Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on providing Macro-Financial Assistance to enlargement and neighbourhood partners in the context of the COVID-19 pandemic crisis
Date: 2020-04-22
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, EU loan, European neighbourhood policy, economic reform, economic stabilisation, enlargement of the Union, epidemic, financial aid, infectious disease, macro-financial assistance

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   EUROPEAN COMMISSION  Brussels, 22.4.2020  COM(2020) 163 final 2020/0065 (COD)  Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on providing Macro-Financial Assistance to enlargement and neighbourhood partners in the context of the COVID-19 pandemic crisis  {SWD(2020) 63 final}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

The COVID-19 pandemic has by now spread around the globe. More than 2 million persons 
have  been  infected  and  almost  140,000  persons  with  confirmed  infections  have  died  in  its 
wake  (according  to  WHO  data  as  of  17  April).  The  initial  response  focuses  on  saving  lives 
across  the  globe,  by  taking  various  measures  to  contain  the  spread  of  the  virus  and 
strengthening  healthcare  systems.  Many  of  these  measures  have  brought  societies  and 
economies to a standstill, but there can be no trade-off between saving lives and jobs. On the 
contrary,  getting  the  virus  under  control  is  a  prerequisite  for  sustainable  development,  be  it 
economic or social. 

Measures  are  also  rapidly  put  in  place  to  limit  the  economic  fallout  of  the  crisis. 
Notwithstanding  these  measures,  together  with  the  impact  of  a  global  recession  and  severe 
stress in the financial markets, most, if not all, enlargement and neighbourhood partners are 
set  for  a  recession  this  year.  Although  the  trigger  for  this  crisis  is  shared  across  them,  its 
duration and severity may differ, reflecting their economic structure as well as their ability to 
take effective counteracting measures. Together with the collapse of trade and the shift in risk 
aversion  away  from  emerging  markets  in  general,  the  recession  is  causing  their  balance  of 
payments (BoP) to come under acute stress. Depending on the spread of the virus, as well as 
of its economic consequences, there is also a clear and imminent risk related to social stability 
and security, with possible spillovers within the region and beyond.  

Against  this  background,  the  European  Commission  is  proposing  the  use  of    macro-
financial  assistance  (MFA)  to  support  ten  neighbouring  partners  in  the  context  of  the 
COVID-19 crisis.  

MFA is part of the EU’s external crisis response toolkit. It is used to address situations of BoP 
crises, in tandem with a disbursing IMF arrangement that is subject to an agreed programme 
of  economic  reforms.  In  this  exceptional  situation,  the  Commission  proposes  MFA 
programmes  also  for  partners  that  benefit  from  emergency  funding  from  the  IMF, 
which  can  come  without  prior  actions  and/or  conditionality,  such  as  through  the  Rapid 
Financing Instrument (RFI). These ‘crisis MFAs’ will  therefore be  shorter in duration (12 
months instead of 2.5 years) and include only two disbursements. The first disbursement will 
be  released  as  soon  as  possible  after  the  adoption  of  the  MFA  Decision  and  upon  the 
corresponding agreement on a Memorandum of Understanding (MoU) with each beneficiary. 
The  second  disbursement  will  be  released  once  the  conditions  are  fulfilled  that  will  be 
detailed in the MoUs. As for any MFA, this conditionality is specific to each partner to ensure 
that  it  is  fully  adequate,  within  the  framework  of  the  MFA  instrument  to:  foster 
the  overall  macroeconomic  management, 
macroeconomic  stability  whilst 
strengthening economic governance and transparency, and improving conditions for renewed 
sustainable growth. Moreover, it will need to be formulated in a way that makes it possible to 
implement,  taking  into  account  the  shorter  time  span  and  the  context  of  the  ongoing 
pandemic.  

improving 

The European Commission submits to the European Parliament and the Council a proposal to 
grant MFA to ten partners for a total amount of EUR 3 billion. The assistance would take 
the form of medium-term loans.  

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The  proposed  EU  MFA  is  intended  to  help  partners  cover  part  of  their  urgent  external 
financing needs in the context of IMF programmes currently being implemented, reducing in 
this  way  their  economy’s  short-term  balance  of  payments  vulnerabilities  related  to  the 
COVID-19  crisis.  The  proposed  assistance  would  support  external  stabilisation  and  thereby 
provide policy space to the authorities to implement measures to counter the economic fallout 
from  the  COVID-19  crisis,  while  also  encouraging  the  implementation  of  reforms  aimed  at 
improving  macroeconomic  management,  economic  governance  and  transparency,  and 
conditions for renewed sutainable growth.  

The  proposed  MFA  is  in  line  with  the  aims  of  the  EU’s  enlargement  and  neighbourhood 
strategies. It would signal to the partners in the region that the EU is ready to support them at 
this time of unprecedented crisis. In this context, the Commission considers that the political 
and  economic  pre-conditions  for  an  MFA  operation  of  the  proposed  amount  and  nature  are 
satisfied. 

The proposed MFA covers the Republic of Albania, Bosnia and Herzegovina, Georgia, 
the Hashemite Kingdom of Jordan, Kosovo*, the Republic of Moldova, Montenegro, the 
Republic  of  North  Macedonia,  the  Republic  of  Tunisia  and  Ukraine.  However,  the 
situation is still evolving and the COVID-19 crisis is becoming increasingly challenging also 
in  other  countries.  MFA  remains  available  also  for  other  eligible  countries  in  situations  of 
balance-of-payments  difficulties  that  may  appear  later.  The  Commission  will  also  initiate  a 
discussion on the scope of the MFA instrument and how it interacts with other EU external 
policies. 

The  amount  of  MFA  is  based  on  a  preliminary  estimate  of  the  residual  external  financing 
needs  of  the  partners  and  takes  into  account  their  capacity  to  finance  themselves  with  their 
own  resources,  in  particular  the  international  reserves  at  their  disposal,  as  well  as  resources 
provided by the IMF and the World Bank. The determination of the amount of the assistance 
also  takes  into  account  the  need  to  ensure  fair  burden  sharing  between  the  EU  and  other 
donors,  as  well  as  the  pre-existing  deployment  of  the  EU’s  other  external  financing 
instruments and the added value of the overall EU involvement. 

Enlargement partners 

Albania is particularly vulnerable to the economic fallout from the pandemic due to its 
close economic relations with some highly affected EU Member States, the importance of 
tourism  and  its  high  refinancing  needs.  The  limited  capacity  of  the  health  sector  and  the 
damages  from  the  November  2019  earthquake,  which  already  absorbed  the  limited  fiscal 
space available, aggravate the situation. Despite this, the government swiftly adopted policy 
support measures of about 2% of GDP for the benefit of affected businesses and households 
and for the health sector. According to the revised budget, the fiscal deficit is set to reach 4% 
of GDP and  public debt could increase to  over 69%  of GDP in  2020, although this appears 
optimistic.  International  institutions  forecast  real  GDP  to  drop  by  around  5%  this  year.  In 
addition to the fiscal deficit, the government needs to refinance foreign debt amortisation of 
EUR 545 million (3.8% of GDP). This was initially planned to be partly covered by issuing a 
EUR  500-600  million  Eurobond,  but  the  prospect  for  placing  such  a  large  amount  in  the 
market seems highly uncertain under current conditions. The financing gap after RFI support 
from  the  IMF,  World  Bank  loans  and  grants  from  the  EU’s  Instrument  for  Pre-accession 
Assistance (IPA) could reach 2.5% of GDP, or about EUR 350 million. In this context, MFA 
in the amount of EUR 180 million is warranted. 

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In  Bosnia  and  Herzegovina,  the  outbreak  of  the  COVID-19  pandemic  sharply 
exacerbated the already ongoing economic slowdown, in particular affecting transport and 
tourism,  but  also  workers  remittances,  accounting  for  some  5%  of  GDP  and  providing  an 
important  lifeline,  in  particular  for  lower  income  households.  Latest  projections  for  2020 
expect  a  drop  in  economic  activity  of  some  10%,  with  a  sharp  increase  in  unemployment. 
Despite rather sound  fiscal headline numbers, the country’s capacity to create the necessary 
fiscal  space  at  short  notice  is  very  limited.  The  Bosnian  authorities  have  already  requested 
emergency  financing  from  the  IMF,  amounting  to  up  to  EUR 330  million  (nearly  2%  of 
GDP). The economic slowdown will lead to a large drop in revenues and a sharp increase in 
transfers,  resulting  in  a  strong  increase  in  financing  needs.  Current  estimates  point  to  a 
remaining financing gap of some EUR 500 million (2.8% of GDP) in 2020, after IMF (up to 
EUR  330  million,  nearly  2%  of  GDP)  and  World  Bank  (about  EUR  20  million  or  0.1%  of 
GDP) contributions. Due to the country’s poor credit rating, access to international financial 
markets is very limited, while the country’s financial markets are too shallow to accommodate 
these remaining financing needs. In this context, MFA in the amount of EUR 250 million is 
warranted. 

The outbreak of the COVID-19 pandemic and related shutdown have a drastic impact 
on  the  economy  of  Kosovo  through  a  disruption  of  trade  and  financial  flows. 
Remittances, which account for more than 10% of GDP, finance a substantial part of private 
consumption,  while  service  exports  to  the  diaspora  (mainly  tourism)  mitigate  a  very  large 
merchandise trade deficit (over 40% of GDP). A further vulnerability of Kosovo’s economy is 
the  fragile  private  sector,  dominated  by  micro  enterprises  with  limited  liquidity  buffers. 
Against  this  background,  real  GDP  is  set  to  contract  by  around  5%  in  2020.  Despite  rather 
sound fiscal headline numbers in 2019, fiscal space is very limited. Kosovo has no access to 
international financial markets (due to the absence of a credit rating), nearly two-thirds of its 
total debt is held by a narrow investor base with the Kosovo Pension Security Trust and the 
central  bank,  accounting  for  around  38%  and  23%  respectively  of  the  total.  The  mix  of 
plummeting  public  revenue  together  with  large  basic  payments  and  the  crisis  response 
measures constitute an acute liquidity risk. The IMF estimates government revenues to fall by 
50-60% year-on-year in April-June, while the caretaker government approved an emergency 
package of EUR 180 million. The government’s bank balance, which has already fallen below 
the legally prescribed 4.5% of GDP, is expected to decline further to 2.5% of GDP in 2020. 
Kosovo has requested and the IMF Board subsequently approved on 10 April emergency IMF 
liquidity  assistance  of  EUR  51.6  million  through  the  RFI.  According  to  the  current 
projections,  the  remaining  residual  financing  gap  is  estimated  at  some  EUR  210  million.  In 
this context, MFA in the amount of EUR 100 million is warranted. 

Montenegro is particularly exposed to the economic fallout from the pandemic due to its 
very  strong  reliance  on  the  tourism  sector  as  well  as  its  high  external  financing  needs. 
Montenegro  faces  a  deep  recession  in  2020,  with  international  institutions  forecasting  up  to 
9% real contraction of the economy. Tourism, one of the most affected sectors, accounts for 
more  than  20%  of  GDP  and  is  a  key  source  of  foreign  exchange,  employment  and  fiscal 
revenues.  However,  coronavirus  containment  measures  brought  tourism  and  travel  to  a 
standstill at a time when these activities were about to enter the high season. Despite limited 
fiscal space, the government swiftly adopted policy support measures of about 2% of GDP to 
help  the  economy  to  deal  with  the  consequences  of  the  pandemic.  Measures  concern,  in 
particular,  deferred  payments  of  taxes  and  social  contributions,  a  moratorium  on  loan 
repayments and on rent payments for the lease of state-owned property, as well as subsidies 
for  businesses  and  workers.  Preliminary  estimates  from  the  Ministry  of  Finance  expect  the 
fiscal deficit to rise to more than 7% of GDP and public debt to increase by an additional 2.6 

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percentage points (pps.) to 82% of GDP in 2020, the highest in the region. The financing gap 
after IMF and World Bank loans and EU grants could reach about EUR 120 million. In this 
context, MFA in the amount of EUR 60 million is warranted. 

In North Macedonia, the economy is heavily disrupted, as extended social containment 
measures  are  having  a  severe  impact  on  output  and  employment,  and  external  trade 
activity is strongly hit. Current projections point to a decline in real GDP of around 4% in 
2020. The government has taken bold measures in a timely manner to support SME liquidity 
and  employment  during  the  months  of  April  and  May  in  the  sectors  most  affected.  Fiscal 
space  to  accommodate  the  socioeconomic  fallout  from  the  crisis  is,  however,  limited.  In  a 
best-case scenario, the government expects a revenue shortfall of 20% in 2020, compared to 
the original budget, and plans to reallocate expenditure without raising the ceiling. Based on 
2019 GDP, this would imply a deficit of around 8%. Private transfers from abroad, including 
workers’  remittances,  as  well  as  inflows  of  foreign  direct  investment,  are  expected  to  drop 
markedly,  lowering  reserve  coverage.  Moreover,  in  2020-2021,  the  government,  as  well  as 
public  enterprises,  face  particularly  high  domestic  and  external  refinancing  needs,  totalling 
EUR  1.65  billion  (about  7.3%  of  2019  GDP  in  each  of  the  two  years).  This  includes 
amortisation  of  the  EUR  500  million  2014  Eurobond,  parts  of  the  2015  Eurobond  and  the 
2013 World Bank policy-based guarantee, as well as repayment of large foreign commercial 
loans  of  the  Public  Enterprise  for  State  Roads,  which  is  tasked  with  the  implementation  of 
major  road  transport  infrastructure.  The  government  has  requested  assistance  from  the  IMF 
through the RFI, which amounts to EUR 177 million, as well as a loan from the World Bank. 
According to current estimates, a financing gap of some EUR 330 million will remain after 
the IMF, the World Bank and the EU grant funding. In this context, MFA in the amount of 
EUR 160 million is warranted. 

Eastern neighbourhood 

Georgia  is  set  to  enter  a  deep  recession  this  year  amid  mounting  financing  needs. 
Georgia’s  economy  is  heavily  affected  by  the  corona  crisis.  Recent  estimates  taking  into 
account the impact of the virus suggest an economic contraction of around 4% in 2020. Due 
to the cost of measures to mitigate the impact of the crisis, increased healthcare spending and 
lower  revenues,  the  fiscal  deficit  in  2020  is  expected  to  increase  to  some  8%  of  GDP. 
Georgia’s balance of payment will also deteriorate due to lower revenues from the export of 
services (especially from tourism), lower inflows of remittances, likely lower inflow of FDI 
and an outflow of portfolio capital. The external funding gap is tentatively estimated by the 
IMF  at  around  USD  1.6  billion  in  2020-2021,  and  Georgia  will  need  assistance  from  its 
international partners to cover this gap. On 14 April the authorities concluded with the IMF a 
staff  level  agreement  providing  for  an  increase  of  the  current  (almost  fully  disbursed) 
Extended Fund Facility (EFF) programme by approx. USD 375 million, of which USD 308 
million  are  to  be  disbursed  in  2020.  Negotiations  are  ongoing  with  the  World  Bank,  ADB, 
AFD, KfW and EIB about augmenting their policy-based loans. Georgia has an ongoing MFA 
programme  with  the  final  instalment  of  EUR  25  million  expected  to  be  disbursed  in  the 
second  quarter  of  2020  subject  to  implementation  of  the  agreed  policy  conditions;  most  of 
them have already been met. Overall, on current information, some USD 900 million of the 
estimated financing gap for this year remains to be filled. As there are good prospects also for 
the contributions of other creditors, a new MFA programme of EUR 150 million is warranted.  

The  impact  of  the  measures  to  halt  the  spread  of  the  COVID-19  virus  and  the  fallout 
from  the  global  recession  are  set  to  affect  the  economy  of  the  Republic  of  Moldova 
(hereafter referred to as Moldova) strongly in 2020. The main transmission channels of the 

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crisis are remittances (which account for 15% of GDP in Moldova) and trade with countries 
hit by the crisis, in particular EU Member States. Moldova’s economy is expected to fall into 
recession in 2020, while the balance of payments and public finance will come under heavy 
pressure  due  to  the  crisis.  The  external  funding  gap  is  tentatively  estimated  at  USD  800 
million  (about  7%  of  GDP)  in  2020  and  the  fiscal  financing  gap  is  estimated  at  MDL  10.5 
billion (around USD 550 million). Moldova has some policy space to counteract the shocks as 
both public debt and international reserves have been on a positive trajectory during the last 
years supported by a three-year IMF EFF/ECF programme, but not for long and clearly within 
limits.  The  IMF  is  prepared  to  extend  about  USD  240  million  (EUR  220  million)  of 
emergency  support  to  Moldova  to  mitigate  the  economic  effects  of  the  COVID-19  crisis. 
Moldova has an ongoing MFA programme where the second and third instalments of EUR 70 
million  in  total  can  be  disbursed  if  the  conditions  are  met  before  the  programme  expires  in 
July 2020. In addition, already announced credits from Russia of EUR 200 million for 2020, 
which were primarily aimed for infrastructure investments, could be reallocated to address the 
effects  of  the  crisis.  However,  given  the  limited  access  to  international  capital  markets, 
Moldova  would  be  in  need  of  additional  assistance  to  cover  the  external  financing  gap. 
Against  this  background,  a  new  MFA  programme  in  the  amount  of  EUR  100  million  is 
warranted. 

In  Ukraine,  macro-financial  stability  has  come  under  renewed  pressure  this  year, 
especially  after  the  abrupt  government  reshuffle  beginning  of  March,  which  coincided 
with the outbreak of the global coronavirus crisis. Financial-market conditions deteriorated 
sharply  in  mid-March,  when  Eurobond  sovereign  yields  almost  tripled,  before  stabilising  at 
around 8%, from 4.4% in late January. A negative confidence effect, fuelled by expectations 
for  a  deep  contraction  (where  forecasts  range  from  4%  and  9%  in  2020),  resulted  in 
heightened  demand  for  foreign  currency.  The  National  Bank  of  Ukraine  had  to  sell  the 
equivalent  of  USD  2.2  billion  in  the  second  half  of  March,  thereby  reducing  its  official 
international  reserves  by  more  than  8%  from  the  USD  27  billion  reported  for  end-February 
2020. The revised 2020 budget, adopted by the parliament on 13 April, provides for a EUR 
2.5 billion coronavirus fund for immediate measures to counter the spread of COVID-19. In 
light  of  the  expected  recession-driven  deterioration  of  public  finances  and  additional  crisis-
related expenditures, the overall 2020 budgetary deficit has been revised to 7.5% of GDP, or 
the  equivalent  of  USD  11  billion.  While  some  of  the  budget  deficit  can  be  financed 
domestically, the government also has USD 5 billion in external debt repayments falling due 
in 2020. The IMF estimates the overall external financing gap to be around USD 12 billion in 
2020.  Against  this  backdrop,  the  IMF  agreed  to  increase  the  size  of  its  recently  negotiated 
three-year  programme  from  USD  5.5  billion  to  USD  10  billion,  of  which  USD  3.5  billion 
would become available this year. Along with a World Bank loan and the remaining EUR 500 
million  tranche  of  the  EU’s  existing  MFA  programme,  for  which  conditions  have  been 
fulfilled and which is expected to be disbursed in the second quarter of 2020 (as soon as the 
prior actions for the new IMF programme have been implemented), around USD 5 billion of 
financing are available. The remainder of the USD 12 billion gap would need to be covered 
through additional official financing or through a drawdown of official international reserves. 
In this context, a new MFA programme with a total envelope of EUR 1.2 billion is warranted. 

Southern neighbourhood 

A  recession  cannot  be  avoided  in  Jordan,  with  pressures  mounting  on  the  balance  of 
payments, reflecting the country’s limited policy space. The outbreak of the coronavirus is 
expected to have a significant impact on the Jordanian economy through its disrupting effects 
on trade flows, global value chains and tourism. Due to the constrained fiscal  space, Jordan 

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has  so  far  mobilised  primarily  monetary  policy  measures  to  contain  the  damage  on  the 
economy.  However,  under  a  generalised  lockdown,  the  effectiveness  of  such  measures  is 
curtailed.  The  economy  is  now  likely  to  experience  a  recession  in  2020  with  grave 
consequences for the already high level of unemployment (at around 19% at end-2019). The 
fiscal deficit is expected to widen to above 5% of GDP, notably on the back of an expected 
decline  in  tax  revenues.  Thus,  gross  public  debt  is  likely  to  exceed  100%  of  GDP  in  2020. 
Securing concessional lending for the financing of the fiscal deficit will be critical for keeping 
the interest rate burden down and supporting debt sustainability. Even before the coronavirus 
outbreak, Jordan was facing significant  external financing needs. Against  this  backdrop,  the 
EU adopted a EUR 500 million MFA operation in January 2020. With the COVID-19 crisis, 
these needs have increased further. The current account deficit is expected to widen as a result 
of  the  steep  decline  in  tourism,  while  the  significant  increase  of  the  interest  rates  faced  by 
emerging economies in financial markets could put at risk the roll-over of a USD 1.25 billion 
Eurobond  maturing  in  October  2020.  On  current  information,  USD  1.5  billion  of  the 
estimated financing gap for this year remains to be filled and additional MFA support of EUR 
200 million is warranted. This will be combined with the existing MFA programme to a total 
amount of EUR 700 million.1   

Sizeable  financing  needs  in  Tunisia  call  for  international  support  amid  a  mounting 
economic crisis. Tunisia will likely plunge into a recession in 2020, as economic activity will 
be  significantly  affected  by  the  drop  in  global  demand  and  by  the  effect  of  containment 
measures introduced in mid-March to halt the spread of the coronavirus. While monetary and 
fiscal  measures  have  been  adopted  to  mitigate  the  economic  impact  of  the  crisis, 
macroeconomic imbalances persist, policy space remains limited and external financing needs 
are set to increase during the year. The downturn will put severe pressure on employment and 
social  stability.  It  will  also  result  in  a  severe  deterioration  of  the  budget,  reducing  revenues 
and putting additional pressure on expenditure to support the economy and the health system. 
As a result, it is likely that the fiscal deficit will widen significantly and that public debt will 
increase  in  2020.  The  government  expects  a  larger-than-projected  fiscal  deficit  (to  4.3%  of 
GDP),  for  which  about  USD 1  billion  (or  2.6%  of  GDP)  in  additional  external  financing 
would need to be mobilised. The balance of payments needs will be even larger (around 4.7% 
of  GDP),  given  the  expected  fallout  of  the  pandemic  on  the  private  sector  and  its  access  to 
external financing. The sharp decline in remittances and tourism (over 7% of GDP), despite 
lower oil prices, will also lead to a shortfall of foreign exchange revenues. The government 
will  most  likely  not  be  able  to  cover  its  financing  needs  from  domestic  and  international 
markets  in  2020  and  has  requested  emergency  assistance  of  the  equivalent  of  USD  753 
million (100% of the quota) from the IMF. The government needs around USD 3.5 billion in 
external financing this year, with reimbursement peaks in April and June putting pressure on 
liquidity. Additionally, financing needs are set to further increase in line with the COVID-19 
fiscal  impact  and  response,  while  access  to  financial  markets  will  remain  very  challenging 
during the year and the foreseen USD 1.1 billion market issuance can no longer be taken for 
granted.  On  current  information,  approximately  EUR  2.5  billion  of  the  estimated  financing 
gap  for  this  year  remains  to  be  filled  and  an  MFA  programme  of  EUR  600  million  is 
warranted.  

1  

Subject to the swift adoption of the omnibus MFA Decision, the Commission is planning to combine 
the implementation of this MFA Decision for Jordan with that of the EUR 500 million MFA adopted in 
January 2020. This would mean agreeing on a single MoU with Jordan, in which the first and second 
disbursements  combine  loan  parts  from  both  Decisions,  while  the  third  disbursement  would  come 
exclusively  from  the  January  2020  Decision.  The  availability  periods  under  both  Decisions  would  be 
respected. 

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• 

Consistency with existing policy provisions in the policy area 

The  proposed  MFA  operation  takes  place  under  very  particular  circumstances  of  extreme 
urgency related to the global coronavirus pandemic. The proposed MFA is consistent with the 
EU’s  commitment  to  support  the  enlargement  and  neighbourhood  partners  with  their 
immediate economic difficulties. It is also consistent with the principles governing the use of 
the  instrument  of  MFA,  including  its  exceptional  character,  political  preconditions, 
complementarity,  conditionality  and  financial  discipline.  The  Commission  will  continue  to 
monitor  and  assess  during  the  life  of  the  MFA  operations  satisfaction  of  these  criteria, 
including the assessment, in close liaison with the European External Action Service, of the 
political preconditions. 

In the implementation of the assistance, the Commission will ensure consistency with recent 
and ongoing MFA operations, in particular those under the following MFA Decisions: 

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Decision  (EU)  2016/1112  of  the  European  Parliament  and  of  the  Council  of 
6 July 2016 providing further macro-financial assistance to Tunisia; 

Decision  (EU)  2017/1565  of  the  European  Parliament  and  of  the  Council  of 
13 September  2017  providing  macro-financial  assistance  to  the  Republic  of 
Moldova; 

Decision  (EU)  2018/598  of  the  European  Parliament  and  of  the  Council  of 
18 April 2018 providing further macro-financial assistance to Georgia; 

Decision  (EU)  2018/947  of  the  European  Parliament  and  of  the  Council  of 
4 July 2018 providing further macro-financial assistance to Ukraine; 

Decision  (EU)  2020/33  of  the  European  Parliament  and  of  the  Council  of 
15 January 2020 providing further macro-financial assistance to the Hashemite 
Kingdom of Jordan. 

• 

Consistency with other Union policies 

The EU is mobilising all available instruments and coordinating closely with Member States, 
as well as European financial institutions, in order to mount an effective external response to 
the COVID-19 crisis, under the banner of “Team Europe”. EU MFA is part of this approach 
for the enlargement and neighbourhood regions, complementing a total of EUR 3.87 billion in 
grants  mobilised  under  the  Instrument  for  Pre-accession  Assistance  and  the  European 
Neighbourhood  Instrument,  including  blending  and  contributions  to  financial  instruments 
through the Neighbourhood Investment Platform and the Western Balkans Investment Forum. 
In addition, loans for public and private sector investments will continue to be provided under 
the  European  Investment  Bank’s  External  Lending  Mandate.  The  neighbourhood  will  also 
benefit  from  investment  programmes  backed  by  EUR  0.5  billion  of  guarantees  from  the 
European Fund for Sustaiable Development, mostly reoriented towards SME financing.  

By  supporting  the  adoption  by  authorities  of  an  appropriate  framework  for  short-term 
macroeconomic policy and structural reforms, the EU’s MFA would enhance the added value 
of the overall EU involvement and increase the effectiveness of the EU’s overall intervention 
including through other financial instruments.  

EN 

7 

  EN 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  this  proposal  is  Article  212  of  the  TFEU.  In  the  current  situation  of 
urgency,  this  proposal  could  also  be  based  on  Article  213  TFEU.  Nevertheless,  the 
Commission has decided to present it on the basis of Article 212 TFEU to follow the ordinary 
legislative procedure with the full involvement of the European Parliament. The Commission 
counts on the cooperation of the European Parliament and the Council for swift adoption. 

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  does  not  fall  under  an  exclusive  competence  of  the  EU.  The  subsidiarity 
principle  applies  to  the  extent  that  the  objectives  of  restoring  the  beneficiary’s  short-term 
macroeconomic stability cannot be sufficiently achieved by the Member States alone and can 
therefore be better achieved by the European Union. The main reasons are greater scale and 
facilitated donor coordination in order to maximise the effectiveness of the assistance.  

• 

Proportionality 

The  proposal  complies  with  the  proportionality  principle:  it  confines  itself  to  the  minimum 
required  in  order  to  achieve  the  objectives  of  short-term  macroeconomic  stability  by 
alleviating  the  risk  of  a  possible  default  and  does  not  go  beyond  what  is  necessary  for  that 
purpose.  

In view of the size of the beneficiary’s external financing needs in 2020 and 2021, the amount 
of  the  assistance  will  correspond  to  a  relatively  limited  part  of  these  needs.  Given  the 
assistance pledged to the beneficiaries by other bilateral and multilateral donors and creditors, 
it is deemed an appropriate level of burden-sharing for the EU. 

• 

Choice of the instrument 

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  its  rapid  implementation  to  alleviate  the  beneficiaries  immediate 
external  financial  constraints,  but  also  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 the beneficiaries under other, more narrowly focused 
EU financial instruments.  

3. 

• 

RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER 
CONSULTATIONS AND IMPACT ASSESSMENTS 

Ex-post evaluations/fitness checks of existing legislation 

All MFA operations are subject to an ex-post evaluation, which is normally carried out within 
two years from the end of the availability period defined in the legislative decision granting 
assistance. The objective is twofold: (i) to analyse the impact of MFA on the economy of the 
beneficiary  and  in  particular  on  the  sustainability  of  its  external  position;  (ii)  to  assess  the 
added value of the EU intervention.  

EN 

8 

  EN 

The  evaluations  carried  out  so  far  conclude  that  MFA  operations  do  contribute  to  the 
improvement  of  the  beneficiary’s  external  sustainability,  macroeconomic  stability  and  
achievement  of  structural  reforms.  MFA  operations  had  a  positive  effect  on  the  balance  of 
payments of the beneficiary and contributed to relax their budgetary constraints. They also led 
to a slightly higher economic growth.  

All evaluations highlight that an important attribute of the EU MFA versus alternative sources 
of  financing  is  its  highly  concessional  terms,  i.e.  relatively  low  interest  rates,  long  maturity 
and  long  grace  period.  This  generates  fiscal  space  and  contributes  to  public  debt 
sustainability.   

The ex-post evaluations also confirm that previous MFAs were implemented efficiently, and 
were  well  coordinated  with  other  EU  programmes  and  with  programmes  of  other  donors 
(notably,  the  IMF  and  the  World  Bank).  MFA  policy  conditionality  is  found  to  be  separate 
from the IMF conditionality, but complementary and/or reinforcing. Recent experiences show 
that the presence of two independent but coordinated programmes reinforces the capacity of 
delivering results, through complementary conditionality and combined financial resources.  

The evaluations also note the shortcomings of each MFA operation, with the most common 
ones  being  the  lack  of  visibility  of  them  and  the  sometimes  long  negotiating  process.  The 
Commission will further consider the identified limitations in a forthcoming evaluation on the 
operations  carried  out  during  2010-2020,  which  is  planned  to  be  launched  in  2020.  This 
evaluation  could  also  provide  a  good  basis  for  a  further  reflection  on  the  scope  and  other 
aspects  of  the  MFA  instrument  as  well  as  how  it  interacts  with  other  EU  external  policy 
instruments. 

All  final  reports  of  completed  ex-post  evaluations  of  MFA  operations  are  published  on 
https://ec.europa.eu/info/evaluation-reports-economic-and-financial-affairs-policies-and-
spending-activities_en. 

• 

Stakeholder consultations 

MFA is provided as an integral part of the EU and the wider international response in relation 
to the COVID-19 crisis. In the preparation of this proposal for MFA, the Commission services 
have  consulted  with  the  International  Monetary  Fund,  which  is  in  the  process  of  putting  in 
place  sizeable  financing  programmes,  and  other  multilateral  and  bilateral  creditors  and 
donors.  The  Commission  has  also  been  in  regular  contact  with  the  national  authorities  of 
potential beneficiaries. 

• 

Collection and use of expertise 

Due  to  the  need  for  an  urgent  approval  process,  an  Operational  Assessment  verifying  the 
quality  and  reliability  of  the  beneficiary’s  public  financial  circuits  and  administrative 
procedures  will  be  carried  out  by  the  Commission  or,  if  necessary,  with  the  assistance  of 
external experts. 

• 

Impact assessment 

The EU’s macro-financial assistance is an emergency instrument aimed at alleviating the risk 
of default and economic collapse of partners by addressing beneficiaries’ short-term external 
financing  needs  while  supporting  policy  measures  aimed  at  strengthening  the  balance  of 
payments  and  fiscal  positions  and  supporting  renewed  sustainable  growth.  Therefore,  this 

EN 

9 

  EN 

MFA  proposal  is  exempted  from  the  requirement  to  carry  out  an  Impact  Assessment  in 
accordance  with  the  Commission’s  Better  Regulation  Guidelines  (SWD(2015)  111  final)  as 
there  is  a  political  imperative  to  move  ahead  quickly  in  an  emergency  situation  requiring  a 
rapid response.  

4. 

BUDGETARY IMPLICATIONS 

The  planned  assistance  would  be  provided  in  the  form  of  loans  and  should  be  financed 
through  a  borrowing  operation  that  the  Commission  will  conduct  on  behalf  of  the  EU.  The 
budgetary impact of the assistance will correspond to the provisioning, at a rate of 9%, of the 
amounts disbursed in the Guarantee Fund for External Actions of the EU. Assuming that the 
loans  will  be  disbursed  in  2020,  and  according  to  the  rules  governing  the  guarantee  fund 
mechanism,2  the  provisioning  will  take  place  in  year  n+2,  the  year  n  being  the  year  of  the 
disbursement. The impact of loans disbursed in 2020 will thus fall on the 2022 budget, for a 
maximum  amount  of  EUR  270  million.  Should  part  of  the  loans  be  disbursed  in  2021,  the 
corresponding provisioning will take place in the 2023 budget. 

The  Commission  considers  that  the  amounts  set  aside  in  the  Guarantee  Fund  provide  an 
adequate buffer to protect the EU budget against contingent liablilities related to these MFA 
loans.  It  cannot  be  excluded,  however,  that  the  current  macroeconomic  circumstances  and 
potential  concentration  of  credit-risk  exposures  may  increase  the  need  to  set  aside 
supplementary budgetary resources over the lifetime of the loans.  

The Commission assesses that the budgetary impact of the proposed MFA operations can be 
accommodated within the Commission’s proposal for the next MFF. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  European  Union  shall  make  MFA  available  to  partners  for  a  total  amount  of  up  to 
EUR 3 billion, provided in the form of medium- to long-term loans, which will contribute to 
cover their external financing needs in 2020-21.  

Based  on  a  preliminary  assessment  of  financing  needs,  the  amounts  of  MFA  to  be  made 
available shall be distributed to the beneficiaries as follows: 

 
 
 
 
 
 
 
 
 
 

EUR 180 million for the Republic of Albania 
EUR 250 million for Bosnia-Herzegovina 
EUR 150 million for Georgia 
EUR 200 million for the Hashemite Kingdom of Jordan 
EUR 100 million for Kosovo 
EUR 100 million for the Republic of Moldova 
EUR 60 million for Montenegro 
EUR 160 million for the Republic of North Macedonia 
EUR 600 million for the Republic of Tunisia 
EUR 1.2 billion for Ukraine 

2  

Council  Regulation  (EC,  Euratom)  No  480/2009  of  25  May  2009  establishing  a  Guarantee  Fund  for 
external actions (OJ L 145, 10.6.2009, p. 10).  

EN 

10 

  EN 

                                                 
The  assistance  is  planned  to  be  disbursed  in  two  loan  instalments.  The  disbursement  of  the 
first instalment is expected to take place towards mid-2020. The second instalment could be 
disbursed  in  the  fourth  quarter  of  2020  or  in  the  first  half  of  2021  provided  that  the  policy 
measures attached to it have been implemented in a timely manner.  

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.  

The Commission and the authorities of each partner separately will agree on a Memorandum 
of  Understanding  setting  out  the  reform  measures  associated  with  the  proposed  MFA 
operation, including aspects of timing and sequencing. Moreover, as is normally the case with 
MFA, the disbursements would inter alia be conditional on satisfactory progress with the IMF 
programme and the continued drawing by the partner on IMF funds. 

The  proposal  includes  a  sunset  clause.  The  proposed  MFA  would  be  made  available  for  12 
months,  starting  from  the  first  day  after  the  entry  into  force  of  the  Memorandum  of 
Understanding. 

The  Commission  will  report  yearly  to  the  European  Parliament  and  to  the  Council  on  the 
implementation  of  this  Decision  in  the  preceding  year.  Furthermore,  the  fulfilment  of  the 
objectives of the assistance will be assessed by the Commission, including in the context of an 
ex-post  evaluation  that  the  Commission  shall  submit  to  the  European  Parliament  and  to  the 
Council not later than two years after the expiry of the availability period of the assistance.  

EN 

11 

  EN 

2020/0065 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on providing Macro-Financial Assistance to enlargement and neighbourhood partners 
in the context of the COVID-19 pandemic crisis 

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 (2) 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) 

*3  

The  current  COVID-19  crisis  has  very  damaging  effects  on  economic  and  financial 
stability in the enlargement and neighbourhood regions. Partners are currently facing a 
weak  and  rapidly  worsening  balance-of-payments  and  fiscal  situation,  with  the 
economy moving into recession. There is a strong case for the EU to move quickly and 
decisively  in  support  of  these  economies.  This  proposal  for  the  Union’s  macro-
financial assistance therefore covers ten partners: the Republic of Albania, Bosnia and 
Herzegovina,  Kosovo*,3  Montenegro,  the  Republic  of  North  Macedonia  in  the 
enlargement  region;  Georgia,  the  Republic  of  Moldova  and  Ukraine  in  the  Eastern 
neighbourhood and the Hashemite Kingdom of Jordan and the Republic of Tunisia in 
the Southern neighbourhood (henceforth “partner(s)”). 

The  urgency  of  the  assistance  is  related  to  the  immediate  need  of  the  partners  for 
funds, in addition to those which will be provided through other EU instruments and 
by international financial institutions, EU Member States and other bilateral donors, in 
order  to  create  short-term  policy  space  for  the  authorities  to  implement  measures  to 
counter the economic fallout from the the COVID-19 crisis.  

The  authorities  of  each  partner  and  the  International  Monetary  Fund  (IMF)  have 
agreed or are expected to agree shortly on an programme that will be supported by a 
financing arrangement with the IMF. 

The Union’s macro-financial assistance should be an exceptional financial instrument 
of untied and undesignated balance-of-payments support, which aims at addressing the 
beneficiary’s  immediate  external  financing  needs  in  tandem  with  a  disbursing 
arrangement with the International Monetary Fund (IMF) that is subject to an agreed 
programme of economic reforms. In the context of the COVID-19 crisis, the Union’s 

This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the 
ICJ Opinion on the Kosovo Declaration of Independence. 

EN 

12 

  EN 

 
                                                 
(5) 

(6) 

(7) 

(8) 

(9) 

macro-financial  assistance  should  also  be  available  to  partners  that  benefit  from 
emergency  funding  from  the  IMF,  which  can  come  without  prior  actions  and/or 
conditionality, such as through the Rapid Financing Instrument (RFI). This assistance 
should therefore be shorter in duration, limited to two disbursements and underpin the 
implementation of a policy programme containing a limited set of reform measures. 

Financial support from the Union to the partners is consistent with the Union’s policy 
as set out in the enlargement and neighbourhood policies. 

Given that the partners are either accession / pre-accession partners or covered by the 
ENP, they are eligible to receive the Union’s macro-financial assistance. 

Given  that  the  drastically  worsening  external  financing  needs  of  the  partners  are 
expected to  be  well  above  the  resources  that  will  be  provided  by  the  IMF  and  other 
multilateral institutions, the  Union’s  macro-financial assistance  to be  provided  to the 
partners  is,  under  the  current  exceptional  circumstances,  considered  to  be  an 
appropriate  response  to  the  partners’  requests  to  support  financial  stabilisation.  The 
Union’s  macro-financial  assistance  would  support  the  economic  stabilisation, 
supplementing resources made available under the IMF’s financial arrangement. 

The  Union’s  macro-financial  assistance  should  aim  to  support  the  restoration  of  a 
sustainable  external  financing  situation  for  the  partners  thereby  supporting  renewed 
economic and social development. 

The  amount  of  the  Union’s  macro-financial  assistance  is  based  on  a  preliminary 
estimate of each partner’s residual external financing needs and takes into account its 
capacity to finance itself with its own resources, in particular the international reserves 
at  its  disposal.  The  Union’s  macro-financial  assistance  should  complement  the 
programmes  and  resources  provided  by  the  IMF  and  the  World  Bank.  The 
determination  of  the  amount  of  the  assistance  also  takes  into  account  the  need  to 
ensure  fair  burden  sharing  between  the  Union  and  other  donors,  as  well  as  the  pre-
existing deployment of the Union’s other external financing instruments and the added 
value of the overall Union involvement.  

(10)  The Commission should ensure that the Union’s macro-financial assistance is legally 
and  substantially  in  accordance  with  the  key  principles  and  objectives  of,  and  the 
measures taken within, the different areas of external action and other relevant Union 
policies. 

(11)  The  Union’s  macro-financial  assistance  should  support  the  Union’s  external  policy 
towards  the  partners.  The  Commission  services  and  the  European  External  Action 
Service  should  work  closely  together  throughout  the  macro-financial  assistance 
operation in order to coordinate, and to ensure the consistency of, the Union’s external 
policy.  

(12)  The  Union’s  macro-financial  assistance  should  support  the  partners’  commitment  to 
values shared with the Union, including democracy, the rule of law, good governance, 
respect for human rights, sustainable development and poverty reduction, as well as its 
commitment to the principles of open, rule-based and fair trade. 

respect  effective  democratic  mechanisms, 

(13)  A pre-condition for granting the Union’s macro-financial assistance should be that the 
partners 
including  a  multi-party 
parliamentary system and the rule of law, and guarantees respect for human rights. In 
addition,  the  specific  objectives  of  the  Union’s  macro-financial  assistance  should 
strengthen  the  efficiency,  transparency  and  accountability  of  the  public  finance 
management  systems  in  the  partners  and  to  promote  structural  reforms  aimed  at 

EN 

13 

  EN 

supporting  sustainable  growth  and  fiscal  consolidation.  Both  fulfilment  of  the 
preconditions and the achievement of those objectives should be regularly monitored 
by the Commission and the European External Action Service. 

(14) 

In  order  to  ensure  that  the  Union’s  financial  interests  linked  to  the  Union’s  macro-
financial  assistance  are  protected  efficiently,  the  partners  should  take  appropriate 
measures  relating  to  the  prevention  of,  and  fight  against,  fraud,  corruption  and  any 
other irregularities linked to the assistance. In addition, provision should be made for 
the Commission to carry out checks, for the Court of Auditors to carry out audits and 
for the European Public Prosecutor’s Office to exercise its competences. 

(15)  Release of the Union’s macro-financial assistance is without prejudice to the powers 
of the European Parliament and the Council (as the Union’s budgetary authority). 

(16)  The  amounts  of  the  provision  required  for  macro-financial  assistance  should  be 
consistent with the budgetary appropriations provided for in the multi-annual financial 
framework. 

(17)  The  Union’s  macro-financial  assistance  should  be  managed  by  the  Commission.  In 
order  to  ensure  that  the  European  Parliament  and  the  Council  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. 

(18) 

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.4 

(19)  The  Union’s  macro-financial  assistance  should  be  subject  to  economic  policy 
conditions,  to  be  laid  down  in  a  Memorandum  of  Understanding.  In  order  to  ensure 
uniform conditions of implementation and for reasons of efficiency, the Commission 
should be empowered to negotiate such conditions with the authorities of the partner 
under  the  supervision  of  the  committee  of  representatives  of  the  Member  States  in 
accordance  with  Regulation  (EU)  No 182/2011.  Under  that  Regulation,  the  advisory 
procedure should, as a general rule, apply in all cases other than as provided for in that 
Regulation.  Considering  the  potentially  important  impact  of  assistance  of  more  than 
EUR  90  million,  it  is  appropriate  that  the  examination  procedure  be  used  for 
operations  above  that  threshold.  Considering  the  amount  of  the  Union’s  macro-
financial  assistance  to  each  partner,  the  advisory  procedure  should  apply  to  the 
adoption  of  the  Memorandum  of  Understanding  with  Montenegro,  while  the 
examination  procedure  should  apply  to  the  adoption  of  the  Memorandum  of 
Understanding with the other partners covered by this Decision, and correspondingly 
for any reduction, suspension or cancellation of the assistance, 

4 

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 (OJ L 55, 28.2.2011, p. 13). 

EN 

14 

  EN 

                                                 
HAVE ADOPTED THIS DECISION:  

Article 1 

1. 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

2. 

3. 

4. 

5. 

The  Union  shall  make  macro-financial  assistance  (“the  Union’s  macro-financial 
assistance”) available to the Republic of Albania, Bosnia and Herzegovina, Georgia, 
the Hashemite Kingdom of Jordan, Kosovo, the Republic of Moldova, Montenegro, 
the Republic of North Macedonia, the Republic of Tunisia and Ukraine (“partner(s)”) 
for  a  maximum  total  amount  of  EUR  3  billion,  with  a  view  to  supporting  the 
partners’  economic  stabilisation  and  a  substantive  reform  agenda.  The  assistance 
shall  contribute  to  covering  the  partners’  urgent  balance-of-payments  needs  as 
identified  in  the  programme  supported  by  the  International  Monetary  Fund  (IMF) 
and shall be made available as follows: 

EUR 180 million for the Republic of Albania; 

EUR 250 million for Bosnia-Herzegovina; 

EUR 150 million for Georgia; 

EUR 200 million for the Hashemite Kingdom of Jordan; 

EUR 100 million for Kosovo; 

EUR 100 million for the Republic of Moldova; 

EUR 60 million for Montenegro; 

EUR 160 million for the Republic of North Macedonia; 

EUR 600 million for the Republic of Tunisia; 

EUR 1.2 billion for Ukraine.  

The full amount of the Union’s macro-financial assistance shall be provided to each 
partner 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  and  to  on-lend  them  to  the  partner.  The  loans  shall  have  a  maximum 
average maturity of 15 years. 

The  release  of  the  Union’s  macro-financial  assistance  shall  be  managed  by  the 
Commission in a manner consistent with the agreements or understandings reached 
between  the  IMF  and  the  partner.  The  Commission  shall  regularly  inform  the 
European Parliament and the Council of developments regarding the Union's macro-
financial  assistance,  including  disbursements  thereof,  and  shall  provide  those 
institutions with the relevant documents in due time. 

The  Union’s  macro-financial  assistance  shall  be  made  available  for  a  period  of  12 
months, starting from the first day after the entry into force of the Memorandum of 
Understanding referred to in Article 3(1).  

If the financing  needs of a partner decrease fundamentally during the period  of the 
disbursement  of  the  Union’s  macro-financial  assistance  compared  to  the  initial 
projections,  the  Commission,  acting  in  accordance  with  the  examination  procedure 
referred  to  in  Article 7(2),  shall  reduce  the  amount  of  the  assistance  or  suspend  or 
cancel it. 

EN 

15 

  EN 

Article 2 

A pre-condition for granting the Union’s macro financial assistance shall be that the 
partner  respects  effective  democratic  mechanisms  –  including  a  multi-party 
parliamentary system – and the rule of law, and guarantees respect for human rights. 

The  Commission  and  the  European  External  Action  Service  shall  monitor  the 
fulfilment  of  this  pre-condition  throughout  the  life-cycle  of  the  Union’s  macro-
financial assistance. 

Paragraphs  1  and  2  of  this  his  Article  shall  be  applied  in  accordance  with  Council 
Decision 2010/427/EU.5 

Article 3 

The  Commission,  in  accordance  with  the  examination  procedure  referred  to  in 
Article 7(2),  shall  agree  with  the  authorities  of  each  partner  on  clearly  defined 
economic policy and financial conditions, focusing on structural reforms and sound 
public finances, to which the Union's macro-financial assistance is to be subject, to 
be  laid  down  in  a  Memorandum  of  Understanding  (“the  Memorandum  of 
Understanding”)  which  shall  include  a  timeframe  for  the  fulfilment  of  those 
conditions.  The  economic  policy  and  financial  conditions  set  out 
the 
Memorandum  of  Understanding  shall  be  consistent  with  the  agreements  or 
understandings referred to in Article 1(3), including the macroeconomic adjustment 
and  structural  reform  programmes  implemented  by  the  partner,  with  the  support  of 
the IMF. 

in 

The  conditions  referred  to  in  paragraph  1  shall  aim,  in  particular,  at  enhancing  the 
efficiency,  transparency  and  accountability  of  the  public  finance  management 
systems  in  the  partners,  including  for  the  use  of  the  Union’s  macro-financial 
assistance. Progress in  mutual  market  opening,  the  development  of  rules-based  and 
fair trade, and other priorities in the context of the Union’s external policy shall also 
be duly taken into account when designing the policy measures. Progress in attaining 
those objectives shall be regularly monitored by the Commission.  

The  detailed  financial  terms  of  the  Union’s  macro-financial  assistance  shall  be  laid 
down  in  a  Loan  Agreement  to  be  concluded  between  the  Commission  and  the 
authorities of each partner separately.  

The  Commission  shall  verify  at  regular  intervals  that  the  conditions  referred  to  in 
Article 4(3)  continue  to  be  met,  including  whether  the  economic  policies  of  the 
partner  are  in  accordance  with  the  objectives  of  the  Union’s  macro-financial 
assistance.  In  so  doing,  the  Commission  shall  coordinate  closely  with  the  IMF  and 
the  World  Bank,  and,  where  necessary,  with  the  European  Parliament  and  the 
Council. 

Article 4 

Subject  to  the  conditions  referred  to  in  paragraph 3,  the  Union’s  macro-financial 
assistance shall be made available by the Commission two loan instalments. The size 

Council  Decision  2010/427/EU  of  26 July  2010  establishing  the  organisation  and  functioning  of  the 
European External Action Service (OJ L 201, 3.8.2010, p. 30). 

1. 

2. 

3. 

1. 

2. 

3. 

4. 

1. 

5 

EN 

16 

  EN 

                                                 
of each instalment shall be laid down in the Memorandum of Understanding referred 
to in Article 3.  

The amounts of the Union’s macro-financial assistance shall be provisioned, where 
required, in accordance with Council Regulation (EC, Euratom) No 480/2009.6  

The  Commission  shall  decide  on  the  release  of  the  instalments  subject  to  the 
fulfilment of all of the following conditions: 

(a) 

(b) 

(c) 

the pre-condition set out in Article 2; 

a  continuous  satisfactory  track  record  of  implementing  a  non-precautionary 
IMF credit arrangement;  

the  satisfactory  implementation  of  the  economic  policy  and  financial 
conditions agreed in the Memorandum of Understanding.  

The  release  of  the  second  instalment  shall  not,  in  principle,  take  place  earlier  than 
three months after the release of the first instalment.  

Where the conditions referred to in the first subparagraph of paragraph 3 are not met, 
the Commission shall temporarily suspend or cancel the disbursement of the Union's 
macro-financial  assistance.  In  such  cases,  it  shall  inform  the  European  Parliament 
and the Council of the reasons for the suspension or cancellation.  

The Union’s macro-financial assistance shall be disbursed to the central bank of the 
partner.  Subject 
the  Memorandum  of 
Understanding,  including  a  confirmation  of  residual  budgetary  financing  needs,  the 
Union funds may be transferred to the Ministry of Finance as the final beneficiary. 

the  provisions 

to  be  agreed 

in 

to 

Article 5 

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

Where the circumstances permit, and if the partner so requests, the Commission may 
take the steps necessary 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.  

Where  circumstances  permit  an  improvement  of  the  interest  rate  of  the  loan  and  if 
the  partner  so  requests,  the  Commission  may  decide  to  refinance  all  or  part  of  its 
initial  borrowings  or  may  restructure  the  corresponding  financial  conditions. 
Refinancing  or  restructuring  operations  shall  be  carried  out  in  accordance  with 
paragraphs  1  and  4  and  shall  not  have  the  effect  of  extending  the  maturity  of  the 
borrowings concerned or of increasing the amount of capital outstanding at the date 
of the refinancing or restructuring. 

All costs incurred by the Union which relate to the borrowing and lending operations 
under this Decision shall be borne by the partner.  

Council  Regulation  (EC,  Euratom)  No 480/2009  of  25 May  2009  establishing  a  Guarantee  Fund  for 
external actions (OJ L 145, 10.6.2009, p. 10). 

2. 

3. 

4. 

5. 

1. 

2. 

3. 

4. 

6 

EN 

17 

  EN 

                                                 
5. 

1. 

2. 

3. 

7 

8 

9 

10 

11 

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

Article 6 

The  Union’s  macro-financial  assistance  shall  be  implemented  in  accordance  with 
Regulation  (EU,  Euratom)  No 2018/1046  of  the  European  Parliament  and  of  the 
Council.7 

The  Union’s  macro-financial  assistance  shall  be 
management. 

implemented  under  direct 

The Loan Agreement referred to in Article 3(3) shall contain provisions:  

(a) 

(b) 

(c) 

(d) 

ensuring  that  the  partner  regularly  checks  that  financing  provided  from  the 
budget  of  the  Union  has  been  properly  used,  takes  appropriate  measures  to 
prevent irregularities and fraud, and, if necessary, takes legal action to recover 
any funds provided under this Decision that have been misappropriated; 

ensuring  the  protection  of  the  Union’s  financial  interests,  in  particular 
providing  for  specific  measures  in  relation  to  the  prevention  of,  and  fight 
against,  fraud,  corruption  and  any  other  irregularities  affecting  the  Union’s 
macro-financial  assistance,  in  accordance  with  Council  Regulation  (EC, 
Euratom)  No 2988/958,  Council  Regulation  (EC,  Euratom)  No 2185/969, 
Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the 
Council10 and, for those Member States participating in enhanced cooperation 
regarding  the  European  Public  Prosecutor’s  Office,  Council  Regulation  (EU) 
2017/1939.11  Notably,  to  that  end,  the  European  Anti-Fraud  Office  (OLAF) 
shall be expressly authorised to carry out investigations, including in particular 
on-the-spot  checks  and  inspections  including  digital  forensic  operations  and 
interviews;  

expressly  authorising  the  Commission,  or  its  representatives  to  carry  out 
checks, including on-the-spot checks and inspections;  

expressly  authorising  the  Commission  and  the  Court  of  Auditors  to  perform 
audits  during  and  after  the  availability  period  of  the  Union’s  macro-financial 

Regulation  (EU,  Euratom)  No 2018/1046  of  the  European  Parliament  and  of  the  Council  of  18  July 
2018 on the financial rules applicable to the general budget of the Union and repealing Regulation (EU, 
Euratom) No 966/2012 (OJ L 193, 30.07.2018, p. 1). 

Council Regulation (EC, Euratom) 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  (EC,  Euratom)  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  (EU,  Euratom)  No 883/2013  of  the  European  Parliament  and  of  the  Council  of 
11 September  2013  concerning  investigations  conducted  by  the  European  Anti-Fraud  Office  (OLAF) 
and  repealing  Regulation  (EC)  No 1073/1999  of  the  European  Parliament  and  of  the  Council  and 
Council Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1). 

Council  Regulation  (EU)  2017/1939  of  12  October  2017  implementing  enhanced  cooperation  on  the 
establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1). 

EN 

18 

  EN 

                                                 
assistance,  including  document  audits  and  on-the-spot  audits,  such  as 
operational assessments; 

(e) 

ensuring that the Union is entitled to early repayment of the loan where it has 
been  established  that,  in  relation  to  the  management  of  the  Union’s  macro-
financial assistance, the partner has engaged in any act of fraud or corruption or 
any other illegal activity detrimental to the financial interests of the Union. 

(f) 

ensuring that all costs incurred by the Union that relate to a financial assistance 
shall be borne by the partner. 

the 

implementation  of 

Before 
the 
Commission  shall  assess  by  means  of  an  operational  assessment,  the  soundness  of 
the partner’s financial arrangements, the administrative procedures, and the internal 
and external control mechanisms which are relevant to the assistance. 

the  Union’s  macro-financial  assistance, 

Article 7 

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 4  of  Regulation  (EU) 
No 182/2011 shall apply to the Union’s macro-financial assistance for Montenegro, 
while  Article 5  of  Regulation  (EU) No 182/2011  shall  apply  to  the  Union’s  macro-
financial assistance for the other partners covered by this Decision. 

Article 8 

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 of that implementation. The report shall: 

(a) 

(b) 

(c) 

 examine  the  progress  made  in  implementing  the  Union’s  macro-financial 
assistance; 

 assess the economic situation and prospects of the partners, as well as progress 
made in implementing the policy measures referred to in Article 3(1); 

indicate the connection between  the economic policy conditions  laid  down in 
the  Memorandum  of  Understanding,  the  partners’  on-going  economic  and 
fiscal  performance  and  the  Commission’s  decisions  to  release  the instalments 
of the Union’s 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,  assessing  the  results  and  efficiency  of  the 
completed  Union’s  macro-financial  assistance  and  the  extent  to  which  it  has 
contributed to the aims of the assistance. 

4. 

1. 

2. 

1. 

2. 

EN 

19 

  EN 

Article 9 

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

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

EN 

20 

  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.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management mode(s) planned  

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  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on operational appropriations  

3.2.3. Estimated impact on appropriations of an administrative nature 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party contributions  

3.3.  Estimated impact on revenue

EN 

21 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Macro-financial  Assistance  to  enlargement  and  neighbourhood  partners  in  the 
context of the COVID-19 pandemic crisis 
Policy area(s) concerned in the ABM/ABB structure12  

1.2. 

Policy area:  Economic and Financial Affairs 

Activity: 

International economic and financial affairs 

1.3. 

Nature of the proposal/initiative  

X The proposal/initiative relates to a new action  

  The  proposal/initiative 
project/preparatory action13  

relates 

to  a  new  action 

following  a  pilot 

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

 The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objective(s) 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

 “A  new  boost  for  jobs,  growth  and  investment:  promoting  prosperity  beyond  the 
EU” 

1.4.2. 

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

Specific objective No 

“Promoting prosperity beyond the EU”  

ABM/ABB activity(ies) concerned 

The DG ECFIN related activities pertain to:  

(a)  Supporting macro-financial stability and promoting growth-enhancing reforms 
outside the EU, including through regular economic dialogues with key partners and 
by providing macro-financial assistance; and  

(b)  Supporting  the  enlargement  process  and  the  implementation  of  the  EU 
enlargement  and  neighbourhood  policies  and  other  EU  priorities  in  partners  by 
conducting economic analysis and providing policy assessments and advice. 

12 
13 

ABM: activity-based management; ABB: activity-based budgeting. 
As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

EN 

22 

  EN 

                                                 
1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

 

 

 

 

Contribute to covering the external financing needs of the partner in the context 
of a significant deterioration of their external accounts brought about by the on-
going COVID-19 crisis.  

Alleviate the partner’s budgetary financing needs. 

Support the fiscal consolidation effort and external stabilisation in the context 
of the foreseen IMF programme. 

Support  structural  reforms  aimed  at  improving  the  overall  macroeconomic 
management,  strengthening  economic  governance  and  transparency,  and 
improving conditions for sustainable growth. 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

The  authorities  of  the  partners  will  be  required  to  report  on  a  set  of  economic 
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 instalments of the assistance.  

The  Commission  services  will  continue  to  monitor  public  finance  management, 
following  the  operational  assessment  of  the  financial  circuits  and  administrative 
procedures in partners, where necessary. The EU Delegation in the partners 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 the respective partner.  

An annual report to the Council and European Parliament is foreseen in the proposed 
legislative decision, including 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  on  the  fulfilment  of  the 
political  pre-conditions  and  a  satisfactory  track  record  in  the  implementation  of  a 
financing arrangement between the partner and the IMF. In addition, the Commission 
shall agree with the authorities of the partner on specific policy conditions, listed in a 
Memorandum of Understanding.  

The assistance is planned to be disbursed in two loan instalments. The disbursement 
of  the  first  instalment  is  expected  to  take  place  mid-2020.  The  second  instalment 
could be disbursed in the fourth quarter of 2020 or in the first half of 2021 provided 
that  the  policy  measures  attached  to  each  instalment  have  been  implemented  in  a 
timely manner. 

1.5.2.  Added value of EU involvement 

The instrument of macro-financial assistance is a policy-based instrument directed to 
alleviate  short-  and  medium-term  external  financial  needs.  In  the  context  of  the 
current  COVID-19  crisis,  MFA  will  help  to  provide  economic  policy  space  for  the 

EN 

23 

  EN 

authorities  to  mount  an  effective  economic  response  to  the  crisis.  By  helping  the 
partner  overcome  the  economic  difficulties  reinforced  by  the  COVID-19  crisis,  the 
proposed MFA will contribute to promoting macroeconomic and political stability in 
the partners. MFA will complement the resources made available by the international 
financial institutions, bilateral donors and other EU financial institutions. In doing so, 
it will contribute to the overall effectiveness of the financial support provided by the 
international  community,  as  well  as  of  other  EU  financial  assistance,  including 
budgetary support operations. 

In  addition  to  the  financial  impact  of  the  MFA,  the  proposed  programme  will 
strengthen the governments’ reform commitment and their 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  that  the  EU  is  ready  to  support  partners  in  moments  of 
economic difficulties.  

1.5.3. 

 Lessons learned from similar experiences in the past 

Macro-financial  assistance  operations  in  partners  are  subject  to  ex-post  evaluation. 
Evaluations  conducted  thus  far  (on  completed  MFA  programmes),  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 partner. In most cases, MFA operations had 
a positive effect on the balance of payments of the partner and helped to relax their 
budgetary constraints. They also led to somewhat higher economic growth. 

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

The  EU  is  among  the  major  donors  to  the  Western  Balkans,  Southern  and  Eastern 
neighbourhoods,  supporting  their  economic,  structural  and  institutional  reforms  as 
well as civil society. In this context, MFA complements other EU external actions or 
instruments  used  to  support  the  partners.  It  is  also  aligned  with  the  Single  Support 
the  European 
Framework  defining  areas  of  focus  of  bilateral  aid  under 
Neighbourhood  Instrument  and  the  Instrument  for  Pre-Accession  Assistance  for 
2014-2020.  

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 
balance-of-payments  and  budgetary  situation,  and  an  appropriate  framework  for 
advancing structural reforms. MFA does not provide regular financial support and is 
to  be  discontinued  as  soon  as  the  partner’s  external  financial  situation  has  been 
brought back onto a sustainable path.  

MFA  would  also  be  complementary  to  interventions envisaged  by  the  international 
community,  in  particular  the  adjustment  and  reform  programmes  supported  by  the 
IMF and the World Bank. 

EN 

24 

  EN 

1.6. 

Duration and financial impact  

X  Proposal/initiative of limited duration  

–    Proposal/initiative in effect from June 2020 to May 2021  

–    Financial impact from 2022 to 2023  

 Proposal/initiative of unlimited duration 

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

–  followed by full-scale operation. 
1.7.  Management mode(s) planned14  

X  Direct management by the Commission 

–   by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated; 

–   international organisations and their agencies (to be specified); 

–  the EIB and the European Investment Fund; 

–   bodies referred to in Articles 208 and 209 of the Financial Regulation; 

–   public law bodies; 

–   bodies governed by private law with a public service mission to the extent that 

they provide adequate financial guarantees; 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  provide  adequate 
financial guarantees; 

–    persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP 

pursuant to Title V of the TEU, and identified in the relevant basic act. 

– 

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

Comments  

14 

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 

25 

  EN 

 
 
                                                 
2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

The  actions  to  be  financed  under  this  Decision  will  be  implemented  under  direct 
management  by  the  Commission  from  headquarters  and  with  support  of  the  Union 
delegations.  

This assistance is of macroeconomic nature and its design is consistent with the IMF-
supported programme. The monitoring of the action by the Commission services will 
take  place  on  the  basis  of  progress  in  the  implementation  of  the  IMF  arrangement 
and the implementation of specific reform measures to be agreed with the authorities 
of  the  partners  in  a  Memorandum  of  Understanding  with  a  frequency  that  is 
consistent with the number of instalments (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 
operations.  

There  is  a  risk  that  the  MFA  could  be  used  in  a  fraudulent  way.  As  MFA  is  not 
designated to specific expenses (contrary to project financing, for example), this risk 
is  related  to  factors  such  as  the  general  quality  of  management  systems  in  the 
partner’s  Central  Bank  and  the  Ministry  of  Finance,  administrative  procedures, 
control and oversight functions, the security of IT systems and the appropriateness of 
internal and external audit capabilities. 

A  second  risk  stems  from  the  possibility  that  the  partner  will  fail  to  service  the 
financial liabilities towards the EU stemming from the proposed MFA loans (default 
or  credit  risk),  which  could  be  caused  for  example  by  a  significant  additional 
deterioration of the balance of payments and fiscal position of the partner. 

2.2.2. 

Information concerning the internal control system set up 

The  macro-financial  assistance  will  be  liable  to  verification,  control  and  auditing 
procedures under the responsibility of the Commission, including the European Anti-
Fraud Office (OLAF), and by the European Court of Auditors as foreseen by Article 
129 of the Financial Regulation 

Ex-ante: Commission assessment of management and control systems in the partners. 
For  each  partner,  an  ex-ante  operational  assessment  of  the  financial  circuits  and 
control  environment  is  carried  out  by  the  Commission,  if  necessary,  with  technical 
support  from  consultants.  An  analysis  of  accounting  procedures,  segregation  of 
duties and internal/external audit of the Central bank and the Ministry of Finance are 
carried out to ensure a reasonable level of assurance for sound financial management. 
Should weaknesses be identified, they are translated into conditions, which have to 
be  implemented  before  the  disbursement  of  the  assistance.  Also,  when  needed, 
specific arrangements for payments (e.g. ring-fenced accounts) are put in place. 

During  implementation:  Commission  checks  of  periodic  partner  declarations.  The 
payment is subject to (1) monitoring by DG ECFIN staff, in close coordination with 
the  EU  Delegations  and  with  the  external  stakeholders,  like  the  IMF,  of  the 
implementation of the agreed conditionalities, and (2) the normal control procedure 

EN 

26 

  EN 

provided  for  by  the  financial  circuit  (model  2)  used  in  DG  ECFIN,  including  the 
verification  by  the  financial  unit  of  the  fulfilment  of  conditions  attached  to  the 
disbursement of the assistance mentioned above. The disbursement relating to MFA 
operations may be subject to additional independent ex-post (documentary and/or on-
the-spot)  verifications  by  officials  of  the  ex-post  control  team  of  the  DG.  Such 
verifications  may  also  be  initiated  at  the  request  of  the  responsible  AOSD. 
Interruptions  and  suspensions  of  payments,  financial  corrections  (implemented  by 
Commission), and recoveries may be practiced where needed (it has not occurred so 
far), and are explicitly foreseen in the financing agreements with the partners. 

2.2.3.  Estimate of the costs and benefits of the controls and assessment of the expected level 

of risk of error  

The control systems in place, such as the ex-ante operational assessments or the ex-
post assessments, ensured an effective error rate for the MFA payments of 0%. There 
are  no  known  cases  of  fraud,  corruption  or  illegal  activity.  MFA  operations  have  a 
clear  intervention  logic,  one  that  allows  the  Commission  to  evaluate  their  impact. 
The  controls  enable  the  confirmation  of  assurance  and  of  attainment  of  policy 
objectives and priorities.  

2.3.  Measures to prevent fraud and irregularities 

Specify existing or envisaged prevention and protection measures. 

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

First,  the  Loan  Agreement  will  comprise  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,  including  in  the  area  of  public  finance  management,  with  a  view  to 
strengthening  efficiency,  transparency  and  accountability.  Also,  the  assistance  will 
be paid to a specific account of the Central Bank of the partner.  

Moreover, in line with the requirements of the Financial Regulation, if necessary, the 
Commission services will carry out an Operational Assessment of the financial and 
administrative circuits of the partner to ascertain that the procedures in place for the 
management of programme assistance, including MFA, provide adequate guarantees. 
The  assessment  will  cover  areas  such  as  budget  preparation  and  execution,  public 
internal  financial  control,  internal  and  external  audit,  public  procurement,  cash  and 
public  debt  management,  as  well  as  the  independence  of  the  central  bank. 
Developments in that area will be further closely monitored by the EU Delegations in 
the  respective  partner.  The  Commission  is  also  using  budget  support  assistance  to 
help  the  respective  partners  improve  their  PFM  systems,  and  these  efforts  are 
strongly supported by other donors. 

Finally, the assistance will be liable to verification, control and auditing procedures 
under  the  responsibility  of  the  Commission,  including  the  European  Anti-Fraud 
Office (OLAF), and the European Court of Auditors as foreseen by Article 129 of the 
Financial Regulation. 

EN 

27 

  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  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Heading of 
multiannual 
financial 
framework 
2014-2020 

4 

4 

01 03 02 

Macro-financial assistance  

01 03 06 

Provisioning of the Guarantee Fund  

Type of  
expenditure 

Diff./Non-
diff.15 

Contribution  

from 
EFTA 
countries
16 

from 
candidate 
countries17 

from third 
countries 

within the 
meaning of 
Article 21(2)(a) of 
the Financial 
Regulation  

Diff. 

NO 

NO 

NO 

NO 

Non-diff. 

NO 

NO 

NO 

NO 

  01  03  06  –  According  to  the  Commission  proposal,  the  Guarantee  Fund  for  external 
actions  will  be  provisioned  according  to  the  Guarantee  Fund  Regulation  No  480/2009, 
using  the  appropriations  under  budget  line  01  03  06  (“Provisioning  of  the  Guarantee 
Fund”),  at  a  rate  of  9%  of  the  total  outstanding  capital  liabilities.  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 entered in year “n” into the “n+1” draft budget and effectively paid in one transaction 
at the beginning of the year “n+1” from the budget line “Provisioning of the Guarantee 
Fund” (budget line 01 03 06). 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. 

  N.B. Under the MFF for 2021-2027, there will be a new budgetary nomenclature which 
has  not  yet  been  adopted.  The  budgetary  impact  will  thus  fall  on  the  successor  budget 
lines. 

15 
16 
17 

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 

28 

  EN 

 
 
 
                                                 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial  
framework  

4 

The EU as a global partner 

EUR million (to three decimal places) 

DG: ECFIN 

2020 

2021 

2022 

2023 

TOTAL 

 Operational appropriations  

Budget  line  01  03  06  Provisioning  of  the 
Guarantee Fund 

Budget 
line  01  03  02  Macro-financial 
assistance  (operational  assessment  and  ex-
post evaluation) 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(3a) 

(4a) 

0.350 

0.350 

270.0 

270.0 

0.450 

0.450 

Appropriations  of  an  administrative  nature  financed  from  the 
envelope of specific programmes18  

- 

- 

- 

- 

TOTAL appropriations  
under HEADING 4 
of the multiannual financial framework 

Commitments 

=1+3 

0.350 

270.0 

0.450 

Payments 

=2+4 

0.350 

270.0 

0.450 

270.0 

270.0 

0.800 

0.800 

270.8 

270.8 

18 

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 

29 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Heading of multiannual financial  
framework  

5 

‘Administrative expenditure’ 

EUR million (to three decimal places) 

DG: ECFIN 

 Human resources  

 Other administrative expenditure  

TOTAL DG ECFIN 

Appropriations  

2020 

2021 

2022 

2023 

TOTAL 

1.614 

0.240 

1.854 

- 

- 

- 

0.007 

0.009 

- 

- 

0.007 

0.009 

1.630 

0.240 

1.870 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

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

Commitments 

Payments 

2.204 

2.204 

270.007 

0.459 

270.007 

0.459 

272.670 

272.670 

2020 

2021 

2022 

2023 

TOTAL 

EUR million (to three decimal places) 

EN 

30 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–    The proposal/initiative does not require the use of operational appropriations  

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

2020 

2021 

2022 

2023 

TOTAL 

OUTPUTS 

Commitment appropriations in EUR million (to three decimal places) 

Indicate 
objectives and 
outputs  

Type19 

 

A
v
e
r
a
g
e 
c
o
st 

SPECIFIC OBJECTIVE No 120… 

- Output 

- Output 

- Output 

Operational  
Assessment 

Provisioning 
of the 
Guarantee 
Fund 

Ex-post 
Evaluation  

Subtotal for specific objective No 
1 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost 

Total 
No 

Total 
cost 

5 

0.350 

1 

270.0 

3 

0.450 

TOTAL COST 

0.350 

270.0 

0.450 

270.8 

19 
20 

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 

31 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–    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) 

2020 

2021 

2022 

2023 

TOTAL 

1.614 

0.240 

1.854 

- 

- 

- 

0.007 

0.009 

1.630 

- 

- 

0.240 

0.007 

0.009 

1.870 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

Other administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 521 
of the multiannual 
financial framework  

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by 
appropriations from the DG that 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 
constraints.
allocation 

procedure 

budgetary 

light 

and 

the 

of 

in 

21 

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 

32 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.  Estimated requirements of human resources 

–    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 

2020 

2021 

2022 

2023 

 Establishment plan posts (officials and temporary staff) 

XX 01 01 01 (Headquarters and Commission’s Representation 
Offices) 

7.5 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

 External staff (in Full Time Equivalent unit: FTE)22 

0.03 

0.04 

XX 01 02 01 (AC, END, INT from the ‘global envelope’) 

5.75 

0.03 

0.03 

XX 01 02 02 (AC, AL, END, INT and JED in the delegations) 

XX 01 04 yy 23 

- at Headquarters 

- in Delegations  

XX 01 05 02 (AC, END, INT - Indirect research) 

10 01 05 02 (AC, END, INT - Direct research) 

Other budget lines (specify) 

TOTAL 

13.25 

0.06 

0.07 

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 

ECFIN Director Dir. D: Supervise and manage the operation, liaise with Council and 
Parliament for the adoption of the Decision and the approval of the Memorandum of 
Understanding  (MoU),  negotiate  the  MoU  with  the  authorities  of  the  beneficiary  , 
review reports, lead missions and assess progress with conditionality compliance. 

ECFIN  HoU/DHoU  Dir.  D:  Assist  the  Director  in  managing  the  operation,  liaising 
with Council and Parliament for the adoption of the Decision and the approval of the 
MoU,  negotiating  the  MoU  and  (together  with  Dir.  L)  the  Loan  Facility  Agreement 
with the authorities of the beneficiary, reviewing reports and assessing progress with 
conditionality compliance.  

ECFIN Desk economists, MFA Sector (Dir. D): Prepare the Decision and MoU, liaise 
with the authorities and the IFIs, conduct review missions, prepare Commission staff 
reports and Commission procedures related to the management of the assistance, liaise 
with external experts for the operational assessment and the ex-post evaluation.  

BUDG  Directorate  E  (Units  E1,  E2  and  E3  under  the  supervision  of  the  Director): 
Prepare  the  Loan  Facility  Agreement  (LFA),  negotiate  it  with  the  authorities  of  the 
beneficiary and have it approved by the responsible Commission services and signed 

22 

23 

AC=  Contract  Staff;  AL  =  Local  Staff;  END=  Seconded  National  Expert;  INT  =  agency  staff; 
JED= Junior Experts in Delegations.  
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 

EN 

33 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
by  both  parties.  Follow  up  the  entry  into force of  the  LFA.  Prepare  the  Commission 
decision(s) on the borrowing transaction(s), follow up the submission of the Request(s) 
for  Funds,  select  the  banks,  prepare  and  execute  the  funding  transaction(s)  and 
disburse the funds to the beneficiary. Carry out the back-office activities to follow up 
the reimbursement of the loan(s). Prepare the corresponding reports on these activities. 

External staff 

EN 

34 

  EN 

 
 
3.2.4.  Compatibility with the current multiannual financial framework  

–  X  The  proposal/initiative  is  compatible  with  the  current  multiannual  financial 

framework. 

–    The proposal/initiative will entail reprogramming of the relevant heading in the 

multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

–    The  proposal/initiative  requires  application  of  the  flexibility  instrument  or 

revision of the multiannual financial framework. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

3.2.5.  Third-party contributions  

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

–  The proposal/initiative provides for the co-financing estimated below: 

Appropriations in EUR million (to three decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

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

Total 

Specify  the  co-financing 
body  

TOTAL appropriations 
co-financed  

EN 

35 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.3. 

Estimated impact on revenue  

–  X  The proposal/initiative has no financial impact on revenue. 

–    The proposal/initiative has the following financial impact: 

–    on own resources  

–    on miscellaneous revenue  

Appropriation
s available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

EUR million (to three decimal places) 

Impact of the proposal/initiative24 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

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

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected. 

Specify the method for calculating the impact on revenue. 

24 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 25% for collection costs. 

EN 

36 

  EN