COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION of Macro-financial assistance operations to third countries (Meta-evaluation of operations 2010-2020)
Date: 2023-01-13
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU aid, European neighbourhood policy, International Monetary Fund, economic stabilisation, financial aid, macro-financial assistance, macroeconomics, third country

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   EUROPEAN COMMISSION  Brussels, 13.1.2023  SWD(2023) 17 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE EVALUATION  of  Macro-financial assistance operations to third countries   (Meta-evaluation of operations 2010-2020)           {SWD(2023) 16 final}  
 
 
Macro-financial  assistance  (MFA)  is  a  form  of  EU  financial  aid  for  partner  countries, 
experiencing  a  balance-of-payments  crisis,  helping  to  restore  their  external  stability  and 
return their economies to a sustainable path. It takes the form of concessional medium-/long-
term  loans  and/or  grants  and  typically  complements  financing  provided  by  the  international 
community  in  the  context  of  a  financial  arrangement  with  the  International  Monetary  Fund 
(IMF).  Support  can  be  provided  only  if  beneficiaries  respect  effective  democratic 
mechanisms, including a multi-party parliamentary system and the rule of law and guarantee 
respect  for  human  rights  (political  pre-condition).  Disbursements  are  conditional  on  the 
implementation of policy reforms agreed between the Commission, on behalf of the EU, and 
the beneficiary country in a bilateral Memorandum of Understanding (MoU). 

Since its inception, MFA has been gaining increasing prominence in the external toolbox 
of the EU and is an important part of its contribution to the Global Financial Safety Net 
under  G20  rules.  This  meta-evaluation  was  undertaken  by  the  Commission’s  Directorate 
General for Economic and Financial Affairs (DG ECFIN) to assess whether the principles and 
characteristics  governing MFA  are still fit for  its  purpose. The exercise,  coinciding with  the 
MFA’s thirtieth anniversary, took stock of previous evaluations and will help the Commission 
learn  how  to  improve  the  design  and  implementation  of  MFA,  as  well  as  the  methodology 
used to evaluate individual operations. The Staff Working Document (SWD) is mainly based  
on  an  external  study  of  ex-post  evaluations  of  15  MFA  operations  during  2010-2020, 
complemented  by  experience  with  the  2020  COVID-19  MFA  package  and  the  recent  MFA 
operations with Ukraine1. The bulk of MFA funding made available during 2009-2019 (EUR 
6.3  billion  in  total)  was  provided  to  the  eastern  neighbourhood  (71%:  Armenia,  Georgia, 
Moldova,  Ukraine),  followed  by  the  southern  neighbourhood  (24%:  Jordan,  Lebanon, 
Tunisia). Additionally, EUR 3 billion of MFA support in the form of loans to 10 countries was 
authorised  in  response  to  the  COVID-19  pandemic  in  2020.  Furthermore  in  2022,  EUR  7.2 
billion was disbursed to Ukraine in three successive operations. 

State of play and objectives  

The EU has been providing MFA to partner countries, primarily in its neighbourhood, 
through targeted interventions  since 1990.  It is  a  “crisis” instrument in the EU’s  external 
policy  toolkit  and  is  used  in  response  to  sudden  (and  unexpected)  economic  and  financial 
developments  in  partner  countries.  The  absence  of  a  framework  regulation  for  this  policy 
means  that  MFA  operations  are  adopted  and  implemented  by  means  of  ad-hoc  decisions. 
Since 2013, the European Parliament (EP) and the Council have been authorising each MFA 
operation on the basis of Article 212 of the Treaty on the Functioning of the European Union 
(TFEU),  and  acting  as  co-legislators  on  a  Commission  proposal  in  accordance  with  the 
ordinary legislative procedure (the OLP2). The Council alone can authorise MFA operations in 
urgent cases on the basis of Article 213 of the TFEU.  

By a Joint Declaration in 20133, the EP and the Council have provided guidance on the 
MFA instrument. While not legally binding, it takes stock of the main features of MFA. In 

1  The  countries  covered  by  the  meta-evaluation  are:  Albania,  Armenia,  Bosnia  and  Herzegovina,  Georgia, 
Jordan, Kosovo, Kyrgyz Republic , Lebanon, Moldova, Montenegro, North Macedonia, Serbia, Tunisia and, 
Ukraine. 

2  The  procedure  for  the  OLP  is  laid  out  in  Article  294  of  the  TFEU.  The  Council  alone  authorised  MFA 

operations before 2013. 

3 Decision No 778/2013/EU of the European Parliament and of the Council of 12 August 2013 providing further 

macro-financial assistance to Georgia (OJ L 218, 14.8.2013, p. 15).  

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accordance with this Joint Declaration, MFA is an exceptional financing instrument of untied 
and  undesignated  balance-of-payments  support  for  pre-accession  and  neighbourhood 
countries and territories  (and others, in exceptional cases).  Its objectives are to: (i)  restore a 
sustainable  external  finance  situation  for  eligible  countries  facing  external  financing 
difficulties,  (ii)  underpin  the  implementation  of  a  policy  programme  containing  structural 
reforms to improve the balance of payments position,  (iii) strengthen the implementation  of 
relevant  agreements  and  programmes  with  the  EU.  Furthermore,  the  EP  and  the  Council 
establish  that  MFA  is  linked  to  the  political  pre-condition  and  on  the  implementation  of  an 
IMF economic programme. 
The EU’s treaties set out the broader goals and purposes of MFA as a tool for the  EU 
external  action.  These  include  safeguarding  the  EU  values  and  fundamental  interests; 
consolidating and supporting democracy, human rights and the rule of law; and encouraging 
the integration of the beneficiary countries into the world economy4. 

Evaluation findings 

Overall,  MFA  was  effective  in  stabilising  the  beneficiaries’  (external)  macroeconomic 
position,  especially  in  the  short  and  medium-terms.  Notably,  the  individual  ex-post 
evaluations  show  that  despite  a  challenging  external  environment  at  the  start  of  MFA 
operations, market access was maintained or regained in all cases. Besides, reserve adequacy 
and current accounts mostly improved during MFA operations, while inflation subsided. 

The following features were considered key in supporting MFA’s effectiveness: 
 

the  focus  on  countries  in  the  EU’s  direct  vicinity  and  the  strong  ties  with  those 
countries help ensure that MFA policy conditions are relevant and can be met and that the 
instrument achieves its goals; 
the preference for loans and the standard availability period of 2.5 years create an overall 
framework that incentivises reforms and their implementation. The bulk of MFA funding 
was in the form of loans (95%), and the rest was in grants; 

 

  policy conditions  are  determined as a package of reforms,  ensuring  a comprehensive 
reform effort.  The chosen policy areas, the degree of ambition and impact on long-term 
sustainability,  as  well  as  the  sequencing  of  reforms  was  found  to  be  appropriate  and 
important ingredients for successful operations. The external study has found evidence of 
high compliance with MFA conditionality and very little backtracking on reforms. 

MFA  has  been  a  relatively  cost-efficient  instrument.  For  the  EU,  the  complete  non-
occurrence  of  defaults  to  date  has  allowed  the  related  external  guarantee  provisioning  to  be 
routinely  returned  to  the  EU  budget.  Concomitance  with  IMF  interventions  has  provided 
assurance  regarding  the  beneficiary’s  debt  sustainability  and  repayment  capacity,  while  the 
division  of  labour  with  the  IMF  has  generated  significant  resource  savings  for  the  EU.  For 
beneficiary countries, the high degree of loan concessionality provides substantial savings in 
comparison with market funding in a period of stress. 

Stakeholders  have  confirmed  that  the  objectives,  design  and  implementation  of  MFA 
operations  were  largely  complementary  and  consistent  with  other  EU  initiatives  and 
IMF  operations.  MFA  was  complementary  to  budget  support  programmes  in  partner 
countries as well as to IMF/World Bank operations. The pooling of resources and expertise, 

4 Article 21 of the Treaty on European Union. 

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and  policy  conditionality  between  the  Commission  and  the  IMF  in  synchronised  operations 
has increased the overall impact of MFA in terms of the level of support and leverage to push 
for reforms. 

MFA  operations  have  substantial EU  added  value  in  various  areas. For  Member  States, 
the  joint  action  has  provided  additional  funding  and  economies  of  scale.  For  beneficiaries, 
MFA has promoted reforms that would not otherwise have taken place so quickly and broadly. 

Other features can reduce the effectiveness of MFA. 
  The  lengthy  procedures  for  adopting  MFA  operations  can  pose  risks  to  their 
effectiveness.  The  time lag  between  request  and  disbursement  was  generally  considered 
protracted  for  a  crisis  instrument,  especially  when  standard  decision-making  procedures 
are  being  applied  as  it  may  affect  the  implementation  of  envisaged  reforms  and  lead  to 
some  unwanted  economic  corrections  occurring  before  external  funding  support  is  fully 
made available.  

  Notwithstanding the high compliance rates, the MoU’s lack of flexibility appears to 
have  reduced  the  effectiveness  of  MFA  in  times  of  profound  change.  Across  the 
evaluated operations, beneficiaries complied with roughly 90% of the agreed conditions, 
at least broadly. MFA policy conditions are fixed at the operation’s inception and remain 
unchanged  once  the  national  procedures,  often  requiring  parliamentary  ratification,  have 
been finalised.  

  The  relatively  low  size  of  the  MFA  also  affected  its  effectiveness,  with  lower  MFA 
amounts  producing  less  stabilisation  benefits  and  weaker  reforms  implementation. 
Besides,  MFA  visibility  was  rather  low.  The  instrument  was  under-exploited  for  the 
promotion of EU economic diplomacy in partner countries. It also limited  the perceived 
EU value added in comparison with the IMF/World Bank operations. 

Conclusions and lessons learned 

Continuing  demand  for  MFA  from  partner  countries  and  external  evaluation  findings 
demonstrate the ongoing relevance of MFA and the reforms that it promotes. MFA was 
requested and employed 15 times during the evaluation period, and 10 new operations were 
requested  and  authorised  at  the  start  of  the  COVID-19  pandemic  in  2020.  The  continuing 
demand attests its ongoing relevance, and stakeholders generally confirm the EU value added 
of  past  operations. The  overall  assessment  of  the  MFA  instrument  over  the  meta-evaluation 
period is very positive and shows that MFAs contributed to stabilisation of the beneficiaries’ 
economies.  It  was  found  to  be  very  cost-efficient  to  the  EU  budget.  MFA  policy  conditions 
were shown to be relevant and well-coordinated with other EU instruments in neighbourhood 
and pre-accession countries.  

The  evaluation  has  nevertheless  identified  several  areas  where  there  may  be  room  for 
improvement  :  (i)  Concomitance  with  IMF  support:  despite  the  proven  value  added  of  the 
link with IMF support, making MFA strictly conditional on beneficiaries having a satisfactory 
track record of implementing the IMF programme has sometimes delayed the implementation 
of  MFA;  (ii)  Lengthy  decision-making  procedure  for  a  crisis  instrument:  the  length  of  the 
standard procedures has been found to delay the swift availability of MFA support. It was the 
intention of the Commission in 2011 to establish a framework regulation for MFA that would 
make  the  instrument  more  effective  by  streamlining  its  decision-making  process,  but  no 
to  all  EU 
agreement  could  be  reached  on  a 
institutions.  Recent experiences with the COVID-19 package and MFA to Ukraine following 
Russia’s invasion have shown, however, that the current EU procedures can allow for a very 

that  was  acceptable 

legal  set-up 

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rapid adoption, when all institutions  make full use of the available procedural flexibilities in 
particularly  urgent  cases.  (iii)  Volume  of  the  financial  assistance:  the  impact  of  MFA 
operations is found to be proportional to the level of financial support. It is not entirely clear 
to  what  extent  the  limits  imposed  in  that  respect  in  relation  to  contributing  to  the  residual 
to  adapt  policy 
financing  gap  provide  sufficient  flexibility.  (iv)  Some 
conditionalities in light of changing circumstances during an operation could enhance MFA’s 
capacity to effectively anchor and accompany important policy reforms. (v) Limited visibility 
the 
of  MFA  operations:  various  elements  could  be  explored, 
dissemination of ex-post evaluations results. 

including  regarding 

flexibility 

The framework for MFA ex-post evaluations is overall appropriate and useful. Ex-post 
evaluations  have  been  carried  out  to  a  high  standard  and  further  enhanced  with  the 
introduction of the Better Regulation Guidelines.  

A  comprehensive  assessment  of  the  MFA  operations  is  set  out  in  the  accompanying  SWD, 
which informs this executive summary.  

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