Proposal for a Decision of the European Parliament and of the Council providing macro-financial assistance to the Republic of Moldova SEC(2010)706
Date: 2010-06-09
Institutions: European Commission
Subjects: EU aid, European neighbourhood policy, Moldova, economic stabilisation, financial aid, macroeconomics, reflation

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EUROPEAN COMMISSION  

Brussels, 9.6.2010 
COM(2010)302 final 

2010/0162 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

providing macro-financial assistance to the Republic of Moldova 

SEC(2010)706 

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EXPLANATORY MEMORANDUM 

(1) 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

The  Commission  proposes  to  provide  to  the  Republic  of  Moldova  macro-financial 
assistance  (MFA)  in  the  form  of  a  grant  of  up  to  EUR  90  million.  The  proposed 
assistance is intended to contribute to covering Moldova's general balance-of-payments 
needs  and  the  financing  needs  of  the  State  budget  identified  by  the  International 
Monetary  Fund  (IMF).  It  will  support  the  authorities'  stabilisation  programme  with  a 
view  to  ensuring  sustainable  fiscal  and  external  accounts,  and  will  thus  help  the 
country address the consequences of the global financial crisis. 

The  proposed  European  Union  macro-financial  assistance  will  complement  support 
from the IMF foreseen under the financing arrangement agreed by the IMF board on 29 
January  2010.  EU  MFA  is  aimed  at  contributing  to  covering  the  country's  external 
financing  needs  in  2010  and  2011.  During  these  two  years  the  uncovered  financing 
needs  of  the  Republic  of  Moldova  will  reach  a  peak.  Should  in  2012  a  substantial 
financing  gap  still  exist,  further  EU  assistance  might  be  considered  under  a  new 
initiative. 

The proposed assistance will also strengthen the reform momentum in the Republic of 
Moldova in supporting the government's economic programme and its efforts towards 
integration with the EU. It will also contribute to the implementation of the European 
Union's  cooperation  strategy  towards  the  Republic  of  Moldova  and,  more  generally, 
towards the countries of the Eastern Partnership. 

EU MFA will be exceptional and limited in time, and will be conditional 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. 

•  General context 

The  Republic  of  Moldova  is  one  of  the  countries  in  the  European  Union's  eastern 
neighbourhood  most  heavily  affected  by  the  global  crisis.  Despite  high  average 
economic growth rates in the years leading up to the crisis, Moldova's income level per 
capita  remains  by  far  the  lowest  in  the  region.  The  policy  response  to  the  economic 
crisis was delayed first by the preparation for parliamentary elections in Spring 2009 
and  later  by  internal  political  tensions  over  the  election  results.  The  repeat  elections 
that  had  to  be  organised  in  the  Autumn  of  2009  brought  a  coalition  government  into 
power  on  a  reform  agenda  that  seeks  closer  approximation  to  the  EU  and  aims  at 
turning  around  the  previous  growth  model  which  relies  heavily  on  the  inflow  of 
remittances.  These  political  developments  have  created  a  new  momentum  in  the 
scaling  up  of  bilateral  relations  with  the  EU,  culminating  in  the  opening  of  formal 
negotiations on a new Association Agreement on 12 January 2010. 

Immediately  after  the  swearing  in  of  the  new  government  headed  by  Prime  Minister 
Filat  on  25  September  2009  the  authorities  of  the  Republic  of  Moldova  approached 
international donors with a request to cover the financing needs of the country. On 29 
September, during the new Prime Minister's visit to Brussels, the incoming government 
confirmed  the  request  for  EU  financial  support  submitted  earlier  in  the  year  by  the 

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previous  administration.  On  29  January  2010,  the  IMF  Board  approved  an  assistance 
programme  covering  the  period  2010-2012,  under  a  mixture  of  Extended  Credit 
Facility  (ECF)  and  Extended  Fund  Facility  (EFF).  The  programme  is  designed  to  be 
complemented  by  other  international  donors,  in  particular  the  World  Bank  (WB)  and 
the  EU,  as  well  as  other  donors,  both  multilateral  and  bilateral.  At  the  Consultative 
Group  meeting  in  Brussels  of  24  March  2010  substantial  contributions  from  bilateral 
donors were indeed confirmed. The proposed MFA is part of the financing provided in 
the context of the programme implementation 

•  Existing provisions in the area of the proposal 

None. 

•  Consistency with other policies and objectives of the European Union 

The  MFA  programme  is  complementary  to  other  EU  financing,  in  particular  to 
medium-term ENPI budget support implemented within the framework of the Country 
Strategy for EU cooperation with the Republic of Moldova. Thus, it can help increase 
the EU's leverage on policy making as well as help the Republic of Moldova overcome 
the current deep economic crisis. The MFA programme is also complementary to the 
external  financing  coming  from  the  IMF  and  the  World  Bank  and  from  the  bilateral 
donors.  

(2) 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

During the preparation of the present Commission proposal, the Commission services 
have  been  in  contact  with  the  authorities  of  the  Republic  of  Moldova,  the  IMF,  the 
World  Bank,  the  EBRD  and  potential  bilateral  donors  and  creditors,  to  discuss 
assistance needs.  

Following  the  adoption  of  the  Decision  of  the  Parliament  and  the  Council,  the 
Commission  services  will  negotiate  a  Memorandum  of  Understanding  and  a  Grant 
Agreement to lay down in detail the implementation modalities of the assistance with 
the authorities of the Republic of Moldova.  

•  Collection and use of expertise 

The Commission services, with the assistance of external consultants, will carry out an 
Operational  Assessment  of  the  quality  and  reliability  of  public  financial  circuits  and 
administrative controls in the Republic of Moldova. 

•  Impact assessment  

Macro-financial assistance will have an immediate impact on the balance of payments 
and the State budget of the Republic of Moldova and will in this way contribute to the 
alleviation of financial constraints on the implementation of the authorities' economic 
programme.  Macro-financial  assistance  will  further  support  the  general  objectives  of 
the  stabilisation  programme  agreed  with  the  IMF.  Project  finance  and/or  technical 
assistance  would  not  be  suitable  to  address  these  objectives  in  the  macro-economic 
stabilisation programme.  

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The disbursements will contribute to the building up of reserves in the National Bank; 
the national currency equivalent of the assistance, if channelled to the state budget, will 
contribute to the financing of the budget deficit. 

European Union assistance will also support the authorities' efforts to implement short- 
and  medium-term  policies  identified  in  the  EU-Republic  of  Moldova  Action  Plan 
agreed in the context of the European Neighbourhood Policy.  

(3) 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action  

The European Union shall make available to the Republic of Moldova macro-financial 
assistance of up to EUR 90 million. Given the deep impact of the economic crisis on 
the  economy  and  the  country's  eligibility  for  concessional  (IDA)  financing,  the 
European Union assistance will be provided in the form of a grant. 

The  assistance  will  be  made  available  in  three  or  four  instalments:  in  principle,  two 
instalments  in  2010  and  one  or  two  instalments  in  2011.  The  assistance  will  be 
managed  by  the  Commission.  The  Commission  will  agree  with  the  authorities  the 
specific  economic  policy  and  financial  conditions  attached  to  the  payment  of  each 
instalment.  Specific  provisions  on  the  prevention  of  fraud  and  other  irregularities, 
consistent with the Financial Regulation, will be included as necessary.  

The  assistance  will  be  fully  consistent  with  the  macroeconomic  targets  already  set  in 
the economic policy plans agreed by the Republic of Moldova with the IMF. It will be 
also consistent with longer-term policy objectives contemplated in the EU-Republic of 
Moldova  Partnership  and  Cooperation  Agreement  and  more  recently  in  the  EU- 
Republic of Moldova Action Plan adopted in 2005 in the framework of the European 
Neighbourhood Policy. As regards specific economic policy conditions attached to the 
disbursement of the assistance, the Commission intends to focus on a limited number 
of  areas  including  public  finance  management  and  financial  stability.  Also,  the 
Commission may consider targeting specific policies of particular importance, such as 
priorities  identified  in  the  report  on  implementation  of  the  European  Neighbourhood 
Policy (ENP Progress Report) adopted in April 2010, or measures deemed appropriate 
following the Operational Assessment. 

•  Legal basis 

Article 212 of the Treaty on the functioning of the European Union (TFEU). 

•  Subsidiarity principle 

The proposal falls under the shared competence of the European Union in the field of 
economic and financial cooperation with third countries.  

•  Proportionality principle 

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

The  amount  of  the  new  assistance  proposed  –up  to  EUR  90  million–  corresponds  to 

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slightly  more  than  27%  of  the  residual  external  financing  needs  of  the  Republic  of 
Moldova in 2010 and 2011, over and above macro-economic support provided by the 
IMF and the World Bank. This burden sharing by the European Union takes account of 
the current exceptional juncture, as the unfolding of the global crisis is having a severe 
effect on Moldova's economy.  

•  Choice of instruments 

Proposed instruments: other. 

In the absence of a framework regulation for the macro-financial assistance instrument, 
ad hoc Parliament and Council decisions under Article 212 of the TFEU are now the 
legal instrument for this assistance. 

(4) 

Budgetary implication 

The  assistance  will  be  financed  from  commitment  appropriations  in  2010  and  2011 
under  budget  line  01  03  02  (Macroeconomic  assistance);  the  payments  will  also  take 
place in 2010 and 2011. 

(5) 

ADDITIONAL INFORMATION 

•  Review/revision/sunset clause 

The proposal sets a limited availability period. 

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2010/0162 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  

providing macro-financial assistance to the Republic of Moldova 

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 thereof,  

Having regard to the proposal from the European Commission1,  

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

Acting in accordance with the ordinary legislative procedure,2 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

Relations between the Republic of Moldova and the European Union are developing 
within  the  framework  of  the  European  Neighbourhood  Policy.  In  2005,  the 
Community  and  the  Republic  of  Moldova  agreed  on  a  European  Neighbourhood 
Policy  Action  Plan  identifying  medium-term  priorities  in  the  bilateral  relations.  The 
framework of European Union-Republic of Moldova relations is further enhanced by 
the  recently  launched  Eastern  Partnership.  In  January  2010  the  European  Union  and 
the  Republic  of  Moldova  started  negotiating  an  Association  Agreement  that  is 
expected to replace the existing Partnership and Cooperation Agreement.  

The  economy  of  the  Republic  of  Moldova  has  been  severely  affected  by  the 
international  financial  crisis  with  dramatically  declining  output,  deteriorating  fiscal 
position and increasing external financing needs.  

Economic  stabilisation  and  recovery  in  the  Republic  of  Moldova  are  supported  by 
financial  assistance  of  the  International  Monetary  Fund  (IMF).  The  IMF  financing 
arrangement for the Republic of Moldova was approved on 29 January 2010.  

The Republic of Moldova has requested Union macro-financial assistance in view of 
the worsening economic situation and outlook.  

Given that a residual financing gap in 2010-2011 remains in the balance of payments, 
macro-financial assistance is considered an appropriate response to the request of the 

1 
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OJ C […], […], p. […].  
OJ L 

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authorities  of  the  Republic  of  Moldova  for  support  of  the  economic  stabilisation  in 
conjunction with the current IMF programme. The present macro-financial assistance 
is  also  expected  to  contribute  to  alleviate  the  external  financing  needs  of  the  State 
budget. 

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 EU 
involvement. 

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

Specific  objectives  of  the  assistance  should  strengthen  efficiency,  transparency  and 
accountability. These objectives should be regularly monitored by the Commission. 

The  conditions  attached  to  the  provision  of  the  macro-financial  assistance  should 
reflect  key  principles  and  objectives  of  Union  policy  towards  the  Republic  of 
Moldova. 

In  order  to  ensure  efficient  protection  of  the  Union's  financial  interests  linked  to  the 
present financial assistance, it is necessary to provide for appropriate measures by the 
Republic  of  Moldova  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. 

(6) 

(7) 

(8) 

(9) 

(10) 

(11)  The release of the Union macro-financial assistance is without prejudice to the powers 

of the budgetary authority. 

(12)  The Union macro-financial assistance should be implemented by the Commission. The 
measures  necessary  for  the  implementation  of  this  Decision  should  be  adopted  in 
accordance  with  Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the 
procedures for the exercise of implementing powers conferred on the Commission3,  

HAVE ADOPTED THIS DECISION:  

Article 1 

1. 

2. 

The  European  Union  shall  make  available  to  the  Republic  of  Moldova  macro-
financial assistance in the form of a grant of a maximum amount of EUR 90 million 
with a view to supporting the economic stabilisation in the Republic of Moldova and 
alleviating its balance of payments and budgetary needs as identified in the current 
International Monetary Fund (IMF) programme.  

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  the  Republic  of  Moldova  and  with  key  principles  and 

3 

OJ L 184, 17.7.1999, p.23 

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objectives of economic reform set out in the European Union-Republic of Moldova 
Partnership and Cooperation Agreement and Action Plan.  

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

Article 2 

The  Commission,  acting  in  accordance  with  the  advisory  procedure  referred  to  in 
Article 6 of this Decision, is empowered to agree with the authorities of the Republic 
of Moldova the economic policy conditions attached to the European Union macro-
financial  assistance,  to  be  laid  down  in  a  Memorandum  of  Understanding.  These 
conditions  shall  be  consistent  with  the  agreements  or  understandings  reached 
between  the  IMF  and  the  Republic  of  Moldova  and  with  the  key  principles  and 
objectives of economic reform set out in the European Union-Republic of Moldova 
Partnership  and  Cooperation  Agreement  and  Action  Plan.  These  principles  and 
objectives aim at strengthening the efficiency, transparency and accountability of the 
assistance,  including  in  particular  public  finance  management  systems  in  the 
Republic  of  Moldova.  Progress  in  attaining  those  objectives  will  be  regularly 
monitored by the Commission. The detailed financial terms of the assistance shall be 
laid  down  in  a  Grant  Agreement  to  be  agreed  between  the  Commission  and  the 
authorities of the Republic of Moldova.  

During the implementation of the Union macro-financial assistance, the Commission 
shall monitor the soundness of the financial arrangements, administrative procedures, 
and  the  internal  and  external  control  mechanisms  in  the  Republic  of  Moldova 
relevant to such assistance. 

The  Commission  shall  verify  at  regular  intervals  that  the  economic  policies  in  the 
Republic  of  Moldova  are  in  accordance  with  the  objectives  of  the  Union  macro-
assistance  and  that  the  agreed  economic  policy  conditions  are  being  satisfactorily 
fulfilled. To this end the Commission shall coordinate closely with the IMF and the 
World Bank. 

Article 3 

The Union macro-financial assistance shall be made available by the Commission to 
the  Republic  of  Moldova  in  not  less  than  three  grant  instalments,  subject  to  the 
conditions  of  paragraph  2.  The  size  of  each  instalment  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 and the subsequent instalments shall 
not take place earlier than three months after the release of the previous instalment. 

The  Union  funds  shall  be  paid  to  the  National  Bank  of Moldova.  Subject  to 
provisions  to  be  agreed  in  the  Memorandum  of  Understanding,  including  a 

3. 

1. 

2. 

3. 

1. 

2. 

3. 

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confirmation of residual budgetary financing needs, the funds may be transferred to 
the Treasury of the Republic of Moldova as the final beneficiary. 

Article 4 

The 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  Union4  and  its  implementing 
rules5.  In  particular,  the  Memorandum  of  Understanding  and  the  Grant  Agreement  to  be 
agreed with the authorities of the Republic of Moldova shall provide for specific measures to 
be  implemented  by  the  Republic  of  Moldova  in  relation  to  the  prevention  of,  and  the  fight 
against,  fraud,  corruption  and  other  irregularities  affecting  the  assistance.  In  order  to  ensure 
greater  transparency  in  the  management  and  disbursement  of  Union  funds,  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. 

1. 

2. 

1. 

2. 

Article 5 

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 set out in the Memorandum of Understanding referred to in Article 
2(1), on-going economic and fiscal performance of the Republic of Moldova, and on 
release of the instalments of the assistance. 

The Commission shall submit to the European Parliament and to the Council an ex 
post  evaluation  report  no  later  than  two  years  after  the  expiry  of  the  availability 
period referred to in Article 1(3).  

The Commission shall be assisted by a committee.  

Article 6 

Where  reference  is  made  to  this  paragraph,  Articles  3  and  7  of  Decision 
1999/468/EC shall apply, having regard to the provisions of Article 8 thereof.  

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

Article 7 

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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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This decision is addressed to the Member States. 

Done at Brussels, […] 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Macro-financial assistance to the Republic of Moldova. 

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: 

Article 01 03 02 – Macroeconomic assistance 

3.2. 

Duration of the action and of the financial impact: 

Disbursements  will  take  place  over  2010-2011  in  at  least  three  tranches.  However, 
delays that would prolong the operation cannot be excluded.  

3.3. 

Budgetary characteristics: 

Budget line 

Type of 
expenditure 

New 

EFTA 
contribution 

Contributions 
from applicant 
countries 

Heading in 
financial 
perspective 

01. 03. 02 

Non-
comp 

Diff 

NO 

NO 

NO 

No 4 

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4. 

SUMMARY OF RESOURCES 

4.1. 

Financial Resources 

4.1.1. 

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

Expenditure type 

2010 

2011 

Total 

Section 
no. 

EUR million (to 3 decimal places) 

Operational expenditure6 

Commitment Appropriations 
(CA) 

8.1. 

Payment 
(PA) 

Appropriations 

(request) 

98,985 

114,8687 

90,000 

103,5008 

a

b

Administrative expenditure within reference amount9 

Technical  &  administrative 
assistance (NDA) 

8.2.4. 

c

TOTAL REFERENCE AMOUNT 

Commitment 
Appropriations 

Payment Appropriations 

  a+c

  b+c

0 

0 

0 

0 

0 

0 

Administrative expenditure not included in reference amount10 

Human 
associated 
(NDA) 

resources 

and 
expenditure 

8.2.5. 

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

costs, 

8.2.6. 

d

e

Total indicative financial cost of intervention 

0 

0 

0 

0 

TOTAL  CA  including  cost 
of Human Resources 

98,985 

114,86811 

  a+c
+d
+e

6 
7 
8 
9 
10 
11 

Expenditure that does not fall under Chapter xx 01 of the Title 01 concerned. 
Preliminary Draft Budget for 2011 
Preliminary Draft Budget for 2011 
Expenditure within article xx 01 04 of Title xx. 
Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05. 
Preliminary Draft Budget for 2011 

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TOTAL  PA  including  cost 
of Human Resources 

90,000 

103,500
12 

  b+c
+d
+e

4.1.2.  Compatibility with Financial Programming 

X 

Proposal is compatible with existing financial programming. 

(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 
Agreement13 (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 

2010 

2011 

1/3

1/3  

5. 

CHARACTERISTICS AND OBJECTIVES 

5.1. 

Needs to be met in the short or long term 

The  economy  of  the  Republic  of  Moldova  has  been  severely  hit  by  the  global 
economic  and  financial  crisis.  Economic  growth  started  to  decelerate  in  the  second 
half  of  2008  and  output  contracted  by  6.5%  in  2009.  Although  the  current  account 
deficit  is  declining,  overall  external  financing  needs  remain  high  due  to  the  fall  in 
inflows  (most  crucially  of  remittances  on  which  the  Moldovan  economy  is  very 
dependant) and the in short-term debt repayment obligations. For the years 2010 and 
2011  the  International  Monetary  Fund  identified  a  residual  external  financing  gap 
amounting to EUR 460 million. The European Union is expected to cover a part of 
these residual external financing needs. 

5.2. 

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

The  EU  financial  support  reflects  the  importance  of  relations  with  the  Republic  of 
Moldova  in  the  European  Neighbourhood  Policy.  Macro-financial  assistance  is  an 

12 
13 

Preliminary Draft Budget for 2011 
See points 19 and 24 of the Interinstitutional agreement. 

EN 

13 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
appropriate instrument to complement the existing Union assistance and contributes 
to  a  fully  financed  IMF-supported  economic  stabilisation  programme.  It  will  also 
support the further economic and political integration with the EU that is underway, 
as  is  exemplified  by  the  start  of  negotiations  on  an  EU  Association  Agreement  in 
January  2010.  Thereby,  important  synergies  can  be  established  with  respect  to  its 
impact on economic reform and stabilisation.  

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  "current  account  balance  as  a  percentage  of  GDP" 
(expected  result:  improvement),  "external  debt  as  a  percentage  of  GDP"  (expected 
result: decrease) and "official reserves in months of imports of goods and services" 
(expected result: a stabilisation or an increase). 

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: 

EN 

14 

   EN 

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 authorities of 
the Republic of Moldova 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  Chisinau  will  also  provide 
reporting  on  issues  relevant  to  the  monitoring  of  the  assistance.  The  Commission 
services will remain in close contact with the IMF and the World Bank. 

6.2. 

Evaluation 

6.2.1.  Ex-ante evaluation 

An  ex–ante  evaluation  was  carried  out  by  Commission  services  (Unit  D3  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 of the previous operation carried out in 2007-2008 in the Republic of 
Moldova  was  finalized  in  February  2010.  The  evaluation  concludes  that  "MFA  has  had  a 
positive  but  small  role  in  affecting  the  medium-  and  long-term  external  sustainability 
prospects. These effects mainly stem from positive impact on economic growth during 2006-
2008  that  consequently  affected  debt  to  GDP".  Regarding  the  impact  of  MFA  on  structural 
reforms, the evaluation concludes that "MFA had a political reinforcing effect in all domains" 
(of conditionality selected).  

Since  2004  a  total  of  eleven  ex-post  evaluations  have  been  carried  out  on  macro-
financial assistance operations, including four in the newly independent states of the 
former  Soviet  Union.  All  these  evaluations  conclude  that  MFA  operations  do 
contribute, albeit sometimes modestly and indirectly, to the improvement of external 
sustainability, the macroeconomic stability and the achievement of structural reforms 
in the recipient country. In most cases, MFA operations had a positive effect on the 
balance  of  payments  of  the  beneficiary  country and helped to relax their budgetary 
constraints. They also led to a slightly higher economic growth. 

6.2.3.  Terms and frequency of future evaluation 

An  independent  ex-post  evaluation  of  the  assistance  to  the  Republic  of  Moldova  is 
planned  to  be  carried  out  under  the  multi-annual  evaluation  programme  of  the 
Directorate-General  for  Economic  and  Financial  Affairs  within  two  years  of  the 
expiry date of the financial assistance. 

7. 

ANTI-FRAUD MEASURES  

The proposed legal basis for macro-financial assistance to the Republic of Moldova 
includes  a  provision  on  fraud  prevention  measures.  These  measures  will  be 

EN 

15 

   EN 

elaborated further in the Memorandum of Understanding and the grant 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  to 
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. 

The  Commission  services  have  put  in  place  a  programme  of  Operational 
Assessments  of  the  financial  circuits  and  administrative  procedures  in  all  third 
countries  benefiting  from  macro-financial  assistance 
the 
requirements  of  the  Financial  Regulation  applicable  to  the  General  Budget  of  the 
European Communities. In the Republic of Moldova, a first Operational Assessment 
took  place  in  early  2007  and  a  World  Bank's  Public  Financial  Management 
Performance study was published in April 2006 and updated in June 2008. An update 
of  the  existing  Operational  Assessment  will  be  commissioned  by  the  European 
Commission  shortly.  Its  results  will  be  used  to  guide  the  definition  of  the  specific 
policy measures in the field of public finance management. 

in  order 

to  fulfil 

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 2010 

Year 2011 

Year 2013 

TOTAL 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

of 

(Headings 
Objectives, 
actions 
and 
outputs should be 
provided) 

OPERATIONAL 
OBJECTIVE No.1  

2 
tranches 

50 

1  or  2 
tranches 

40 

3 

90 

Action  1  Balance 
of 
payments/ 
budget support to 
the  Republic  of 
Moldova 

Provision 
of 
BoP/budgetary 
support  in  the 
form of grants 

Action 2 
Operational 
Assessment. 

- Output 1  Report 

1 

0.05 

1 

0.05 

Action 3  
Ex-post 
Evaluation. 

- Output 1  Report 

1 

0.15 

1 

0.15 

TOTAL COST 

50.05 

40 

0.15 

90.20 

EN 

16 

   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 2010  Year n+1  Year n+2  Year n+3  Year n+4  Year n+5 

Officials or 
temporary 
staff14 (XX 01 
01) 

A*/AD 

1/3 

1/3 

B*, 
C*/AST 

Staff  financed15  by  art. 
XX 01 02 

Other  staff16  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 grant 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 

14 
15 
16 

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 

17 

   EN 

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

Expenditure on administrative management) 

Budget line 01 03 02 

Macro-economic assistance 

EUR million (to 3 decimal places) 

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 agencies17 

Other 

technical 

and 

administrative 

assistance 

- intra muros  

- extra muros 

1) Operational assessment  

0.050 

2) Ex-post evaluation  

0.150 

0.050 

0.150 

Total  Technical  and  administrative 
assistance 

0.050 

0.150 

0.200 

17 

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

EN 

18 

   EN 

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

amount 

EUR million (to 3 decimal places) 

Type of human resources 

Year n 

Year 
n+1 

Year 
n+2 

Year 
n+3 

Year 
n+4 

Year 
n+5 

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 
costs 
in  reference 
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 

EN 

19 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.2.6. Other administrative expenditure not included in reference amount 

EUR million (to 3 decimal places)

Year 
n+5 

and 
later 

TOTAL 

0.030 

Year 
2010 

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 – Committees18  

XX 01 02 11 04 – Studies & consultations 

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 

18 

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

EN 

20 

   EN