COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council at first reading on the adoption of a Decision of the European Parliament and of the Council providing macro-financial assistance to the Kyrgyz Republic
Date: 2013-10-07
Institutions: European Commission
Subjects: EU aid, Kyrgyzstan, balance of payments, economic stabilisation, financial aid, macroeconomics, reflation, social problem

EUROPEAN 
COMMISSION 

Brussels, 7.10.2013  
COM(2013) 699 final 

2011/0458 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

position of the Council at first reading on the adoption of a Decision of the European 
Parliament and of the Council providing macro-financial assistance to the Kyrgyz 
Republic 

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2011/0458 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

position of the Council at first reading on the adoption of a Decision of the European 
Parliament and of the Council providing macro-financial assistance to the Kyrgyz 
Republic 

1. 

BACKGROUND 

Date of transmission of the proposal to the European Parliament and 
to the Council  

(document COM(2011) 925 final - 2011/0458(COD): 

20 December 2011 

Date of the opinion of the Committee of the Regions: 

not applicable 

Date of the position of the European Parliament, first reading: 

11 December 2012 

Date of transmission of the amended proposal: 

not applicable 

Date of the position of the Council, first reading: 

23 September 2013  

2. 

OBJECTIVE OF THE PROPOSAL FROM THE COMMISSION 

The  proposal  followed  the  High  Level  Donors  Meeting  of  27  July  2010  where  the 
international community pledged support for the democratic transition in the Kyrgyz Republic 
in  the  aftermath  of  the  tragic  inter-ethnic  violence  earlier  in  2010.  The  objectives  of  the 
proposed Macro-Financial Assistance (MFA) are to:  

•  Contribute  to  cover  the  current  substantial  residual  external  financing  gap  of  the 

Kyrgyz Republic; 

•  Support the macroeconomic and structural reform agenda of the Kyrgyz government as 

agreed with the international donor community; 

•  Contribute to maintaining economic stability in the country during this critical period 
in view of helping the pro-democracy authorities to prevent the reoccurrence of inter-
ethnic violence.  

More  concretely,  the  assistance  would  also  promote  policy  measures  to  strengthen  public 
finance management (building on measures supported by the ongoing EU's sectoral budgetary 
support  operation),  tax  reforms  to  underpin  fiscal  sustainability  as  well  as  to  strengthen  the 
banking system.  

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3. 

COMMENTS ON THE POSITION OF THE COUNCIL 

3.1.  General context of the Commission proposal in first reading 

The  European  Commission  pledged  up  to  EUR  117.9  million  of  assistance  to  the  Kyrgyz 
Republic  at  the  High  Level  Donors  Meeting  of  July  2010,  including  crisis  instruments  (e.g. 
Instrument for Stability, Humanitarian Aid) and thematic budget lines. The proposed MFA of 
EUR  30  million  was  meant  to  support  the  effectiveness  of  the  above  mentioned  EU 
interventions by reducing the short-term financial vulnerability of this country. 

However, the Commission proposal of late 2011 could not be adopted for more than one-and-
a-half  years  because  of  a  dispute  between  the  co-legislators  related  to  the  choice  of  the 
comitology procedure for the adoption of the Memorandum of Understanding, which contains 
the  economic  and  financial  policy  measures  to  be  implemented  by  the  beneficiary.  The 
Council insisted on the (binding) examination procedure, whereas the Parliament insisted on 
the (non-binding) advisory procedure. The Parliament's view was expressed in its position in 
the first reading of 11 December 2012. 

This dispute was finally settled in the context of the conciliation procedure on the proposed 
decision of the European Parliament and the Council providing further MFA to Georgia. This 
decision was adopted on 12 August 2013. 

The  Council's  position  on  the  proposed  decision  for  the  MFA  to  the  Kyrgyz  Republic  was 
adopted  on  23  September  2013  (first  reading).  The  Council  amendments  are  in  accordance 
with  the  outcome  of  the  Trilogue  of  26  June  2013,  which  was  endorsed  by  the  Parliament 
through  a  letter  dated  11  July  2013.  In  this  letter,  the  Chair  of  the  International  Trade 
Committee  of  the  Parliament  indicated  that  he  would  recommend  to  the  plenary  that 
Parliament, in its second reading, accepts the Council position without any amendments. 

3.2. Commission comments 

The  Commission  supports  the  Council  position  in  first  reading  and  agrees  with  its 
amendments. The Commission welcomes the fact that the co-legislators could finally find the 
necessary  agreement  on  the  planned  MFA  operation  for  the  Kyrgyz  Republic  after  a  long 
delay of more than one-and-a-half years. During the visit of the Kyrgyz President in Brussels 
on 17 September 2013, the relevance and urgency of the MFA operation were reiterated.  

4. 

CONCLUSION 

The  Commission  supports  the  Council  position  in  first  reading  and  agrees  with  the 
amendments  to  its proposal. The Commission will fully cooperate with the co-legislators in 
order to ensure the adoption of the proposal by the Parliament in an early second reading.  

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