Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing macro-financial assistance to the Hashemite Kingdom of Jordan
Date: 2013-04-29
Institutions: European Commission
Subjects: European neighbourhood policy, Jordan, balance of payments assistance, economic reform, economic stabilisation, financial aid

EUROPEAN 
COMMISSION 

Brussels, 29.4.2013  
COM(2013) 242 final 

2013/0128 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

providing macro-financial assistance to the Hashemite Kingdom of Jordan 

{SWD(2013) 151 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal  

Since  early  2011,  Jordan's  economy  has  been  significantly  affected  by  the  domestic  events 
related to the Arab Spring and the ongoing regional unrest, notably in neighbouring Egypt and 
Syria.  Combined  with  a  weaker  global  environment,  the  political  transition  of  Jordan  has 
taken  a  heavy  toll  on  external  receipts  and  has  strained  public  finances.  Lower  tourism  and 
FDI  inflows,  higher  international  energy  prices  and  the  repeated  disruptions  to  the  flow  of 
natural  gas  from  Egypt,  which  forced  Jordan  to  replace  gas  imports  from  Egypt  with  more 
expensive  fuels  for  electricity  generation,  have  put  a  drag  on  growth  and  have  resulted  in  a 
marked  deterioration  in  the  balance  of  payments  and  fiscal  position.  Jordan  has  also  been 
affected by the intensification of the Syria crisis, notably through the inflow of refugees and 
its fiscal implications. While Jordan has so far managed to date to maintain macroeconomic 
stability, including through substantial fiscal consolidation efforts and financial support from 
foreign donors, there are significant balance of payments and financing needs.  

Under  the  pressure  of  a  sharp  drop  of  international  reserves  in  the  first  half  of  2012,  the 
Jordanian  authorities  have  agreed  on  a  USD  2  bn  (800%  of  quota),  36-month  Stand-By 
Arrangement (SBA) with the IMF, approved in August 2012.  

In view of the worsening economic situation and outlook, the Jordanian government requested 
Macro-Financial Assistance (MFA) from the EU in the amount of EUR 200 mn in December 
2012.  The  Commission  intends  to  submit  to  the  European  Parliament  and  the  Council  a 
proposal  for  MFA  to  the  benefit  of  the  Hashemite  Kingdom  of  Jordan  amounting  to  a 
maximum  of  EUR  180  mn  in  the  form  of  a  medium  term  loan.  The  proposed  legal  base  is 
Article 212 of the TFEU.  

The EU's MFA would contribute towards covering Jordan's residual external financing needs 
in 2013 and 2014, in the context of the IMF programme. The MFA would help Jordan address 
the lingering economic consequences of the Arab Spring and the external shocks of its energy 
sector.  It  would  reduce  the  economy's  short-term  balance  of  payments  and  fiscal 
vulnerabilities, while supporting the adjustment and reform programmes agreed with the IMF 
and  the  World  Bank,  as  well  as  the  reforms  agreed  under  the  EU's  budgetary  support 
operations (including the Good Governance and Development Contract operation of EUR 40 
mn  financed  by  the  Support  for  Partnership  Reform  and  Inclusive  Growth  (SPRING) 
programme). 

The  proposed  assistance  would  promote  policy  measures  to  improve  public  financial 
management  and  tax  reform  while  strengthening  the  social  safety  net  (including  through  a 
better  targeting  of  the  cash  transfers  system  put  in  place  last  November  to  compensate 
households for the reform of the energy subsidy system); measures to improve the regulatory 
framework and climate for investment; and reforms to reduce unemployment and encourage 
participation in the labour market, notably among women.  

The proposed MFA is consistent with the political and financial pledges made by the EU to 
the Jordanian authorities at the EU-Jordan Task Force meeting in February 2012. It is also in 
line with the aims of the new partnership for the South Mediterranean region proposed at the 
G8 Deauville summit and the orientations of the new European Neighbourhood Policy. In the 

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same vein, it would signal to the other countries in the region that the EU is ready to support 
countries like Jordan, embarking on political reforms, in moments of economic difficulties. 

In this context, the Commission considers that the political and economic pre-conditions for a 
MFA operation of the proposed amount and nature are satisfied. 

•  General context 

Jordan has faced worsening economic conditions since 2011 due to the regional and political 
turmoil  associated  with  the  Arab  Spring  and  the  weaker  regional  and  global  economic 
environment.  These  circumstances  negatively  affected  two  of  the  main  external  drivers  of 
economic growth,  namely  tourism receipts and foreign direct investment (FDI). In addition, 
the frequent interruption of gas supplies from Egypt has forced the government to replace gas 
with  more  expensive  oil  imports,  which  has  increased  the  import  bill  significantly1.  These 
adverse external shocks have contributed to create large fiscal and external imbalances.  

In  this  context,  and  following  a  period  of  robust  economic  growth  averaging  6.5%  during 
2000-2009, partly reflecting a propitious external environment, GDP growth dropped sharply 
to  2.6%  in  2011.  GDP  growth  picked  up  moderately  to  2.9%  in  the  first  half  of  2012, 
following a recovery of tourism receipts and despite the weak performance of the mining and 
construction sectors. In 2013, GDP growth is projected to be supported by increased FDIs in 
the energy and banking sectors but remain relatively low (at about 3%). 

Consumer price inflation increased moderately in the course of 2012, reaching an average of 
4.8%, compared to 4.5% in 2011, as the impact of domestic fuel and electricity tariff increases 
was partially offset by that of weaker domestic demand. Inflation is expected to rise further to 
6.1%  on  average  in  2013,  partly  as  a  result  of  the foreseen energy  price adjustments.  Since 
mid-2011, monetary policy has been tightened in order to preserve the attractiveness of JOD-
denominated  assets.  The  current  fixed  exchange  rate  policy  (peg  to  the  USD)  has  helped 
anchor inflation expectations. 

The  external  position  has  worsened  markedly  since  the  beginning  of  2011  due  to  the 
aforementioned shocks. The current account deficit (including grants) reached 12% of GDP in 
2011  (19%  of  GDP  excluding  grants),  up  from  7.1%  of  GDP  in  2010  (11.3%  of  GDP 
excluding grants), partly due to a 16.6% increase in the import bill. By the end of 2012, it had 
widened further to 17% of GDP (20.6% of GDP excluding grants), despite a 15.3% increase 
in  tourism  receipts  (broadly  attributed  to  tourist  flows  from  Arab  countries)  and  a  3.5% 
increase of remittances. The projection is, however, that the current account deficit excluding 
grants will narrow down to 12.1% in 2013 in view of stronger export growth and a gradual 
normalisation  of  gas  supplies  from  Egypt.  The  shortfall  in  FDI  in  2011-2012  further 
deteriorated  the  external  position.  Financing  needs  for  2011-12  were  largely  met  through 
foreign assistance, in particular form the Gulf Cooperation Council (GCC) countries and the 
Bretton Woods institutions, and the mobilisation of international reserves, which fell by 14% 
(to  USD  10.7  billion)  in  2011  and  more  dramatically  throughout  2012,  to  reach  USD  5.2 
billion (just above 3 months of imports) by the end of the year. 

1 

Although  in  mid-January  Jordan's  Egyptian  gas  supplies  temporarily  returned  to  normal  levels  after 
nearly two years of reduced supply (240 million cubic feet per day compared to an average of 40 mcf 
for most of 2012), they have recently dropped again to one-third of their normal levels, prompting fresh 
concerns over the security of the country’s primary energy source. Moreover, the renegotiation of the 
gas supply contract with Egypt has approximately tripled its price. 

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Public  finances  have  been  under  strain  due  to  the  social  expenditure  packages  adopted  in 
2011,  the  budgetary  impact  of  the  increase  in  energy  import  prices  and  the  economic 
slowdown.  The  budget  deficit  excluding  grants  increased  from  7.7%  of  GDP  in  2010  to 
11.7%  in  2011,  while  public  debt  had  risen  to  70.7%  of  GDP  by  end-2011  (from  67.1%  of 
GDP  at  end-2010).  Although  the  2012  budget  adopted  in  February  envisaged  a  large  fiscal 
adjustment compared to 2011, by mid-year it had become clear that this could no longer be 
possible,  reflecting  much  higher  than  assumed  fuel  subsidies,  a  higher  wage  bill  due  to  the 
reform of the civil service, higher pension and health outlays, and spending on housing and 
medical assistance for Syrian refugees2. To mitigate debt sustainability and possible shortfalls 
in  external  flows,  the  government  decided  in  May  2012  to  take  additional  fiscal  measures, 
amounting  to  3.4%  of  GDP.  The  aim  was  to  lower  the  overall  deficit  in  2012  by 
approximately 1.5 percentage points of GDP (to 10.7% of GDP, excluding grants).  

On the expenditure side, fiscal consolidation measures (amounting to 2.9% of GDP) included: 
the removal of subsidies on gasoline octane 95, jet fuel and heavy fuel oil; a 13% decrease in 
the subsidy for gasoline octane 90; a 6% increase in the price of diesel; as well cuts in capital 
spending and current expenditure. On the revenue side, the consolidation effort amounted to 
0.4% of GDP and included, inter alia, the introduction of a sales tax on cellular phones and air 
conditions; the increase in the taxes on cars, air tickets and alcoholic and tobacco products; 
and the removal of certain tax exemptions.  

In early September 2012, the government took the decision  to introduce a 6% tax on diesel 
and to remove subsidies from gasoline octane 90. However, this decision, which is a structural 
benchmark of the IMF programme, was initially suspended by the King. The liberalization of 
gasoline octane 90 finally took place in mid-November (together with the lifting of subsidies 
on  diesel,  kerosene,  and  household  gas  prices),  in  full  alignment  with  the  price  adjustment 
structural benchmark set by the IMF program. Although these measures led to serious social 
protests in mid-November, the government maintained the fuel price adjustments.  

As  underlined  at  the  Joint  Dialogue  on  Economic  Reforms  conducted  by  the  Commission 
with the Jordanian authorities last October, Jordan has made significant progress in a number 
of  key  reform  areas.  This  includes  the  adjustment  of  energy  prices,  plans  to  diversify  the 
energy  supply,  measures  to  raise  women's  participation  in  the  labour  force,  schemes  to 
support SMEs access to finance, and the submission to parliament of legislative proposals on 
income  taxation,  PPPs  and  social  security  reform.  However,  substantial  structural  reform 
challenges  have  yet  to  be  addressed.  Moreover,  many  legislative  proposals  remain  stuck  in 
parliament and the dissolution of the parliament and organisation of parliamentary elections 
held at end-January 2013 further delayed their adoption.  

On 3 August 2012, the IMF Board approved, as noted, a USD 2 bn (800% of quota) 36-month 
Stand-By  Arrangement  (SBA)  for  Jordan.  The  programme  is  relatively  frontloaded,  with 
300% of quota (out of the total of 800%) paid out in the first two tranches (the second tranche 
is to be disbursed upon completion of the first programme review). The program envisages a 
package  of  measures  aimed  at  strengthening  growth  while  reducing  vulnerability  to 
exogenous shocks, notably by reforming the energy subsidies system, bringing NEPCO back 
to  cost  recovery  and  promoting  energy  supply  diversification.  The  program  further  foresees 
consolidating the fiscal sector through an effective rationalization of the tax system, improved 

2 

Jordan  is  being  seriously  affected  by  the  on-going  Syrian  refugee  crisis.  With  the  biggest  influx  of 
Syrian  refugees  (about  180,000  by  January  2013)  and  the  fastest  growing  refugee  camp  (about  1,000 
Syrians crossing Jordanian borders every day), Jordan has been the most affected country in the region 
at  a  time  the  economy  is  already  grappling  with  severe  shortages  of  water  and  electricity.  Since  the 
outbreak  of  the  Syrian  conflict,  the  budgetary  cost  of  hosting  Syrian  refugees  is  estimated  to  have 
exceeded EUR 600 mn (about 3% of the Kingdom’s GDP). 

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tax administration and cuts in expenditure. For 2013, substantial additional fiscal adjustment 
measures  are  planned,  including  increases  in  diesel  and  kerosene  prices,  reductions  in  tax 
exemptions and, possibly, increases in excise taxes, with the aim of cutting the fiscal deficit 
excluding grants to 9.3% of GDP for that year (5.5% including grants).  

Based  on  the  latest  available  IMF  projections,  the  external  financing  gap  for  the  IMF 
programme  period  (2013-2015)  is  estimated  at  USD  5.9  billion,  essentially  reflecting  a 
sizeable (although declining overtime) current account deficit and the need to rebuild official 
foreign exchange reserves With reserves already at  a critically low level at  the  end  of 2012 
(just above the minimum benchmark of 3 months of imports, as noted), and Jordan's balance 
of payments remaining very vulnerable to external shocks, notably further disruptions in gas 
supplies from Egypt and political developments in the region, the IMF programme aims at a 
considerable replenishment of official reserves. Net of disbursements under the SBA and the 
World  Bank's  Development  Policy  Loan  (DPL),  Jordan  faces  a  residual  external  financing 
gap of USD 4.1 billion over these three years to be covered by other donors (GCC countries, 
US,  EU,  France,  and  Japan).  The  proposed  MFA  from  the  EU  would  correspond  to  about 
4.4% of the residual external financing gap. 

•  Existing provisions in the area of the proposal 

None 

•  Consistency with the other policies and objectives of the Union 

The  EU  has  for  long  had  an  interest  to  engage  with  Jordan,  acknowledging  Jordan's 
stabilizing  role  in  the  region  as  well  as  its  mutual  economic  and  financial  links.  The 
contractual relations between the EU and Jordan are framed by the Association Agreement in 
May 2002, which liberalizes trade between the two parties and foresees the strengthening of 
our bilateral political dialogue and economic cooperation. Bilateral relations have been further 
reinforced  under  the  EU's  European  Neighbourhood  Policy  (ENP),  including  through  the 
adoption  of  a  five-year  ENP  Action  Plan  in  2005,  replaced  by  a  new  5-year  Action  Plan  in 
2010,  which  identifies  key  reform  measures  in  both  the  political  and  economic  spheres  and 
promotes  Jordan's  regulatory  convergence  with  the  EU.  Moreover,  Jordan  is  the  first 
Mediterranean  partner  country  with  whom  the  EU  has  concluded  technical  negotiations 
leading  to  an  "Advanced  Status".  It  is  also  a  member  of  the  Union  for  the  Mediterranean. 
Economic ties with the EU are also important. In  2011,  the EU was Jordan's first source of 
imports (20.1%), although it was only the seventh destination of Jordan's exports. And the EU 
has offered to Jordan, as noted, the negotiation of DCFTA with the goal to increase Jordan's 
integration into the EU single market.  

In  sum,  while  Jordan's  road  to  full  democracy  is  not  without  difficulties  and  significant 
uncertainties  remain,  the  country  has  taken  significant  steps  towards  political  and  economic 
reform and there is also a strong framework of bilateral relations between the EU and Jordan. 

Since  the  Arab  Spring  began,  the  EU  has  declared  on  various  occasions  its  commitment  to 
support Jordan in its economic and political reform process. Indeed, the EU’s commitment to 
support Jordan’s political and economic reform was the main message of the first EU-Jordan 
Task Force held in Amman in February 2012.  

The MFA proposal is consistent with the EU's commitment to support Jordan's economic and 
political transition. It is also consistent with the guidelines for the MFA, as provided by the 

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Council conclusions of 2002 on MFA and the accompanying letter of the Council President to 
the Commission President. In particular, and as explained in more detail in the Staff Working 
Document  accompanying  the  Commission's  proposal,  the  proposal  is  consistent  with  the 
following  principles:  exceptional  character,  political  preconditions,  complementarity, 
conditionality and financial discipline.  

The  Commission  will  continue  to  monitor  and  assess  during  the  life  of  the  MFA  operation 
satisfaction  of  these  criteria,  including  the  assessment,  in  close  liaison  with  the  European 
External Action Service, of the political preconditions. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

•  Consultation of interested parties 

MFA is provided as an integral part of the international support to the economic stabilisation 
and  recovery  programme  of  Jordan.  In  the  preparation  of  this  proposal  for  MFA,  the 
Commission  services  have  consulted  with  the  International  Monetary  Fund  and  the  World 
Bank,  which  have  already  put  in  place  sizeable  financing  programs.  The  Commission 
consulted the EU Member States in the Economic and Financial Committee before submitting 
its  proposal  for  MFA.  The  Commission  has  also  been  in  regular  contact  with  the  Jordanian 
authorities. 

•  Collection and use of expertise 

An  Operational  Assessment  verifying  the  quality  and  reliability  of  Jordan's  public  financial 
circuits  and  administrative  procedures  will  be  carried  out  by  the  Commission  with  the 
assistance of external experts. 

•  Impact assessment 

The  MFA  and  the  economic  adjustment  and  reform  programme  attached  to  it  will  help 
alleviate  Jordan's  short-term  financing  needs  while  supporting  policy  measures  aimed  at 
strengthening  medium-term  balance  of  payments  and  fiscal  sustainability  and  raising 
sustainable growth, as agreed with the IMF. It will notably help improve the efficiency and 
transparency of public finance management; promote fiscal reforms to increase tax collections 
and  improve  the  progressivity  of  the  tax  system;  support  existing  efforts  to  strengthen  the 
social  safety  net;  promote  labour  market  reforms  (to  reduce  unemployment  and  raise 
participation rates, notably among women); and facilitate the adoption of measures to improve 
the regulatory framework for trade and investment. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The  European  Union  shall  make  MFA  available  to  Jordan  for  a  total  maximum  amount  of 
EUR 180 million, provided in the form of a medium term loan. The assistance will contribute 
to  cover  Jordan's  residual  external  financing  needs  in  2013-14,  as  identified  by  the 
Commission based on the estimates of the IMF.  

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The  assistance  is  planned  to  be  disbursed  in  two  loan  instalments  and  to  allow  some 
frontloading  given  the  urgency  of  the  financing  needs.  The  disbursement  of  the  first 
instalment  is  expected  to  take  place  in  the  second  half  of  2013.  The  second  instalment, 
conditional on a number of policy measures, could be disbursed in the first half of 2014. The 
assistance will be managed by the Commission. Specific provisions on the prevention of fraud 
and other irregularities, consistent with the Financial Regulation, are applicable.  

As  usual  with  the  MFA  instrument,  the  disbursements  would  be  conditional  on  successful 
programme  reviews  under  the  IMF's  financial  arrangement  (the  SBA).  In  addition,  the 
Commission and the Jordanian authorities would agree on specific structural reform measures 
in a Memorandum of Understanding. The Commission will target structural reforms aimed at 
improving the overall macroeconomic management and the conditions for sustainable growth 
(e.g. targeting the transparency and efficiency of public finance management; fiscal reforms; 
reforms to strengthen the social safety net; labour market reforms; and reforms to improve the 
regulatory framework for trade and investment). 

The  decision  to  disburse  the  full  MFA  in  the  form  of  loans  is  justified  by  Jordan's  level  of 
development (as measured by its per-capita income) and debt indicators. It is also consistent 
with  the  treatment  given  to  Jordan  by  the  World  Bank  and  the  IMF.  Indeed,  Jordan  is  not 
eligible for concessional financing from either the IDA or the IMF's Poverty Reduction and 
Growth Trust fund. 

•  Legal basis 

The legal basis for this proposal is Article 212 of the TFEU.  

•  Subsidiarity principle 

The proposal falls under the mixed competence of the EU. The subsidiarity principle applies 
to  the  extent  that  the  objectives  of  restoring  short-term  macroeconomic  stability  in  Jordan 
cannot  be  sufficiently  achieved  by  the  Member  States  alone  and  can  therefore  be  better 
achieved by the European Union. The main reasons are the budgetary constraints faced at the 
national level and the need for strong donor coordination in order to maximise the scale and 
effectivenes of the assistance.  

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•  Proportionality principle 

The  proposal  complies  with  the  proportionality  principle:  it  confines  itself  to  the  minimum 
required  in  order  to  achieve  the  objectives  of  short-term  macro  economic  stability  and  does 
not go beyond what is necessary for that purpose.  

As identified by the Commission based on the estimates of the IMF in the context of the SBA 
Arrangement, the amount of the assistance corresponds to 4.4% of the residual financing gap 
for the period 2013-2015. This is consistent with standard rules on burden-sharing for MFA 
operations. Given the assistance pledged to Jordan by other bilateral and multilateral donors 
and creditors, it is deemed an appropriate level of burden-sharing for the EU. 

•  Choice of instruments 

Other instruments would not be adequate because, in the absence of a framework regulation 
for  Macro-Financial  Assistance,  ad  hoc  European  Parliament  and  Council  decisions  under 
Article 212 TFEU are the only available legal instrument for this assistance. 

Project  finance  or  technical  assistance  would  not  be  suitable  or  sufficient  to  address  these 
macroeconomic  objectives.  The  key  value  added  of  the  MFA  in  comparison  to  other  EU 
instruments would be to alleviate the external financial constraint and to help create a stable 
macroeconomic  framework,  including  by  promoting  a  sustainable  balance  of  payments  and 
budgetary situation, and an appropriate framework for structural reforms. By helping to put in 
place an appropriate overall framework for macroeconomic and structural policies, MFA can 
increase  the  effectiveness  of  the  actions  financed  in  Jordan  under  other,  more  narrowly 
focused EU financial instruments.  

4. 

BUDGETARY IMPLICATION 

The  planned  assistance  would  be  provided  in  the  form  of  a  loan  and  should  be  financed 
through  a  borrowing  operation  that  the  Commission  will  conduct  on  behalf  of  the  EU.  The 
budgetary costs of the assistance will correspond to the provisioning, at a rate of 9%, of the 
amounts disbursed in the guarantee fund for external lending of the EU, from budget line 01 
04  01  14  ("the  provisioning  of  the  Guarantee  Fund").  Assuming  that  the  first  loan 
disbursement will be made in 2013 for the amount of EUR 100 million and the second loan 
disbursement in 2014 for the amount of EUR 80 million, and according to the rules governing 
the guarantee fund mechanism, the provisioning will take place in the 2015-16 budgets. 

5. 

OPTIONAL ELEMENTS 

•  Review/revision/sunset clause 

The proposal includes a sunset clause. The proposed MFA would be made available for two 
years,  starting  from  the  first  day  after  the  entry  into  force  of  the  Memorandum  of 
Understanding. 

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2013/0128 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

providing macro-financial assistance to the Hashemite Kingdom of Jordan 

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 Commission3,  

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

Acting in accordance with the ordinary legislative procedure4, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

3 
4 

the 

('Jordan')  are  developing  within 

Relations  between  the  European  Union  ('the  Union')  and  the  Hashemite  Kingdom  of 
Jordan 
the  European 
Neighbourhood  Policy  (ENP).  An  Association  Agreement  between  the  European 
Communities and their Member States, of the one part, and Jordan, of the other part, 
entered into force in May 2002. Bilateral political dialogue and economic cooperation 
have been further developed within the framework of ENP Action Plans, of which the 
most  recent  covers  the  period  2010-2015.  In  2010,  the  Union  granted  Jordan 
''Advanced Status" partnership, implying expanded areas of cooperation between both 
parties. 

framework  of 

Jordan's  economy  has  been  significantly  affected  by  domestic  events  related  to  the 
events  in  the  Southern  Mediterranean  since  the  end  of  2010,  known  as  the  "Arab 
Spring", and by the ongoing regional unrest, notably in neighbouring Egypt and Syria. 
Combined with a weaker global environment, the repeated disruptions to the flow of 
natural gas from Egypt, which have forced Jordan to replace gas imports from Egypt 
with  more  expensive  fuels  for  electricity  generation,  and  the  important  inflow  of 
refugees from Syria have resulted in important external and budgetary financial gaps. 

Since  the  Arab  Spring  began,  the  Union  has  declared  on  various  occasions  its 
commitment  to  support  Jordan  in  its  economic  and  political  reform  process.  This 
commitment was reaffirmed in the conclusions of the 10th meeting of the Association 
Council between the Union and Jordan in December 2012.  

Jordan  has  embarked  on  a  series  of  political  reforms,  most  notably  leading  to  the 
adoption  by  the  Jordanian  Parliament  in  September  2011  of  over  40  constitutional 
amendments,  representing  a  significant  step  towards  a  fully-fledged  democratic 

OJ C […], […], p. […]. 
Position of the European Parliament of … 2012 and Decision of the Council of … 2012. 

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(5) 

(6) 

(7) 

(8) 

(9) 

system. Political and economic support from the Union to Jordan's reform process is 
consistent with the Union's policy towards the Southern Mediterannean region, as set 
out in the context of the ENP. 

In August 2012, the Jordanian authorities and the International Monetary Fund (IMF) 
agreed  on  a  three-year  Stand-By-Arrangement  of  SDR  1,364  million  in  support  of 
Jordan's economic adjustment and reform programme.  

The Union has made available EUR 293 million in grants for the period 2011-13 under 
its  regular  cooperation  programme  in  support  of  Jordan's  political  and  economic 
reform  agenda.  In  addition,  EUR  70  million  has  been  allocated  to  Jordan  in  2012 
under  the  "Support  for  partnership,  reforms  and  inclusive  growth"  (SPRING) 
programme,  and  EUR  10  million  in  Union  humanitarian  aid  to  support  Syrian 
refugees. 

In  December  2012,  Jordan  requested  macro-financial  assistance  from  the  Union  in 
view of the worsening economic situation and outlook. 

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

The Union 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. The Commission should ensure that the Union 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. 

(10)  The  specific  objectives  of  the  Union  macro-financial  assistance  should  be  to 
strengthen  efficiency, 
the  public  finance 
transparency  and  accountability  of 
management systems in Jordan and to promote structural reforms aimed at supporting 
sustainable and inclusive growth, employment creation and fiscal consolidation. These 
objectives should be regularly monitored by the Commission. 

(11)  The  conditions  underlying  the  provision  of  the  Union  macro-financial  assistance 
should reflect the key principles and objectives of the Union’s policy towards Jordan.  

(12) 

In order to ensure efficient protection of the financial interests of the Union linked to 
this macro-financial assistance, it is necessary that Jordan adopt appropriate measures 
relating  to  the  prevention  of,  and  the  fight  against,  fraud,  corruption  and  any  other 
irregularities in relation to the assistance. It is also necessary to provide for appropriate 
controls by the Commission and appropriate audits by the European Court of Auditors. 

(13)  The release of the Union macro-financial assistance should be without prejudice to the 

powers of the budgetary authority.  

(14)  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. 

EN 

1 

   EN 

(15) 

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  powers5.  The  fact  that  the  assistance  is  of  a  substantial 
amount  and,  therefore,  has  a  potentially  important  impact,  justifies  the  use  of  the 
examination procedure, in line with Article 2(2) of Regulation (EU) No 182/2011. 

HAVE ADOPTED THIS DECISION: 

1. 

2. 

3. 

4. 

1. 

Article 1 

The Union shall make available to Jordan macro-financial assistance of a maximum 
amount  of  EUR  180  million,  with  a  view  to  supporting  Jordan's  economic 
stabilisation and reforms. The assistance shall contribute to covering Jordan's balance 
of payments needs as identified in the current IMF programme.  

The full amount of the macro-financial assistance shall be provided to Jordan in the 
form  of  loans.  The  Commission  shall  be  empowered  on  behalf  of  the  Union  to 
borrow  the  necessary  funds  on  the  capital  markets  or  from  financial  institutions  in 
order  to  onlend  them  to  Jordan.  The  loans  shall  have  a  maximum  maturity  of  15 
years. 

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 Jordan and with the key principles and objectives of economic 
reforms set out in the EU-Jordan Association Agreement and the EU-Jordan Action 
Plan  for  2010-2015  agreed  under  the  European  Neighbourhood  Policy.  The 
Commission shall regularly inform the European Parliament and the Economic and 
Financial  Committee  of  developments  in  the  management  of  the  Union  macro-
financial assistance and provide them with relevant documents. 

The  Union  macro-financial  assistance  shall  be  made  available  for  a  period  of  two 
years  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 examination procedure referred to in 
Article  6(2),  shall  be  empowered  to  agree  with  the  authorities  of  Jordan  on  the 
economic  policy  and  financial  conditions  attached  to  the  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 shall be consistent with the agreements or 
understandings referred to in Article 1(3). Those conditions shall aim, in particular, 
at  strengthening  the  efficiency,  transparency  and  accountability  of  public  finance 
management  systems  in  Jordan,  including  for  the  use  of  the  Union  macro-financial 
assistance. Progress in attaining these objectives shall be regularly monitored by the 
Commission.  

5 

OJ L 55, 28.2.2011, p. 13. 

EN 

2 

   EN 

                                                 
2. 

3. 

4. 

1. 

2. 

3. 

1. 

2. 

3. 

4. 

5. 

The  detailed  financial  terms  of  the  assistance  shall  be  laid  down  in  a  Loan 
Agreement to be agreed between the Commission and the authorities of Jordan.  

During the implementation of the Union macro-financial assistance, the Commission 
shall  monitor  the  soundness  of  Jordan's  financial  arrangements,  the  administrative 
procedures  and  the  internal  and  external  control  mechanisms  which  are  relevant  to 
the assistance, as well as the adherence to the agreed timeframe. 

The Commission shall verify at regular intervals that the economic policies of Jordan 
are  in  accordance  with  the  objectives  of  the  Union  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 

Subject to the conditions set out in paragraph 2, the Union financial assistance shall 
be made available by the Commission to Jordan in two loan instalments. The size of 
each instalment shall be laid down in the Memorandum of Understanding.  

The  Commission  shall  decide  on  the  release  of  the  instalments  subject  to  a 
satisfactory  implementation  of  the  IMF  programme  and  the  fulfilment  of  the 
the  Memorandum  of 
economic  policy  and  financial  conditions  agreed 
Understanding.  The  disbursement  of  the  second  instalment  shall  not  take  place 
earlier than three months after the release of the first instalment. 

in 

The Union funds shall be paid to the Central Bank of Jordan. Subject to provisions to 
be  agreed  in  the  Memorandum  of  Understanding,  including  a  confirmation  of 
residual  budgetary  financing  needs,  the  Union  funds  may  be  paid  to  the  Jordanian 
Ministry of Finance as the final beneficiary. 

Article 4 

The  borrowing  and  lending  operations  related  to  the  Union  macro-financial 
assistance shall be carried out in euro using the same value date and shall not expose 
the Union to any risk related to transformation of maturities, any exchange or interest 
rate risk, or any other commercial risk. 

Upon request by Jordan, the Commission shall take the necessary steps to ensure that 
an  early  repayment  clause  is  included  in  the  loan  terms  and  conditions.  The  early 
repayment  clause  shall  be  matched  by  a  corresponding  clause  in  the  terms  and 
conditions of the Commission's borrowing operations.  

Upon  request  by  Jordan  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. 

All costs incurred by the Union in relation to the borrowing and lending operations 
under this Decision shall be borne by Jordan.  

The  Commission  shall  inform  the  European  Parliament  and  the  Economic  and 
Financial  Committee  of  developments  in  the  operations  referred  to  in  paragraphs  2 
and 3. 

EN 

3 

   EN 

1. 

2. 

1. 

2. 

1. 

2. 

Article 5 

The  Union  macro-financial  assistance  shall  be  implemented  in  accordance  with 
Regulation  (EU,  Euratom)  No  966/2012  of  the  European  Parliament  and  of  the 
Council of 25 October 2012 on the financial rules applicable to the general budget of 
the  Union  and  repealing  Council  Regulation  (EC,  Euratom)  No  1605/20026  and  its 
rules of application7.  

The Memorandum of Understanding and the Loan Agreement to be agreed with the 
authorities  of  Jordan  shall  provide  for  appropriate  measures  in  relation  to  the 
prevention of, and the fight against, fraud, corruption and any other irregularities in 
relation to the assistance. In order to ensure greater transparency in the management 
and  disbursement  of  funds,  the  Memorandum  of  Understanding  and  the  Loan 
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 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply. 

Article 7 

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  laid  down  in  the  Memorandum  of 
Understanding,  Jordan’s  on-going  economic  and  fiscal  performance  and  the 
Commission’s  decisions  to  release  the  instalments  of  the  Union  macro-financial 
assistance.  

Not  later  than  two  years  after  the  expiry  of  the  availability  period  referred  to  in 
Article  1(4),  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  3rd  day  folloiwng  publication  in  the  Official 
Journal of the European Union. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

6 
7 

OJ L 298, 26.10.2012, p. 1. 
OJ L 362, 31.12.2012, p. 1. 

EN 

4 

   EN 

                                                 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned in the ABM/ABB structure 

1.3.  Nature of the proposal/initiative  

1.4.  Objectives  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management mode(s) envisaged  

2. 

MANAGEMENT MEASURES 

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

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

3.2.  Estimated impact on expenditure  

3.3.  Estimated impact on revenue

EN 

5 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Macro-financial assistance to the Hashemite Kingdom of Jordan 
Policy area(s) concerned in the ABM/ABB structure8  

1.2. 

Policy area:  Title 01 – Economic and Financial Affairs 

Activity: 

03 – International economic and financial affairs 

1.3. 

Nature of the proposal/initiative  

X The proposal/initiative relates to a new action  

1.4. 

Objectives 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

"To promote prosperity beyond the EU" 

The major area of DG ECFIN related activity pertains to:  

1.  Fostering  the  implementation  of  the  European  Neighbourhood  Policy  by 
deepening  economic  analysis  and  strengthening  policy  dialogue  and  advice  on  the 
economic aspects of the Action Plans. 

2.  Developing,  monitoring  and  implementing  macro-financial assistance for partner 
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(ies) concerned: International Economic and Financial Relations, 
global governance.  

1.4.3.  Expected result(s) and impact 

The proposed assistance consists of an EU loan of EUR 180 million to the Hashemite 
Kingdom  of  Jordan  ('Jordan'),  with  a  view  to  contributing  to  a  more  sustainable 
balance  of  payments  situation.  The  assistance,  to  be  disbursed  in  two  instalments, 
will help the country overcome the economic and social hardships endured as a result 
of the domestic and regional unrest. It will also promote structural reforms aimed at 
raising sustainable economic growth and improving public finance management.  

1.4.4. 

Indicators of results and impact  

The  authorities  will  be  required  to  report  on  a  set  of  indicators  to  the  Commission 
services  on  a  regular  basis  and  provide  a  comprehensive  report  on  the  compliance 
with the agreed policy conditions ahead of the disbursement of the second instalment 
of the assistance.  

The  Commission  services  will  continue  to  monitor  public  finance  management, 
following  the  operational  assessment  of  the  financial  circuits  and  administrative 

8 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 

EN 

6 

   EN 

                                                 
procedures in Jordan that will be carried out in preparation of this operation. The EU 
Delegation  in  Jordan  will  also  provide  regular  reporting  on  issues  relevant  for  the 
monitoring of the assistance. The Commission services will remain in close contact 
with the IMF and the World Bank to benefit from their insights from their on-going 
activities in Jordan.  

An annual report to the Council and European Parliament is foreseen in the proposed 
legislative  decision,  comprising  an  assessment  of  the  implementation  of  this 
operation.  An  independent  ex-post  evaluation  of  the  assistance  will  be  carried  out 
within two years after the expiry of the implementation period. 

1.5. 

Grounds for the proposal/initiative  

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

The  disbursement  of  the  assistance  will  be  conditional  upon  a  satisfactory  track 
record  in  the  implementation  of  the  Stand-By  Arrangement  (SBA)  between  Jordan 
and the IMF. In addition, the Commission shall agree with the Jordanian authorities 
on specific policy conditions, listed in a Memorandum of Understanding, to be met 
before the second instalment is released by the Commission.  

1.5.2.  Added value of EU involvement 

By  helping  the  country  overcome  the  economic  shock  caused  by  the  domestic  and 
regional  unrest,  the  proposed  MFA  will  contribute  to  promoting  macroeconomic 
stability, economic reforms and political progress in the country. By complementing 
the  resources  made  available  by  the  international  financial  institutions,  the  EU  and 
other donors, it will contribute to the overall effectiveness of the package of financial 
support agreed by the international donor community in the aftermath of the crisis.  

The proposed programme will also strengthen the government's reform commitment 
and its aspiration towards closer relations with the EU. This result will be achieved, 
inter alia, through appropriate conditionality for the disbursement of  the assistance. 
In a larger context, the programme will signal to the other countries in the region that 
the  EU  is  ready  to  support  countries  embarking  on  a  clear  path  towards  political 
reforms in times of economic difficulties. 

1.5.3.  Lessons learned from similar experiences in the past 

Since  2004,  a  total  of  fifteen  ex-post  evaluations  have  been  carried  out  on  macro-
financial assistance operations. These evaluations conclude that MFA operations do 
contribute,  albeit  sometimes  modestly  and  indirectly,  to  the  improvement  of  the 
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 somewhat higher economic growth. 

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

The EU is among the major donors of Jordan. The EU has made available EUR 293 
mn  in  grants  for  the  period  2011-13  under  its  regular  cooperation,  in  support  of 
Jordan's  political  and  economic  reform  agenda.  In  addition,  EUR  70  mn  has  been 
allocated  to  Jordan  in  2011  under  the  SPRING  programme,  and  EUR  10  mn  from 
Humanitarian Aid to support Syrian refugees. 

The key value added of the MFA in comparison to other EU instruments would be to 
help create a stable macroeconomic framework, including by promoting a sustainable 

EN 

7 

   EN 

balance  of  payments  and  budgetary  situation,  and  an  appropriate  framework  for 
structural reforms. MFA does not provide a regular financial support nor is meant to 
support the economic and social development of the recipient countries. The MFA is 
to  be  discontinued  as  soon  as  the  country's  external  financial  situation  has  been 
brought back into a sustainable path. Afterwards, regular EU cooperation assistance 
instruments are meant to take over. 

MFA  is  also  meant  to  be  complementary  to  interventions  by  the  international 
financial institutions, in particular the adjustment and reform programme supported 
by the IMF's SBA and the Development Policy Loan of the World Bank. 

1.6. 

Duration and financial impact  

X Proposal/initiative of limited duration  

X  Proposal/initiative  in  effect  for  2  years  from  the  entry  into  force  of  the 
Memorandum of Understanding, as stated in Article (1.4) of the Decision  

X Financial impact from 2013 to 2016  

1.7.  Management mode(s) envisaged9  

X Centralised direct management by the Commission  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

This assistance is of macroeconomic nature and its design is consistent with the IMF-
supported  economic  programme.  The  monitoring  of  the  action  by  the  Commission 
services  will  take  place  on  the  basis  of  progress  in  the  implementation  of  the  SBA 
and  specific  reform  measures  to  be  agreed  with  the  Jordanian  authorities  in  a 
Memorandum of Understanding (see also point 1.4.4).  

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

There are fiduciary, policy and political risks related to the proposed MFA operation.  

There is a risk that the macro-financial assistance, which is not dedicated to specific 
expenses, could be used in a fraudulent way. In general terms, this risk is related to 
factors  such  as  the  quality  of  management  systems  in  the  central  bank  and  the 
ministry  of  finance  and  the  appropriatedness  of  internal  and  external  audit 
capabilities.  

Another  key  risk  to  the  operation  stems  from  the  regional  economic  and  political 
uncertainty,  notably  in  Syria,  which  has  direct  implications  for  the  Jordanian 
economy. On the domestic front, the main risk is instability related to difficulties in 
the  political  and  economic  reform  process.  The  full  implementation  of  the 
stabilisation  and  reform  measures  supported  by  the  international  community, 
including 
the  proposed  MFA  operation,  might  be  undermined  by  social 
dissatisfaction.  

Jordan also remains vulnerable to possible new disruptions in the supply of imported 
natural gas from Egypt. Finally, there are risks stemming from a possible weakening 

9 

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 

EN 

8 

   EN 

                                                 
of  the  European  and  global  economic  environment  and  an  increase  in  international 
energy and food prices.  

2.2.2.  Control method(s) envisaged  

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.  

2.2.3.  Costs and benefits of controls and probable non-compliance rate 

The  basic  costs  for  the  Commission  related  to  the  methods  of  verification  and 
control,  as  well  as  the  cost  of  the  Operational  Assessment  of  financial  and 
administrative circuits conducted prior to the operation, are described in Table 3.2.1. 
In  addition,  there  are  costs  for  the  European  Court  of  Auditors  and  of  possible 
interventions of the OLAF. The Operational Assessment not only helps assess risks 
of misuse of the funds but, as a collateral benefit, it provides useful information on 
the necessary reforms in the area of public finance management, which are reflected 
in the policy conditionality of the operation. Regarding the probable non-compliance 
rate, the risk of non-compliance (in the form of non-repayment of the loan or misuse 
of the funds) is judged to be low, based on the experience with the MFA instrument 
since its creation.  

2.3.  Measures to prevent fraud and irregularities  

To mitigate the risks of fraudulent use several measures will be taken:  

First,  the  proposed  legal  basis  for  macro-financial  assistance  to  Jordan  includes  a 
provision on fraud prevention measures. These measures will be elaborated further in 
the  Memorandum  of  Understanding  and  the  Loan  Agreement,  envisaging  a  set  of 
provisions on inspection, fraud prevention, audits, and recovery of funds in case of 
fraud or corruption. It is further envisaged that a number of specific policy conditions 
will be attached to the assistance, mainly in the area of public finance management, 
with a view to strengthening efficiency, transparency and accountability.  

Second, before the agreement on the Memorandum of Understanding is reached, the 
Commission services, with the support of duly mandated external experts, will carry 
out an Operational Assessment of the financial circuits and administrative procedures 
at  the  Ministry  of  Finance  and  the  Central  Bank  of  Jordan,  in  order  to  fulfil  the 
requirements  of  the  Financial  Regulation  applicable  to  the  General  Budget  of  the 
European  Communities.  This  review  will  determine  whether  the  framework  for 
sound financial management of macro-financial assistance is sufficiently effective in 
Jordan  by  covering  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.  In  the  light  of  this 
assessment,  specific  mechanisms  applying  to  the  management  of  the  funds  by  the 
beneficiaries may be introduced in agreement with the national authorities. Also, the 
assistance will be paid to a dedicated account at the Central Bank of Jordan. 

Finally, the assistance will be liable to verification, control and auditing procedures 
under  the  responsibility  of  the  Commission,  including  OLAF,  and  the  European 
Court of Auditors. 

EN 

9 

   EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

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

•  Existing budget lines 

01 03 02: Macro-financial assistance 

01 04 01 14 – Provisioning of the Guarantee Fund 

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure 

Contribution  

Number  
[Description………………...…
…….] 

01 03 02 

Macro-financial assistance 

01 04 01 14  

Provisioning of the 
Guarantee Fund 

Diff./non-diff.
(10) 

from EFTA 
countries11 

from 
candidate 
countries12 

from third 
countries 

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

Diff. 

NO 

NO 

NO 

NO 

Diff. 

NO 

NO 

NO 

NO 

Heading of 
multiannual 
financial 
framework 

4 

4 

01 04 01 04 – European Union guarantee for EU loans raised for macro-financial assistance to 
third countries:  The  Guarantee Fund  for  external actions has to be provisioned according to 
the  Fund  Regulation,  as  amended.  In  line  with  this  Regulation,  loans  are  based  on  the 
outstanding  amount  at  the  end  of  a  year.  The  provisioning  amount  is  calculated  at  the 
beginning  of  the  year  "n"  as  the  difference  between  the  target  amount  and  the  Fund's  net 
assets at the end of the year "n-1". This provisioning amount is introduced in the year "n" to 
the "n+1" preliminary budget and effectively paid in one transaction at the beginning of the 
year  "n+1"  from  "the  provisioning  of  the  Guarantee  Fund"  (budget  line  01  04  01  14).  As  a 
result,  9%  (maximum  of  EUR  16.2  million)  of  the  effectively  disbursed  amount  will  be 
considered  in  the  target  amount  at  the  end  of  the  year  "n-1"  for  the  calculation  of  the 
provisioning of the Fund. 

The budget entry ("p.m.") reflecting the budget guarantee for the loan will be activated only in 
the case of an effective call on the guarantee. It is not expected that the budget guarantee be 
called. 

(cid:133)(cid:133)New budget lines requested: not applicable. 

10 
11 
12 

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

EN 

10 

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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  

EUR million (to three decimal places) 

[Heading: The EU as a global partner] 

Year 
201313 

Year 
2014 

Year 
2015 

Year 
2016 

TOT
AL 

Budget line 01 04 01 14 Provisioning of the 
Guarantee Fund 

Commitments 
Payments 

(1a) 

(2a) 

9 

9 

7.2 

7.2 

16.2 

16.2 

Appropriations  of  an  administrative  nature  financed  from  the  envelope 
of specific programmes14  
(operational assessment and ex-post evaluation) 
Budget line 01 03 02 

Commitments 

(3) 

TOTAL appropriations 
for DG ECFIN 

Payments 

Commitments 

Payments 

(3a) 

=1+1a 
+3 

=2+2a 

+3 

(cid:121) TOTAL operational appropriations  

Commitments 
Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelope for specific programmes  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADING 4 
of the multiannual financial framework 

Commitments 

Payments 

=4+ 6 

=5+ 6 

0.05 

0.05 

0.05 

0.05 

0.05 

0.05 

0.05 

0.05 

0.15 

0.05 

9.15 

0.20 

0.20 

0.10 

7.2 

16.4 

9.05 

7.3 

16.4 

9.15 

9.05 

9.15 

9.05 

7.2 

7.3 

7.2 

7.3 

16.4 

16.4 

16.4 

16.4 

13 
14 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

11 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
If more than one heading is affected by the proposal / initiative: 

Heading of multiannual financial 
framework: 

5 

DG: <…….> 

(cid:121) Human resources 
(cid:121) Other administrative expenditure  

EUR million (to three decimal places) 

‘Administrative expenditure’ 

Year 
2013 

Year 
2014 

Year 
2015 

Year 
2016 

TOTA
L 

0.040 

0.025 

0.028 

0.015 

0.021 

0.016 

0.105 

0.040 

TOTAL DG ECFIN 

Appropriations  

0.065 

0.043 

0.021 

0.016 

0.145 

TOTAL appropriations 
for HEADING 5 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

0.065 

0.043 

0.021 

0.016 

0.145 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

Payments 

EUR million (to three decimal places) 

Year 
201315 

Year 
2014 

Year 
2015 

Year 
2016 

TOTAL 

0.115 

0.043 

9.171 

7.216 

16.545 

0.115 

0.043 

9.071 

7.316 

16.545 

15 

Year N is the year in which implementation of the proposal/initiative starts. 

EN 

12 

   EN 

 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.2.  Estimated impact on operational appropriations  

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

–  X The proposal/initiative requires the use of operational appropriations, as explained below: 

Indicate objectives and outputs  

(cid:216) 

Commitment appropriations in EUR million (to three decimal places) 

Year 
2013 

Year 
2014 

Year 
2015 

Year 
2016 

TOTAL 

Type16 

Average cost

  Cost
r
e
b
m
u
N

  Cost
r
e
b
m
u
N

  Cost
r
e
b
m
u
N

  Cost Total number Total cost
r
e
b
m
u
N

SPECIFIC OBJECTIVE NO 317 

- Output 1 

- Output 2 

- Output 3 

Operational 
assessment 

Ex-post evaluation 

Provisioning of the 
Guarantee Fund 

1 

0.05

1 

1 

0.15

9 

1 

7.2 

1 

1 

2 

0.05 

0.15 

16.2 

Subtotal for specific objective No 1 

TOTAL COST 

1 

1 

0.05

0.05

2 

2 

10.5

10.5

1 

1 

7.2 

7.2 

4 

4 

17.75 

17.75 

16 
17 

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.). 
As described in point 1.4.2. ‘Specific objective(s)…’  

EN 

13 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

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

administrative nature  

–  X  The  proposal/initiative  requires  the  use  of  appropriations  of  an  administrative 

nature, as explained below: 

EUR million (to three decimal places) 

Year 
201318 

Year 
2014 

Year 
2015 

Year 
2016 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

0.040 

0.028 

0.021 

0.016 

0.025 

0.015 

0.065 

0.043 

0.021 

0.016 

Other administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 519 of 
the multiannual financial 
framework  

Human resources  

Other 
of 
an 
nature 

expenditure  
administrative 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

0.105 

0.040 

0.145 

TOTAL 

0.065 

0.043 

0.021 

0.016 

0.145

The  administrative  appropriations  required  will  be  met  by  the  appropriations  of  the  DG  which  are  already  assigned  to 
management  of  the  action  and/or  which  have  been  redeployed  within  the  DG,  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 budgetary 
constraints.

18 
19 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

14 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.   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: 

Estimate to be expressed in full time equivalent units 

Year 
2013 

Year 
2014 

Year 
2015 

Year 2016 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

(cid:121) Establishment plan posts (officials and temporary agents) 

01 01 01 01 (Headquarters and 
Commission’s Representation Offices) 
XX 01 01 02 (Delegations) 
XX 01 05 01 (Indirect research) 
10 01 05 01 (Direct research) 

0.15 

0.12 

0.08 

0.05 

(cid:121) External personnel (in Full Time Equivalent unit: FTE)20 

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 yy21 

- at Headquarters 
- in delegations  

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

10 01 05 02 (CA, SNE, INT - Direct 
research) 
Other budget lines (specify) 
TOTAL 

0.25 

0.16 

0.14 

0.12 

0.40 

0.28 

0.22 

0.17 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have 
been  redeployed  within  the  DG,  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 budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary staff 

External staff 

Supervise and manage the operation, agree on the Loan Agreement 
review 
lead  missions  and  assess  progress  with 
reports, 
conditionality compliance.  

A  seconded  National  Expert  in  Unit  ECFIN  D2  will  be  directly 
involved in preparing the Memorandum of Understanding, liaising 
with the authorities and the IFIs, liaising with external experts for 
the  operational  assessment  and  ex-post  evaluation,  conducting 
reports  and 
review  missions,  preparing  Commission  staff 
Commission  procedures  related 
the 
assistance. 

the  management  of 

to 

20 

21 

CA= Contract Agent; LA = Local Agent; SNE = Seconded National Expert; INT = agency staff (‘Intérimaire’); JED= 
‘Jeune Expert en Délégation’ (Young Experts in Delegations).  
Sub-ceiling for external staff covered by operational appropriations (former "BA" lines). 

EN 

15 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.4.  Compatibility with the current multiannual financial framework  

–  X Proposal/initiative is compatible the current multiannual financial framework. 

3.2.5.  Third-party contributions  

–  X 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. 

EN 

16 

   EN