P7_TA(2012)0466 Macro-financial assistance to the Kyrgyz Republic ***I European Parliament legislative resolution of 11 December 2012 on the proposal for a decision of the European Parliament and of the Council providing macro-financial assistance to the Kyrgyz Republic (COM(2011)0925 — C7-0521/2011 — 2011/0458(COD)) P7_TC1-COD(2011)0458 Position of the European Parliament adopted at first reading on 11 December 2012 with a view to the adoption of Decision No …/2013/EU of the European Parliament and of the Council providing macro-financial assistance to the Kyrgyz Republic
Date: 2012-12-11
Institutions: Committee on Budgets, Committee on Foreign Affairs, Committee on International Trade, European Parliament
Subjects: EU aid, Kyrgyzstan, economic reform, economic stabilisation, financial aid, macroeconomics, reflation








C_2015434EN.01016001.xml










23.12.2015   


EN


Official Journal of the European Union


C 434/160





P7_TA(2012)0466
Macro-financial assistance to the Kyrgyz Republic ***I
European Parliament legislative resolution of 11 December 2012 on the proposal for a decision of the European Parliament and of the Council providing macro-financial assistance to the Kyrgyz Republic (COM(2011)0925 — C7-0521/2011 — 2011/0458(COD))
(Ordinary legislative procedure: first reading)
(2015/C 434/21)

The European Parliament,






—


having regard to the Commission proposal to Parliament and the Council (COM(2011)0925),










—


having regard to Article 294(2) and Article 209 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0521/2011),










—


having regard to Article 294(3) of the Treaty on the Functioning of the European Union,










—


having regard to Rule 55 of its Rules of Procedure,










—


having regard to the report of the Committee on International Trade (A7-0208/2012),












1.


Adopts its position at first reading hereinafter set out;












2.


Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;












3.


Instructs its President to forward its position to the Council, the Commission and the national parliaments.






P7_TC1-COD(2011)0458
Position of the European Parliament adopted at first reading on 11 December 2012 with a view to the adoption of Decision No …/2013/EU of the European Parliament and of the Council providing macro-financial assistance to the Kyrgyz Republic
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 209 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 (1),
Whereas:






(1)


Cooperation with the EU is based on a Partnership and Cooperation Agreement (PCA) that entered into force in 1999. The EU grants Generalised System of Preferences (GSP) treatment to the Kyrgyz Republic.










(2)


Kyrgyz economy has been affected by the international financial crisis in 2009 and by the ethnic violence of June 2010, which disrupted economic activities, creating substantial public expenditure needs for reconstruction and social assistance, and resulted in important external and budgetary financial gaps.










(3)


At the High Level Donors Meeting held in July 2010, the international community pledged USD 1,1 billion in emergency support to assist in the recovery of the Kyrgyz Republic. The EU announced that it would provide up to EUR 117,9 million as financial assistance at this High Level Donors Meeting.










(4)


The EU Foreign Affairs Council, in its conclusions on the Kyrgyz Republic of 26 July 2010, welcomed the efforts of the new Kyrgyz government to establish a democratic institutional framework and invited the Commission to ‘continue providing assistance, including new assistance programmes, to the Kyrgyz authorities in the implementation of their reform programme and to contribute to sustainable economic and social development of the country’.










(5)


EU political and economic support to the Kyrgyz Republic’s incipient parliamentary democracy will provide a political signal of strong EU support to democratic reforms in Central Asia, consistent with the EU policy towards the region spelled out in the Strategy for Central Asia for 2007-2013 and with statements by EU leaders.










(6)


The economic adjustment and reform process of the Kyrgyz Republic is supported by financial assistance from the International Monetary Fund (IMF). In June 2011, the Kyrgyz authorities agreed with the three-year IMF Extended Credit Facility of SDR 66,6 million in support of the country.










(7)


The EU intends to provide sectoral budget support to the Kyrgyz Republic under the Development Cooperation Instrument for a total of EUR 33 million over the period 2011 — 2013 to support reforms in social protection, education and public financial management.










(8)


The Kyrgyz Republic requested in 2010 EU macro-financial assistance in view of the worsening economic situation and outlook.










(9)


Given that, after taking into account macroeconomic support from the IMF and the World Bank, there is still a residual financing gap in the balance of payments, and given the vulnerability of the external position to exogenous shocks which requires maintaining an appropriate level of the foreign exchange reserves, macro-financial assistance is considered an appropriate response to the Kyrgyz Republic's request under the current exceptional circumstances. The EU's macro-financial assistance programme to the Kyrgyz Republic (hereinafter ‘the Union's macro-financial assistance’) would support the country's economic stabilisation and the structural reform agenda, supplementing the resources being made available under the IMF's financial arrangement.










(10)


The Union's macro-financial assistance should not merely supplement programmes and resources from the IMF and the World Bank, but should also ensure the added value of Union's involvement.










(11)


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










(12)


The specific objectives of the Union's macro-financial assistance should strengthen efficiency, transparency and accountability of the public finance management in the Kyrgyz Republic. These objectives should be regularly monitored by the Commission.










(13)


The conditions underlying the provision of the Union's macro-financial assistance should reflect the key principles and objectives of the Union’s policy towards the Kyrgyz Republic.










(14)


In order to ensure efficient protection of the EU’s financial interests linked to this macro-financial assistance, it is necessary that the Kyrgyz Republic adopt appropriate measures relating to the prevention of, and the fight against, fraud, corruption and any other irregularities linked to this assistance. It is also necessary that the Commission provide for appropriate controls and that the Court of Auditors provide for appropriate audits.










(15)


The release of the EU's financial assistance is without prejudice to the powers of the budgetary authority.










(16)


The assistance should be managed by the Commission. In order to ensure that the European Parliament and the Economic and Financial Committee are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and provide them with relevant documents.










(17)


In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission's exercise of implementing powers (2).










(18)


Economic policy conditions, to be laid down in a Memorandum of Understanding, will be attached to the Union's macro-financial assistance. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Kyrgyz authorities under the supervision of the Committee of the Member States foreseen by Regulation (EU) No 182/2011. The fact that the assistance is of a limited maximum amount provides for the due justification required by the second sentence of Article 2(3) of Regulation (EU) No 182/2011 to subject the adoption of the Memorandum of Understanding to the advisory procedure.
[Am. 1]











(19)


According to the International Monetary Fund, the Kyrgyz Republic falls under the category of ‘emerging and developing economies’; according to the World Bank, the Kyrgyz Republic is part of the group of ‘low-income economies’ and ‘IDA countries’; according to the UN-OHRLLS (3), the Kyrgyz Republic falls under the category of ‘landlocked-developing country’; according to the OECD/Development Assistance Committee, the Kyrgyz Republic is in the list of ‘other low income countries’. Therefore, the Kyrgyz Republic should be considered as being a developing country in the sense of Article 208 TFEU, which justifies the choice of Article 209 TFEU as a legal basis for this Decision,




HAVE ADOPTED THIS DECISION:

Article 1

1.   The European Union shall make macro-financial assistance available to the Kyrgyz Republic for a maximum amount of EUR 30 million, with a view to supporting the country's economic stabilisation and covering its balance of payments needs as identified in the current IMF programme. Of this amount, up to EUR 15 million shall be provided in the form of loans and up to EUR 15 million in the form of grants. The release of the proposed macro-financial assistance is subject to the approval of the 2013 Budget by the budgetary authority. The Commission is empowered to borrow the necessary resources on behalf of the European Union in order to finance the loan component of the Union's macro-financial assistance. The loan shall have a maximum maturity of 15 years.
2.   The release of the Union's financial assistance shall be managed by the Commission in a manner consistent with the agreements or understandings reached between the IMF and the Kyrgyz Republic and with the key principles and objectives of economic reforms set out in the the EU-Kyrgyz Republic Partnership and Cooperation Agreement and in the Strategy for Central Asia for 2007-2013. The Commission shall regularly inform the European Parliament and the Economic and Financial Committee of developments in the management of the assistance and provide them with relevant documents.
3.   The European Union financial assistance shall be made available for two years starting from the first day after the entry into force of the Memorandum of Understanding referred to in Article 2(1).

Article 2

1.   The Commission, acting in accordance with the advisory procedure referred to in Article 6(2), shall be empowered to agree with the authorities of the Kyrgyz Republic on the economic policy and financial conditions attached to the European Union macro-financial assistance, to be laid down in a Memorandum of Understanding which shall include a timeframe for their fulfilment (hereafter the ‘Memorandum of Understanding’). The economic policy and financial conditions set out in the Memorandum of Understanding shall be consistent with the agreements or understandings referred to in Article 1(2). These conditions will aim, in particular, at strengthening the efficiency, transparency and accountability of the assistance, including public finance management systems in the Kyrgyz Republic. Progress in attaining these objectives shall be regularly monitored by the Commission. The detailed financial terms of the assistance shall be laid down in the Grant Agreement and the Loan Agreement to be agreed between the Commission and the authorities of the Kyrgyz Republic.
2.   During the implementation of the European Union financial assistance, the Commission shall monitor the soundness of the Kyrgyz Republic's financial arrangements, the administrative procedures and the internal and external control mechanisms which are relevant to such assistance and the adherence to the agreed timeframe.
3.   The Commission shall verify at regular intervals that the economic policies of the Kyrgyz Republic are in accordance with the objectives of the Union's macro-financial assistance and that the agreed economic policy conditions are being satisfactorily fulfilled. In doing so, the Commission shall coordinate closely with the IMF and the World Bank, and, when required, with the Economic and Financial Committee.

Article 3

1.   Subject to the conditions of paragraph 2, the European Union financial assistance shall be made available by the Commission to the Kyrgyz Republic in two instalments, each of them consisting of a loan and a grant element. The size of each instalment shall be laid down in the Memorandum of Understanding.
2.   The Commission shall decide on the release of the instalments subject to a satisfactory implementation of the economic policy conditions agreed in the Memorandum of Understanding. The disbursement of the second instalment shall not take place earlier than three months after the release of the first instalment.
3.   The European Union funds shall be paid to the National Bank of the Kyrgyz Republic. Subject to provisions to be agreed in the Memorandum of Understanding, including a confirmation of residual budgetary financing needs, the Union funds may be transferred to the Treasury of the Kyrgyz Republic as the final beneficiary.

Article 4

1.   The borrowing and lending operations related to the loan component of the European Union assistance shall be carried out in euro using the same value date and shall not involve the European Union in the transformation of maturities, in any exchange or interest rate risks, or in any other commercial risk.
2.   The Commission shall take the necessary steps, if the Kyrgyz Republic so requests, to ensure that an early repayment clause is included in the loan terms and conditions and that it is matched by a corresponding clause in the terms and conditions of the borrowing operations.
3.   At the request of the Kyrgyz Republic and where circumstances permit an improvement of the interest rate of the loan, the Commission may refinance all or part of its initial loan or restructure the corresponding financial conditions. Refinancing or restructuring operations shall be carried out in accordance with the conditions set out in paragraph 1 and shall not have the effect of extending the average maturity of the loan concerned or increasing the amount of capital outstanding at the date of the refinancing or restructuring.
4.   All costs incurred by the European Union which are related to the borrowing and lending operations under this Decision shall be borne by the Kyrgyz Republic.
5.   The European Parliament and the Economic and Financial Committee shall be kept informed of developments in the operations referred to in paragraphs 2 and 3.

Article 5

The European Union 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 Communities (4) and its implementing rules. In particular, the Memorandum of Understanding, the Loan Agreement and the Grant Agreement to be agreed with the authorities of the Kyrgyz Republic shall provide for appropriate measures 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 funds, the Memorandum of Understanding, the Loan Agreement and the Grant Agreement shall also provide for controls, including on-the-spot checks and inspections, to be carried out by the Commission, including the European Anti-Fraud Office. Those documents shall, in addition, provide for audits, including where appropriate on-the-spot audits, by the Court of Auditors.

Article 6

1.   The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.
2.   Where reference is made to this paragraph, Article 4 of Regulation (EU) No 182/2011 shall apply.

Article 7

1.   By 30 June of each year, the Commission shall submit to the European Parliament and to the Council a report on the implementation of this Decision in the preceding year, including an evaluation thereof. The report shall indicate the connection between the economic policy conditions as laid down in the Memorandum of Understanding, the Kyrgyz Republic’s on-going economic and fiscal performance and the Commission’s decisions to release the instalments of the assistance.
2.   No later than two years after the expiry of the availability period referred to in Article 1(3), the Commission shall submit to the European Parliament and to the Council an ex post evaluation report.

Article 8

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

Done at


For the European Parliament


The President




For the Council


The President





(1)  Position of the European Parliament of 11 December 2012.

(2)  OJ L 55, 28.2.2011, p. 13.

(3)  UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States.

(4)  OJ L 248, 16.9.2002, p. 1.