilisation  and  Association 
Agreement and the Interim Agreement on Trade and Trade related Matters. 

The  Serbian  economy  has  been  increasingly  hit  by  the  international  financial  crisis 
since the second half of 2008, with declining output, falling fiscal revenues and rising 
external financing needs.  

Serbia's economic stabilisation and recovery is supported by financial assistance of the 
International Monetary Fund (IMF). In November 2008, the Serbian authorities agreed 
initially  with  the  IMF  on  a  new  Stand-By  Arrangement  which  was  approved  in 
January 2009.  

Following a further deterioration of the economic situation and a necessary revision of 
the  programme's  underlying  economic  assumptions  as  well  as  higher  external 
financing  needs,  an  agreement  was  reached  between  Serbia  and  the  IMF  in  March 
2009 to turn the Stand-By Arrangement into a EUR 3 billion disbursing programme, 
which was approved on 15 May 2009 by the IMF board. 

(5) 

The  Community  intends  to  provide  in  2009  and  2010  Instrument  for  Pre-Accession 
(IPA) budget support grants of a total of EUR 100 million. 

2 
3 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 

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(6) 

(7) 

(8) 

Serbia has requested additional Community macro-financial assistance in view of the 
worsening economic situation and outlook.  

Given  that  a  residual  financing  gap  remains  in  the  balance  of  payments  in  2010, 
macro-financial  assistance  is  considered  an  appropriate  response  to  Serbia's  request 
under  the  current  exceptional  circumstances  to  support  economic  stabilisation  in 
conjunction with the current IMF programme. The present financial assistance is also 
expected to contribute to alleviate budgetary financing needs. 

In order to ensure efficient protection of the Community's financial interests linked to 
the present financial assistance, it is necessary to provide for appropriate measures by 
Serbia  related  to  the  prevention  of,  and  the  fight  against,  fraud,  corruption  and  any 
other irregularities linked to this assistance, as well as for controls by the Commission 
and audits by the Court of Auditors. 

(9) 

The release of the Community financial assistance is without prejudice to the powers 
of the budgetary authority. 

(10)  This  assistance  should  be  managed  by  the  Commission,  in  consultation  with  the 

Economic and Financial Committee. 

(11)  The Treaty does not provide, for the adoption of this Decision, powers other than those 

of Article 308, 

HAS DECIDED AS FOLLOWS:  

Article 1 

1. 

2. 

3. 

4. 

The  Community  shall  make  available  to  Serbia  macro-financial  assistance  in  the 
form of a loan facility with a maximum principal amount of EUR 200 million and a 
maximum average maturity of 15 years with a view to supporting Serbia's economic 
stabilisation  and  alleviating  its  balance  of  payments  and  budgetary  needs  as 
identified in the current IMF programme.  

To  this  end,  the  Commission  is  empowered  to  borrow  on  behalf  of  the  European 
Community the necessary resources.  

The  release  of  the  Community  financial  assistance  shall  be  managed  by  the 
Commission in a manner consistent with the agreements or understandings reached 
between the IMF and Serbia.  

The  Community  financial  assistance  shall  be  made  available  for  two  years  starting 
from  the  first  day  after  the  entry  into  force  of  the  Memorandum  of  Understanding 
referred  to  in  Article  2(1).  However,  if  circumstances  so  require,  the  Commission, 
after consultation of the Economic and Financial Committee, may decide to extend 
the availability period by a maximum of one year. 

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1. 

2. 

3. 

1. 

2. 

3. 

1. 

2. 

3. 

Article 2 

The  Commission  is  empowered  to  agree  with  the  authorities  of  Serbia,  after 
consulting  the  Economic  and  Financial  Committee,  the  economic  policy  conditions 
attached  to  the  Community  macro-financial  assistance,  to  be  laid  down  in  a 
Memorandum  of  Understanding.  The  conditions  shall  be  consistent  with  the 
agreements  or  understandings  reached  between  the  IMF  and  Serbia.  The  detailed 
financial terms of the assistance shall be laid down in a Loan Agreement to be agreed 
between the Commission and the authorities of Serbia.  

During the implementation of the Community financial assistance, the Commission 
shall  monitor  the  soundness  of  Serbia's  financial  arrangements,  administrative 
procedures, and the internal and external control mechanisms which are relevant to 
such assistance. 

The Commission shall verify at regular intervals that Serbia's economic policies are 
in  accordance  with  the  objectives  of  the  Community  assistance  and  that  the  agreed 
economic  policy  conditions  are  being  satisfactorily  fulfilled.  In  doing  so,  the 
Commission shall coordinate closely with the Bretton Woods Institutions, and, when 
required, with the Economic and Financial Committee. 

Article 3 

The Community financial assistance shall be made available by the Commission to 
Serbia in two loan instalments, subject to the conditions of paragraph 2. The size of 
the loan instalments will be laid down in the Memorandum of Understanding.  

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  not  take  place 
earlier than three months after the release of the first instalment. 

The  Community  funds  shall  be  paid  to  the  National  Bank  of  Serbia.  Subject  to 
provisions  to  be  spelled  out  in  the  Memorandum  of  Understanding,  including  a 
confirmation  of  residual  budgetary  financing  needs,  their  counter-value  in  local 
currency may be transferred to the Treasury of Serbia as the final beneficiary.  

Article 4 

The Community borrowing and lending operations referred to in this Decision shall 
be carried out in euro using the same value date and shall not involve the Community 
in the transformation of maturities, in any exchange or interest rate risks, or in any 
other commercial risk. 

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

At  the  request  of  Serbia,  and  where  circumstances  permit  an  improvement  of  the 
interest  rate  of  the  loan,  the  Commission  may  refinance  all  or  part  of  its  initial 

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borrowings  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 
borrowing concerned or increasing the amount  of capital  outstanding at the date of 
the refinancing or restructuring. 

4. 

5. 

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

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

Article 5 

The Community 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  Communities4  and  its 
implementing  rules5.  In  particular,  the  Memorandum  of  Understanding  and  the  Loan 
Agreement to be agreed with the authorities of Serbia shall provide for appropriate measures 
by  Serbia  in  relation  to  the  prevention  of,  and  the  fight  against,  fraud,  corruption  and  other 
irregularities affecting the assistance. They 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 6 

By 31 August of each year 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 
preceding year. The report shall indicate the connection between the policy conditions as laid 
down  in  a  Memorandum  of  Understanding  pursuant  to  Article  2(1),  Serbia's  on-going 
economic and fiscal performance, and the Commission's decision to release the instalment of 
the assistance. 

Article 7 

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

Done at Brussels, […] 

For the Council 
The President 
[…] 

4 
5 

OJ L 248, 16.9.2002 p. 1.  
Commission Regulation (EC, Euratom) No 2342/2002 OJ L 357 31.12.2002, p.1 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Macro-financial assistance to Serbia 

2. 

ABM / ABB FRAMEWORK 

Policy Area(s) concerned and associated Activity/Activities: 

Title 01 – Economic and Financial Affairs, 03 – International economic and financial 
affairs 

3. 

BUDGET LINES 

3.1. 

Budget  lines  (operational  lines  and  related  technical  and  administrative 
assistance lines (ex- B.A lines)) including headings: 

01 04 0114 Provisioning of the Guarantee Fund  

3.2. 

Duration of the action and of the financial impact: 

Start  2010,  tentatively  all  disbursements  will  take  place  over  the  year  2010  in  two 
tranches (second and fourth quarter). However, delays cannot be excluded that would 
prolong the operation.  

3.3. 

Budgetary characteristics: 

Budget line 

Type of 
expenditure 

New 

EFTA 
contribution 

Contributions 
from applicant 
countries 

Heading in 
financial 
perspective 

01.04.01.14  Comp 

Diff 

NO 

NO 

NO 

No 4 

Assistance in the form of loan 

01 04 01 14 – Provisioning of the Guarantee Fund 

The Guarantee Fund for external actions has to be provisioned according to the Fund 
Regulation  as  amended.  In  line  with  this  Regulation,  loans  are  not  any  more 
provisioned  for  the  entire  amount  at  the  time  of  the  decision  but  based  on  the 
outstanding amount at the end of a year. The provisioning amount is calculated at the 
beginning of the year "n" as the difference between the target amount and the Fund's 
net assets at the end of the year "n-1". This provisioning amount is introduced in the 
year  "n"  to  the  "n+1"  preliminary  budget  and  effectively  paid  in  one  transaction  at 
the  beginning  of  the  year  "n+1"  from  "the  provisioning  of  the  Guarantee  Fund" 
(budget line 01 04 01 14). 

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As a result, 9% (maximum of EUR 18 million) of the effectively disbursed amount 
will be considered in the target amount at the end of the year "n-1" for the calculation 
of the provisioning of the Fund.  

01  04  01  04  –  EC  guarantee  for  Community  loans  raised  for  macro-financial 
assistance to third countries.  

The  budget  entry  ("p.m.")  reflecting  the  budget  guarantee  for  the  loan  (EUR  200 
million) will be activated only in the case of an effective call on the guarantee. It is 
called. 
expected 

guarantee  will 

normally 

budget 

that 

not 

the 

be 

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4. 

SUMMARY OF RESOURCES 

4.1. 

Financial Resources 

4.1.1. 

Summary of commitment appropriations (CA) and payment appropriations (PA) 

EUR million (to 3 decimal places) 

Expenditure type 

Section 
no. 

Operational expenditure6 

Commitment Appropriations 
(CA) 

8.1. 

Payment 
(PA) 

Appropriations 

a 

b 

2009 

2010 

Total 

0 

0 

0 

0 

Administrative expenditure within reference amount7 

Technical  &  administrative 
assistance (NDA) 

8.2.4. 

c 

0 

0 

TOTAL REFERENCE AMOUNT 

Commitment 
Appropriations 

Payment Appropriations 

a+c 

b+c 

0 

0 

0 

0 

Administrative expenditure not included in reference amount8 

Human 
associated 
(NDA) 

resources 

and 
expenditure 

8.2.5. 

d 

Administrative  costs,  other 
than  human  resources  and 
not 
associated 
included 
reference 
in 
amount (NDA) 

costs, 

8.2.6. 

e 

Total indicative financial cost of intervention 

TOTAL  CA  including  cost 
of Human Resources 

TOTAL  PA  including  cost 
of Human Resources 

a+c
+d+
e 

b+c
+d+
e 

0 

0 

0 

0 

0 

0 

0 

0 

4.1.2.  Compatibility with Financial Programming 

X 

Proposal is compatible with existing financial programming. 

6 
7 
8 

Expenditure that does not fall under Chapter xx 01 of the Title xx concerned. 
Expenditure within article xx 01 04 of Title xx. 
Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05. 

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(cid:133) 

(cid:133) 

Proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  financial 
perspective. 

Proposal  may  require  application  of  the  provisions  of  the  Inter-institutional 
Agreement9 (i.e. flexibility instrument or revision of the financial perspective). 

4.1.3.  Financial impact on Revenue 

X 

Proposal has no financial implications on revenue 

(cid:133) 

Proposal has financial impact – the effect on revenue is as follows: 

4.2. 

Human Resources FTE (including officials, temporary and external staff) – see 
detail under point 8.2.1. 

Annual requirements 

Total  number  of  human 
resources 

2009 

2010  

1/3

1/3  

5. 

CHARACTERISTICS AND OBJECTIVES 

5.1. 

Need to be met in the short or long term 

The  Serbian  economy  has  been  severely  hit  by  the  global  economic  and  financial 
crisis. Economic growth started to decelerate in the second half of 2008 and output is 
expected  to  contract  by  2%  in  2009.  Although  the  current  account  deficit  is 
declining, overall external financing needs remain high due to an increase in short-
term  debt  repayment  obligations.  The  International  Monetary  Fund  identified  an 
external  financing  gap  to  be  filled  by  IMF,  World  Bank  and  official  donors  of 
EUR2.4  billion  in  2009  and  EUR  1.1  billion  in  2010.  Whereas  the  programme  is 
under current assumptions expected to be fully financed in 2009 and 2011, a residual 
financing gap remains in 2010 after IMF and expected World Bank support, and is 
estimated  by  the  IMF  at  about  EUR  200  million,  to  be  covered  by  the  European 
Community.  

5.2. 

Value-added  of  Community  involvement  and  coherence  of  the  proposal  with 
other financial instruments and possible synergy 

The  Community  financial  support  reflects  the  country's  strategic  importance  as  a 
potential  candidate  country  for  EU  accession.  Macro-financial  assistance  is  an 
appropriate 
to  complement  existing  Community  assistance  and 
contributes  to  a  fully  financed  IMF-supported  economic  stabilisation  programme. 
Thereby,  important  synergies  can  be  established  with  respect  to  its  impact  on 
economic reform and stabilisation.  

instrument 

9 

See points 19 and 24 of the Interinstitutional agreement. 

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5.3. 

Objectives, expected results and related indicators of the proposal in the context 
of the ABM framework 

Within  the  Activity  "International  Economic  and  Financial  Affairs"  of  the 
Directorate General for Economic and Financial Affairs, the Objective of "providing 
macro-financial  assistance  to  third  countries  in  resolving  their  balance  of  payment 
crises and restoring external debt sustainability" is related to the general objective "to 
promote prosperity beyond the EU". 

The  related  indicators  are:  "official  reserves  in  months  of  imports  of  goods  and 
services"  (expected  result:  "a  stabilisation  or  an  increase");  and  "external  debt  as  a 
percentage of GDP" (expected result: a level deemed sustainable upon the end of the 
current programme). 

5.4.  Method of Implementation (indicative) 

X 

Centralised Management 

X 

directly by the Commission 

(cid:133) 

indirectly by delegation to: 

(cid:133) 

executive Agencies 

(cid:133) 

bodies set up by the Communities as referred to in art. 185 of the 
Financial Regulation 

(cid:133) 

national public-sector bodies/bodies with public-service mission 

(cid:133) 

Shared or decentralised management 

(cid:133)  with Member states 

(cid:133)  with Third countries 

(cid:133) 

Joint management with international organisations (please specify) 

Relevant comments: 

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6. 

MONITORING AND EVALUATION 

6.1.  Monitoring system 

The monitoring of the action by the Commission services will take place on the basis 
of  macroeconomic  and  structural  policy  measures  to  be  agreed  with  the  Serbian 
authorities in a Memorandum of Understanding. The authorities will be required to 
report  on  those  measures  to  the  Commission  services  on  a  regular  basis.  The 
Delegation of the European Commission in Belgrade will also provide reporting on 
issues  relevant  for  the  monitoring  of  the  assistance.  The  Commission  services  will 
remain  in  close  contact  with  the  IMF  and  the  World  Bank  to  benefit  from  their 
expertise. 

6.2. 

Evaluation 

6.2.1.  Ex-ante evaluation 

An  ex–ante  evaluation  was  carried  out  by  Commission  services  (Unit  D1  of  the 
Economic and Financial Affairs Directorate-General). 

6.2.2.  Measures taken following an intermediate/ex-post evaluation (lessons  learned from 

similar experiences in the past) 

An  ex-post  evaluation  on  a  previous  macro-financial  assistance  operation  in  favour 
of Serbia was carried out in 2008. Ex-post evaluations were also carried out for other 
countries of the Western Balkans (Albania, Bosnia and Herzegovina and the former 
Yugoslav Republic of Macedonia) and for two new independent states of the former 
Soviet  Union  (Armenia,  Tajikistan).  The  results  of  those  evaluations  provide  some 
useful lessons for the current operation in favour of Serbia.  

6.2.3.  Terms and frequency of future evaluation 

An independent ex-post evaluation of the assistance to Serbia is planned to be carried 
out  under  the  multi-annual  evaluation  programme  of  the  Directorate-General  for 
Economic and Financial Affairs. 

7. 

ANTI-FRAUD MEASURES  

Commission  services  have  put  in  place  an  on-going  programme  of  Operational 
Assessments  of  the  financial  circuits  and  administrative  procedures  in  all  third 
countries benefiting from the Community macro-financial assistance in order to fulfil 
requirements  of  the  Financial  Regulation  applicable  to  the  General  Budget  of  the 
European Communities. 

In  Serbia,  the  Commission  services  assessed  in  2004,  with  the  support  of  duly 
mandated  external  experts,  the  reliability  of  financial  circuits  and  administrative 
procedures that are relevant for to this type of assistance, concluding that the existing 
fiduciary  environment  was  broadly  satisfactory.  At  the  same  time,  the  assessment 
identified  a  number  of  areas  for  improvement,  notably  in  the  field  of  internal 
controls.  A  new  Operational  Assessment  has  been  commissioned  by  the  European 

EN 

15 

   EN 

 
Commission and is underway. Its results will be used to guide the definition of the 
specific policy measures to be attached to the release of the assistance with a view of 
strengthening  efficiency, 
transparency  and  accountability  of  public  finance 
management systems in Serbia. 

The  proposed  legal  basis  for  macro-financial  assistance  to  Serbia  includes  a 
provision on fraud prevention measures. These measures will be elaborated further in 
a  Memorandum  of  Understanding  and  the  loan  agreement.  It  is  envisaged  that  a 
number of specific policy conditions will be attached to the assistance mainly in the 
field  of  public  finance  management,  with  a  view  of  strengthening  efficiency, 
transparency and accountability of the assistance. The macro-financial assistance will 
be liable to verification, control and auditing procedures under the responsibility of 
the  Commission,  including  the  European  Antifraud  Office  (OLAF),  and  by  the 
European Court of Auditors. 

EN 

16 

   EN 

 
8. 

DETAILS OF RESOURCES 

8.1. 

Objectives of the proposal in terms of their financial cost 

Commitment appropriations in EUR million (to 3 decimal places) 

Type of output 

Av. 
cost 

Year 2009 

Year 2010 

Year 2011 

Year 2012 

Year n+4 

Year n+5 and 
later 

TOTAL 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

of 

(Headings 
Objectives, 
and 
actions 
outputs should be 
provided) 

OPERATIONAL 
OBJECTIVE No.1  

Action  1  Balance 
of 
payments/ 
budget support to 
Serbia 

- Output 1  Guarantee Fund 

0 

 0 

.0 

provisioning 

- Output 2 

Action  2  Update 
of  Operational 
Assessment. 

- Output 1  Report 

1 

Sub-total 
Objective 1 

OPERATIONAL 
OBJECTIVE  No.2 
1……… 

0.05 

0.05 

18.0 

18.0 

EN 

17 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Action 
1………………. 

- Output 1 

Sub-total 
Objective 2 

OPERATIONAL 
OBJECTIVE  No.n 
1 

Sub-total 
Objective n 

TOTAL COST 

0.05 

18.0 

EN 

18 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.2. 

Administrative Expenditure  

8.2.1.  Number and type of human resources 

Types of post 

Staff to be assigned to management of the action using existing and/or 
additional resources (number of posts/FTEs) 

Year 2009  Year n+1  Year n+2  Year n+3  Year n+4  Year n+5 

Officials or 
temporary 
staff10 (XX 01 
01) 

A*/AD 

1/3  1/3 

B*, 
C*/AST 

Staff  financed11  by  art. 
XX 01 02 

Other  staff12  financed by 
art. XX 01 04/05 

TOTAL 

1/3  1/3 

8.2.2.  Description of tasks deriving from the action 

Inter alia prepare/negotiate memoranda of understanding and loan agreement, liaise 
with  the  authorities  and  the  International  Financial  Institutions,  monitor  economic 
and  structural  policies  of  the  beneficiary  country,  conduct  review  missions  and 
prepare  Commission  staff  reports,  prepare  Commission  procedures  related  to  the 
management of the assistance.  

8.2.3. 

Sources of human resources (statutory) 

X 

(cid:133) 

(cid:133) 

(cid:133) 

(cid:133) 

Posts currently allocated to the management of the programme to be replaced 
or extended 

Posts pre-allocated within the APS/PDB exercise for year n 

Posts to be requested in the next APS/PDB procedure 

Posts  to  be  redeployed  using  existing  resources  within  the  managing  service 
(internal redeployment) 

Posts required for year n although not foreseen in the APS/PDB exercise of the 
year in question 

10 
11 
12 

Cost of which is NOT covered by the reference amount 
Cost of which is NOT covered by the reference amount 
Cost of which is included within the reference amount 

EN 

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   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
8.2.4.  Other  Administrative  expenditure  included  in  reference  amount  (XX  01  04/05  – 

Expenditure on administrative management) 

EUR million (to 3 decimal places) 

Budget line 01 03 02 

Macro-economic assistance 

Year 
n 

Year 
n+1 

Year 
n+2 

Year 
n+3 

Year 
n+4 

Year 
n+5  

and 
later 

TOTAL 

Technical 

1 
and 
assistance (including related staff costs) 

administrative 

Executive agencies13 

Other 

technical 

and 

administrative 

assistance 

- intra muros  

- extra muros 

1) Operational assessment  

0.050 

2) Ex-post evaluation  

0.250 

Total  Technical  and  administrative 
assistance 

0.050 

0.250 

8.2.5.  Financial cost of human resources and associated costs not included in the reference 

amount 

Type of human resources 

Year n 

Year n+1  Year n+2  Year n+3  Year n+4  Year n+5 

EUR million (to 3 decimal places) 

13 

Reference should be made to the specific legislative financial statement for the Executive Agency(ies) 
concerned. 

EN 

20 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
and later 

Officials  and  temporary  staff 
(XX 01 01) 

0.030 

0.030 

Staff  financed  by  Art  XX  01 
02  (auxiliary,  END,  contract 
staff, etc.) 

(specify budget line) 

cost 

Total 
of  Human 
Resources  and  associated 
in  reference 
costs 
amount) 

(NOT 

0.030 

0.030 

Calculation– Officials and Temporary agents 

Reference should be made to Point 8.2.1, if applicable 

NOT APPLICABLE 

Calculation– Staff financed under art. XX 01 02 

Reference should be made to Point 8.2.1, if applicable 

NOT APPLICABLE 

8.2.6. Other administrative expenditure not included in reference amount 

EUR million (to 3 decimal places)

Year 
2009 

Year 
n+1 

Year 
n+2 

Year 
n+3 

Year 
n+4 

XX 01 02 11 01 – Missions 

0.020 

0.010 

XX 01 02 11 02 – Meetings & Conferences 

XX 01 02 11 03 – Committees14  

XX 01 02 11 04 – Studies & consultations 

Year 
n+5 

and 
later 

TOTAL 

0.030 

14 

Specify the type of committee and the group to which it belongs. 

EN 

21 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
XX 01 02 11 05 - Information systems 

2 

Total 

Other  Management 

Expenditure (XX 01 02 11) 

3  Other 

expenditure 

administrative 
including reference to budget line) 

nature 

of 

an 
(specify 

expenditure, 
than  human  resources  and 
in 

Total  Administrative 
other 
associated  costs  (NOT 
reference amount) 

included 

0.020 

0.010 

0.030 

Calculation - Other administrative expenditure not included in reference amount 

Three staff missions for one/two persons 

EN 

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   EN