REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Evaluation of Decision N° 534/2014/EU of the European Parliament and of the Council of 15 May 2014 providing macro-financial assistance to Tunisia
Date: 2021-01-29
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, European neighbourhood policy, Tunisia, balance of payments, balance of payments assistance, economic reform, economic stabilisation, macro-financial assistance, political reform, structural adjustment

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   EUROPEAN COMMISSION  Brussels, 29.1.2021  COM(2021) 33 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Evaluation of Decision N° 534/2014/EU of the European Parliament and of the Council of 15 May 2014 providing macro-financial assistance to Tunisia  {SWD(2021) 8 final}  
 
 
In May 2014, the European Parliament and Council adopted1 a MFA operation of EUR 300 
million  to  support  Tunisia  in  addressing  its  balance-of-payment  (BoP)  crisis,  which  had 
worsened  after  the  Jasmine  Revolution  in  2011  and  the  subsequent  political  and  economic 
transition. The operation was disbursed in full, in three tranches, between May 2015 and July 
2017. 

ICF,  in  cooperation  with  Cambridge  Econometrics,  was  appointed  as  external  contractor  to 
undertake  the  ex-post  evaluation  of  MFA-I  in  Tunisia,  on  which  the  accompanying 
Commission  Staff  Working  Document  (SWD)  is  based.  The  aim  of  the  external  evaluation 
was to assess the relevance, efficiency, effectiveness, coherence, and EU value added of the 
MFA  operation.  It  also  explored  the  social  impact  of  the  programme  and  its  effect  on 
Tunisia’s  public  debt  sustainability.  The  evaluation  in  question  draws  on  evidence  gathered 
through  a  variety  of  quantitative  and  qualitative  research  techniques,  including  key 
stakeholders  consultation.  A  number  of  methodological  limitations  have  been  identified; 
however,  they  do  not  impact  the  overall  reliability  of  the  evaluation  analysis.  Risks  and 
limitations  identified  were  mitigated  by  using  a  wide  range  of  sources,  different  evaluation 
techniques, alternative scenarios and multiple rounds of feedback. 

The external evaluation and the Commission’s SWD intend to (1) inform the future use of the 
MFA  instrument;  and  (2)  ensure  transparency  and  accountability,  in  accordance  with  the 
Financial Regulation2 and the MFA decision for Tunisia.  

The evaluation found that MFA-I was relevant in terms of its objectives, financial envelope 
and  structural  conditions.  MFA  policy  conditionality  covered  the  most  relevant  reform 
challenges in Tunisia, namely: taxation; public-finance management; social-safety net (SSN); 
financial sector; public statistical system; trade. While the country successfully delivered on 
all the agreed reform conditions, difficulties were encountered in the field of SSN and trade 
reforms.  The  external  evaluation  concluded  that  more  capacity  from  the  relevant  Tunisian 
institutions would have facilitated better progress on these actions, given the challenges faced 
by the still young Tunisian institutions in terms of administrative capability and ownership, in 
a context of political instability. This finding also highlighted the need for designing reforms 
in a way that secures achievable targets taking into account a fragile institutional context and 
a  fragmented  political  landscape,  which  could  delay  the  implementation  of  the  reform 
programme, as seen in the period 2015-2017. The fact that many conditions under MFA-I (in 
the 
tax,  public-finance  management,  social-safety  net  and  financial  sectors)  were 
subsequently taken further as part of MFA-II underlines the shared intention, by the EU and 
Tunisian Government,  to  concentrate efforts on pushing for steady progress  in  these critical 
reform areas. 

MFA-I  was  effective  in  helping  to  improve  Tunisia’s  BoP,  as  well  as  supporting  fiscal 
consolidation  through  highly  concessional  financial  terms  and  policy  conditions.  The  MFA 
covered around 11.3% of the residual financing gap for the period 2015-2016 and increased 
confidence in the Tunisian economy (by decreasing the market-based financing cost, and by 
helping to stabilise the national currency). 

MFA-I was designed and implemented efficiently and it was coherent with the broad policy 
framework guiding the EU-Tunisia relations. There is also a high level of external coherence 

1 Decision No 534/2014/EU of the European Parliament and of the Council of 15 May 2014, providing macro-
financial assistance to the Republic of Tunisia. Available at: https://eur-lex.europa.eu/legal-
content/EN/TXT/?qid=1476964844762&uri=CELEX:32014D0534 
2 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018R1046 

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with interventions coming from other international donors. The MFA not only contributed to 
‘burden  sharing’  with  the  International  Monetary  Fund  (IMF)  and  other  donors  in  financial 
terms, but also reinforced reforms promoted by the IMF and World Bank (WB) through the 
use  of  cross  conditionality  and  complementary  conditions.  Notwithstanding  the  original 
intention  of  reducing  cross-conditionality,  the  evaluation  confirmed  that  the  choice  of 
concentrating on key reform  areas, even if already tackled  elsewhere, was a successful one. 
Similar considerations are encouraged for future interventions.  

The  EU’s  added  value  primarily  concerned  the  financial  benefits  granted  to  the  Tunisian 
economy,  with  the  highly  concessional  terms  of  the  MFA  loans  allowing  for  fiscal  savings 
and a gradual  adjustment  of the primary public  deficit.  In certain reform areas, MFA added 
additional  endorsement  to  the  reforms  driven  by  the  IMF  (i.e.  financial  sector)  and  the  WB 
(i.e. SSN reforms), contributing to the sustained mobilisation of local authorities around these 
issues.  Furthermore,  MFA-I  was  the  only  instrument  advancing  the  simplified  income  tax 
declaration system (regime forfaitaire).  

A  counterfactual  analysis  on  the  MFA’s  social  impact  suggested  that,  if  MFA  was  not 
provided  but  IMF  support  continued,  the  indirect  effects  on  the  social  situation  in  Tunisia 
would  have  been  limited.  MFA  had  more  impact  through  direct  channels,  namely  the 
conditions in the Memorandum of Understanding related to social safety net reforms. 

Finally,  the  evaluation  found  that  MFA-I  had  a  positive  effect  on  the  sustainability  of 
Tunisia’s public debt. It enabled fiscal savings, resulting from the very favourable financial 
conditions of the operation, and it helped Tunisia’s adjustment path by creating fiscal space 
for  other  reforms  and  for  sustaining  social  spending.  However,  given  its  relatively  limited 
size,  it  is  unlikely  that  the  absence  of  MFA-I  would  have  significantly  affected  the 
sustainability of Tunisian public debt. 

In conclusion, MFA-I was relevant to support Tunisia's economic recovery after the Jasmine 
Revolution in 2011 and the ensuing political transition, providing fiscal savings and financial 
benefits, as well as boosting private sector confidence. The MFA conditionality package was 
fully aligned with the related IMF programme and created a politically reinforcing effect that 
contributed to the mobilisation of local authorities around crucial reforms, even in areas not 
covered  by  other  international  donor  programmes.  The  Commission  Staff  Working 
Document,  which  informs  this  report,  provides  a  detailed  and  comprehensive  assessment  of 
the MFA intervention.  

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