Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down general provisions for Macro-Financial Assistance to third countries
Date: 2011-07-04
Institutions: European Commission
Subjects: EU aid, International Monetary Fund, financial aid, financial cooperation, third country

EUROPEAN COMMISSION 

Brussels, 4.7.2011 
COM(2011) 396 final 

2011/0176 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

laying down general provisions for Macro-Financial Assistance to third countries  

{SEC(2011) 865 final} 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Since its launch in 1990, Macro-Financial Assistance (MFA) has been used to grant financial 
assistance  of  a  macroeconomic  nature  to  third  countries  that  are  experiencing  short-term 
balance-of-payments difficulties. A total of 55 MFA decisions benefiting 23 countries have so 
far  been  approved,  with  total  commitments  amounting  to  EUR 7.4 billion,  in  the  form  of 
grants and loans.  

MFA  complements  financing  provided  by  the  International  Monetary  Fund  (IMF)  in  the 
context  of  an  adjustment  and  reform  programme.  This  is  in  recognition  of  the  fact  that, 
although  within  the  global  economic  architecture  the  provision  of  balance-of-payments 
support  is  primarily  the  role  of  the  IMF,  it  is  in  some  cases  appropriate  for  the  EU  to 
supplement,  on  an  exceptional  basis,  the  IMF’s  assistance  for  countries  politically, 
economically and geographically close to the EU. 

In  addition  to  the  existence  of  an  IMF  financial  arrangement,  key  pre-conditions  for  the 
provision  of  MFA  by  the  EU  are  the  existence  of  a  residual  external  financing  gap,  as 
estimated by the Commission in liaison with the IMF, and the respect of effective democratic 
institutions  and  mechanisms  in  the  beneficiary  country.  Following  the  approval  of  an  MFA 
operation, disbursements of the assistance are conditional on satisfactory progress under the 
IMF  programme  and  on  the  fulfilment  by  the  recipient  country  of  certain  economic  and 
financial policy measures, agreed between the EU and the beneficiary country based on a joint 
understanding of the country’s main economic and structural challenges. MFA is exceptional 
in nature and is to be discontinued once the country can satisfy its external financing needs 
through other sources, such as the international financial institutions (IFIs) and private capital 
inflows. 

MFA has made a valuable contribution to macroeconomic stability in EU candidate, potential 
candidate and neighbourhood countries, with positive spill-over effects on the EU economy. 
However, some of its features tend to reduce its effectiveness and transparency. In particular, 
MFA  is  currently  subject  to  case-by-case  legislative  decisions,  i.e.  the  launch  of  each 
individual MFA operation with a country in crisis requires a separate legislative decision.  

1.1. 

Grounds for and objectives of the proposal  

With  the  proposed  Framework  Regulation,  the  Commission  intends  to  create  a  formal  legal 
instrument for MFA to third countries. The primary objective is to make MFA more effective 
by  streamlining  its  decision-making  process.  As  highlighted  by  the  global  financial  crisis, 
dealing  effectively with macroeconomic and financial emergency situations requires a crisis 
response  instrument  that  can  be  deployed  quickly  and  efficiently.  This  calls  for  a  decision-
making  process  that  avoids  long  procedures  and  delays.  The  proposed  Regulation  would 
speed up the decision-making for individual MFA operations so that the instrument can better 
help beneficiary countries withstand short-term external financial pressures, while supporting 
them in adopting adjustment measures designed to restore a sustainable balance-of-payments 
position.  The  ability  to  deploy  MFA  more  swiftly  should  also  increase  its  complementarity 
with the facilities of the IFIs.  

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Furthermore, the proposed Regulation would align the decision-making process for MFA with 
that  of  other  external  financial  assistance  instruments  of  the  EU.  Notably,  the  Commission 
would  have  competence  for  adopting  decisions  granting  MFA  under  the  supervision  of  a 
committee  of  Member  State  representatives  in  accordance  with  the  examination  procedure 
introduced by the new comitology rules, which entered into force on 1 March 2011.1  

The  proposed  Framework  Regulation  also  aims  at  formalising  and  clarifying  the  key  rules 
governing  MFA,  with  a  view  to  reinforcing  the  transparency  and  predictability  of  the 
instrument, albeit without substantially altering it. So far, MFA has been based on principles 
established by Council conclusions. These “Genval criteria”2 stipulate the geographical scope, 
pre-conditions  and  principal  modalities  for  implementation  of  MFA.  They  have  served  as  a 
useful  guideline  for  past  MFA  operations.  They  should  therefore  be  maintained  and 
reaffirmed. The proposed Regulation updates and clarifies some of these criteria.  

The need to adopt a Framework Regulation in order to make the decision-making process of 
MFA  more  efficient,  provide  a  more  transparent  legal  basis  for  this  instrument  and  refine 
some of the Genval criteria was recognised by the European Parliament as early as 2003 in its 
Resolution on the implementation of MFA to third countries.3 

Moreover, following the entry into force of the Lisbon Treaty, MFA decisions are no longer 
taken  by  the  Council  alone,  but  in  accordance  with  the  ordinary  legislative  procedure  (co-
decision).  This  has  underlined  the  need  to  give  to  the  Parliament  co-ownership  of  the  rules 
and criteria governing MFA by enshrining them in a basic legal instrument approved by both 
co-legislators.  The  proposed  Framework  Regulation  would  give  the  Genval  criteria  such  a 
formal, legally binding status.  

1.2. 

General context 

The global financial crisis of 2008-09 has highlighted the importance for the EU of endowing 
itself  with  solid  and  expeditious  crisis  prevention  and  management  systems,  including 
appropriate  financial  facilities.  The  process  of  adoption  of  separate  legislative  decisions  for 
each MFA operation has tended to result in significant delays between the request for support 
by the country and the first disbursement. This is harming the effectiveness of an instrument 
meant  to  be  used  in  the  context  of  critical  balance-of-payments  situations  that  require  an 
expeditious response. The lengthy process has resulted in a time lag between the approval of 
IMF  programmes  and  the  EU  MFA  operations  associated  with  them.  In  line  with  these 
considerations, a 2009 meta-evaluation of past MFA operations4 has identified the delays in 
adopting MFA decisions as an important shortcoming of the instrument – a shortcoming that 
the proposed Framework Regulation aims to address. Furthermore, the co-decision procedure, 
which applies to MFA under the Lisbon Treaty, combined with the need to allow for at least 
eight weeks for the national parliaments to use their right of scrutiny of new legislation, could 

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4 

Regulation  (EU)  182/2011  of  the  European  Parliament  and  of  the  Council  laying  down  the  rules  and 
general principles concerning mechanisms for control by Member States of the Commission’s exercise 
of implementing powers (OJ L 55, 28.2.2011, p. 13), which replaces Council Decision 1999/468/EC. 
The Genval criteria were last stated in the conclusions of the ECOFIN Council of 8 October 2002.  
OJ C 68 E, 18.3.2004, p. 86. 
“Meta-evaluation  of  Macro-Financial  Assistance  Operations,  2004-2008.  Final  Report”,  GHK 
Consulting,  October  2009,  available  on:  http://ec.europa.eu/economy_finance/evaluation/pdf/ 
final_report_meta_annex_en.pdf. 

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result in a further lengthening of the decision-making process. This has added another reason 
for proposing the Framework Regulation now. 

1.3. 

Comparison with existing provisions in the area of the proposal 

Decision-making process 

Under  the  proposed  Framework  Regulation,  the  Commission  would  submit  draft  country-
specific  MFA  decisions  to  a  committee  of  Member  State  representatives  (“the  Committee” 
hereafter).  The  Committee  would  deliver  an  opinion  in  accordance  with  the  examination 
procedure established by the comitology regulation that entered into force on 1 March 2011.5 
This  decision-making  process  would  replace  the  current  lengthier  case-by-case  legislative 
decisions for MFA. 

In line with the comitology regulation, the Committee would be composed of representatives 
of the Member States and chaired by the Commission, with the chair not having the right to 
vote. The procedure would be as follows: The Commission would submit to the Committee 
draft Commission decisions granting MFA to a third country (“draft implementing acts”). In 
case  of  a  positive  opinion  by  the  Committee  (adopted  by  a  qualified  majority  of  the 
representatives  of  the  Member  States)  on  the  proposed  decisions,  the  Commission  would 
adopt  them.  In  case  of  a  negative  opinion  of  the  Committee  (also  adopted  by  a  qualified 
majority of the representatives of the Member States), the Commission would not adopt them, 
although it could refer them to the appeal committee or present amended drafts. Finally, if no 
opinion was delivered, the Commission could still adopt the draft decisions, unless a simple 
majority of the Committee’s members opposed them. 

Once a decision to provide assistance to a third country has been adopted in accordance with 
the  procedure  described  so  far,  the  Commission  would  implement  the  MFA  operation.  The 
Memorandum  of  Understanding  laying  down  the  policy  measures  associated  with  the 
assistance would be adopted by the Commission, subject to the opinion of the Committee. For 
this purpose, the Committee would act in accordance with the advisory procedure since these 
Memoranda have no budgetary implications, or implications for third countries, beyond those 
of  the  decision  granting  the  assistance.  Once  a  Memorandum  of  Understanding  has  been 
adopted,  the  Commission  would  decide  on  the  release  of  the  assistance  subject  to  a 
satisfactory  implementation  of  the  economic  programme  supported  by  the  IMF  and  of  the 
policy measures agreed between the EU and beneficiary country. 

As foreseen in Articles 10 and 11 of Regulation (EU) 182/2011, the European Parliament and 
the  Council  would  have  access  to  the  documents  concerning  the  proceedings  of  the 
Committee and the right to challenge draft implementing acts submitted by the Commission, 
should either of them consider that these go beyond the implementing powers provided for in 
the Framework Regulation. 

Guidelines for MFA operations 

Aside  from  the  changes  to  the  decision-making  process,  the  Framework  Regulation  would 
also formalise and, where appropriate, update the Genval criteria that guide MFA operations. 
These criteria were stated in the conclusions of the ECOFIN Council of 8 October 2002 and 
confirmed by the Economic and Financial Committee in March 2006.  

5 

Regulation (EU) 182/2011, op. cit. 

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•  Exceptionality: MFA is exceptional in nature, mobilised on a case-by-case basis to help the 
recipient  country  deal  with  short-term  balance-of-payments  or  budget  difficulties.  It  is  to 
be  discontinued  once  the  country  can  satisfy  its  external  financing  needs  through  other 
sources. 

•  Geographical  delimitation:  According  to  the  Genval  criteria,  MFA  is  reserved  for  third 
countries with close political and economic links to the EU. In 2002, the Council specified 
that  is  meant  to  cover  candidate  and  potential  candidate  countries,  the  three  European 
countries of the CIS (Belarus, Moldova and Ukraine) and the countries concerned by the 
Barcelona  process  (i.e.  countries  having  signed,  or  expected  to  sign,  Euro-Mediterranean 
Association  Agreements).  Other  third  countries  may  in  exceptional  circumstances  also 
become eligible. 

The  Framework  Regulation  defines,  as  countries  and  territories  eligible  for  MFA,  the 
candidate  and  potential  candidate  countries,  all  countries  and  territories  covered  by  the 
European  Neighbourhood  Policy  (including  those  in  the  South  Caucasus:  Armenia, 
Azerbaijan and Georgia), as well as other third countries in exceptional and duly justified 
circumstances. Such other countries must be politically, economically and geographically 
close to the EU. 

•  Political  pre-conditions:  In  line  with  the  EU’s  fundamental  values,  a  potential  recipient 
country  must  have  in  place  effective  democratic  institutions  and  mechanisms,  including 
multi-party parliamentary systems, and respect human rights and the rule of law. 

•  Complementarity and burden sharing: MFA operations are contingent on the existence and 
satisfactory  implementation  of  an  IMF-supported  programme  in  the  recipient  country 
entailing  the  use  of  IMF  funds.  With  a  view  to  an  appropriate  financial  burden  sharing 
between  the  EU  and  other  donors,  the  Genval  criteria  established  a  ceiling  for  the  EU’s 
contribution of 60% of the country’s residual external financing gap (i.e. after the support 
expected from the IFIs) for candidate and potential candidate countries and of one-third of 
the residual external financing gap for other countries. 

While  reaffirming  the  principles  of  complementarity  to  IFI  support  and  burden  sharing 
with  other  donors,  the  Commission  does  not  propose  to  include  explicit  ceilings  for  the 
share  of  the  contribution  made  by  EU  MFA  to  covering  the  residual  financing  gaps  of 
beneficiary countries. This reflects past experience that financing gaps are in certain cases 
difficult to estimate in a precise manner. Furthermore, non-EU bilateral  donors generally 
participate  only  on  a  small  scale,  if  at  all,  in  covering  the  external  financing  gaps  of 
countries neighbouring the EU. 

•  Conditionality: The launch of any MFA operation is conditional on the country having an 
IMF-supported  programme  in  place  that  entails  the  use  of  IMF  funds.  In  addition,  the 
Commission,  on  behalf  of  the  EU,  agrees  with  the  recipient  country  on  a  separate  set  of 
policy  conditions.  These  conditions  are  laid  down  in  a  Memorandum  of  Understanding 
(MoU).  

•  Financial discipline: When MFA takes the form of a grant, the funds come from the EU 
budget. The amounts provided as MFA have to be consistent with the ceilings established 
for  the  relevant  budget  appropriations  in  the  EU’s  multi-annual  Financial  Perspectives. 
When it takes the form of a loan, the Commission, on behalf of the EU, issues a bond in 

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the  capital  markets  that  matches  the  financial  terms  agreed  with  the  beneficiary  country 
and on-lends the proceeds immediately. To cover against the risk of default by beneficiary 
countries, the EU bond is guaranteed by the Guarantee Fund, which is provisioned at a rate 
of 9% of the outstanding amount.   

In order to strengthen financial discipline and enhance the predictability of the instrument, 
the  Framework  Regulation  proposes  a  more  transparent  approach  for  determining  under 
what  circumstances  MFA  should  be  provided  in  the  form  of  a  loan  or  a  grant,  or  a 
combination  of  the  two.  In  line  with  World  Bank  and  IMF  practice,  the  main  criteria 
determining the form of the assistance are: the level of economic and social development 
(average income levels, poverty ratios); and debt sustainability, also in view of a country’s 
capacity to repay. 

1.4. 

Consistency with the other policies and objectives of the Union 

Framework regulations have been adopted for all key external financial instruments of the EU 
(the Instrument for Pre-Accession, the European Neighbourhood and Partnership Instrument, 
the  Development  Cooperation  Instrument,  the  Instrument  for  Stability,  the  Instrument  for 
Nuclear  Safety  Cooperation  and  Humanitarian  Aid).  These  cover  the  2007-13  financial 
perspective  and  grant  implementation  powers  to  the  Commission.  The  decision-making 
procedure  envisaged  for  MFA  under  the  proposed  Framework  Regulation  is  similar  to  the 
procedure used in other external financing instruments.  

MFA and other external assistance instruments are mutually reinforcing. The policy measures 
to be agreed between the Commission and the beneficiary country are consistent with existing 
partnership,  cooperation  or  association  agreements  concluded  between  the  EU  and  the 
beneficiary  country.  Moreover,  MFA  can  increase  the  effectiveness  of  the  programmes 
supported by other EU external financial instruments, in particular projects financed under the 
Instrument  for  Pre-Accession  Assistance  and  the  European  Neighbourhood  and  Partnership 
Instrument,  notably  by  contributing  to  ensure  an  appropriate  overall  framework  for 
macroeconomic stability and structural reform through its conditionality. Conversely, policy 
measures  included  in  Memoranda  of  Understanding  of  MFA  operations  are  often  supported 
by  technical  assistance  provided  by  the  EU  through  its  regular  cooperation  instruments,  as 
well as by the sectoral actions identified under direct budgetary support operations. Finally, 
they complement the public finance management and other objectives of the EU's longer-term 
sectoral budgetary support operations. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

A  comprehensive  meta-evaluation  of  MFA  operations  undertaken  between  2004  and  2008 
was conducted by the Commission in 2009 with support from external experts. In the context 
of  this  meta-evaluation,  the  Commission  organised  in  May  2009  a  high-level  workshop 
gathering officials from the relevant Commission services, the IMF and the World Bank. The 
proposed  Framework  Regulation  is  consistent  with  the  results  of  this  meta-evaluation  and 
consultation process, which underlined the need for a swifter decision-making process and a 
more transparent legal basis. It is also consistent with the Resolution on the implementation of 
MFA adopted by the European Parliament in 20036, which called for a Framework Regulation 

6 

OJ C 68 E, 18.3.2004, p. 86. 

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in  order  to  expedite  decision  procedures  and  create  a  clearer  legal  basis.  Since  the  main 
objective  of  the  proposed  Framework  Regulation  is  a  change  in  the  EU’s  decision-making 
procedure  for  MFA  operations,  rather  than  a  change  of  substance  of  the  instrument,  the 
Commission  did  not  conduct  a  formal  Impact  Assessment.  The  impact  of  the  proposed 
Regulation  is  assessed  in  some  detail  in  the  Commission  Staff  Working  Document 
accompanying the proposal. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

In  contrast  with  the  situation  under  the  EC  Treaty,  the  article  of  the  TFEU  governing 
economic and financial cooperation with third countries (Article 212 TFEU) includes MFA. 
This  article  has  formed  the  legal  basis  for  the  MFA  decisions  adopted  since  the  entry  into 
force of the Lisbon Treaty. However, if the recipient country of MFA is a developing country, 
the  decision  would  be  adopted  on  the  basis  of  Article 209  TFEU,  which  governs  the  EU’s 
development  cooperation.  As  the  proposed  Regulation  provides  the  framework  for  future 
MFA operations in crisis-hit third countries, it has the same legal basis as individual country-
specific post-Lisbon MFA decisions, i.e. Articles 209 and 212 TFEU. 

Furthermore, it is proposed that the Commission will be able to adopt country-specific MFA 
decisions  under  the  supervision  of  a  committee  of  Member  State  representatives.  This  is  in 
recognition of the fact that MFA belongs to the category of legally binding acts that need to 
be  implemented  uniformly  and  hence  centrally,  as  governed  by  Article 291  TFEU  on 
implementing  powers  conferred  on  the  Commission,  in  particular  its  paragraph 2.  As  MFA 
decisions  are  draft 
the 
aforementioned committee of Member State representatives would act in accordance with the 
examination procedure as established by the comitology regulation.7 

implementing  acts  with  substantial  budgetary 

implications, 

3.2. 

Subsidiarity principle 

The  proposed  Framework  Regulation  concerns  EU  financial  assistance  to  third  countries, 
which  is  an  area  of  shared  competence  of  the  EU.  The  MFA  instrument  complies  with  the 
subsidiarity principle as the objective of restoring short-term macroeconomic stability in third 
countries can be achieved more efficiently and effectively by the EU than by Member States 
individually. The EU as a whole can bundle financial resources and negotiate with recipient 
countries on modalities of the assistance and policy conditions as a single interlocutor. 

3.3. 

Proportionality principle 

The proposal complies with the proportionality principle. This is guaranteed by the continued 
application  of  key  principles  of  MFA  such  as  complementarity  to  IFI  support  and  burden 
sharing with other donors, which ensures that the EU does not cover an unduly large part of a 
recipient  country’s  financing  gap.  Furthermore,  proportionality  is  assured  by  the  fact  that 
MFA will not go beyond authorised budgetary appropriations and is consistent with the multi-
annual financial perspectives. 

7 

Regulation (EU) 182/2011, op. cit. 

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3.4. 

Choice of instruments 

The  proposed  Framework  Regulation  does  not  imply  a  fundamental  change  of  substance  in 
MFA as an instrument; it focuses instead on streamlining the decision-making process. For a 
financial instrument such as MFA that is managed centrally by the Commission for the whole 
of  the  EU,  a  regulation  (as  opposed  to  a  directive)  is  the  appropriate  legal  instrument  to 
achieve  this.  A  Framework  Regulation  will  align  the  decision-making  procedures  for  MFA 
with  those  of  other  external  assistance  instruments,  while  also  offering  the  opportunity  to 
achieve other objectives related to MFA, such as the formalisation and updating of the Genval 
criteria, including ensuring their formal endorsement by both the Council and the Parliament. 

A conceivable alternative way to achieve the primary objective of streamlining the decision-
making process for MFA would have been the use on a regular basis of Article 213 TFEU for 
MFA. This article empowers the Council to “adopt the necessary decisions on a proposal from 
the  Commission”  when  “the  situation  in  a  third  country  requires  urgent  financial  assistance 
from  the  Union”.  However,  as  underlined  by  the  legal  services  of  the  Council  and  the 
Commission,  the  use  of  an  urgency  procedure  as  the  regular  legal  basis  for  all  or  most 
operations under a specific instrument, such as MFA, would not have been appropriate. 

4. 

BUDGETARY IMPLICATIONS 

The  proposed  Framework  Regulation  in  itself  does  not  imply  a  change  from  the  current 
practice  regarding  the  number  of  MFA  operations  or  the  amounts  granted  in  each  of  them. 
The number and scale of operations is determined by the frequency and severity of economic 
and financial crises, as is the case for any crisis response instrument. In any case, MFA will 
remain consistent with the current financial perspectives covering the period of 2007-13 and 
the budgetary appropriations foreseen therein.  

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2011/0176 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

laying down general provisions for Macro-Financial Assistance to third countries  

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 
Articles 209 and 212 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, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Union  is  a  major  provider  of  economic,  financial  and  technical 
assistance  to  third  countries.  Union  macro-financial  assistance  (hereinafter  "macro-
financial assistance") has proved an efficient instrument for economic stabilisation and 
a  driver  for  structural  reforms  in  the  beneficiary  countries.  In  accordance  with  its 
overall  policy  vis-à-vis  candidate,  potential  candidate,  and  neighbourhood  countries, 
the  Union  should  be  in  a  position  to  provide  macro-financial  assistance  to  those 
countries  with  the  aim  of  developing  a  zone  of  shared  stability,  security,  and 
prosperity. 

At  present,  macro-financial  assistance  to  third  countries  is  based  on  ad-hoc  country 
specific  decisions  of  the  European  Parliament  and  of  the  Council.  This  reduces  the 
efficiency and effectiveness of the assistance by causing unnecessary delays between 
requests for macro-financial assistance and their actual implementation. 

A  framework  for  delivering  macro-financial  assistance  to  third  countries  with  which 
the  Union  has  important  political,  economic  and  commercial  ties  should  make  the 
assistance  more  effective.  In  particular,  it  should  be  possible  to  provide  macro-
financial  assistance  to  third  countries  to  encourage  them  to  adopt  economic  policy 
measures likely to solve a balance of payments crisis. 

The European Parliament, in its resolution on the implementation of macro-financial 
assistance  to  third  countries  of  3  June  20031,  called  for  a  framework  regulation  for 
macro-financial  assistance  in  order  to  expedite  the  decision-making  process  and 
provide this financial instrument with a formal and transparent basis. 

1 

OJ C 68 E, 18.3.2004, p. 86. 

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(5) 

(6) 

(7) 

(8) 

(9) 

The adoption of a general regulation for macro-financial assistance based on Articles 
209  and  212  is  without  prejudice  to  the  provisions  of  Article  213  of  the  Treaty, 
governing urgent financial assistance to third countries, and of the related prerogatives 
of the Council. 

In  2006,  the  Union  overhauled  and  streamlined  its  external  assistance  framework  to 
make  it  more  effective.  For  all  the  key  external  financial  instruments,  it  adopted 
framework regulations granting implementation powers to the Commission. The only 
major  instrument  that  does  not  currently  have  a  framework  regulation  is  macro-
financial assistance.  

In  its  conclusions  of  8  October  2002,  the  Council  established  criteria  (the  so-called 
Genval  criteria)  to  guide  the  EU's  macro-financial  assistance  operations.2  It  is 
appropriate to formalise these criteria in a legal  act endorsed  by  both the Parliament 
and the Council while updating and clarifying them. 

Appropriate procedures and instruments should be provided for in advance to enable 
the  Union  to  ensure  that  macro-financial  assistance  can  be  made  available 
expeditiously,  especially  when  circumstances  call  for  immediate  action.  This  would 
also  increase  the  clarity  and  transparency  of  the  criteria  applicable  to  the 
implementation of macro-financial assistance. 

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

(10)  Macro-financial  assistance  should  support  the  beneficiary  countries'  commitments  to 
common  values  with  the  Union,  including  democracy,  the  rule  of  law,  good 
governance, respect for human rights, sustainable development and poverty reduction, 
as well as to the principles of open, rules-based and fair trade. 

(11)  The  specific  objectives  of  individual  macro-financial  assistance  operations  should 
include  the  strengthening  of  efficiency,  transparency  and  accountability  of  public 
finance  management  in  the  beneficiary  countries.  The  fulfilment  of  these  objectives 
should be regularly monitored by the Commission. 

(12)  Since  the  objectives  of  this  Regulation,  namely  to  contribute  to  macroeconomic 
stabilisation in partner third countries, cannot be sufficiently achieved by the Member 
States and can, by reason of the scale of the action, be better achieved at Union level, 
the Union may adopt measures, in accordance with the principle of subsidiarity as set 
out in Article 5 of the Treaty. In accordance with the principle of proportionality, as 
set out in that Article, this Regulation does not go beyond what is necessary in order to 
achieve those objectives. 

(13)  Macro-financial assistance should be complementary to the resources provided by the 
International  Monetary  Fund  and  other  multilateral  financial  institutions  and  there 
should be a fair burden sharing with other donors. Macro-financial assistance should 
ensure the added value of the involvement of the Union.  

2 

Ecofin  Council  Conclusions  –  "Review  of  EU  macro-financial  assistance  and  the  EC  lending  and 
guarantee capacity for external actions", 8 October 2002. 

EN 

9 

   EN 

 
                                                 
(14) 

(15) 

In  order  to  ensure  efficient  protection  of  the  Union's  financial  interests  linked  to 
macro-financial assistance, it is necessary to provide for appropriate measures by the 
beneficiary  countries  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. 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Regulation,  as 
regards  the  approval  and  management  of  macro-financial  assistance  operations  in 
beneficiary countries, implementing powers should be conferred on the Commission. 
Those  powers  should  be  exercised  in  accordance  with  Regulation  (EU)  182/2011  of 
the  European  Parliament  and  of  the  Council  laying  down  the  rules  and  general 
principles concerning mechanisms for control by Member States of the Commission’s 
exercise of implementing powers3.  

(16)  The examination procedure should be used for the adoption of implementing decisions 
defining  the  amount,  form,  duration  and  general  conditions  of  individual  macro-
financial  assistance  operations  given  that  such  decisions  have  substantial  budgetary 
implications. 

(17)  The  advisory  procedure  should  be  used  for  the  adoption  of  the  Memorandum  of 
Understanding (MoU) laying down the economic policy measures associated with the 
Union's macro-financial assistance given that the MoU is not an implementing act of 
general  scope,  nor  an  act  entailing  budgetary  implications  or  implications  for  third 
countries beyond those already entailed by the decision granting the assistance. 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Aim and scope of the assistance 

1. 

2. 

3. 

This  Regulation  lays  down  general  provisions  for  the  granting  of  macro-financial 
assistance to eligible third countries and territories as set out in Article 2. 

Macro-financial assistance shall be an exceptional financial instrument of untied and 
undesignated balance-of-payments support to eligible third countries and territories. 
It shall aim at restoring a sustainable external finance situation for countries facing 
external  financing  difficulties.  It  shall  underpin  the  implementation  of  strong 
adjustment and structural reform measures designed to remedy balance of payments 
difficulties. 

Macro-financial  assistance  may  be  granted  on  condition  of  the  existence  of  a 
significant and residual external financing gap jointly identified with the multilateral 
financial  institutions  over  and  above  the  resources  provided  by  the  International 
Monetary Fund (IMF) and other multilateral institutions, despite the implementation 
of strong economic stabilisation and reform programmes. 

3 

OJ L 55, 28.11.2011, p. 13. 

EN 

10 

   EN 

 
                                                 
4. 

Macro-financial assistance shall be of a temporary nature and shall be discontinued 
as  soon  as  the  beneficiary  country's  external  financial  situation  has  been  brought 
back into a sustainable situation. 

Article 2 

Eligible countries 

The third countries and territories eligible for macro-financial assistance shall be: 

(a) 

(b) 

(c) 

1. 

2. 

3. 

4. 

5. 

Candidate  and  potential  candidate  countries  as  listed  in  Point  1  of  Annex  I  to  this 
Regulation, 

Countries and territories covered by the European Neighbourhood Policy as listed in 
Point 2 of Annex I to this Regulation, 

Other third countries in exceptional and duly justified circumstances. Such countries 
must be politically, economically and geographically close to the European Union. 

Article 3 

Form of the assistance 

Macro-financial  assistance  shall  take  the  form  of  a  loan  or  a  grant  or  of  a 
combination of both. In determining the appropriate form, the Commission shall take 
into consideration the level of economic development of the beneficiary country, as 
measured  by  per  capita  income  and  poverty  ratios,  as  well  as  its  capacities  for 
repayment drawing on debt sustainability analysis. 

Where macro-financial assistance takes the form of a loan, the Commission shall be 
empowered  on  behalf  of  the  Union  to  borrow  the  necessary  funds  on  the  capital 
markets or from financial institutions and on-lend them to the beneficiary country. 

Borrowing and lending operations shall be carried out in euro using the same value 
date  and  shall  not  involve  the  Union  in  the  transformation  of  maturities,  or  in  any 
exchange or interest rate risk. 

All  costs  incurred  by  the  Union  which  are  related  to  borrowing  and  lending 
operations shall be borne by the beneficiary country. 

At  the  request  of  the  beneficiary  country,  and  where  circumstances  permit  an 
improvement  of  the  interest  rate  of  the  loan,  the  Commission  may  refinance  all  or 
part  of  its  initial  borrowings  or  restructure  the  corresponding  financial  conditions. 
Refinancing and restructuring operations shall be carried out in accordance with the 
conditions  laid  down  in  paragraph  4  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. 

EN 

11 

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Article 4 

Financial provisions 

The amounts of macro-financial assistance provided in grants under this Regulation 
shall  be  consistent  with  the  budget  appropriations  established  in  the  multi-annual 
financial framework. 

The  amounts  of  macro-financial  assistance  provided  in  loans  under  this  Regulation 
shall be provisioned in accordance with Council Regulation (EC, Euratom) 480/2009 
of 25 May 2009 on the Guarantee Fund for external actions4.  

Annual  appropriations  shall  be  authorised  by  the  budgetary  authority  within  the 
limits  of  the  financial  framework.  The  corresponding  reference  amounts  for  the 
period 2011 to 2013 are set out in Annex II.  

Article 5  

Amount of the assistance 

The amount of the assistance shall be based on the residual external financing needs 
of  the  beneficiary  country.  These  shall  be  established  by  the  Commission  in 
cooperation  with  international  financial  institutions,  based  on  a  comprehensive  and 
well  documented  quantitative  assessment.  In  particular,  the  Commission  will  draw 
on the latest balance of payments projections for the country in question produced by 
the IMF and take into account the expected financial contributions from multilateral 
donors.  

The determination of the amounts of macro-financial assistance shall also take into 
account the need to ensure a fair burden sharing with other donors. 

In case the financing needs of the beneficiary country decline fundamentally during 
the period of disbursement of the macro-financial assistance, the Commission, acting 
in accordance with Article 14 (2), may decide to reduce the amount of funds made 
available in the context of the assistance, suspend or cancel the assistance. 

Article 6 

Conditionality 

A  pre-condition  for  granting  macro-financial  assistance  shall  be  that  the  recipient 
including  multi-party 
respects  effective  democratic  mechanisms, 
country 
parliamentary systems, the rule of law and respect for human rights. 

Macro-financial  assistance  shall  be  conditional  on  the  existence  of  an  IMF 
programme entailing the use of IMF resources.  

1. 

2. 

3. 

1. 

2. 

3. 

1. 

2. 

4 

OJ L 145, 10.6.2009, p. 10. 

EN 

12 

   EN 

 
                                                 
3. 

4. 

5. 

6. 

1. 

2. 

3. 

4. 

5. 

6. 

The disbursement of the assistance shall be conditional on a satisfactory track record 
of an IMF programme. It shall also be conditional on the implementation,  within a 
specific time frame, of a series of clearly defined economic policy measures focusing 
on  structural  reforms,  to  be  agreed  between  the  Commission  and  the  beneficiary 
country and to be laid down in a Memorandum of Understanding. 

With a view to protecting the Union’s financial interests and reinforcing beneficiary 
countries’  governance,  the  Memorandum  of  Understanding  shall  include  measures 
aiming  at  strengthening  the  efficiency,  transparency  and  accountability  of  public 
finance management systems.  

Progress  on  mutual  market  opening,  the  development  of  rules-based  and  fair  trade 
and other priorities in the context of the Union's external policy should also be duly 
taken into account in designing the policy measures.  

The  policy  measures  shall  be  consistent  with  the  existing  partnership  agreements, 
cooperation agreements or association agreements concluded between the Union and 
the  beneficiary  country  and  with  the  macroeconomic  adjustment  and  structural 
reform programmes implemented by the beneficiary country with the support of the 
IMF. 

Article 7 

Procedure 

A country seeking to be granted macro-financial assistance shall request it in writing 
to the Commission.  

If the conditions referred to in Article 1, Article 2, Article 4 and Article 6 are met, 
macro-financial assistance shall be granted by the Commission acting in accordance 
with Article 14(2). 

The  decision  to  provide  a  loan  shall  specify  the  amount,  the  maximum  average 
maturity, the maximum number of instalments of the macro-financial assistance. The 
decision  to  provide  a  grant  shall  specify  the  amount,  and  the  maximum  number  of 
instalments.  In  both  cases  the  availability  period  of  the  macro-financial  assistance 
shall be defined. As a rule, it shall not exceed three years. 

Following  the  approval  of  the  decision  granting  macro-financial  assistance,  the 
Commission, acting in accordance with Article 14(3), shall agree the policy measures 
referred to in Article 6(3), (4), (5) and (6) with the beneficiary country.  

Following  the  approval  of  the  decision  granting  macro-financial  assistance,  the 
Commission  shall  agree  the  detailed  financial  terms  of  the  assistance  with  the 
beneficiary country. These shall be laid down in a Grant or Loan Agreement. 

The  Commission  shall  inform  the  European  Parliament  and  the  Council  of 
developments  in  country-specific  assistance  and  provide  them  with  the  relevant 
documents.  

EN 

13 

   EN 

 
Article 8 

Implementation and financial management  

The  Commission  shall  implement  assistance  under  this  Regulation  in  accordance 
with Regulation (EC, Euratom) No 1605/20025 and its implementing rules6. 

The  implementation  of  macro-financial  assistance  shall  be  under  direct  centralised 
management. 

Budget  commitments  shall  be  made  on  the  basis  of  decisions  taken  by  the 
Commission  in  accordance  with  this  Article.  Budget  commitments  for  assistance 
extending over a number of financial years may be split into annual instalments. 

Article 9 

Disbursement of the assistance 

Macro-financial  assistance  shall  be  disbursed  to  the  central  bank  of  the  beneficiary 
country.  

The  assistance  shall  be  disbursed  in  successive  instalments,  conditional  upon  the 
fulfilment of the conditions referred to in Article 6(2) and 6(3). 

The  Commission  shall  verify  at  regular  intervals  that  the  conditions  referred  to  in 
Article 6(2) and 6(3) continue to be met.  

In  case  the  conditions  referred  to  in  Article  6(2)  and  6(3)  are  not  met,  the 
Commission  can  temporarily  suspend,  reduce  or  cancel  the  disbursement  of  the 
assistance.  

Article 10 

Support measures 

Within  the  limits  referred  to  in  Article  4(1),  budgetary  funds  of  the  Union  may  be 
used  to  cover  expenditure  associated  with  the  preparation,  follow-up,  monitoring, 
auditing,  and  evaluation  of  macro-financial  assistance  operations  necessary  for  the 
implementation of this Regulation and for the achievement of its objectives. 

The  activities  referred  to  in  paragraph  1  shall  be  implemented  through  consultancy 
contracts. 

Council  Regulation  (EC,  Euratom)  No  1605/2002  of  25  June  2002  on  the  Financial  Regulation 
applicable to the general budget of the European Communities (OJ L 248, 16.9.2002, p. 1). 
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). 

1. 

2. 

3. 

1. 

2. 

3. 

4. 

1. 

2. 

5 

6 

EN 

14 

   EN 

 
                                                 
3. 

1. 

2. 

3. 

4. 

5. 

7 

8 

9 

Where  these  consultancy  contracts  exceed  a  unitary  value  of  EUR  250,000,  they 
shall  be  signed  by  the  Commission  following  the  procedure  established  by 
Article 14(2). 

Article 11 

Protection of the Union’s financial interests  

Beneficiary countries shall regularly check that financing provided from the budget 
of  the  Union  has  been  properly  used,  take  appropriate  measures  to  prevent 
irregularities  and  fraud,  and,  if  necessary,  take  legal  action  to  recover  any  funds 
provided under this Regulation that have been misappropriated. 

Any agreements resulting from this Regulation shall contain provisions ensuring the 
protection  of  the  European  Union’s  financial  interests,  in  particular  with  respect  to 
fraud,  corruption  and  any  other  irregularities,  in  accordance  with  Regulation 
(Euratom, EC) No 2988/957, Regulation (Euratom, EC) No 2185/968 and Regulation 
(EC) No 1073/19999.  

The Memorandum of Understanding referred to in Article 6(3) shall expressly entitle 
the  Commission  and  the  Court  of  Auditors  to  perform  audits,  including  document 
audits  and  on-the-spot  audits  such  as  operational  assessments.  The  Memorandum 
shall also expressly authorise the Commission or its representatives to carry out on-
the-spot  checks  and  inspections,  as  provided  for  in  Council  Regulation  (Euratom, 
EC) No 2185/96. 

During the implementation of the macro-financial assistance, the Commission shall 
monitor,  by  means  of  operational  assessments,  the  soundness  of  the  beneficiary 
country's  financial  arrangements,  administrative  procedures,  internal  and  external 
control mechanisms which are relevant to such assistance.  

Where it has been established that, in relation to the management of assistance under 
this Regulation, a beneficiary country has engaged in any act of fraud or corruption 
or  any  other  illegal  activity  detrimental  to  the  financial  interests  of  the  Union,  the 
Commission  shall  be  entitled  to  the  full  repayment  of  the  grant  and/or  the  early 
repayment of the loan. 

Article 12 

Evaluation 

Council Regulation (Euratom, EC) No 2988/95 of 18 December 1995 on the protection of the European 
Communities financial interests (OJ L 312, 23.12.1995, p. 1). 
Council  Regulation  (Euratom,  EC)  No  2185/96  of  11  November  1996  concerning  on-the-spot  checks 
and inspections carried out by the Commission to protect the Communities' financial interests against 
fraud and other irregularities (OJ L 292, 15.11.1996, p. 2). 
Regulation  (EC)  No  1073/1999  of  the  European  Parliament  and  of  the  Council  of  25  May  1999  on 
investigations conducted by the European Anti-Fraud Office (OLAF) (OJ L 136, 31.5.1999, p. 1). 

EN 

15 

   EN 

 
                                                 
6. 

7. 

1. 

2. 

1. 

2. 

3. 

The  Commission  shall  regularly  evaluate  the  results  and  efficiency  of  macro-
financial  assistance  in  order  to  ascertain  whether  the  objectives  have  been  met  and 
enable it to formulate recommendations with a view to improving future operations.  

The  Commission  shall  send  ex-post  evaluation  reports  to  the  European  Parliament 
and the  Council, assessing  the  extent to which recently completed MFA operations 
have contributed to the aims of the assistance. 

Article 13 

Annual report 

The  Commission  shall  examine  the  progress  made  on  implementing  the  measures 
taken under this Regulation and shall submit annually a report on the implementation 
of macro-financial assistance to the European Parliament and the Council.  

The  annual  report  shall  assess  the  economic  situation  and  prospects  of  the 
beneficiary  countries,  as  well  as  the  progress  made  with  the  implementation  of  the 
policy measures referred to in Article 6(3).  

Article 14 

Committee 

The Commission shall be assisted by a Committee. 

Where  reference  is  made  to  this  paragraph,  Article 5  of  Regulation  (EU)  182/2011 
shall apply.  

Where  reference  is  made  to  this  paragraph,  Article 4  of  Regulation  (EU)  182/2011 
shall apply.  

Article 15 

Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union and shall expire on 31 December 2013. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

16 

   EN 

 
 
 
ANNEX I 

COUNTRIES AND TERRITORIES ELIGIBLE UNDER ARTICLE 2(a) AND (b) 

1. Candidate and potential candidate countries 

Albania 

Bosnia-Herzegovina 

Croatia 

Iceland 

Kosovo (under UNSC resolution 1244/99) 

Former Yugoslav Republic of Macedonia 

Montenegro 

Serbia 

Turkey 

2. Countries and territories covered by the European Neighbourhood Policy 

Algeria 

Armenia 

Azerbaijan 

Belarus 

Egypt 

Georgia 

Israel 

Jordan 

Lebanon 

Libya 

Moldova 

Morocco 

Occupied Palestinian Territory 

Syria 

EN 

17 

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Tunisia 

Ukraine 

EN 

18 

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ANNEX II 

REFERENCE AMOUNTS REFERRED TO IN ARTICLE 4(3) 

Budget line  

Reference amounts in '000 euro 

Commitments in 
Macroeconomic assistance 
grants (budget line 01 03 02) 

20111 

2012 

2013 

104,869

104,900 

137,436

1 

Appropriation entered in 2011 Budget. 

EN 

19 

   EN 

 
 
 
                                                 
LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSAL 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Regulation of the European Parliament and of the Council laying down general 
provisions for Macro-Financial Assistance to Third Countries  

1.2. 

Policy area(s) concerned in the ABM/ABB structure1  

Policy area: Title 01 – Economic and Financial Affairs 

Activity: 03 – International Economic and Financial Affairs 

1.3. 

Nature of the proposal/initiative  

(cid:133) The proposal/initiative relates to a new action  

(cid:133)  The  proposal/initiative  relates  to  a  new  action  following  a  pilot  project/preparatory 
action2  

X The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objectives 

1.4.1.  The Commission’s multiannual strategic objective targeted by the proposal: 

“To promote prosperity beyond the EU” 

The main area of DG ECFIN related activity is to develop, monitor and implement 
macro-financial  assistance  for  third  countries,  in  co-operation  with  the  relevant 
international financial institutions. 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objective  No 3: "Providing macro-financial assistance to third countries in 
resolving their balance of payment crises and restoring external debt sustainability" 

ABM/ABB  activity  concerned:  International  Economic  and  Financial  Relations.  
Global Governance. 

1 
2 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

20 

   EN 

 
 
                                                 
1.4.3.  Expected result(s) and impact 

The main objective for the proposed Framework Regulation is to make the Macro-
Financial Assistance (MFA) instrument more effective through a streamlining of its 
decision-making process. 

As highlighted by the global financial crisis, dealing effectively with macroeconomic 
and financial emergencies requires a crisis response instrument that can be deployed 
quickly  and  efficiently.  This  calls  for  a  decision-making  system  that  avoids  long 
procedures.  The  proposed  Regulation  would  speed  up  the  decision-making  for 
individual  MFA  operations  so  that  the  instrument  can  better  help  beneficiary 
countries withstand short-term external financial pressures, while supporting them in 
adopting measures designed to restore a sustainable balance-of-payments position.  

Under  the  proposed  Regulation,  the  Commission  would  be  able  to  adopt  country-
specific MFA decisions under the supervision of a committee consisting of Member 
State  representatives  and  chaired  by  the  Commission,  in  accordance  with  the 
examination procedure. This would allow for a swifter decision process compared to 
the case-by-case procedure applied to past decisions.  

While  the  Framework  Regulation  constitutes  a  new  legal  instrument,  it  will  not 
change the substance of MFA. 

1.4.4. 

Indicators of results and impact 

The implementation of MFA operations adopted under the proposed Regulation will 
be monitored based on the system of regular reporting of indicators agreed in MFA 
operations, the compliance statements provided by the authorities of the beneficiary 
ahead of disbursements and IMF documents. 

As at present, each MFA operation will be subject to an ex-ante evaluation and to an 
ex-post  evaluation,  to  be  carried  out  by  the  Commission  or  its  duly  authorised 
representatives within two years after the expiry of the operation. An annual report to 
the  Council  and  European  Parliament  is  foreseen  in  the  proposed  Regulation, 
containing an assessment of the implementation of MFA operations. 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

No particular requirements have been identified for the adoption of the proposal. 

A  number  of  pre-conditions  must  be  met  by  the  recipient  country  to  be  eligible  to 
receive MFA. These are specified in the Framework Regulation. 

1.5.2.  Added value of EU involvement 

The  financial  assistance  provided  under  MFA  operations  and  the  policy  measures 
attached to them aim at supporting the EU agenda vis-à-vis the recipient countries, 
notably  by  promoting  macroeconomic  and  political  stability 
the  EU’s 
neighbourhood. The policy measures associated with MFA cover selected provisions 
related,  where  applicable,  to  the  accession-related  agreements,  Stabilisation  and 
Association  Agreements,  Partnership  and  Cooperation  Agreements  and  European 

in 

EN 

21 

   EN 

 
Neighbourhood Policy Action Plans or equivalent documents. They also cover other 
conditions  aimed  at  fostering  a  sustainable  balance  of  payments  and  budgetary 
position, raising potential growth, promoting integration and regulatory convergence 
with the EU and strengthening public finance management.  

MFA operations allow the EU as a whole to bundle financial resources and negotiate 
with  recipient  countries  on  modalities  of  the  assistance  and  policy  conditions  as  a 
unified actor.  

By  complementing  the  resources  made  available  by  the  IFIs  and  other  donors,  EU 
MFA  contributes to  the overall  effectiveness of the financial  support agreed by the 
international donor community.  

1.5.3.  Lessons learned from similar experiences in the past 

In addition to the country-specific evaluations, a meta-evaluation of MFA operations 
was  carried  out  in  2009,  which  reviewed  the  evaluations  of  seven  individual  MFA 
operations  conducted  between  2004  and  2008.  One  of  the  findings  of  the  meta-
evaluation  were  the  delays  in  the  decision-making  process  of  the  MFA,  which  it 
described  as  an  important  shortcoming  of  the  instrument,  notably  when  compared 
with interventions of the IFIs.  

The  meta-evaluation  also  found  that,  in  general,  MFA  operations  had  a  positive 
impact  on  the  implementation  of  structural  reforms  in  beneficiary  countries, 
particularly for public finance and financial sector reforms.  

1.5.4.  Coherence and possible synergy with other relevant instruments 

As indicated, MFA operations are complementary to, and closely coordinated with, 
interventions by the IFIs, in particular the IMF.  

MFA and other external assistance instruments of the EU are mutually reinforcing. 
MFA  can  increase  the  effectiveness  of  the  programmes  supported  by  other  EU 
external  financial  instruments,  in  particular  the  Instrument  for  Pre-Accession 
Assistance  and  the  European  Neighbourhood  and  Partnership  Instrument,  by 
contributing to ensure an appropriate overall framework for macroeconomic stability 
and  structural  reform.  Conversely,  some  of  the  policy  measures  attached  to  MFA 
operations are often supported by technical assistance provided by the EU through its 
regular  cooperation  instruments  and  by  the  sectoral  actions  identified  under  direct 
budgetary  support  operations.  Finally,  they  complement  the  public  finance 
management and other objectives of longer-term direct budgetary support operations. 

1.6. 

Duration and financial impact  

X Proposal/initiative of limited duration  

–  (cid:133)  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY]  

–  X  Financial impact from 2011 to 2013 

(cid:133) Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

EN 

22 

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–  followed by full-scale operation. 

1.7.  Management mode(s) envisaged3  

X Centralised direct management by the Commission  

(cid:133)  Centralised  indirect  management  with  the  delegation  of  implementation  tasks 
to: 

–  (cid:133)  executive agencies  

–  (cid:133)  bodies set up by the Communities4  

–  (cid:133)  national public-sector bodies/bodies with public-service mission  

–  (cid:133)  persons entrusted with the implementation of specific actions pursuant to Title 
V of the Treaty on European Union and identified in the relevant basic act within 
the meaning of Article 49 of the Financial Regulation  

(cid:133) Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

If more than one management mode is indicated, please provide details in the "Comments" section. 

Comments : 

Active cooperation is achieved with the EU Delegations in the monitoring of the assistance. 

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

See section 1.4.4 above. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

There are both fiduciary and policy risks related to MFA operations.  

There is a risk that MFA could be used in a fraudulent way. This risk is related to 
factors  such  as  central  bank  independence,  quality  of  management  systems  and 
administrative  procedures,  control  and  oversight  functions  in  the  financial  circuits, 
security  of  IT  systems,  and  adequate  internal  and  external  audit  capabilities  in  the 
beneficiary country.  

3 

4 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the 
BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

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As  regards  policy  risks,  MFA  operations  are  based  on  the  assumption  that  the 
government  of  the  beneficiary  country  remains  committed  to  the  adjustment  and 
reform  programme  agreed  with  the  IMF.  There  is  a  risk  that  the  governments  of 
beneficiary countries do not comply with IMF programme conditions, as targets may 
turn out more difficult to reach than assumed and as political conditions may change.  

Finally, there is a limited risk of a non-repayment of the MFA provided in the form 
of  loans.  The  macroeconomic  adjustment  and  reform  programme  supported  by  the 
MFA operation and the related IMF's financial arrangement help to mitigate this risk, 
to  the  extent  that  they  contribute  to  restore  balance  of  payments  and  fiscal 
sustainability. Also, the provisioning of the Guarantee Fund for external lending of 
the EU, in line with the rules governing the Guarantee Fund mechanism, is aimed at 
addressing possible adverse implications of non-repayment of the loan.  

2.2.2.  Control methods envisaged  

See section 2.3 below. 

2.3.  Measures to prevent fraud and irregularities 

The  Commission  services  have  put  in  place  a  programme  of  Operational 
Assessments (OAs) of the financial circuits and administrative procedures in all third 
countries benefiting from EU MFA, consistent with the requirements of the Financial 
Regulation applicable to the General Budget of the EU. Conclusions of other relevant 
reports of the IMF and the World Bank are also taken into consideration.  

The Commission services, with the support of duly mandated external experts, will 
continue  to  carry  out  OAs  at  the  ministries  of  finance  and  the  central  banks  of 
beneficiary  countries.  These  reports  cover  areas  such  as  management  structure  and 
organisation, management and control of funds, security of IT systems, internal and 
external audit capacity as well as the independence of the central bank.  

The  proposed  Regulation  includes  specific  provisions  on  fraud  prevention.  Each 
MFA operation 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.  Fraud  prevention  provisions  are 
also to be included in the Memorandum of Understanding of each MFA operation.  

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3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

•  Existing expenditure budget lines:  

In order of multiannual financial framework headings and budget lines. 

01 03 02 – Macroeconomic assistance  

Budget line 

Heading of 
multiannual 
financial 
framework 

Type of  
expenditure 

DA/NDA 
(5) 

Contribution  

from 
EFTA6 
countries 

From 
candidate 
countries7 

from third 
countries 

within the meaning of 
Article 18(1)(aa) of the 
Financial Regulation  

4 

01 03 02 01 

Macroeconomic 
assistance 

DA 

NO 

NO 

NO 

NO 

01 04 01 14 – Provisioning of the Guarantee Fund 

Budget line 

Heading of 
multiannual 
financial 
framework 

Type of 
expenditure 

Diff./non-diff. 

Contribution  

from 
EFTA 
countries 

From 
candidate 
countries 

from third 
countries 

within the meaning of 
Article 18(1)(a) of the 
Financial Regulation  

01 04 01 14 

4 

Provisioning 
the 
Fund 

of 
Guarantee 

DA 

NO 

NO 

NO 

NO 

The Guarantee Fund for external actions has to be provisioned according to the Fund 
Regulation, as amended. In line with this Regulation, loans' provisioning is based on 
their  outstanding  amount  at  the  end  of  a  year.  The  Guarantee  Fund  is  providing  a 
guarantee  to  three  types  of  EU  external  loans:  EIB  in  the  context  of  its  external 
mandate, Euratom and MFA. 

Regarding MFA operations, the guarantee Fund is linked with budget line 01 04 01 
04  –  EC  guarantee  for  Community  loans  raised  for  macro-financial  assistance  to 
third countries. The budget entry (“p.m.”) on this line reflects the budget guarantee 
for each MFA loan. It will  be  activated only in the case of an effective call on the 
guarantee.  In  view  of  the  past  implementation,  it  is  not  expected  that  the  budget 
guarantee will be called. 

5 
6 
7 

DA= Differentiated appropriations / DNA= Non-Differentiated Appropriations 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

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New budget lines requested: No. 

3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial framework:  

4 

DG: ECFIN 

(cid:121)  Operational appropriations (grants) 

EUR million (to 3 decimal places) 

01  03  02  Macroeconomic 
assistance 

01  04  01  14  Provisioning  of 
the Guarantee Fund 

EUR million 

20118 

2012 

2013 

Number of budget line: 01 03 02 

Commitments 

Payments 

(1) 

(2) 

104.869 
88.700 

104.900 
88.500 

137.436 
116.000 

(cid:121)  Of  which,  estimate  of  appropriations  of  an  administrative  nature 
the  envelop  of  specific  programs9:  operational 
financed 
assessments and ex-post evaluations  

from 

Number of budget line: 01 03 02 

(cid:121) Operational appropriations (loans) 

Number of budget line: 01 04 01 14  

Commitments 

Payments 

Commitments10 

Payments11 

(3) 

(4) 

(3) 

(4) 

0.700 

0.600 

0.600 

0.600 

0.600 

0.700 

138.880 

260.170 

200.000 

58.320 

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). As a result, 9% 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.” 

TOTAL appropriations  
under HEADING 4 
of the multiannual financial framework 

Commitments 

=4+6 

243.749 

365.070 

337.436 

Payments 

=5+6 

88.700 

88.500 

174.320 

8 

9 

10 
11 

2011 is the year in which implementation of the Regulation is expected to start. As from 2014, amounts 
should be consistent with new multi-annual financial framework starting on that year. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of the  implementation  of  MFA 
operations. 
Appropriations for all types of EU loans: EIB, Euratom and MFA. 
Estimate of payment appropriations for MFA loans only on the basis of a provisioning of 9 % of their 
outstanding amount in year after the disbursement takes place. 

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26 

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Heading of multiannual financial framework:  

5 

" Administrative expenditure " 

201112 

2012 

2013 

TOTAL 

EUR  

DG: ECFIN 

(cid:121) Human resources  
(cid:121) Other administrative expenditure : 01 01 02 11 01 - 
Missions and representation costs 

762,000 

762,000 

762,000 

2,286,000 

160,000 

133,000 

200,000 

493,000 

TOTAL DG ECFIN 

Appropriations  

922,000 

895,000 

962,000 

2,779,000 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial 
framework  

(Total  commitments 
= Total payments) 

922,000 

895,000 

962,000 

2,779,000 

3.2.2.  Estimated impact on appropriations of an administrative nature 

3.2.2.1.  Summary  

–  (cid:133)  The  proposal/initiative  does  not 

require 

the  use  of  administrative 

appropriations  

–  X  The  proposal/initiative  requires  the  use  of  administrative  appropriations13. 

The  administrative  appropriations  required  will  be  met  by  the  appropriations 
which are already assigned to management of the action and/or which have been 
redeployed,  together  if  necessary  with  any  additional  allocation  which  may  be 
granted to the managing DG under the annual allocation procedure and in the light 
of existing budgetary constraints. 

3.2.2.2.  Estimated requirements of human resources  

–  (cid:133)  The proposal/initiative does not require the use of human resources  

–  X  The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

12 

13 

2011 is the year in which implementation of the Regulation is expected to start. As from 2014, amounts 
should be consistent with new multi-annual financial framework starting on that year. 
Existing staff in charge of MFA operations in DG ECFIN 

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27 

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Estimate to be expressed in full amounts (or at most to one decimal place) 

201114 

2012 

2013 

Establishment plan posts (officials and temporary agents) 

Economic and Financial Affairs 01 01 01 
(Headquarters and Commission’s Representation 
Offices) 

6.0 

6.0 

6.0 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

- 

- 

10 01 05 01 (Direct research) 
External personnel (in Full Time Equivalent unit: FTE)15 

- 

XX 01 02 01 (CA, INT, SNE from the "global 
envelope") 

- 

- 

- 

- 

- 

- 

- 

- 

- 

XX 01 02 02 (CA, INT, JED, LA and SNE in the 
delegations) 

XX 01 04 yy 

- at Headquarters 

- in delegations 

XX 01 05 02 (CA, INT, SNE – Indirect research) 

10 01 05 02 (CA, INT, SNE - Direct research) 

Other budget lines (specify) 

TOTAL 

6.0 

6.0 

6.0 

The  human  resources  required  will  be  met  by  staff  from  the  DG  who  are  already 
assigned to the management of MFA operations and/or have been redeployed within 
the DG, if necessary along with any additional allocation that may be granted to the 
managing  DG  under  the  annual  allocation  procedure  and  in  light  of  budgetary 
constraints.  The  cost  of  the  staff  needed  in  geographic  desks  to  formulate  and 
monitor  MFA  is  estimated  on  the  basis  of  50%  of  the  annual  expenditure  for  an 
AD5-AD12 grade official per each MFA operation. Based on the experience of the 
past 5 years, 8 MFA operations per year are foreseen on average either as ongoing or 
new  operations.  Support  functions  including  coordination,  financial  management, 
contribution to operational assessments and ex-post evaluations and secretarial work 
are estimated to represent an additional cost of 50% of that of the geographic desks. 

Description of tasks to be carried out: 

Officials and temporary agents 

E.g.  prepare  memoranda  of  understanding  and  loan  or  grant 
agreements,  liaise  with  the  authorities  and  the  IFIs,  liaise  with 
external  experts  for 
the  operational  assessments  and  ex-post 
evaluations,  conduct  review  missions  and  prepare  Commission  staff 
reports,  prepare  Commission  procedures  related  to  the  management 
of the assistance including comitology. 

External personnel 

N.A. 

14 

15 

2011 is the year in which implementation of the Regulation is expected to start. As from 2014, amounts 
should be consistent with new multi-annual financial framework starting on that year. 
CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young 
Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert.  

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28 

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3.2.3.  Compatibility with the current multiannual financial framework  

–  X  Proposal/initiative  is  compatible  with  the  current  multiannual  financial 

framework. 

–  (cid:133)  Proposal/initiative  will  entail  reprogramming  of  the  relevant  heading  in  the 

multiannual financial framework. 

–  (cid:133)  Proposal/initiative requires application of the flexibility instrument or revision 

of the multiannual financial framework16. 

3.2.4.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties  

3.3. 

Estimated impact on revenue  

–  X  Proposal/initiative has no financial impact on revenue. 

–  (cid:133)  Proposal/initiative has the following financial impact: 

– 

– 

(cid:133) 

(cid:133) 

on own resources  

on miscellaneous revenue  

16 

See points 19 and 24 of the Inter-institutional Agreement. 

EN 

29 

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