COMMISSION STAFF WORKING DOCUMENT Background Analysis per beneficiary country Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of macro-financial assistance to third countries in 2022
Date: 2023-07-11
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: European neighbourhood policy, economic stabilisation, macro-financial assistance, macroeconomics, multiannual financial framework, structural adjustment, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 11.7.2023  SWD(2023) 244 final  COMMISSION STAFF WORKING DOCUMENT Background Analysis per beneficiary country Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of macro-financial assistance to third countries in 2022 {COM(2023) 409 final}  
 
 
LIST OF ABBREVIATIONS 

AA 

CPI 

Association agreement 

Consumer price index 

DCFTA 

Deep and Comprehensive Free Trade Area 

ECF 

EFF 

EU 

EUR 

FDI 

IFI 

IMF 

LFA 

MFA 

MoU 

OJ 

PFM 

PPP 

pps 

SME 

SOB 

SOE 

SWD 

USD 

WIIW 

y-o-y 

Extended credit facility 

Extended fund facility 

European Union 

Euro 

Foreign direct investment 

International Financial Institution 

International Monetary Fund 

Loan facility agreement 

Macro-financial assistance 

Memorandum of understanding 

Official Journal of the European Union 

Public finance management 

Public-private partnership 

Percentage points 

Small and medium-sized enterprises 

State-owned bank 

State-owned enterprise 

Staff working document 

United States dollar 

Vienna Institute for International Economic Studies 
US 
Year-on-year 

1 

 
 
 
 
 
 
 
 
 
 
 
CONTENTS 

Introduction .................................................................................................................................................. 3 

Background analysis of beneficiaries of macro-financial assistance ........................................................ 4 

1.  Moldova ................................................................................................................................................. 4 

1.1  Macroeconomic performance ..................................................................................................... 4 
Implementation of macro-financial assistance .................................................................... ……6  
1.2 
1.2.1   Recent macro-financial assistance operations…………………………….………...…….....6 
1.2.2  Policy conditionality ............................................................................................................. 7 

2.  Ukraine ................................................................................................................................................ 10 

2.1  Macroeconomic performance ................................................................................................... 10 
Implementation of macro-financial assistance .......................................................................... 13 
2.2 
2.2.1   Recent macro-financial assistance operations………………………………………....…...13 
2.2.2  Policy conditionality ........................................................................................................... 16 

3. 

Jordan ................................................................................................................................................. 22 

3.1  Macroeconomic performance ................................................................................................... 22 
Implementation of macro-financial assistance .......................................................................... 24 
3.2 
3.2.1   Recent macro-financial assistance operations…………………….………………...……...24 
3.2.2  Policy conditionality ........................................................................................................... 25 

4.  Tunisia ................................................................................................................................................. 30 

4.1  Macroeconomic performance ................................................................................................... 29 
Implementation of macro-financial assistance .......................................................................... 32 
4.2 
4.2.1   Recent macro-financial assistance operations………………….…………………...……...32 
4.2.2  Policy conditionality ........................................................................................................... 32 

5.  Bosnia & Herzegovina ....................................................................................................................... 36 

5.1  Macroeconomic performance ................................................................................................... 36 
Implementation of macro-financial assistance .......................................................................... 38 
5.2 
5.2.1   Recent macro-financial assistance operations…………………….………………...……...38 
5.2.2  Policy conditionality ........................................................................................................... 39 

Annex 1: MFA operations by date of decision, 1990-2021 .................................................................. 42 
Annex 2: Status of disbursements made by date of decision at end-December 2022 .......................... 43 
Annex 3: MFA amounts authorised* by year, 2005-2022 (EUR million) ........................................... 49 
Chart 3A: MFA amounts authorised by year, 2006-2022 (EUR million) ............................................ 49 
Chart 3B: MFA amounts authorised by region, 2006-2022 (%) .......................................................... 49 
Annex 4: MFA amounts disbursed by year, 2006-2022 (EUR million) ............................................... 50 
Chart 4A: MFA amounts disbursed by year, 2006-2022 (EUR million) .............................................. 50 
Chart 4B: MFA amounts disbursed by region, 2006-2022 (%) ............................................................ 50 

2 

 
 
 
INTRODUCTION 

This  Staff  Working  Document  complements  the  Commission’s  report  to  the  European 
Parliament and the Council on the implementation of macro-financial assistance (MFA) 
to third countries in 2022 1. 

In  2022,  the  two  remaining  MFA  operations  under  Decision (EU) 2020/701,  which 
aimed  to  support  10  partner  countries  in  dealing  with  the  economic  fallout  from  the 
COVID-19  crisis,  were  concluded.  Tunisia  received  the  second  disbursement  on 
25 May 2022,  thus  successfully  finishing  the  operation  upon  fulfilment  of  the  policy 
conditions  agreed  in  the  Memorandum  of  Understanding  (MoU).  However,  the  second 
instalment  for  Bosnia  and  Herzegovina  was  not  disbursed  due  to  limited  reform 
implementation by the end of the availability period. 

Besides the financial assistance planned in the context of the COVID-19 pandemic, the 
implementation  of  the  third  regular  MFA  programme  for  Jordan  was  also  carried  out. 
The  third  and  final  instalment  remained  available  until  April  2023  and  the  programme 
was successfully completed by then. 

After  the  completion  of  all  the  10  operations  under  the  COVID-19  MFA  package,  the 
focus shifted to the support provided in the context of Russia’s war of aggression against 
Ukraine  in  2022,  notably  to  Ukraine  itself  but  also  to  Moldova.  Financial  support  to 
North  Macedonia  was  also  considered  and  was  later  proposed  at  the  start  of  2023.  In 
these  extraordinary  circumstances,  MFA  forcefully  demonstrated 
its  continuing 
relevance  and  flexibility  in  allowing  the  EU  to  extend  sizeable  short-term  financial 
support  to  countries  in  the  EU  Neighbourhood  that  have  been  strongly  affected  by  the 
war or its economic fallout. 

For each beneficiary country, the report provides more detailed information on: (i) their 
macroeconomic and financial situation; (ii) the implementation of their MFA operations; 
and (iii) the policy conditionality attached to the MFA operations under analysis.  

The  annexes  include  overview  tables  detailing  the  effective  disbursements  of  MFA 
operations  since  1990  by  date  of  adoption  of  the  related  decisions,  as  well  as  tables 
detailing MFA commitment and payment amounts in 2006-2021, by year and by region 2. 

1 This document is based on information available up to 5 May 2023. 
2 The document and the annexes distinguish between authorised amounts (the amounts made available to 
the beneficiary country as stated in the decisions providing MFA) and disbursed amounts (the amounts 
actually paid to the beneficiary country).  

3 

 
 
 
                                                           
BACKGROUND ANALYSIS OF BENEFICIARIES OF MACRO-FINANCIAL ASSISTANCE 3 

1. 

MOLDOVA 

The Moldovan economy has been severely affected by Russia’s invasion of Ukraine, as 
well  as  the  protracted  energy  crisis  and  a  drought  in  the  summer.  These  caused  a  deep 
recession  in  2022.  Spiking  inflation  eroded  households’  disposable  income  and  loss  of 
confidence due to the war significantly reduced investment. On the fiscal side, the high 
energy  prices  necessitated  further  spending  on  subsidies  to  the  most  vulnerable 
consumers  and  increased  the  budget  deficit.  The  current  account  deficit  also  increased, 
driven  by  a  sizeable  negative  trade  balance.  In  light  of  these  developments,  Moldova 
received increased financial support from its international partners, including the EU via 
MFA. The EU also  granted Moldova candidate status on 23 June 2022, thus supporting 
its  ambition  of  further  deepening  Moldova's  political  association  and  economic 
integration with the EU.  

1.1 Macroeconomic performance 

Following  a  significant  post-pandemic  recovery  of  real  GDP  by  13.9%  in  2021,  the 
Moldovan economy was severely impacted by Russia’s invasion of Ukraine. Real GDP 
plummeted by 5.9% in 2022. The recession was driven by 4% and 6% falls in household 
consumption  and  investment  respectively.  On  the  production  side,  a  drought  in  the 
summer caused agricultural output (which accounts for about 10% of Moldova’s GDP) to 
decline  by  25%.  Despite  a  relatively  strong  export  performance,  high  import  prices 
contributed to an overall negative contribution of net exports to growth.  

Inflation  in  Moldova  accelerated  markedly  in  2022  and  peaked  at  34.6%  in  October 
compared  to  5.1%  in  2021.  This  was  driven  by  high  energy  and  food  prices.  Demand-
side pressures eased somewhat in the second half of 2022, but high credit growth in the 
first  half  also  contributed  to  the  accelerating  inflation.  Strong  inflationary  pressures 
caused the central bank to tighten its monetary policy stance with three upward revisions 
of the key interest rate (by a cumulative 15 pps) in 2022 to 21.5%. Inflation had slowed 
(albeit moderately) by the end of the year to 30.2% and this allowed the base rate to be 
reduced to 20%. 

On the fiscal side, Moldova’s budget deficit widened to 5.2% of GDP in 2022 (1.9% in 
2021)  but  remained  below  the  6.2%  of  GDP  that  was  anticipated  in  the  budgetary 
revision in August. Revenues and international support (including in the form of grants) 
were better than projected, but the increased spending on energy  (through subsidies for 
the most vulnerable households) had a marked impact on Moldova’s public finances. The 
authorities  expect  the  budget  deficit  to  widen  to  6%  of  GDP  in  2023  due  to  energy 
support  via  the  Energy  Vulnerability  Reduction  Fund  as  well  as  public  salary  and 
pensions  increases,  which  are  deemed  necessary  to  partly  cushion  the  effects  of  high 
inflation. 

Moldova’s public debt-to-GDP ratio is lower than that of most of its regional peers, but it 
did increase by 4 pps to 36.3% of GDP in 2022. The latest IMF programme review (April 
2023)  states  that  there  is  still  a  moderate  risk  of  debt  distress  in  Moldova  due  to  high 
sensitivity to external shocks. About 95% of Moldova’s public external debt  is owed to 
multilateral  creditors  on  concessional  terms.  Moldova  not  only  has  limited  access  to 
international  debt  markets  but  has  also  found  it  increasingly  difficult  to  borrow  on  the 

3 This section quotes statistics supplied by national authorities and other relevant sources. 

4 

 
                                                           
domestic market. Moldova has only been able to borrow at very short maturities and at 
historically  high  nominal  interest  rates  (in  the  range  of  20%  to  22%  per  annum  as  of 
November 2022), increasing the roll-over risks of the debt.  

On the external side, the current account deficit remained high in 2022 at 15.7% of GDP. 
This  was  largely  driven  by  a  high  negative  trade  balance  of  34.5%  of  GDP.  However, 
remittances remained broadly stable at 13.7% of GDP despite initial fears that transfers 
from abroad (especially Russia and the Commonwealth of Independent States) would fall 
markedly.  Notwithstanding  the  war-related  uncertainty,  net  FDI  (at  3.7%  of  GDP  for 
2022  as  a  whole)  returned  to  its  pre-pandemic  levels,  when  much  of  it  was  due  to 
reinvested earnings and carry-over effects from the previous year.  

After some volatility in the foreign exchange market due to Russia’s invasion of Ukraine, 
Moldova’s foreign currency reserves have been rebuilt to high levels (USD 4.5 billion in 
February 2023, which corresponds to 5 months of imports).  

The  economy  is  set  to  make  a  moderate  recovery  in  2023  with  a  stronger  rebound 
expected in 2024. This is likely to be underpinned by  an increase in agricultural output 
(although  subject  to  weather-related  risks)  as  well  as  higher  investment  and  stronger 
household  consumption  as  real  incomes  increase  due  to  falling  inflation.  The  planned 
high  budget  deficit  also  suggests  that  the  government  will  increase  fiscal  support 
(including  continuing  to  support  the  most  vulnerable  in  society  but  a  gradual 
reorientation  of  government  resources  towards  infrastructure  projects).  The  positive 
impact of war-fleeing migrants on the employment rate in 2022 is likely to fade away in 
the  coming  years.  Moldova’s  trade  activity  is  set  to  be  further  affected  by  regional 
disturbances. However, lower energy import prices, increased long-term energy security 
thanks  to  solid  reform  implementation  and  the  projected  recovery  of  economic  activity 
among  key  trading  partners  suggest  that  the  country’s  high  current  account  deficit  will 
gradually narrow in the future.  

Moldova – macroeconomic indicators 

2018 
Moldova 
11 252 
Nominal GDP, millions, USD 
4 142 
Nominal GDP per capita, USD 
4.3 
Real GDP, % change 
0.9 
Consumer price inflation, %, end of period 
3.1 
Consumer price inflation, %, average 
6.5 
Key monetary policy rate, %, end of period 
2.8 
Unemployment rate, LFS, % 
-0.8 
General government balance, % of GDP 
29.3 
Public expenditure, % of GDP 
30.1 
Public debt, % of GDP 
-11.8 
Current account balance, % of GDP 
3.0 
International reserves, USD billion 
5.4 
International reserves, months of imports 
65.1 
Gross external debt, % of GDP 
Net FDI, % of GDP 
2.3 
Source: national authorities and Commission calculations 

2019 
11 737 
4 458 
3.6 
7.5 
4.8 
5.5 
4.3 
-1.4 
29.8 
27.4 
-9.5 
3.1 
6.2 
63.2 
3.9 

2020 
11 530 
4 366 
-7.0 
0.4 
3.8 
2.7 
3.4 
-5.1 
29.3 
33.1 
-7.9 
3.8 
7.6 
72.5 
1.2 

2021 
13 669 
5 249 
13.9 
13.9 
5.1 
6.5 
2.6 
-1.9 
34.0 
32.6 
-11.7 
3.9 
8.0 
64.1 
1.7 

2022 
14 087 
5 473 
-5.9 
30.2 
28.6 
20.0 
3.2 
-5.2 
31.2 
36.3 
-15.7 
4.4 
5.0 
67.0 
3.7 

5 

 
 
 
 
 
 
1.2 Implementation of macro-financial assistance 

1.2.1 Recent macro-financial assistance operations 

Moldova has benefited from 3 MFA operations since 2014. The EU approved a total of 
EUR 350 million  under  these  MFAs  for  Moldova,  of  which  EUR 260 million  has  been 
disbursed  so  far.  Overall  progress  has  been  positive,  but  the  challenging  political 
situation  has  hindered  full  implementation  of,  and  disbursements  under,  the  2017-2020 
operation4, for which the third and final instalment was cancelled because the conditions 
agreed in the MoU were not fulfilled before the MFA’s availability period ended. After 
the  outbreak  of  the  COVID-19  pandemic,  Moldova  also  benefited  from  the  EU’s 
EUR 3 billion  COVID-19  MFA  package  to  10  enlargement  and  neighbourhood 
countries, of which EUR 100 million in loans was allocated to Moldova. Currently, in the 
context of a protracted energy crisis and challenging geopolitical situation, which has put 
additional  pressure  on  Moldova’s  macroeconomic  stability,  the  country  continues  to 
benefit from an ongoing MFA, which is well on track, and a proposal has been made to 
increase it (approval by the European Parliament and Council is pending).  

The authorities officially requested a new MFA in November 2021 in response to the gas 
crisis in Moldova during which the price of gas imported from Russia increased by 5 to 6 
times  compared  to  the  previous  import  price,  heavily  impacting  the  economy  and 
contributing to higher financing needs. The EU agreed to a new operation for Moldova of 
EUR 150 million  (EUR 120 million  in  loans  and  EUR 30 million  in  grants).  The 
European Parliament and Council adopted this new MFA on 6 April 20225 and the MoU 
entered  into  force  on  18 July  2022  after  its  ratification  by  the  Moldovan  parliament. 
Moldova’s successful completion of the corresponding policy conditions (concerning the 
rule  of  law  and  fight  against  corruption,  financial  sector  governance  and  energy  sector 
reforms) allowed the first instalment to be disbursed on 1 August 2022.  

On 9 March 2023, the  authorities submitted to  the Commission  a compliance statement 
on the progress made in meeting the conditions for the second instalment of the ongoing 
MFA. The Commission assessed that four of the six actions have been fully completed 
and  the  other  two  have  been  broadly  fulfilled.  These  two  concern  Action  8  on  the 
assessment of the judiciary and prosecution self-administration bodies (pre-vetting) and 
Action  9  on  the  new  customs  code.6  Based  on  an  overall  positive  assessment,  the 
Commission  disbursed  the  grant  and  loan  components  in  April  and  early  May 
respectively. The final instalment is expected to be disbursed in 2024. 

Russia’s war on  Ukraine and  its  severe impact  on the Moldovan economy  (particularly 
its aggravation of the ongoing energy crisis and the large inflow of war-fleeing migrants) 
prompted  Moldova  to  request  an  increase  in  the  ongoing  operation  on  11 March 2022. 
The Commission has responded to this request for additional assistance (especially in the 
form  of  grants)  by  supplementing  the  existing  MFA  with  a  further  EUR 75 million  via 

4  Decision  (EU)  2017/1565  of  the  European  Parliament  and  of  the  Council  of  13  September  2017  on 
providing macro-financial assistance to the Republic of Moldova (OJ L 242, 20.9.2017, p. 14–21) 

5 Decision (EU) 2022/563 of the European Parliament and of the Council of 6 April 2022 providing macro-

financial assistance to the Republic of Moldova (OJ L 109, 8.4.2022, p. 6–12) 

6 The four actions assessed as fulfilled were Action 4 (establishing a procedure to identify eligible public 
investment projects for funding), Action 5 (new Public Finance Management Reform Strategy), Action 
6  (selection  process  for  vacancies  in  anti-corruption  and  anti-money  laundering  institutions)  and 
Action 7 (national programme on asset recovery) 

6 

 
                                                           
budget support under an existing state-building and resilience contract (disbursed in July 
2022).  

However,  despite  the  additional  assistance,  the  Moldovan  economy  continued  to  face 
considerable  challenges  at  the  end  of  2022  due,  in  particular,  to  the  energy  crisis.  The 
supply and affordability of energy as well as a deteriorating external position (including 
volatility  in  the  foreign  currency  reserves  throughout  2022)  caused  Moldova’s  external 
financing  needs  to  increase  considerably.  On  23 January 2023  and  after  careful 
assessment of Moldova’s macroeconomic position, the Commission adopted a proposal 
for  an  increase  of  the  MFA  for  Moldova  by  an  additional  EUR 145 million 
(EUR 100 million  in  loans  and  EUR 45 million  in  grants).  This  increment  is  to  be 
disbursed in two additional instalments (ideally in the third and fourth quarters of 2023) 
subject to the fulfilment of new policy conditions to be added to the existing MoU. The 
European  Parliament  and  Council  adopted  this  additional  MFA  assistance  on  14  June 
2023. 

This  MFA  support  is  provided  in  conjunction  with  the  resources  from  international 
financial institutions and bilateral donors, including the IMF. On 21 December 2021, the 
IMF  approved  a  new  programme  for  Moldova  of  USD 558 million  under  the  Extended 
Credit  Facility/Extended  Fund  Facility  (ECF/EFF).  Further  to  the  significant  impact  of 
Russia’s  war  on  Ukraine  on  the  Moldovan  economy,  the  ECF/EFF  arrangement  was 
increased  by  USD 260 million  on  11 May 2022.  In  April  2023,  the  IMF  concluded  its 
third programme review, in which it assessed overall progress as positive (while granting 
a waiver on one performance criteria related to the accumulation of external arrears due 
to the temporary nature of the breach and corrective measures that had been put in place). 
The  IMF  notes  the  authorities’  strong  ownership  of,  and  firm  commitment  to  reforms, 
which justifies the IMF’s further support. 

1.2.2 Policy conditionality 

In line with the broad objectives of cooperation between the EU and Moldova under the 
Association  Agreement  and  the  Deep  and  Comprehensive  Free  Trade  Area  (DCFTA) 
Agreement7  (provisionally  applied  from  1  September  2014,  fully  applied  from  1  July 
2016), the ongoing MFA operation has focused on several key areas of reform (e.g. the 
fight  against  corruption  and  the  rule  of  law,  public  finance  management  and  financial 
sector governance, strengthening the business climate and – in view of the energy crisis – 
important  energy  sector  reforms).  The  Moldovan  authorities  have  been  making  good 
progress  on  meeting  the  policy  conditions  so  far,  thus  allowing  two  subsequent  MFA 
disbursements.  

The Moldovan authorities have made significant progress in a number of areas, such as 
criminal asset recovery, following the bank fraud crisis in 2014 (including by improving 
international  cooperation  and  adopting  a  new  asset  recovery  programme).  This  was  an 
important set of conditions, particularly given that a waiver had been granted to Moldova 
under  the  previous  COVID-19-related  MFA  operation  for  a  condition  on  updating  the 
previous 2018 asset recovery strategy. Moreover, further conditions under the MFA call 
on  the  Moldovan  authorities  to  improve  the  institutional  structure  of  the  various  anti-
corruption  agencies,  including  a  clear  delimitation  of  competences  between  the  Anti-
Corruption Prosecutors Office and the National Anti-Corruption Agency.  

7 EUR-Lex - 22014A0830(01) - EN - EUR-Lex (europa.eu) 

7 

 
  
                                                           
Moldova has made significant progress in terms of public finance management (PFM) 
and  a  new  PFM  strategy  is  now  in  place.  This  was  based  on  an  extensive  assessment 
process in close cooperation with international partners and followed by an open public 
consultation  process.  As regards public  finances, the authorities have  sought  to  address 
the chronic issue of budget execution by  adopting new legislation on public investment 
projects, which should help Moldova improve its planning of capital budgets.  

The rule of law and justice sector reforms are long-standing priorities for EU-Moldova 
cooperation and are also supported by the MFA. Moldova has scored poorly for judicial 
independence and transparency in the past. Therefore and in line with recommendations 
by the Venice Commission and best international practices, the authorities have launched 
a  comprehensive  assessment  for  members  of  the  judiciary  and  prosecution  self-
administration  bodies  (pre-vetting).  This  process  has  not  yet  been  finalised,  but 
significant  progress  has  been  made  with  the  assessment  of  the  Superior  Council  of 
Magistracy  and  the  Superior  Council  of  Prosecutors.  The  pre-vetting  process  will 
continue in accordance with a new vetting concept adopted by the Ministry of Justice in 
February 2023.  

Important  progress  has  also  been  made  in  improving  Moldova’s  medium-  to  long-term 
energy  security.  The  protracted  energy  crisis  that  began  in  October  2021  exposed 
several structural weaknesses in the energy sector in Moldova and these were aggravated 
when energy deliveries (of both gas and electricity) were cut due to Russia’s invasion of 
Ukraine. The Moldovan authorities have significantly increased the country’s gas storage 
capacity and have made a commitment to make further progress towards transposing the 
unbundling  regulations  (Moldova’s  key  commitment  under  the  Energy  Security 
Secretariat).  

Finally  and  in  line  with  the  DCFTA,  the  authorities  have  also  implemented  important 
amendments to the new customs code and have adopted an implementing regulation that 
permits it to enter into force (this has been postponed to 2024).  

The  increase  of  the  ongoing  MFA  will  further  support  reform  implementation,  taking 
stock  of  the  progress  already  made  and  identifying  areas  for  improvement.  The 
accompanying  policy  conditions  will  aim  to  ensure  further  effort  on  the  pre-vetting 
process as well as continuation of the important work on the customs code to take all the 
measures necessary for its entry into force on 1 January 2024. The conditions will also be 
closely  aligned  with  Moldova’s  efforts  in  relation  to  its  candidate  status  (i.e.  the  nine 
agreed steps spelled out in the Opinion on Moldova’s application for membership of the 
EU 8). Further progress on this is expected on a number of points, such as the rule of law 
and  good  governance,  and  anti-corruption).  The  MFA  also  remains  consistent  with  the 
government’s long-term objectives. 

8 Commission Opinion on the Republic of Moldova’s application for membership of the European Union, 
17 June 2022. Opinion on Moldova's application for membership of the European Union (europa.eu) 

8 

 
 
                                                           
MFA MOLDOVA 
(ENTRY INTO FORCE 18 JULY 2022 - END OF AVAILABILITY PERIOD 18 JANUARY 2025) 

Decision (EU) 
2022/563 

First instalment 

Second instalment 

Third instalment 

Amount 
(EUR million) 

EUR 50 million 
(15 grants; 35 loans) 

EUR 50 million 
(10 grants; 40 loans) 

EUR 50 million 
(5 grants; 45 loans) 

Implementation 

Disbursed 

Disbursed 

Pending 

Policy conditions 
(total number) 

3 

6 

6 

Reform on adopting 
legislative 
amendments related 
to asset recovery, 
especially the aspect 
of international 
cooperation: 
fulfilled. 

Rule of law and 
fight against 
corruption 

Reform on delineating 
competences between 
the Anti-Corruption 
prosecutors Office and 
the National Anti-
Corruption Centre (with 
clear division of tasks 
between high level and 
petty corruption cases): 
pending. 

Reform on 
appointment of vacant 
management positions 
in several anti-
corruption institutions: 
fulfilled. 

Reform on adopting a 
new asset recovery 
programme: fulfilled. 

Reform on assessment 
of candidates for the 
judiciary and 
prosecution self-
administration bodies 
(pre-vetting): broadly 
fulfilled. 

Financial sector 
governance 

Reform on legislative 
amendments 
concerning the 
electronic payment 
system: fulfilled. 

Energy sector 

Reform on 
establishing gas 
storage capacity: 
fulfilled. 

Reform on increasing 
the capacity of the 
Energy Efficiency 
Agency and 
Energocom: pending. 

Reform on ensuring 
progress towards full 
transposition of the 
Energy Community 
acquis, especially as 

9 

 
 
 
 
 
Public sector 
governance 

Business 
environment 

Reform on legislation 
concerning public 
investment projects: 
fulfilled. 

Reform on adopting a 
new public finance 
management strategy: 
fulfilled. 

Reform on legislative 
amendments to the 
new customs code, its 
implementing 
regulation and entry 
into force: broadly 
fulfilled. 

Remarks 

The political precondition 9 for granting the 
EU’s MFA has been respected; Moldova has a 
positive track record with the ongoing IMF 
programme. 

regards unbundling: 
pending. 

Reform on adoption of a 
new public procurement 
programme: pending. 

Reform on amending 
the law on free 
economic zones: 
pending. 

Reform on adopting a 
new strategy for 
combating undeclared 
work: pending. 

The disbursement of the 
third and final 
instalment is expected 
to be made in 2024, 
subject to a continuing 
positive track record 
with the IMF 
programme and 
fulfilment of the 
political precondition 
and of the policy 
conditions. 

1.  UKRAINE 

Russia’s  war  of  aggression  is  taking  a  heavy  toll  on  Ukraine,  whose  macroeconomic 
performance  was  muted  already  in  peace  times.  In  these  unprecedented  circumstances, 
the  international  community,  including  the  EU  and  its  Member  States,  has  affirmed  its 
solidarity and ensured the provision of adequate resources so that Ukraine can maintain 
its core state functions and macroeconomic stability. The EU’s MFA to Ukraine in 2022 
has  been  generous  with  a  commitment  of  EUR 7.2 billion  of  highly  concessional  loans 
(including a subsidy on interest rate payments under its emergency and exceptional MFA 
packages).  This  support  has  been  provided  on  an  ad  hoc  basis,  so  the  Commission 

9 A precondition for granting MFA is the beneficiary country’s adherence to effective democratic mechanisms. 
These include having a multi‐party parliamentary system, observing the rule of law and respecting human 
rights. 

10 

 
 
 
 
                                                           
proposed  the  establishment  of  the  MFA+  instrument  for  Ukraine  (adopted  by  the  EU’s 
co-legislators on 14 December 2022) to provide the financial support in 2023 in a more 
structured and predictable manner. The candidate status granted by the European Council 
on 23 June 2022 anchors Ukraine firmly to its path to join the EU. 

2.1 Macroeconomic performance 

Beyond  the  human  suffering  it  is  causing,  Russia’s  war  of  aggression  is  inflicting  profound 
damage on Ukraine’s society and economic potential. The destruction of physical capital and 
infrastructure will  seriously hamper future economic growth. The massive human exodus of 
about 7 million people abroad (more than 4 million have sought temporary protection status) 
and the equally massive internal displacement of more than 6.5 million people within Ukraine 
has a dire impact  on the labour market  and the  country’s potential  output. The prolongation 
and  recent  intensification  of  the  war  has  caused  further  capital  depletion  and  increased  the 
extent of reconstruction that will be required in the future. 

After a milder-than-expected COVID-19 recession in 2020 (when GDP fell by 3.8%) and an 
incomplete  rebound  in  2021  (when  real  GDP  rose  by  3.4%),  the  economy  contracted  by 
29.1% in 2022. The fall in output was particularly severe in the first half of 2022,  but there 
was  some  relative  stabilisation  in  the  second  half  of  the  year.  The  yearly  contraction  was 
somewhat less severe than initially expected, but it was still the sharpest fall since the country 
became  independent  in  1991.  The  economy  has  proved  more  resilient  than  expected  to 
Russian attacks on the power grid in late 2022 and early 2023, which destroyed or seriously 
damaged  half  of  the  country’s  electricity  infrastructure.  It  is  estimated  that  population 
displacement, high inflation  and soaring unemployment  (due to  an overall subdued business 
activity  and  severe  output  contraction  in  active  conflict  regions)  have  caused  private 
consumption and investment to fall by around 30% and 35% respectively. A net fall in exports 
caused  about  a  third of the GDP  contraction.  Logistical  difficulties  had a  heavier impact  on 
exports  than  on  imports,  which  were  also  boosted  by  refugees’  consumption  abroad.  Public 
consumption,  which  was  stimulated  by  the  war-related  expenditure,  made  a  small  positive 
contribution. 

Economic contraction has had a considerable impact on the labour market. The unemployment 
rate had oscillated around 10% before 2022, but is expected to have increased to around 25% 
at the end of 2022. This deterioration will have been partly mitigated by the combined impact 
of war mobilisation and of population decline due to large-scale emigration. Nominal wages 
are expected to have fallen slightly in 2022, leading to a decline in real wages of about 30%, 
which would be consistent with the extent of the fall in private consumption. 

The National Bank of Ukraine (NBU) has partly financed the war by suspending the inflation-
targeting framework, fixing and devaluing the exchange rate, and raising its main refinancing 
rate. Official reserves suffered a depletion of almost USD 9 billion in the first months of the 
war, but the subsequent sizeable international financial support helped build them back up to 
almost USD 35.9 billion (4.7 months of imports) by the end of April 2023 (i.e. a third higher 
than a year earlier and the highest level for the last 11 years). This allowed the NBU to refrain 
from a further increase in its policy rate beyond 25% (last hike in June 2022) or from further 
devaluation (beyond the 25% in July 2022). Confidence in the hryvnia strengthened further in 
early 2023, when the spread between the market and official rates narrowed down to a rather 
marginal 5 pps. 

The banking sector has remained stable and maintained ample liquidity, but its loan portfolio 
is  expected  to  deteriorate.  Its  solvency,  which  has  been  supported  by  the  temporary 
supervisory forbearance  measures, will be assessed in  the context  of an asset-quality review 
and  a  stress  test  to  be  carried  out  later  in  2023  (if  the  situation  permits).  The  share  of  non-
performing loans has been rising since the start of the war and the aggregate ratio  had more 

11 

 
 
 
than  doubled  to  23%  in  the  retail  portfolio  by  October  2022  and  increased  by  one  third  to 
almost 50% in the corporate loans segment. 

Accelerating  money  supply  and  an  increase  in  the  relative  scarcity  of  goods  together  mean 
that the hryvnia’s purchasing power is expected to continue falling. Consumer price inflation 
reached  26.6%  in  December  2022  but  eased  to  21.3%  in  March  2023  (slightly  below 
expectations). The growth of the money supply in the broad sense (aggregate M3) accelerated 
to 23.9% in February 2023, which was significantly above the 10.5% increase a year earlier. 
These  expansionary  dynamics  reflect  the  substantial  role  of  money  printing  in  financing  the 
war,  especially  during  the  first  9  months.  It  can  be  expected  to  underpin  continued  high 
inflation of around 20% this year. 

The  state  of  public  finances  has  deteriorated  markedly  due  to  the  duration  and  cost  of  the 
conflict  and  its  impact  on  the  economic  activity.  The  2022  budget  deficit  reached  26.5%  of 
GDP if foreign grants are excluded. Foreign grants, which represented around 10% of GDP, 
made  it  possible  to  limit  general  government  borrowing  to  16.7%  of  GDP  in  2022. 
Skyrocketing expenditure on defence and public order increased overall public expenditure by 
65%  in  2022.  Tax  revenues  contracted  by  almost  8%  in  2022,  but  total  public  revenues 
increased by 32%, thanks mainly to the massive foreign grants. All in all, the war is expected 
to  completely  reverse  the  impressive  fiscal  consolidation  that  had  been achieved  since  2017 
(public debt decreased from around 80% of GDP at the end of 2016 to 49% of GDP at the end 
of 2021). Sizeable borrowing and the steep decline in nominal GDP caused total public debt to 
reach 78.5% of GDP at the end of 2022. 

The loss of access to international debt markets means that Ukraine is now entirely reliant on 
foreign  assistance  and  monetary  financing.  Banks’  demand  for  domestic  government  bonds 
plummeted just after the Russian offensive of March 2022 but recovered in the second half of 
2022. This was partly due to the NBU’s decision to recognise treasury notes as eligible for the 
minimum liquidity reserve requirement. In 2022, the roll-over rates in the primary (domestic) 
government  bond  market  reached  192%,  67%  and  106%  for  UAH-,  USD-  and  EUR-
denominated bonds respectively – even though the average hryvnia yield of 18.3% was well 
below the yearly inflation and the main refinancing rate. While domestic investors continue to 
support the war effort, the latest market data imply expected losses of around 85% for foreign 
Eurobond holders. 

The sizeable positive net income from abroad was responsible for a recorded current account 
surplus  of  5.4%  of  GDP  in  2022.  The  trade  deficit  widened  to  15.6%  of  GDP,  driven  by  a 
strong contraction in the exports of goods (-35.2%) due to production disruptions as well as 
transport and supply chain difficulties. Imports of goods also contracted (-19.5%), but imports 
of  services  increased  by  75.8%  to  16.2%  of  GDP,  primarily  driven  by  refugees’  personal 
expenditure  abroad.  Primary  and  secondary  income  balances  taken  together  registered  a  net 
inflow  of  21%  of  GDP,  thereby  accounting  for  the  overall  current  account  surplus.  This 
sizeable  net  positive  income  from  abroad  was  sustained  by  the  substantial  foreign  grants  as 
well as the stable remittances of 8.6% of GDP. 

After  a  significant  recovery  in  2021,  foreign  direct  investment  has  collapsed  since  the 
outbreak  of  the  war.  Inward  FDI  shrank  by  93%  in  2022.  Portfolio  investment  in  Ukraine 
registered an outflow of 1.4% of GDP in 2022 and other investment in the country was 8.6% 
of  GDP,  driven  primarily  by  the  increase  in  government  borrowing.  However,  the  financial 
account registered an aggregate outflow of almost 7.1% of GDP in 2022 due to the additional 
hoarding  of  foreign  cash  to  a  total  value  of  USD 10.8 billion  (6.8%  of  GDP)  and  the 
exceptional  accumulation of trade credits  with the rest  of the world  of  more than USD 11.3 
billion (7.1% of GDP). The gap in the current account inflow of USD 8.4 billion was financed 
through a USD 2.9 billion drawdown on the official international reserves. 

Under  the  assumption  that  the  combat  eases  and  becomes  more  localised  in  the  course  of 

12 

 
2024, which is the basis for most available forecasts, real GDP is expected to stabilise in 2023 
and  rebound  moderately  in  2024.  Inflation  is  likely  to  remain  high  throughout  2023  and  to 
decline progressively in 2024, continuing to erode real incomes and wealth. The government 
plans  a  fiscal  deficit  (excluding  grants)  of  28.2%  of  GDP  in  2023,  resulting  in  a  projected 
public debt of 85.3% of GDP at the end of 2023. Unemployment is projected to stay at around 
15%  in  2023  (with  a  labour  force  that  is  still  reduced)  and  to  improve  in  2024  as 
reconstruction activity picks up. The current account is projected to remain positive at 1.7% of 
GDP in 2023 before returning to a deficit in 2024. 

Ukraine – macroeconomic indicators 

Ukraine 
Nominal GDP, USD millions 
Nominal GDP per capita, USD 
Real GDP, % change 
Consumer price inflation, %, end of period 
Consumer price inflation, %, average 
Key monetary policy rate, %, end of period 
Growth rate of the money supply, M3 
Unemployment rate, LFS, % 
General government borrowing, % of GDP 
Public expenditure, % of GDP 
Gross public debt, % of GDP 
Current account balance, % of GDP 
Official international reserves, USD billion 
International reserves, months of imports 
Gross external debt, % of GDP 

2018 
130 891 
3 088 
3.5 
9.8 
11.0 
18.0 
5.7 
8.8 
-1.9 
35.1 
60.9 
-4.9 
20.8 
3.5 
87.6 

2019 
153 947 
3 652 
3.2 
4.1 
7.9 
13.5 
12.6 
8.2 
-2.1 
34.5 
50.2 
-2.7 
25.3 
4.0 
79.1 

2020 
156 624 
3 738 
-3.8 
5.0 
2.7 
6.0 
28.6 
9.5 
-5.2 
38.0 
60.4 
3.4 
29.1 
5.5 
80.2 

2021 
200 126 
4 812 
3.4 
10.0 
9.3 
9.0 
12.0 
9.9 
-3.3 
33.8 
48.9 
-1.6 
30.9 
4.4 
64.8 

2022 
160 000 
4 305 
-29.1 
26.6 
20.2 
25.0 
20.8 
25.1 
-16.7 
60.4 
82.1 
5.2 
28.5 
4.2 
95.1 

FDI, liabilities net of reinvested earnings % of GDP 

2.0 

1.8 

1.7 

0.5 

-0.0 

Sources: national authorities and Commission calculations 

2.2 Implementation of macro-financial assistance  

2.2.1 Recent macro-financial assistance operations 

Between  2014  and  2021,  five  consecutive  MFA  operations  provided  a  total  of 
EUR 5.6 billion to Ukraine, out of which EUR 5.0 billion was disbursed effectively 10. In 
response to economic and social challenges arising from the geopolitical tensions in late 
2021  /  early  2022  and  the  security  threats  on  the  border  between  Ukraine  and  Russia 
which  subsequently  escalated  in  the  latter’s  unjustified  war  of  aggression  against 
Ukraine, the Commission tabled a proposal for a sixth, emergency, MFA to Ukraine of 
up  to  EUR 1.2 billion  on  1 February 2022.  The  Decision  granting  this  emergency 
MFA11  operation  entered  into  force  on  3 March  2022  and  the  first  instalment  of 
EUR 600 million was disbursed in two tranches on 11 and 18 March 2022. The second 
instalment of EUR 600 million followed in mid-May. In the context of the disbursement 
of this instalment, the Commission concluded that the Ukrainian authorities had, overall, 
taken action to implement the agreed conditionality. However, the war constitutes force 

10 The third EUR 600 million instalment of MFA-III could not be disbursed because 4 of the 21 structural 
policy conditions had not been implemented when the availability period expired in January 2018. 
11  Decision  (EU)  2022/313  of  the  European  Parliament  and  the  Council  of  24  February  2022  providing 

macro-financial assistance to Ukraine, OJ L 55, 28.2.2022, p. 4–11. 

13 

 
 
 
 
 
 
 
                                                           
majeure that impeded the effective and full completion of the structural policy measures. 
The  Commission,  as  an  exceptional  response  to  Ukraine’s  acute  financing  needs  and 
since the conditionality was not achievable at that stage for reasons of force majeure, and 
having  consulted  the  Member  States’  Committee  for  Macro-financial  Assistance, 
nonetheless  decided  to  proceed  with  the  disbursement  of  the  second  instalment  as  a 
matter of urgency.  

As  a  part  of  the  EU’s  extraordinary  support  to  Ukraine,  namely  to  make  a  sizeable 
contribution  to  the  financing  of  Ukraine’s  immediate  funding  needs  in  the  context  of 
Russia’s  unprovoked  and  unjustified  war  of  aggression,  the  Commission  proposed  on 
1 July 2022  a  new  EUR  1  billion  MFA  operation  for  Ukraine  in  the  form  of  a  highly 
concessional  long-term  loan.  This  proposal  was  the  first  part  of  the  exceptional  MFA 
support  of  up  to  EUR 9 billion  announced  in  the  Commission’s  Communication  on 
Ukraine  Relief  and  Reconstruction  of  18 May 202212  and  endorsed  by  the  European 
Council  of  23-24 June 202213.  The  exceptional  MFA  aimed  to  provide  immediate 
financial assistance in  a  situation of acute funding needs and to  ensure macroeconomic 
stability  and  the  continued  functioning  of  the  most  critical  functions  of  the  Ukrainian 
state, which had to  increasingly resort to  printing money  and drawing down  its foreign 
reserves in the second quarter of 2022. The European Parliament and the Council swiftly 
adopted  the  Decision  to  grant  Exeptional  MFA  over  EUR  1  billion  on  12 July 202214, 
making use of all available procedural flexibilities that could speed up the process. The 
Commission and Ukraine signed the related MoU on 19 July, which made it possible to 
disburse the whole of this  first  part of the exceptional  MFA support  in  two tranches in 
early August 2022. 

On  7 September 2022,  the  Commission  proposed  a  second  MFA  operation  of 
EUR 5 billion  in  loans  under  the  exceptional  MFA  package.  The  European  Parliament 
and the Council adopted the MFA Decision on 20 September 202215, once again using all 
available procedural opportunities to speed up the process. After the entry into force of 
the MoU on 4 October, a first instalment of EUR 2 billion was disbursed to Ukraine on 
18 October.  The 
on 
22 November 2022.  The  third  and  final  payment  of  EUR 500 million  took  place  on 
14 December 2022. The exceptional MFA operations, which brought the EU’s support to 
Ukraine  since  the  beginning  of  the  war  up  to  a  total  of  EUR 7.2 billion,  were  vital  to 
maintaining macroeconomic stability in the country. 

of  EUR 2.5 billion 

disbursement 

followed 

second 

Some changes have been introduced to the support under the exceptional MFA package 
relative  to  the  standard  MFA  set-up,  in  order  to  adapt  the  instrument  to  the  immense 

12 Communication from the European Commission to the European Parliament, the European Council, the 
Council,  the  European  Economic  and  Social  Committee,  and  the  Council  of  the  Regions  –  Ukraine 
Relief and Reconstruction, EUR-Lex - 52022DC0233 - EN - EUR-Lex (europa.eu) 

13 Conclusions of the European Council meeting of 23 and 24 June 2022, pdf (europa.eu) 

14  Decision  (EU)  2022/1201  of  the  European  Parliament  and  of  the  Council  of  12 July  2022  providing 

exceptional macro-financial assistance to Ukraine OJ L 186, 13.7.2022, p. 1–7 

15  Decision  (EU)  2022/1628  of  the  European  Parliament  and  of  the  Council  of  20 September  2022 
providing  exceptional  macro-financial  assistance  to  Ukraine,  reinforcing  the  common  provisioning 
fund by guarantees by Member States and by specific provisioning for some financial liabilities related 
to Ukraine guaranteed under Decision No 466/2014/EU, and amending Decision (EU) 2022/1201,  OJ 
L 245, 22.9.2022, p. 1–13 

14 

 
                                                           
uncertainty and extraordinarily challenging war environment. First, a dedicated reporting 
system to ensure the efficient, transparent and accountable use of MFA funds was set up 
with  the first  part of the exceptional  MFA support and  has  been  used in  the operations 
since  then.  In  a  departure  from  the  usual  practice  of  conducting  an  operational 
assessment  (OA)  of  the  country’s  financial  and  administrative  circuits  before  the 
conclusion  of  the  MoU,  the  OA  for  this  operation  was  conducted  during  the 
implementation  of  the  operation  and  jointly  with  the  following  second  part  of  the 
exceptional  MFA  support  and  for  the  MFA+  instrument.  Second,  as  regards  structural 
policy  conditionality,  no  requirements  (other  than  the  set-up  of  the  reporting  system) 
were attached to the first exceptional MFA operation because the disbursement was made 
in  a single instalment  and  given  the urgency of the financing needs.  The  release of the 
funds under the second  part of the exceptional  MFA support was subject  to  a carefully 
chosen  and  limited  set  of  relevant  and  feasible  policy  conditionality  aiming  at 
strengthening  the  country’s  resilience  and  economic  stability,  improving  the  business 
climate,  reinforcing  the  rule  of  law  and  governance,  and  ensuring  Ukraine’s  energy 
security. To reflect the extraordinarily challenging war environment, the full completion 
of policy actions attached to the disbursements was required only for the final instalment, 
with  previous  disbursements  being  only  subject  to  satisfactory  progress  towards  the 
implementation  of  those  actions.  Third,  both  exceptional  MFA  operations  were  not 
conditional on the presence of a disbursing IMF arrangement, because such support was 
not  possible in  the condition then prevailing. However, the MFA was provided in  very 
close  coordination  with  the  IMF  and  other  IFIs  on  support  to  Ukraine.  Moreover,  the 
successful  implementation  of  the  reform  agenda  underpinning  the  exceptional  MFA 
demonstrated  the  authorities’  resumed  ability  to  implement  targeted  policy  measures 
despite the adverse circumstances.  The  IMF Executive Board was  later  in a position to 
approve  the  Ukrainian  authorities’  request  for  programme  monitoring  with  board 
involvement  (PMB)  on  19 December 2022.  This  four-month  PMB,  a  non-disbursing 
programme,  was  tailored  to  Ukraine’s  exceptional  war  circumstances,  with  a  view  to 
helping 
this 
particularly  difficult  period  and  catalysing  donor-financing.  Fourth,  setting  up  the 
exceptional MFA operations in a highly concessional manner has reduced the impact on 
the country’s debt sustainability. Exceptionally, an interest rate subsidy and a waiver of 
administrative costs have been granted to relieve the country of interest rate repayments. 
In  conjunction  with  a  maximum  average  maturity  of  25  years,  the  EU  has  made  every 
effort to ensure the most favourable terms and conditions for the loan in order to alleviate 
the fiscal burden on the country, thus making the support as grant-like as possible. Fifth, 
taking  into  account  the  exceptionally  high  level  of  risk  and  uncertainty  in  the  war 
context,  the  provisioning  rate  of  9%  generally  applied  for  MFA  loans  to  countries 
addressing  a  balance  of  payment  crisis  has  been  considered  to  be  inadequate  for  the 
exceptional MFA support. A coverage rate of 70% was therefore set in order to contain 
the risk implied by this additional MFA to Ukraine, in line with the principles of sound 
financial  management.  The  composition  of  this  coverage  was  allocated  to  paid-in 
provisioning of 9% from the EU budget and callable guarantees from Member States for 
a further 61% of the outstanding loan amounts. 

implement  prudent  macroeconomic  policies  during 

the  authorities 

On  9 November 2022,  in  view  of  the  ongoing  war  and  Ukraine’s  continuing  external 
financing  needs,  the  Commission  presented  a  proposal  for  a  new  instrument,  Macro-
Financial Assistance+, to channel up to EUR 18 billion in highly concessional loans to 
Ukraine in 2023 in a predictable, continuous, orderly and timely manner. The European 

15 

 
Parliament and Council swiftly approved the MFA+ Regulation on 14 December 202216. 
Unlike  standard  MFA  operations,  and  to  reflect  the  war  circumstances  in  Ukraine,  this 
MFA+ instrument provides several layers of further increased flexibility. Reflecting the 
realities of the war, the instrument drew on the design of conditionality under the second 
exceptional  MFA  operation,  so  that  full  completion  of  policy  actions  attached  to  the 
disbursements will be required only for the final instalment, with previous disbursements 
requiring  satisfactory  progress  towards  the  implementation  of  those  actions.  Again,  the 
implementation  of  the  reporting  system  introduced  with  the  first  exceptional  MFA  is 
continued.  Moreover,  the  MoU  and  its  conditionality  could  be  reviewed  and,  if 
necessary, amended at mid-term (summer 2023) if the war’s continuing development so 
requires. Furthermore, the MFA+ instrument is likewise not conditional on a disbursing 
programme  by  the  IMF,  but  close  cooperation  with  the  IMF  on  the  economic  analysis 
and consistency of policy actions with those recommended by the IMF will continue. The 
concessional nature of the support is strengthened through longer maturities of up to 35 
years and an interest  rate  subsidy. Finally, the loans to  Ukraine  are being covered by  a 
guarantee from the headroom of the EU’s budget, instead of by guarantees from the EU 
budget or the Member States (as was the case for previous MFA operations to Ukraine 
since the outbreak of the war). 

The  following  table  gives  an  overview  of  the  various  flexibility  elements  of  the  two 
exceptional  MFA  operations  and  the  MFA+  instrument  and  contrasts  them  with  the 
standard elements that typically apply to MFA operations. 

Element 

Exceptional MFA 

MFA+ 

Standard MFA 

Link to the IMF 

Not subject to the existence of a disbursing 
IMF programme but close cooperation with the 
IMF (particularly on the analysis of financing 
needs and the broader macroeconomic 
situation) 

Financial terms and 
conditions 

Maximum average maturities of up to 25 years 
(35 years for MFA+) as well as a subsidy for 
the interest costs and a waiver of administrative 
costs 

Budgetary coverage 
of contingent 
liabilities 

70% budgetary 
coverage, of which 
9% is paid-in 
provisioning to the 
Common 
Provisioning Fund 
(CPF) and 61% is 
Member State 
guarantees. 

Backed up by a 
guarantee from the 
EU budget headroom 
(i.e. the budgetary 
space above the 
ceiling for payments 
of the multiannual 
financial framework 
(MFF) up to the limits 
of the own resources 

Subject to the 
existence of a 
disbursing IMF 
programme and a 
continuous 
satisfactory track 
record of 
implementing it 

Typically a maximum 
average maturity of 
15 years and pass-
through of interest 
costs borne by the 
EU’s borrowing 

9% paid-in 
provisioning to the 
CPF 

16  Regulation  (EU)  2022/2463  of  the  European  Parliament  and  of  the  Council  of  14 December  2022 
establishing  an  instrument  for  providing  support  to  Ukraine  for  2023  (macro-financial  assistance  +), 
OJ L 322, 16.12.2022, p. 1–14. 

16 

 
                                                           
Conditionality 

ceiling). 

Full completion of 
policy actions 
required only for the 
final instalment, with 
previous 
disbursements only 
subject to satisfactory 
progress towards the 
implementation of 
those actions and of 
the reporting 
requirements. 

No conditionality 
apart from reporting 
requirements for 
exceptional MFA-I. In 
addition, for 
exceptional MFA-II, 
full completion of 
policy actions was 
required only for the 
final instalment and 
previous 
disbursements were 
only subject to 
satisfactory progress 
towards the 
implementation of 
those actions. 

Satisfactory 
implementation of the 
policy conditions is 
required and defined 
for every instalment 
in the MoU.  

Operational 
assessment 

Conducted during the implementation of the 
MFA operation.  

Carried out before the 
conclusion of the 
MoU. 

2.2.2 Policy conditionality 

Before Russia’s war of aggression against Ukraine, the emergency MFA identified four 
priority  policy  areas  for  reform:  PFM,  governance  and  the  rule  of  law,  improving  the 
business climate, and sector reforms and SOEs. The eight policy measures underpinning 
the  operation,  which  have  been  identified  as  feasible  in  the  short  term,  are  aimed  at 
completing  the  governance  reform  of  SOEs,  improving  the  business  environment  for 
small  and  medium-sized  enterprises,  completing  the  anti-corruption  infrastructure  and 
ensuring functioning market mechanisms in the energy sector. The emergency MFA has 
clearly  shown  the  limitations  imposed  by  the  war  but  there  is  also  ongoing 
acknowledgement of the importance of a relevant reform agenda in order to underpin the 
financial  assistance.  The  exceptional  MFA  therefore  focused  on  a  more  limited  list  of 
particularly pressing policy objectives: economic resilience and stability, governance and 
the  rule  of  law,  and  energy.  The  seven  policy  measures  are  considered  to  be  not  only 
highly relevant in the war context and for the preparation of the country’s recovery and 
the  current  extremely  challenging 
reconstruction  but  also  achievable  even 
circumstances.  They  are  aimed  at  guaranteeing  the  continuous  functioning  of  the  most 
critical state functions. These policy actions remain relevant and have been expanded into 
20 structural measures in four areas under the MFA+ instrument for support to Ukraine 
in 2023 (macro-financial stability, structural reforms and good governance, rule of law, 
and energy),  but the post-war  reconstruction phase will  involve  a much  wider range of 
priorities. 

in 

This  conditionality  should  be  seen  against  the  backdrop  of  the  ambitious  and  wide-
ranging  reform  programme  that  Ukraine  embarked  upon  after  the  political  transition  in 
2014.  This  programme  was  guided  by  continuous  implementation  of  the  association 
agreement  with  the  EU  and  supported  by  large-scale  financial  and  technical  assistance 
provided  by  the  EU  and  other  multilateral  and  bilateral  partners.  Ukraine  managed  to 
make  progress  with  reforms  in  a  variety  of  sectors,  although  overall  progress  has  been 
uneven.  The  main  obstacles  to  faster  reform  implementation  before  the  war  were  the 

17 

 
 
complex  domestic  political  environment;  the  lack  of  political  will  to  implement 
ambitious reforms in certain sectors; and opposition from vested interests, some of which 
the 
continue 
reconstruction  efforts  combined  with  a  firm  wish  to  join  the  EU  are  providing  an 
opportunity to tackle these challenges and to enable Ukraine to ‘build back better’. 

the  country.  Strong  ownership  of 

influence  policymaking 

in 

to 

In  the  area  of  public  finance  management,  the  track  record  of  reforms  supported  by 
MFA  operations  is  rather  favourable.  New  laws  have  improved  fiscal  governance  by 
introducing  medium-term  budgeting  and  by  strengthening  programme-based  budgeting. 
The reorganised State Tax Service and Customs Service are now fully operational. More 
recent actions in this area have included enhancing the VAT-monitoring system based on 
risk  management,  developing  the  electronic  tax  audit  methodology  and  using  new  IT 
solutions in the customs service. To improve tax compliance, the authorities started the 
gradual  deployment  of  electronic  software  tax  registrars  in  2020.  In  addition,  the  State 
Fiscal Service, which was seen as an old-style tax police that disrupted business activity, 
has been replaced by the recently established Bureau for Economic Security. 

Governance reforms have resulted in the setting up of new anti-corruption institutions: 
the National Anti-Corruption Bureau (NABU), the National Agency for the Prevention of 
Corruption (NAPC), the Specialised Anti-Corruption Prosecutor Office (SAPO) and the 
High  Anti-Corruption  Court  (HACC).  After  a  difficult  start,  these  institutions  have 
started to prove their effectiveness: in the last 2 years, the HACC has issued 45 decisions 
in cases that had been investigated and prosecuted by either NABU and SAPO. 80% of 
these decisions have led to convictions for bribery, embezzlement of public funds, abuse 
of office and other corruption offences. The most recent legislative changes in this field 
are  underpinned  by  the  MFA  and  are  aimed  at  strengthening  the  institutional 
independence of NABU and enhancing the credibility of the selection process of its head. 
However, although the anti-corruption infrastructure is functioning, it remains fragile and 
prone to political attacks. For instance, disputes prevented the nomination of the SAPO’s 
head  until  summer  2022, 
institution  of  stable  strategic 
management. 

thereby  depriving 

the 

In spite of reform efforts since 2016, the current judicial system suffers from very low 
levels  of  public  trust  due  to  systemic  corruption,  the  low  efficiency  of  the  courts,  poor 
management  of  resources  and  insufficient  transparency.  This  is  considered  to  be  a  key 
impediment to investment and economic growth. The recently adopted laws address two 
key  judicial  self-governance  bodies:  the  High  Council  of  Judges  (through  integrity 
vetting)  and  the  High  Qualification  Commission  of  Judges,  which  preselects  judges. 
Challenges nevertheless remain, including in the Constitutional Court. The attestation of 
prosecutors  at  both  regional  and  local  levels  was  completed  in  2021.  Nevertheless, 
around 2 000 challenges to the attestation are pending in various courts. 

Important  measures  have  been  launched  in  order  to  improve  the  corporate  governance 
and transparency of state-owned enterprises and banks. For instance, their supervisory 
boards  have  been  granted  appropriate  powers  and  are  required  to  have  a  majority  of 
independent  members,  who  are  to  be  selected  on  a  competitive  and  transparent  basis. 
However,  adherence  to  the  corporate  governance  framework  worsened  in  2021  and  its 
strict implementation has become practically impossible in the context of the war. In line 
with  OECD  guidelines,  the  Ministry  of  Economy  drafted  and  sent  to  the  parliament  a 
draft  law  on  the  corporate  governance  of  SOEs  in  the  second  half  of  2021,  but  its 
adoption is still pending. 

The  energy  sector  has  also  undergone  comprehensive  reform  aimed  at  introducing  the 
liberalised gas and electricity market model inspired by the EU’s Third Energy Package. 

18 

 
Ukraine transposed  most  of the relevant  EU  gas  and electricity-related sector  acquis  in 
2015-17.  This  legislation  provided,  inter  alia,  for  a  stronger  role  of  the  market  in  the 
energy  sector;  for  unbundling  generation  and  supply  from  its  transmission  and 
distribution;  and  for  strengthening  the  energy  regulator.  A  number  of  issues  are  still 
hampering the functioning of, and competition in, the market. In view of the international 
energy  price  hikes,  mounting  debts  and  payment  arrears  in  both  the  gas  and  electricity 
sectors  are  of  particular  concern.  Secure,  competitive  and  sustainable  provision  of 
energy, which is of key importance for the resilience of the economy, has improved since 
Ukraine joined the EU grid in late February 2022. 

Given the mixed progress made with reform implementation, major challenges remain in 
relation  to  further  reform  of  the  judicial  system,  corporate  governance,  energy  and 
reducing  the  regulatory  burden.  Addressing  these  remaining  challenges  as  part  of  a 
comprehensive  effort  to  tackle  the  multiple  challenges  resulting  from  the  ongoing  war 
and  its  destructive  impact  on  Ukraine’s  productive  capacity  and  economic  structures, 
once  the  situation  stabilises,  will  be  crucial  to  rebuilding  the  economy  better  and 
attracting investors to underpin a sustainable economic recovery. 

(ENTRY INTO FORCE 3 MARCH 2022 - END OF AVAILABILITY PERIOD 4 MARCH 2023) 

EMERGENCY MFA UKRAINE 

Decision (EU) 
2022/313 

Amount 
(EUR million) 

First instalment 

Second instalment 

EUR 600 million (loans) 

EUR 600 million (loans) 

Implementation  Disbursed 

Disbursed 

Policy conditions 

(total number) 

Economic 
resilience and 
stability 

7 

Assessed together as not achievable 
for reasons of force majeure. 

Ensure the reappointment or 
transparent and merit-based 
selection of high-quality 
independent professionals as 
members of the supervisory boards 
of the state-owned banks (SOBs) by 
the end of June 2022: not 
achievable for reasons of force 
majeure. 

Continue to work on the corporate 
governance reform of SOEs in line 
with the OECD Guidelines: not 
achievable for reasons of force 
majeure. 

Develop an action plan to identify 

19 

 
 
 
Governance and 
rule of law 

Energy 

Remarks 

the crucial obstacles for SME 
development: not achievable for 
reasons of force majeure. 

Integrity vetting of candidates to the 
vacant High Council of Justice and 
selection of candidates to the High 
Qualification Commission of Judges 
of Ukraine: not achievable for 
reasons of force majeure. 

Complete the selection of a new 
head of the Specialised Anti-
corruption Prosecutor’s Office 
(SAPO): not achievable for 
reasons of force majeure. 

Appointment of the Supervisory 
Board of NJSC Naftogaz and 
approval of a plan for gas purchases 
and storage: not achievable for 
reasons of force majeure. 

Increasing and keeping the tariff for 
electricity transmission serves at the 
level of full recovery of 
economically justified costs: not 
achievable for reasons of force 
majeure. 

The political precondition for granting the EU’s MFA was respected. 

The second review of the IMF’s Stand-by Arrangement (SBA) programme 
approved in 2020 could not be concluded due to the start of Russia’s 
invasion of Ukraine. Instead, the IMF Board approved emergency 
financing under the Rapid Financing Instrument (RFI) on 9 March 2022 
and suspended the SBA. 

As an exceptional response to Ukraine’s acute financing needs and since 
the conditionality could not be achieved at this stage for reasons of force 
majeure, the Commission decided (after consulting the Member States 
Committee on MFA) to proceed with the disbursement of the second 
tranche as a matter of urgency. 

The conditions that could not be met at the time of this operation due to 
force majeure were (partly adapted to the evolving situation) incorporated 
in the conditionality underlying the subsequent exceptional MFA operation 
and/or the MFA+ instrument. 

20 

 
 
 
 
(ENTRY INTO FORCE 19 JULY 2022 - END OF AVAILABILITY PERIOD 18 JULY 2023) 

EXCEPTIONAL MFA-I UKRAINE 

Decision (EU) 
2022/1201 

Amount 
(EUR million) 

Single instalment 

EUR 1 000 million (loans) 

Implementation  Disbursed 

The political precondition for granting the EU’s MFA was respected. 

Remarks 

This operation was not made conditional on a disbursing IMF programme 
or on the implementation of policy reforms. The authorities undertook to 
set up and implement a reporting system on the use of the fund. 

EXCEPTIONAL MFA-II UKRAINE 

(ENTRY INTO FORCE 4 OCTOBER 2022 - END OF AVAILABILITY PERIOD 
3 OCTOBER 2023) 

Decision (EU) 
2022/1628 

First instalment 

Second instalment 

Third instalment 

Amount 
(EUR million) 

EUR 2 000 million 
(loans) 

EUR 2 500 million 
(loans) 

EUR 500 million 
(loans) 

Implementation 

Policy conditions 

(total number) 

Economic 
resilience and 
stability 

Disbursed 

Disbursed 

Disbursed 

7 

6 

Prepare a roadmap for 
phasing out the 
temporary emergency 
economic and financial 
measures imposed for 
the duration of the war: 
fulfilled. 

Develop an action plan 
to identify the crucial 
obstacles for SME 
development: progress 

Develop an action 
plan to identify the 
crucial obstacles for 
SME development: 
broadly fulfilled. 

Methodology and 
criteria for selection of 
supervisory board 
members of state-
owned banks: broadly 
fulfilled. 

21 

 
 
 
 
 
made in in 
implementing. 

Methodology and 
criteria for selection of 
supervisory board 
members of state-
owned banks: progress 
made in 
implementing. 

Integrity vetting of 
candidates to the vacant 
High Council of Justice 
and selection of 
candidates to the High 
Qualification 
Commission of Judges 
of Ukraine: progress 
made in 
implementing. 

Integrity vetting of 
candidates to the 
vacant High Council 
of Justice and 
selection of candidates 
to the High 
Qualification 
Commission of Judges 
of Ukraine: broadly 
fulfilled. 

Increase institutional 
independence and 
operational 
effectiveness of the 
Specialised Anti-
Corruption 
Prosecutor’s Office: 
progress made in 
implementing. 

Increase institutional 
independence and 
operational 
effectiveness of the 
Specialised Anti-
Corruption 
Prosecutor’s Office: 
fulfilled. 

Develop a plan for gas 
purchasing and storage: 
progress made in 
implementing. 

Develop a plan to 
ensure settlements with 
producers of electricity 
from renewable energy 
sources and adjust the 
electricity transmission 
tariff: progress made 
in implementing. 

Develop a plan for gas 
purchasing and 
storage: fulfilled. 

Develop a plan to 
ensure settlements 
with producers of 
electricity from 
renewable energy 
sources and adjust the 
electricity 
transmission tariff: 
fulfilled. 

The political precondition for granting the EU’s MFA was respected. 

22 

Governance and 
rule of law 

Energy 

Remarks 

 
 
 
 
This operation was not 
conditional on a 
disbursing IMF 
programme. 

First instalment 
conditional on 
satisfactory 
implementation of the 
reporting system on the 
use of funds. 

Conditional on 
satisfactory 
implementation of a 
reporting system on the 
use of funds and 
satisfactory progress 
towards the 
implementation of the 
policy conditions. 

Conditional on 
satisfactory 
implementation of a 
reporting system on 
the use of funds and 
the policy conditions. 

2.  JORDAN 

GDP growth was resilient in 2022 and is projected to remain solid in 2023/2024, driven 
by  the  recovering  tourism  sector.  Inflation  has  remained  contained,  but  high 
unemployment  persists.  The  budget  deficit  narrowed  slightly  in  2022  on  the  back  of 
fiscal  consolidation  measures, but  public debt  remains high.  Progress  with reforms  was 
recorded  for  several  action  points  of  the  MFA  conditionality.  The  MFA  to  Jordan  was 
successfully concluded in 2023, with the disbursement of the third and final instalment in 
May 2023. 

3.1 Macroeconomic performance  

Jordan  continues  to  be  partly  shielded  from  the  immediate  effects  of  Russia’s  war  of 
aggression against Ukraine  because it has  long-term gas supply  agreements  with  Egypt 
and  large  cereal  reserves.  Wheat  and  barley  reserves  are  sufficient  for  more  than  12 
months  and  no  shortage  has  been  recorded.  Jordan’s  reliance  on  multiple  suppliers 
assures its food security.  

Economic  growth  stabilised  at  2.7%  y-o-y  during  the  first  three  quarters  of  2022;  the 
same growth rate is also expected to have been recorded for the whole year (after 3.1% in 
2021). Growth was mainly driven by the strong improvement in external sector factors, 
such  as  tourism  income  and  total  exports.  Jordan  benefited  in  particular  from  higher 
demand  for  its  phosphate  and  potash  products  following  Russia’s  invasion  of  Ukraine; 
both are used in the production of fertilisers. 

Activity  in  the  tourism  sector  recovered  to  pre-pandemic  levels.  Tourism  revenue 
increased  by  110%  y-o-y  to  reach  USD 5.8 billion  (12%  of  GDP)  in  2022,  thereby 
surpassing the pre-pandemic level of 2019. The number of tourists grew by 90%  y-o-y, 
reaching 1.4 million visitors in 2022. 

The  unemployment  rate  remained  stable  at  a  very  high  23.1%  in  Q3-2022.  Women’s 
unemployment rate increased from 30.8% in Q3‑2021 to 33.1% in Q3-2022, while men’s 
unemployment  rate  decreased  from  21.2%  to  20.5%  during  the  same  period.  Youth 
unemployment (for the 15-24 age group) remains a challenge, as the rate reached 46.9% 
in Q3‑2022. Unemployment also remains high among university graduates (29.3% in the 
same period). 

Inflation  as  measured  by  the  Consumer  Price  Index  (CPI)  was  a  comparatively  limited 
4.4% in 2022 (up from 1.3% in 2021). The increase was mainly driven by price hikes for 
fuel and lighting (25.6%) and transportation (5.6%) due to the increase in global energy 
prices  in  2022.  Following  Russia’s  invasion  of  Ukraine,  the  Jordanian  authorities 

23 

 
temporarily  froze  local  petrol  prices  in  February  2022.  The  later  removal  of  these 
subsidies (in response to an IMF demand) triggered widespread and violent protests. The 
King  responded  by  instructing  the  government  to  freeze  the  kerosene  tax  during  the 
winter  2022/23,  in  an  effort  to  ease  the  financial  burden  on  the  population.  Food  price 
inflation remained contained at  3.5% in  2022. The  greatest  increases were recorded for 
oils at 8.5%, vegetables and legumes at 5.4% and cereal at 4.3%. The increase for cereals 
was relatively low thanks to Jordan’s large cereal stocks and bread subsidies. 

In  view  of  the  international  monetary  tightening  throughout  2022  and  into  2023,  the 
Central Bank of Jordan (CBJ) raised its interest rates on all monetary policy instruments 
by 425 basis points in eight steps. The most recent hike at the beginning of 2023 brought 
the  main  rate  up  to  6.75%.  Given  the  Jordanian  dinar’s  peg  to  the  USD,  the  CBJ’s 
decision  to  raise  the  interest  rate  was  necessary  (even  if  inflationary  pressures  were 
relatively limited) in order to be in line with the US Federal Reserve’s monetary policy 
tightening and to avoid pressures on capital flows. 

The  budget  deficit  (including  foreign  grants)  was  4.2%  of  GDP  during  the  first  11 
months of 2022 (5.3% of GDP in 2021). Excluding grants, it was 6.6% of GDP (7.8% of 
GDP in  2021). Domestic revenue increased by  9.0%, mainly thanks to  higher revenues 
from the income and value added taxes and from mining. Expenditure increased by 6.8%, 
in  particular  due  to  an  increase  in  interest  payments,  military  expenditures  and 
compensation of civil  servants.  Military expenditure continued to  be the largest  current 
expenditure item (32% of total expenditure), followed by the salaries and wages of civil 
servants  (21%)  and  pensions  and  transfers  (19%).  The  temporary  freeze  in  local  petrol 
prices cost USD 635 million (1.3% of GDP). 

Public debt  remained stable at  110.9% of  GDP in  November 2022  (110.2% of GDP in 
2021).  When  excluding  the  funds  borrowed  from  the  Social  Security  Investment  Fund 
(SSIF), total public debt stood at 88.2 % of GDP in November (88.6% of GDP in 2021). 
The authorities are committed to reducing the latter ratio to 80% of GDP by 2027. The 
IMF assessed the debt ratio (excluding the funds borrowed from the SSIF) as sustainable 
in its most recent report from December 2022. 

The current account deficit widened to 12.7% of GDP during the first three quarters of 
2022  (8.5%  of  GDP  during  the  same  period  of  2021),  driven  by  a  strong  increase  in 
imports  of  goods  in  value  terms  (in  particular  of  energy  and  cereals)  that  brought  the 
deficit  in  trade  in  goods  to  25.9%  of  GDP.  The  strong  recovery  of  the  tourism  sector 
boosted the balance in trade in services to a surplus of 4.2% of GDP, thus mitigating the 
impact of the trade balance on the overall current account balance. 

Remittances by Jordanians abroad mitigated the current account deficit. During the first 
three  quarters  of  2022,  they  amounted  to  roughly  USD 3 billion  (8.4%  of  GDP),  10% 
more than the pre-pandemic level. An estimated 790 000 Jordanians live abroad, roughly 
one  third  in  Saudi  Arabia,  followed  by  the  United  Arab  Emirates,  the  United  States, 
Kuwait, Qatar and the rest of the world. 

Economic  growth  is  projected  to  remain  solid  at  2.7%  in  2023  (IMF  projection  in 
December 2022), the same rate as in 2022, as the continuing post-pandemic recovery is 
expected  to  offset  slower  global  growth  and  tighter  global  financial  conditions.  Fiscal 
policy is  expected to  continue its consolidation course, narrowing the budget  deficit by 
broadening the tax  base  and improving the efficiency and targeting of social measures. 
The consolidation is nevertheless planned to be very gradual, in light of the challenging 

24 

 
global  economic  environment  and  the  very  high  unemployment,  in  order  to  protect  the 
fragile recovery and avoid further social tensions. 

Jordan - macroeconomic indicators  

Jordan 

2018  2019 

2020 

2021 

2022 

Nominal GDP, USD million 
Nominal GDP per capita, USD 
Real GDP, % change 
Consumer price inflation, %, end of period 
Consumer price inflation, %, average 
Key monetary policy rate, %, end of period 
Unemployment rate, LFS, % 
General government balance, % of GDP 
Public expenditure, % of GDP 
Gross public debt, % of GDP 
Current account balance, % of GDP 
International reserves, USD billion 
International reserves, months of imports 
Gross external debt, % of GDP 
Net FDI, % of GDP 
Sources: national authorities and Commission calculations 

43 465 
4 314 
1.9 
3.9 
4.5 
5.75 
18.6 
-2.4 
27.8 
92.5 
-6.8 
12.9 
6.8 
72.2 
2.2 

43 830  44 196 
4 289 
4 412 
-1.6 
1.9 
-0.2 
0.8 
0.3 
0.8 
2.5 
4.0 
22.7 
19.1 
-7.0 
-3.3 
29.4 
27.6 
105.3 
94.5 
-5.7 
-1.7 
15.5 
13.9 
10.1 
7.6 
81.2 
71.4 
1.7 
1.6 

Latest 
dates 
Q1-Q3 

Q1-Q3 

44 561  35 307 
4 666 
4 412 
2.7 
2.2 
4.4 
2.4 
1.3 
4.2 
2.50 
24.1 
-5.3 
30.4 
110.2 
-8.2 
17.9 
9.2 
85.7 
1.4 

6.75  Mar 23 
Q3 
23.1 
Nov 22 
-4.2 
Q3 
30.0 
Nov 22 
110.9 
Q1-Q3 
-12.7 
17.5 
9.1 
81.0 
1.9 

Q3 
Q1-Q3 

3.2 Implementation of macro-financial assistance 

3.2.1 Recent macro-financial assistance operations 

Between  2014  and  2022,  three  consecutive  MFA  operations  provided  a  total  of 
EUR 880 million  in  loans  to  Jordan.  The  EU  has  maintained  its  support  to  Jordan 
throughout  the  difficult  years  of  the  pandemic.  Indeed,  following  Jordan’s  request  for 
further MFA on 11 July 2019, on 6 September 2019 the Commission adopted a proposal 
for a new, follow-up MFA to Jordan to the amount of EUR 500 million in loans. The co-
legislators  adopted  the  proposal  on  15 January 2020.  The  assistance  was  disbursed  in 
three instalments over 2020-2023.  

Later, when the COVID-19 pandemic hit the already struggling Jordanian economy, the 
authorities  requested  further  MFA  on  21 April 2020.  In  turn,  as  part  of  the  COVID-19 
MFA  package  adopted  on  25 May 2020,  the  co-legislators  agreed  to  a  top-up  MFA 
programme  of  EUR 200 million  for  Jordan,  in  addition  to  the  EUR 500 million  made 
available under the MFA-III programme. 

The  new  (combined)  MFA  comes  on  top  of  the  EUR 380 million  of  MFA  provided  to 
Jordan since 2014 under Decisions (EU) 2013/1351 and 2016/2371. The MoU between 
the  EU  and  Jordan,  which  underpins  the  recent  MFA  operation  and  its  top-up,  was 
endorsed  by  the  Member  States  Committee  for  MFA  on  27 July 2020.  It  entered  into 
force on 2 October 2020.  

The  first  instalment  (EUR 250 million  in  loans)  was  subject  to  the  general  political 
precondition for MFA and the IMF programme remaining on track. It was disbursed on 
25 November 2020.  The  second  and  third  instalments  were  also  subject  to  the 
implementation  of  specific  policy  conditionality  agreed  between  Jordan  and  the  EU  in 
the MoU. The programme’s policy conditionality focused primarily on improving PFM 

25 

 
 
 
 
 
 
 
 
 
 
 
and fighting corruption,  and on reforms  in  the utilities  sector, social and  labour market 
policy and governance. The second instalment (EUR 250 million in loans) was disbursed 
on 20 July 2021. A waiver was granted for one condition (relating to steps to implement 
of  an  electronic  invoicing  system  to  fight  tax  evasion),  following  consultation  of  the 
Member States Committee for Macro-financial Assistance and with the expectation that 
this condition  would be  fulfilled once the  reforms  required  for the third  instalment  had 
been implemented (as turned out to be the case). The decision to disburse the third and 
final  instalment  (EUR 200 million  in  loans)  was  adopted  by  the  Commission  on 
31 March 2023. A waiver was granted for one condition (relating to  amendments to the 
Illicit  Enrichment  Law)  following  consultation  of  the  Member  States  Committee  for 
Macro-financial Assistance because only the fourth sub-action was carried out by the end 
of the MFA availability period. However, given the progress made and ongoing process, 
the Commission considered that it was justified to grant a waiver for this condition. The 
third instalment was disbursed on 3 May 2023. 

The support under these MFA  operations  is  provided in  conjunction  with  the resources 
from  international  financial  institutions  and  bilateral  donors,  including  the  IMF.  On 
25 March 2020, the IMF approved a four-year Extended Fund Facility (EFF) programme 
with Jordan. This was initially for roughly USD 1.3 billion (270% of Jordan’s quota) but 
was augmented twice in 2021-2022 to about USD 1.49 billion (334% of Jordan’s quota). 
The  IMF  approved  the  fifth  review  of  the  EFF  in  December  2022,  making  about 
USD 343 million  immediately  available. This  brings  total  IMF disbursements  to  Jordan 
since  the  start  of  2020  to  about  USD 1.7 billion  (including  around  EUR 366 million  in 
emergency assistance to Jordan under the Rapid Financing Instrument to help the country 
deal  with  the  impact  of  the  COVID-19  pandemic  in  May  2020).  Jordan’s  public  debt 
remained high at 113.2% of GDP in 2022, but it was assessed as sustainable by the IMF 
in December 2022.  

3.2.2 Policy conditionality  

The policy actions included in the MoU are in line with the reform commitments taken 
by  Jordan  in  the  context  of  the  EU-Jordan  Partnership  Priorities  and  other  EU  support 
instruments, as well as the adjustment programmes agreed with the IMF and the World 
Bank.  Taking  Jordan’s  Five-year  Reform  and  Growth  Matrix  as  a  guideline  for  the 
design of the policy programme in the MoU ensured that the Jordanian authorities owned 
the reform process and avoided overburdening their (limited) administrative capacities.  

The MFA’s  policy  conditionality falls into the following thematic areas:  public finance 
management (PFM); reforms in the utilities sector; social and labour market policy; and 
governance. The conditions aim to address key weaknesses of the Jordanian economy, as 
well as to mitigate the economic and social impact stemming from regional conflicts and 
the presence of a large number of Syrian refugees in the country. The conditionality was 
also chosen in order to build on the reform progress of the two previous MFA operations. 
For  the  disbursement  of  the  third  and  final  instalment,  14  conditions  needed  to  be 
fulfilled. The Jordanian authorities (broadly) fulfilled all but one condition, for which a 
waiver was granted. 

Jordan  made  significant  progress  with  respect  to  PFM,  in  particular  by  continuing  the 
work  on  the  electronic  invoicing  system,  in  order  to  improve  tax  compliance.  The  e-
invoicing system was developed by a contractor in 2022 and launched in January 2023. 
Another  achievement  was  the  launch  of  the  National  Registry  of  Investment  Projects 
(NRIP), which became operational in June 2022, after the handover from the developer. 
The  NRIP  was  introduced  to  increase  the  transparency  and  efficiency  of  public 
investments.  

26 

 
Progress was also recorded on utilities reforms. With the aim of improving transparency 
and promoting functional unbundling of the government-owned National Electric Power 
Company  (NEPCO)  and  also  supporting  its  financial  sustainability,  NEPCO  started 
publishing  annual  financial  statements  in  2022  for  the  accounting  year  2021,  based  on 
separate  and  independent  accounting  for  each  area  of  operations.  Jordan  also  made 
progress in identifying water leakages and reducing losses from non-revenue water, as it 
launched projects – in close cooperation with international aid and donor organisations – 
to increase accounting for water usage. 

Social and labour market policies were advanced under the MFA with the installation 
of small solar energy stations in at least 4 000 economically vulnerable households and 
extending the social assistance programme. With a view to developing the digital skills 
of  youth  and  improve  their  employment  prospects,  the  government  adopted  a  national 
plan for digital skills training.  

The  authorities  have  advanced  some  governance  reforms  in  line  with  the  MFA 
conditionality,  but  important  challenges  remain 
in  order  to  reduce  corruption. 
Amendments to the Investment  Law were adopted in 2022 to increase  the transparency 
of  tax  incentives  to  businesses.  The  amendments  also  simplify  administrative  and 
governance structures, in particular the duties and authorities of the Ministry of Finance. 
The authorities did not fulfil the condition on the Illicit Enrichment Law. Amendments to 
the  Law  were  adopted  in  2021,  but  these  did  not  include  all  the  points  of  the  MFA 
condition  and  a  waiver  was  therefore  granted  in  March  2023,  before  the  end  of  the 
availability period.  

Besides the MFA conditionality, the government has launched important reform projects. 
In  June  2022,  the  government  laid  out  its  Economic  Modernisation  Vision.  The  plan 
envisions  creating  a  million  new  jobs,  raising  the  standard  of  living  and  boosting 
economic growth over the next 10 years.  

Jordan’s  reform  agenda  is  underpinned  by  the  Government’s  Economic  Priorities 
Programme  (GEPP)  2021-2023,  the  comprehensive  Five-Year  Reform  Matrix  2018-
2022,  which  was  extended  to  2025,  and  the  Government’s  Indicative  Executive 
Programme (GIEP). The GEPP addresses key challenges in the labour market and private 
sector, with 53 targets mainly derived from the Matrix and the GIEP.  

MFA JORDAN III [AND COVID-19 TOP-UP] 

(ENTRY INTO FORCE: 3 OCTOBER 2020 - END OF AVAILABILITY PERIOD 2 APRIL 2023; 
END OF AVAILABILITY PERIOD OF COVID-19 TOP-UP: 2 OCTOBER 2021) 

Decision (EU) 
2020/33 

Decision (EU) 
2020/ 701 

Amount 
(EUR million) 

First instalment 

Second instalment 

Third instalment 

EUR 250 million 
(loans).  

EUR 250 million 
(loans) 

EUR 100 million under 
Decision (EU) 
2020/33; 

EUR 200 million under 
Decision (EU) 
2020/33; 

EUR 200 million 
(loans) 

27 

 
EUR 150 million under 
Decision (EU) 
2020/701  

EUR 50 million under 
Decision (EU) 
2020/701 

Implementation  Disbursed  

Disbursed  

Decision adopted on 
31 March 2023; 
disbursed on 
3 May 2023 

Policy conditions 
(total number) 

Not applicable 

8 

14 

Reform on the draft 
framework law on 
PFM: fulfilled. 

Reform on the 
development of the 
electronic invoicing 
system: waived 17. 

Reform on secondary 
legislation to the Public 
Private Partnerships 
(PPP) legislation: 
fulfilled. 

Reform on the 
electronic tendering 
system: fulfilled. 

Reform on water smart 
meters in Amman and 
Irbid: fulfilled. 

Reform on roll-out 
electronic invoicing 
system: broadly 
fulfilled. 

Reform on 
establishing the 
National Registry of 
Investment Projects: 
fulfilled. 

Reform on dedicated 
PPP Unit: fulfilled. 

Reform on expanding 
the use of the 
electronic tendering 
system: fulfilled. 

Reform on the 
submission of annual 
procurement plans: 
broadly fulfilled. 

Reform on extending 
smart water meters to 
other cities/areas: 
broadly fulfilled.  

Reform on the 
publication of 
NEPCO’s annual 
financial statements: 
fulfilled. 

Public finance 
management 

Utilities 

17 A waiver was granted for Action 2 in 2021, as the project had run into initial difficulties because tenders 
could  not  be  awarded  due  to  insufficient  technical  capacity  on  the  part  of  domestic  contenders  for 
developing the system. Action 2 would implicitly be later fulfilled by Action 9, which aims at the full 
roll-out of the electronic invoicing system. 

28 

 
 
 
 
                                                           
Social and 
labour market 
policy 

Reform on e-licensing 
40 nurseries: fulfilled.  

Governance 

Reform on expanding 
the operation of the 
single window for 
customs clearance: 
fulfilled. 

Reform on signing the 
Convention on Mutual 
Administrative 
Assistance in Tax 
Matters: fulfilled. 

Reform on installing 
small solar energy 
stations: fulfilled. 

Reform on expanding 
the Takaful social 
assistance programme: 
fulfilled. 

Reform on adopting a 
national plan for 
digital skills training: 
fulfilled. 

Reform on developing 
an electronic 
inspection 
management system 
for labour inspections: 
fulfilled. 

Reform on enacting 
amendments to the 
Illicit Enrichment 
Law: waived 18. 

Reform on 
amendments to the 
Investment Law: 
fulfilled. 

Reform on ratifying 
the Convention on 
Mutual Administrative 
Assistance in Tax 
Matters: fulfilled. 

Remarks 

The political precondition for granting the EU’s MFA was respected; a 
positive track record on the ongoing IMF programme was ensured. 

18 The adopted amendments to the Illicit Enrichment Law of 2021 do not sufficiently address the measures 
included  under  the  MFA  condition;  only  one  out  of  four  sub-actions  was  fulfilled  by  the  end  of  the 
MFA availability period. However, given that the process is ongoing and given the progress made with 
the  Illicit  Enrichment  Law  (as  compared  with  its  previous  unamended  version),  the  Commission 
considered that it was justified to grant a waiver for this condition. 

29 

 
 
 
 
                                                           
3.  TUNISIA 

Economic growth  slowed  due to  Russia’s war of aggression  against  Ukraine and rising 
commodity  prices  exacerbated  economic  vulnerabilities  in  a  challenging  political 
context.  This  was  compounded  by  rising  inflation,  worsening  budget  and  trade  deficits 
and  balance  of  payment  pressures.  The 
implementation  of  COVID-19  MFA 
conditionality and subsequent disbursement of the final EUR 300 million helped address 
macroeconomic  imbalances.  Delivering  on  the  prior  actions  required  to  obtain  a  new 
IMF  programme  remains  paramount  in  order  to  restore  macroeconomic  stability  and 
encourage donor assistance, including additional MFA. 

4.1 Macroeconomic performance 

Growth slowed in 2022 to 2.5% from a relatively mild post-pandemic rebound of 4.4% in 
2021.  Real  GDP  grew  by  1.8%  in  Q4  2022  on  an  annual  basis  and  Tunisia  is  not 
expected to regain its 2019-output level before 2024, reflecting the weakness in domestic 
consumption  and  investment,  amid  rising  prices  and  uncertainty  regarding  the  socio-
economic  situation.  Private  investment  remains  subdued,  with  confidence  impacted  by 
the  complex  political  situation,  sluggish  domestic  demand,  and  limited  export  demand 
for Tunisian products. Declared investment projects in industry and services fell by 4.8% 
in 2022.  

Growth in 2022 remained subdued in several sectors. It was driven by a partial recovery 
in  domestic  and  tourism  but  there  were  strong  declines  in  key  areas  such  as 
construction (-10%),  oil  and  gas  extraction  (-10.5%)  and  bad  harvests  leading  to 
lacklustre  growth  in  agriculture  (2%).  Economic  activity  benefited  from  a  growth  in 
manufacturing  (6.6%)  combined  with  more  moderate  increases  in  services  (2.6%). 
External  demand,  notably  from  Europe,  continued  to  support  the  mechanical,  electrical 
and  textile  industries,  with  increases  also  in  the  sectors  linked  to  tourism  (hotels  and 
transport).  

The  weak  recovery  in  the  economy  brought  a  slight  decrease  in  unemployment,  which 
fell to 15.2% in Q4 2022, from 15.3% in Q3 2022 and 16.2% in Q4 2021, but remained 
particularly  high  for  university  graduates  (24%),  youth  (38.8%)  and  women  (20.1%). 
Employment remains concentrated in the services sector (53%), manufacturing industries 
(20%)  and  agriculture  (14%).  The  participation  rate  went  up  slightly  to  46.5%  in  Q4 
2022 but remained below pre-pandemic levels. It remains significantly lower for women 
(28.2%) than for men (65.7%).  

Inflation  has  risen  noticeably,  with  higher  international  commodity  prices  and 
depreciation  exacerbating  supply  bottlenecks.  It  reached  10.4%  in  February  2023  (the 
highest  in  almost  two  decades),  speeding  up  across  product  groups  and  eroding  the 
purchasing  power  of  households  and  investment.  Core  inflation  (excluding  food  and 
energy) increased to 8.1% at the end of 2022, while prices rose at double digit rates not 
only for food (14.6%) but also for transport and services. Inflation is expected to ease as 
commodity  prices  decelerate  but  will  probably  remain  high  due  to  the  weakness  of  the 
Tunisian dinar, supply bottlenecks and expected tax increases combined with lower food 
and energy subsidies. 

Monetary  policy  has  tightened  in  line  with  global  trends.  High  inflationary  pressures 
caused  the  central  bank  to  increase  its  key  policy  rate  by  75  basis  points  to  8.0%  in 
December 2022. Credit growth slowed in 2022 and remains driven by loans to the State 
(12.1%), while credit to private sector grew by 4.7%. The banking sector remained stable 
and  profitability  rebounded  to  near  pre-pandemic  levels  in  the  first  half  of  2022.  The 
average  non-performing  ratio  of  the  nine  largest  banks  increased  by  150  basis  points 

30 

 
y-o-y to 11.7% at the end of Q2 2022. The sector average also increased to 13.1%. Banks 
remain  highly  exposed  to  government  debt,  with  regulatory  capital  requirements  that 
permit limited absorption in a high sovereign risk environment. Given the lack of access 
to  international  markets,  monetary  financing  might  pose  a  risk  in  2023  and  exacerbate 
financial  sector  threats  by  increasing  holdings  of  public  debt  securities  and  SOE  debt, 
unless swift progress is made in securing support from international partners. 

The  dinar  has  been  depreciating  against  the  dollar  and  the  euro  since  early  2021.  This 
trend accelerated in 2022 (-9% against the USD) but was partly reversed in early 2023. 
Pressures on hard currency liquidity due to increases in the energy and import bill were 
still partly eased by reserves and a strong inflow of remittances.  

The budget deficit remained stable at high levels in 2022 and amounted to 7.6% of GDP. 
Revenues  increased  sizably  (22.2%)  –  partly  due  to  higher  taxes  (16.6%)  helped  by 
inflation,  excise  duties  and  grants,  and  partly  due  to  high  oil  and  pipeline  revenues 
(234%).  This  was  in  a  context  of  ongoing  increases  in  public  expenditure  (16.4%), 
notably  in  financial  charges  (26%)  but  also  in  transfers  (42.4%).  These,  together  with 
wages (4.7%), represent over 77% of expenditure. The 2023 budget assumes a slowdown 
in real GDP growth to 1.8% and an average price of USD 89 per barrel of oil. The 2023 
budget  also  projects  a  budget  deficit  of  around  5.2%  of  GDP  on  the  back  of  strong 
reductions in subsidies and the public sector wage bill (as agreed with the IMF) as well 
as a move to raise revenue by 12.5% through large tax increases (including a new tax on 
high-end real estate).  

Tunisia’s limited access to external financing puts additional pressure on public finances. 
The  budget  foresees  financing  needs  of  over  17%  of  GDP  in  2023,  including  external 
borrowing of about EUR 4 billion, at a time when the country might still find it difficult 
to  access  international  markets  and  the  domestic  market  is  stretched  by  the  State 
crowding out private investment. The main external financing alternatives (mostly from 
Gulf  countries)  also  come  with  unfavourable  conditions.  Monetising  the  financing  gap 
would potentially fuel inflation and the drawdown in foreign reserves. 

Public debt remains high amid rising concerns about its level. It reached 79.4% of GDP 
in  2022,  slightly  down  on  the  back  of  nominal  growth.  External  debt,  mostly 
concessional,  still  represents  around  58%  of  the  total  public  debt.  In  January  2023, 
Moody’s  downgraded  Tunisia’s  rating  to  Caa2  with  a  negative  outlook  because  the 
current  absence  of  comprehensive  financing  to  meet  the  government’s  large  funding 
needs raises the default risk.  

The current account deficit deteriorated markedly due to high commodity prices in 2022. 
The trade deficit increased by 40% to the highest value in more than two decades due to a 
very high energy bill. The impact on the current account balance was partly offset by the 
recovery  in  tourist  receipts  (up  83.1%).  Both  exports  and  imports  rose  significantly 
(23.4%  and  31.7%  respectively),  but  the  rise  in  commodity  prices  and  the  profound 
impact of the war in Ukraine on oil and food import prices put pressure on the balance of 
payments. As a result, the current account deficit increased to an estimated 8.6% of GDP 
at  the  end  of  2022  (6.1%  a  year  earlier),  despite  the  strong  growth  in  remittances 
(12.3%).  FDI  increased  by  18.4%  to  an  estimated  1.2%  of  GDP  in  2022  but  remained 
below pre-pandemic levels. 

Foreign reserves decreased despite strong remittance inflows. They went down to around 
3.1 months of imports in January 2023 (compared with 4 months a year earlier and 5.5 
months  at  the  end  of  2020).  This  weakened  confidence  and  reduced  the  buffer  in  the 
context  of  Tunisia's  large  external  imbalances  and  dependence  on  foreign  inflows.  The 

31 

 
pressure on the dinar against the dollar, a tight external debt repayment schedule and the 
rising import bill increased pressure on the reserves, despite higher tourism revenues and 
relatively resilient external capital flows.  

Downside  risks  loom  large  for  the  Tunisian  economy.  The  economic  outlook  has 
deteriorated,  prompting  questions  about  debt  sustainability  and  reflecting  heightened 
fiscal and external liquidity risks. Tunisia’s growth rate is expected to remain among the 
region’s  weakest  in  2023.  The  slowdown  in  Europe  will  hit  exports  growth  and 
inflationary  pressures  are  likely  to  remain  as  the  authorities  gradually  reduce  food  and 
fuel  subsidies  and  international  prices  remain  high.  This  might  in  turn  place  further 
pressure on private spending and fuel rising social tensions.  

The urgent implementation of a reform plan supported by the IMF is necessary to restore 
macroeconomic stability and foster sustainable growth. The authorities’ reform plan aims 
to  address  key  structural  challenges,  including  better  targeting  of  subsidies,  the  high 
public sector wage bill, a fairer tax system and reforming SOEs. It requires a new IMF 
programme  as  an  anchor  to  facilitate  additional  international  assistance  (including  EU 
MFA). Broad-based support by key domestic stakeholders would ensure a more inclusive 
and sustainable growth path and thus facilitate further external support. However, unless 
reform  implementation  is  stepped  up,  further  protracted  delays  in  securing  a  new  IMF 
programme during the year will probably continue to put pressure on public finances and 
erode foreign exchange reserves, exacerbating existing risks.  

Tunisia - macroeconomic indicators  

Tunisia 

2018 

2019 

2020 

2021 

2022  Last 

Date  

Nominal GDP, USD billion 
Nominal GDP per capita, USD 

Real GDP, % change 
Consumer price inflation %, end of period 
Key monetary policy rate %, end of period 
Unemployment rate, LFS, % 
General government balance, % of GDP 
Gross public debt, % of GDP 
Current account balance, % of GDP 
International reserves, USD billion 
International reserves, months of imports 
Gross external debt, % of GDP 
Net FDI, % of GDP 

42.7 

41.9 
3 702  3 601 
1.6 
5.9 
7.8 
14.9 
-3.6 
67.3 
-7.8 
7.3 
3.7 
91.0 
1.9 

2.6 
7.1 
6.8 
15.5 
-4.3 
72.9 
-10.4 
5.2 
2.5 
92.9 
2.3 

42.5 
3 628 
-8.8 
4.9 
6.3 
17.4 
-9.0 
77.6 
-5.9 
9.1 
5.5 
93.0 
1.4 

46.7 
3 962 
4.4 
6.7 
6.3 
16.2 
-7.6 
79.9 
-6.0 
8.6 
4.2 
94.9 
1.1 

46.6 
3 842 
2.5 
10.2 
7.3 
15.2 
-7.6 
79.4 
-8.6 
7.8 
3.4 
n.a. 
1.2 

10.4  Feb 23 
8.0  Feb 23 

15.2 

7.7 
3.1 

Jan 23 
Jan 23 
91.5  Sep 22 

Source: national authorities, Commission calculations and the IMF 

4.2 Implementation of macro-financial assistance 

4.2.1 Recent macro-financial assistance operations 

to  Tunisia  under 

Since  2014,  a  total  of  EUR  1.4  billion  in  highly  concessional  loans  has  been  made 
available 
(2015-2017, 
EUR 300 million),  MFA-II  (2017-2019,  EUR 500 million)  and,  as  part  of  the  MFA 
package  adopted  in  the  context  of  COVID-19,  the  latest  MFA-III  programme  of 
EUR 600 million, with a duration of 1 year from entry into force. The MoU and the LFA 
were signed on 24 November 2020, ratified by the Tunisian Parliament on 15 April 2021 

three  MFA  programmes:  MFA-I 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and  entered  into  force  on  11 May 2021,  upon  publication  in  the  Tunisian  Official 
Gazette. 

The  programme’s  policy  conditionality  focused  primarily  on  four  thematic  areas: 
(i) PFM  and  civil  sector  reform;  (ii) reforms  in  SOEs;  (iii) social  protection;  and 
(iv) investment climate. 

The MFA was provided in two instalments of EUR 300 million each. The first instalment 
was  subject  to  the  general  political  precondition  for  MFA  (respect  for  effective 
democratic  mechanisms,  including  a  multi-party  parliamentary  system,  the  rule  of  law 
and human rights) and was disbursed on 1 June 2021. The required policy reforms for the 
disbursement of the second instalment were either fulfilled or at least broadly fulfilled in 
the  first  months  of  2022.  Notwithstanding  concerns  in  relation  to  the  political 
precondition,  following  a  careful  assessment  of  the  situation  and  a  letter  from  the 
authorities providing assurances and setting out commitments on a political calendar, the 
second and final instalments were disbursed on 25 May 2022. 

The  assistance  was  meant  to  complement  resources  made  available  by  other  donors, 
including the IMF under its EUR 685 million Rapid Financing Facility programme with 
Tunisia approved on 10 April 2020.  

Tunisia requested additional EU MFA of EUR 1.2 billion in November 2022 to support 
financing  needs  in  the  context  of  a  slow  post-pandemic  recovery  and  the  impact  of 
Russia’s  aggression  against  Ukraine.  This  followed  the  staff  level  agreement  reached 
with  the  IMF for  a new  EFF  (4  years, USD 1.9 billion) in  October 2022. However, the 
IMF programme had not yet been adopted at the end of April 2023 due to the need for 
additional  financing  assurances  and  completion  of  prior  actions.  Due  to  the  escalating 
crisis,  the  country’s  external  residual  financing  gap  is  very  sizeable  and  the 
implementation of reforms to address the country’s vulnerabilities has become even more 
urgent.  Based  on  a  careful  assessment  of  MFA  pre-conditions  and  Tunisia’s  external 
financing needs, the Commission is preparing a possible proposal for a new MFA to be 
adopted in 2023 once the IMF programme is in place. 

4.2.2 Policy conditionality 

The policy conditions contained in the MoU of the latest MFA operation, adopted as part 
of  the  MFA  package  adopted  in  the  context  of  COVID-19,  aimed  to  address  key 
structural weaknesses of the Tunisian economy, as well as to mitigate the economic and 
social impact of the COVID-19 emergency. These reforms were all the more important 
as  reform  implementation  had  been  very  limited  in  recent  years,  mostly  due  to  the 
country’s  challenging  political  situation 19  and  the  effects  of  the  COVID-19  pandemic. 
These  led  to  an  increasingly  deteriorating  socio-economic  situation  and  serious 
macroeconomic  imbalances  that  have  now  been  aggravated  by  the  impact  of  Russia’s 
war  of  aggression  against  Ukraine,  notably  in  terms  of  energy  and  food  security. 
Notwithstanding  these  challenges,  the  authorities  hurried  through  the  reforms  agreed 
under the MFA in early 2022. 

19 Following the controversial seizure of power by President Saied in 2021 and the publication of a political 
roadmap in early 2022, a new constitution was adopted through a referendum in July 2022 and two rounds 
of  parliamentary  elections  took  place  in  December  2022  and  January  2023.  However,  the  votes  were 
characterised by the boycott of opposition parties and very low participation rates, reconfirming Tunisians’ 
disinterest  and  prompting  doubts  regarding  the  legitimacy  of  both  the  Tunisian  parliament  and  the 
President’s authority. 

33 

 
                                                           
Progress  on  public  financial  management  and  civil  service  reform  was  achieved  by 
freezing recruitment in the public sector and putting in place a scheme to make it easier 
for civil servants to change posts within the public sector. Regarding the commitment to 
cap wage increases, the total payroll cost was fixed at a level that corresponds to a 5.7% 
increase – i.e. below inflation. Furthermore, a regime of remote working for State, local 
authority and establishment agencies, public companies and bodies was implemented. A 
study  on  the  evaluation  of  the  administrative  timetable  was  launched  and  finalised, 
proposing the options of continuous schedules with and without reducing annual working 
time.  Tax  audits  were  strengthened  by  the  introduction  of  spot  checks.  With  a  view  to 
phasing out energy subsidies, a technical committee was set up to design and implement 
the mechanisms and propose adjustments. A ministerial order was issued to improve and 
control  LPG  distribution  channels.  Finally,  the  fuel  price  adjustment  mechanism  was 
reactivated, followed by upward price revisions in February and March 2022.  

Regarding the governance of state-owned enterprises, progress towards a merit-based 
appointment  system  has  been  made  by  fixing  the  principles  relating  to  the  choice, 
performance  evaluation  and  dismissal  of  administrators.  An  SOE  director’s  guide  has 
been developed to improve the directors’ performance and professionalism. Moreover, a 
decree has been prepared for the appointment of business leaders based on the principles 
of  transparency  and  equality  of  choice  between  candidates  and  taking  gender  equality 
into  consideration.  Finally,  the  government  has  published  a  report  on  the  financial 
situation  of  SOEs  appended  to  the  2022  finance  law,  as  well  as  the  relevant  audited 
financial statements.  

On  social  protection,  the  authorities  established  the  Higher  Council  for  Social 
Development,  setting  out  its  powers,  composition  and  operating  methods.  A  unified 
multisectoral action plan has been developed, covering the roles and responsibilities for 
the development of ID documents and digital authentication. Finally, new digital health 
cards for beneficiaries of assistance programmes have been printed and distributed.  

Regarding the investment climate, facilitating the digitalisation of the legal constitution 
of private limited liability companies has advanced considerably, in parallel with ongoing 
work on the investment  platform. A new portal  has been developed and  validated. The 
government  has  also  developed  and  adopted  an  action  plan  outlining  the  stages  and 
timetable to harmonise the classification of economic activities. 

1.  Box – relevant challenges in the context of a potential new MFA programme 

The new government has been working on an economic reform plan that would underpin 
the IMF programme, including some of the expected key axes: a) improve tax equity by 
taking steps to bring the informal sector into the tax net and broadening the tax base to 
ensure  equitable  contributions  from  all  professions;  b)  contain  expenditures  and  create 
fiscal space for social support (including measures to contain the civil service wage bill 
and  reform  the  subsidy  system,  while  providing  adequate  targeted  protection  to 
vulnerable segments); c) strengthen the social safety net by increasing cash transfers and 
expanding the coverage of social safety nets to compensate vulnerable households for the 
impact of higher prices; d) embark on a comprehensive agenda to reform SOEs, starting 
with  the  enactment  of  a  new  SOE  law;  e)  step  up  structural  reforms  to  enhance 
competition and create a transparent and level-playing field for investors by streamlining 
and simplifying investment incentives; f) strengthen governance and transparency in the 
public  sector,  including  with  a  comprehensive  governance  diagnostic  to  establish  a 

34 

 
 
roadmap for reforms; and g) adapt and build resilience to climate change by promoting 
investment in renewable energy and (waste) water management. 

However, the plan has encountered domestic resistance (for example, there are no official 
public discussions on the reform plan with social partners) and the final approval of the 
IMF  programme  is  still  pending.  In  this  uncertain  context,  the  country’s  vulnerabilities 
will  probably  persist  in  the  coming  years,  due  to  subdued  growth,  vast  structural 
weaknesses, high financing needs, reliance on external funding, and the risk of domestic 
and external shocks. Reforms should aim to restore sustainable macroeconomic positions 
and  address  relevant  items  for  public  expenditure  such  as  the  exceptionally  high  civil 
service  wage  bill,  the  targeting  of  energy  subsidies  and  SOE  liabilities  that  appear  to 
crowd  out  much-needed  social  expenditure  and  growth-enhancing  public  investment. 
Other  remaining  challenges  include  addressing  vested  interests,  improving  governance 
and the business  environment, as well as increasing competition across the economy to 
attract  private  investors  (including  in  emerging  sectors  such  as  digitalisation  and 
renewable energies).  

(ENTRY INTO FORCE ON 11 MAY 2021 - END OF AVAILABILITY PERIOD 11 MAY 2022) 

MFA TUNISIA 

Decision (EU) 
2020/701 

Amount 
(EUR million) 

First instalment 

Second instalment 

EUR 300 million (loans) 

EUR 300 million (loans) 

Implementation  Disbursed 

Disbursed 

Policy conditions 
(total number) 

not applicable 

17 

Public financial 
management and 
civil service 
reform 

Reform of the civil service: 
fulfilled. 

Reform of remote working: 
fulfilled. 

Reform of the administrative 
timetable: fulfilled. 

Reform of tax audits: fulfilled. 

Reform of energy subsidies: 
fulfilled. 

Reform of LPG distribution: 
fulfilled. 

Reform of fuel price revision: 
broadly fulfilled. 

35 

 
 
Reform of SOE governance: 
fulfilled. 

Reform of SOE director’s guide: 
fulfilled. 

Reform of SOE business leader 
appointments: broadly fulfilled. 

Publication of SOE report: 
fulfilled. 

Publication of audited financial 
statements: fulfilled. 

Reform of the Higher Council for 
Social Development: fulfilled. 

Adoption of an action plan for IDs 
and digital authentication: fulfilled. 

Issuance of new digital health 
cards: fulfilled. 

Reform of digitisation of 
investment platform, investment 
declaration and building permits: 
broadly fulfilled. 

Elaboration of an action plan on the 
classification of economic 
activities: broadly fulfilled. 

The political precondition for 
granting the EU’s MFA was 
respected. The emergency IMF 
programme was fully disbursed in 
April 2020. 

The political precondition for 
granting the EU’s MFA was 
broadly fulfilled, despite concerns 
that will require careful monitoring. 
The emergency IMF programme 
was fully disbursed in April 2020. 

State-owned 
enterprises 

Social protection 

Investment 
climate 

Remarks 

4.  BOSNIA & HERZEGOVINA 

After  a  post-pandemic  rebound  in  2021,  economic  activity  decelerated  in  2022  while  higher 
import prices caused inflationary pressures to rise markedly. The labour market and the financial 
sector remained resilient, however. On 15 December 2022, the EU’s Member States approved the 
Commission’s recommendation  20 to grant candidate country status to Bosnia and Herzegovina, 
on the understanding that the steps specified in the Commission’s recommendation are taken in 

20   Council  Conclusion  on  enlargement  and  the  stabilisation  and  association  process,  European  Council 

Conclusions, 15 December 2022.  

36 

 
 
 
 
                                                           
order to strengthen the  rule  of law, the  fight against corruption  and  organised  crime,  migration 
management and fundamental rights.  

5.1 Macroeconomic performance 

Economic activity slowed down during 2022  from  7.1% in  2021 to  4.0% in  2022. The 
main  drivers  of  growth  were  exports,  gross  investment  (including  inventories)  and 
private  consumption.  Due  to  strong  imports  and  decelerating  exports,  the  growth 
contribution  of  net  exports  continued  to  be  negative.  On  the  production  side,  the  main 
sources of growth were services (particularly trade, transport and tourism), as well as IT 
and  communication  and  manufacturing.  High-frequency  data 
the 
deceleration  of  economic  activity  during  the  second  half  of  2022  also  continued  in  the 
first months of 2023.  

indicate 

that 

Tourism continued to recover from the COVID-19-related decline. By the end of 2022, 
the number of arrivals and overnight stays had nearly reached pre-COVID-19 levels.  

The  labour  market  remained  resilient  in  2022.  According  to  labour  market  surveys, 
unemployment dropped to 14.9% in the third quarter of 2022, compared with 16.4% in 
the same period of 2021. Youth unemployment (for the 15-24 age group) fell to 36.2% in 
the third quarter of 2022 from 37.8% a year earlier. The current level is therefore similar 
to youth unemployment rates before the COVID-19 pandemic. The number of registered 
employed  continued  to  increase  during  most  of  2022,  although  at  a  decelerating  pace, 
growing  by  2.4%  y-o-y  in  the  first  11  months  of  2022.  The  main  job-creating  sectors 
continued to be wholesale and retail trade as well as manufacturing.  
Consumer price inflation continued to increase in 2022, reaching 14% on average during 
the  year,  compared  with  an  annual  average  of  2%  in  2021.  However,  after  reaching  a 
peak  of  17.4%  in  October,  inflation  abated  slightly  in  the  last  2  months  of  2022.  The 
main  inflation  drivers  were  higher  prices  for  food  and  non-alcoholic  beverages,  which 
account for one third of the consumer basket and  are responsible for around half of the 
CPI increase. Price rises for transport, which accounts for nearly 13% of the basket, were 
responsible for around 20% of the CPI increase.  

The country’s external accounts deteriorated slightly during 2022, largely due to higher 
import  prices  for  energy  and  decelerating  export  growth.  In  2022,  the  current  account 
deficit increased to 4.3% of GDP (2.4% in 2021). Trade in commodities trade remained 
strong  in  nominal  terms,  with  the  value  of  goods  exports  being  25.9%  higher  in  2022 
than  a  year  earlier  while  imports  increased  by  32.6%.  The  main  export  destinations 
continued to be Germany, Croatia, Serbia, Austria and Italy, which together account for 
about two thirds of total exports. Net FDI inflows remained low at 2.5% of GDP in 2022 
(2.3% in 2021). A large part of those FDI inflows is reinvested earnings. Official foreign 
exchange  reserves  remained  high  in  2022,  but  their  coverage  of  imports  of  goods  and 
services dropped to 7.2 months in December, mainly due to the higher value of imports.  

The  financial  sector  has  remained  stable.  Annual  credit  growth  continued  to  accelerate 
slightly in Q3-2022, reaching 4.5% y-o-y (4.3% in Q2-2022). In October and November, 
lending  continued  to  increase  by  4.5%  and  4.3%,  -mainly  driven  by  bank  loans  to 
households  and  to  private  companies,  which  account  for  50%  and  40%  of  total  loans 
respectively.  Bank  deposit  growth  recovered  from  a  sharp  drop  of  4.4%  in  Q2  and 
accelerated  to  5.5%  in  Q3,  mainly  due  to  deposit  increases  by  the  public  sector,  while 
household deposits continued to decline. The ratio of non-performing loans to total loans 
continued  to  decline  to  4.9%  at  the  end  of  Q3  (5.5%  a  year  earlier).  The  ratio  of  non-
performing loans covered by loan-loss provisions stood at 79.6% in Q3 (77.7% in Q2 and 

37 

 
 
80.2%  in  Q3-2021).  Banking  sector  profitability  continued  to  improve.  The  return-on-
equity (ROE) ratio rose to 12.6% in Q3 (11.8% in Q2). The return on assets (ROA) ratio 
also improved in Q3 marginally to 1.6%. The banking system’s overall capital-adequacy 
ratio remained high at 19.2% in Q3 (19.3% in Q2). This continues to be well above the 
regulatory  minimum  of  12%.  However,  there  are  sizeable  differences  among  the 
country’s 21 banks and pockets of vulnerability remain. 

The country’s nominal effective exchange rate has appreciated markedly during the last 
5 years, mainly due to exchange rate movements of the euro vis-à-vis the US dollar, the 
Turkish lira and the Russian rouble. However, the effective exchange rate has remained 
more  stable  in  real  terms,  benefiting  from  the  country’s  so  far  relatively  low  inflation 
rate,  with  headline  inflation  of  0.8%  on  average  in  the  five-year  period  2017-2021. 
However, headline inflation rose to 14% in 2022, reflecting not only high import prices 
but also steep increases in domestic food prices. As for other Western Balkan countries, 
the  degree  of  euroisation  is  rather  high  (35%  of  deposits  and  41%  of  loans  were 
denominated in euro in December 2022). 

The  general  government’s  fiscal  position  improved  from  a  deficit  of  5.3%  of  GDP  in 
2020  to  a  deficit  of  0.3%  in  2021,  largely  reflecting  the  post-pandemic  economic 
recovery.  For  2022,  no  annual  consolidated  general  government  data  have  been 
published  so  far.  The  spending  structure  is  still  dominated  by  the  public  sector’s  wage 
bill  and  transfer  payments,  while  the  level  of  public  investment  remained  very  low, 
reflecting  a  number  of  factors  such  as  administrative  weaknesses  in  implementing 
planned  investment  projects.  During  the  first  11  months  of  2022,  revenue  from 
countrywide-collected  indirect  taxes  registered  high  nominal  growth  (+14.7%  y-o-y), 
largely  reflecting high inflation. This  revenue category  accounts for nearly  half of total 
revenues. Preliminary entity-level expenditure data point to a strong increase in 2022 for 
public sector wages, pensions and social transfers. 

The public debt-to-GDP ratio stood at 30% at the end of September 2022 (34.4% at the 
end  of  2021).  An  important  reason  for  the  fall  in  the  ratio  was  strong  nominal  GDP 
growth, while the absolute level  of public debt  continued to  increase slightly. Headline 
public debt is low, but there are sizeable contingent liabilities (particularly in the area of 
public  enterprises).  Moreover,  there  is  a  significant  degree  of  non-alignment  with  EU 
public sector accounting standards, which makes it very difficult to assess the country’s 
actual  fiscal  position.  As  a  result,  both  the  deficit  and  debt  ratio  could  be  significantly 
higher than reported.  

In  February  2023,  the  rating  agency  Standard  &  Poor's  affirmed  its  sovereign  credit 
rating  of  Bosnia  and  Herzegovina  at  ‘B’  and  upgraded  the  outlook  from  stable’  to 
‘positive’,  citing  the  recent  relatively  swift  government  formation  process  as  an 
important factor for this more positive assessment. Moody’s latest rating from July 2022 
remained at ‘B3, with a stable outlook’.  

In its latest outlook from April 2023, the IMF has maintained its rather low GDP growth 
projection  for  2023  of  2.0%.  As  a  result  of  an  expected  only  moderate  recovery  of  the 
global  economy,  Bosnia-Herzegovina's  growth  outlook  is  subdued  –particularly  if  the 
newly elected governments do not manage to overcome their persistent internal political 
stalemates,  which  are  preventing  the  country  from  agreement  and  implementation  long 
overdue  structural  reforms,  such  as  strengthening  the  rule  of  law  and  improving  the 
business environment.  

38 

 
 
Bosnia & Herzegovina - macroeconomic indicators 

Bosnia and Herzegovina 

2018 

2019 

2020 

2021 

2022 

Latest 
dates 

Real GDP, % change 
Consumer price inflation, %, end of period 
Key monetary policy rate, %, end of period* 
Unemployment rate, LFS, % 
General government balance, % of GDP 
Gross public debt, % of GDP 
Current account balance, % of GDP** 
Official international reserves, USD billion 
International reserves, months of imports 
Gross external debt, % of GDP 
Net FDI, % of GDP** 

4.6 
1.6 
n.a. 
18.4 
2.2 
34.1 
-3.3 
6.6 
7.3 
65.6 
2.9 

2.9 
0.3 
n.a. 
15.7 
1.9 
32.7 
-2.6 
7.0 
7.8 
63.4 
2.1 

-3.3 
-1.6 
n.a. 
15.9 
-5.3 
36.6 
-3.3 
8.4 
10.0 
64.7 
1.8 

7.1 
6.3 
n.a. 
17.4 
-0.3 
34.4 
-2.4 
9.3 
9.3 
59.0 
2.3 

* Banks use the Euribor as a reference 
** Q figures refer to a four-quarters moving average 

Sources: WIIW, Bosnia & Herzegovina’s central bank and the Bosnia & Herzegovina Agency for 
Statistics 

4.0 

Q4 

14.8  Dec 22 
n.a. 
14.3 
n.a. 
30.0 
-4.3 
8.2  Dec 22 
7.2  Dec 22 
Q3 
2.5  Dec 22 

51.3 

Q3 

5.2 Implementation of macro-financial assistance 

5.2.1 Recent macro-financial assistance operations 

Following an official request for MFA from Bosnia and Herzegovina on 14 April 2020 in 
the  context  of  the  COVID-19  pandemic,  the  European  Parliament  and  the  Council 
approved in May 2020 the COVID-19 MFA package, including a new MFA programme 
of EUR 250 million in loans for Bosnia and Herzegovina. The MoU and the LFA were 
signed on 15 January 2021 and entered into force on 9 June 2021. 

The MFA was to be provided in two instalments. The first instalment (EUR 125 million) 
was  subject  to  the  general  political  precondition  for  MFA  (respect  for  effective 
democratic  mechanisms,  including  a  multi-party  parliamentary  system,  the  rule  of  law 
and  human  rights)  and  was  disbursed  on  7 October 2021.  The  second  instalment 
(EUR 125 million)  was  subject  to  the  fulfilment of  a  set  of  policy  conditions  agreed  in 
the  MoU.  The  policy  measures  fell  into  the  following  four  thematic  areas:  economic 
governance  and  institution  building,  financial  sector  stability,  transparency  and  fight 
against  corruption  and  better  functioning  of  the  labour  market.  Given  the  limited 
implementation  of  reforms  (Bosnia  and  Herzegovina  had  implemented  only  two  of  the 
nine  reforms  agreed  in  the  MoU),  the  second  instalment  of  the  operation  was  not 
disbursed  by  the  end  of  the  availability  period  in  mid-June  2022  and  was  cancelled 
through a Commission Decision21  adopted on 6 July 2022. 
The  MFA  assistance  was  meant  to  complement  resources  made  available  by  other 
donors,  including  the  IMF,  under  its  Rapid  Financing  Facility  programme  of 
EUR 330 million approved on 20 April 2020.  

21   Commission implementing decision of 6.7.2022 on the cancellation by the European Union of macro-
financial  assistance  to  Bosnia  and  Herzegovina  in  the  amount  of  EUR  125  million,  SJ-031  C(2022) 
4866 final.  

39 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
5.2.2 Policy conditionality  

During 2022, political disputes continued to paralyse political decision taking, leading to 
a  further  deterioration  in  cooperation  at  entity  level  and  to  disagreements  on 
implementing countrywide reforms in line with EU-accession requirements. As a result, 
economic reforms in general remained blocked, including those which had been agreed 
in the context of the MFA operation. This particularly affected agreed policy conditions 
that  either  required  improved  cooperation  and  coordination  among  the  country’s 
stakeholders  or  tried  to  strengthen  the  functioning  of  countrywide  institutions.  As  a 
result, even simple requirements, such as organising regular meetings of already existing 
countrywide  institutions,  were  not  fulfilled.  In  the  area  of  financial  markets,  the 
authorities adopted the required deposit insurance law, which will strengthen the sector’s 
shock resilience in times of stress in the financial markets. With respect to maintaining 
the  central  bank’s  independence  and  the  integrity  of  the  currency  board,  some  high-
ranking  politicians proposed measures  which would  have undermined this requirement. 
However,  the  central  bank’s  independence  and  the  integrity  of  the  currency  board 
arrangement  were  ultimately  not  touched.  The  functioning  of  the  central  bank’s 
governing  board  was  impeded  by  delays  to  the  appointment  of  crucial  board  members 
that forced  the  central  bank to  function  with a temporary technical  mandate. The MFA 
operation  also  included  a  requirement  to  develop  and  discuss  in  the  parliament 
amendments to the current law on the High Judicial and Prosecutorial Council (HJPC), 
with  a  view  to  establishing  a  system  of  verification  of  asset  declarations  of  judges  and 
prosecutors  and  members  of  the  HJPC.  If  adopted,  those  amendments  would  have 
improved the country’s alignment with the EU acquis in the judicial area, which would 
have  improved  the  judiciary’s  resilience  against  corruption.  Here  too,  the  country’s 
authorities failed to present the required amendments to the parliament. The requirements 
to  lower  the  tax  wedge  in  the  Federation  entity,  which  could  have  helped  to  lower  the 
costs  of  labour  and  thus  helped  to  stimulate  employment,  were  not  adopted  by  the 
entity’s parliament. In addition, agreed measures to improve the capacity of the country’s 
employment office, which would have helped to reduce chronically high unemployment, 
were  not  carried  out.  Overall,  of  the  nine  agreed  policy  measures  under  the  MFA 
operation, only one was fully implemented and one was partially implemented. 

MFA COUNTRY BOSNIA AND HERZEGOVINA 

(ENTRY INTO FORCE ON 9 JUNE 2021 - END OF AVAILABILITY PERIOD 10 JUNE 2022) 

Decision (EU) 2020/701 

First instalment 

Second instalment 

Amount (EUR million) 

EUR 125 million (loans) 

EUR 125 million (loans) 

Implementation 

Disbursed 

Cancelled on 6 July 2022 

Policy conditions 

(total number) 

Not applicable. 

9 

40 

 
 
Institutional framework 

Financial sector 

Governance and anti-
corruption 

Holding of regular meetings of 
the Socio-Economic Task 
Force: not fulfilled. 

Strengthening the coordination 
role of the Directorate for 
Economic Planning for the 
preparation of the countrywide 
Economic Reform Programme 
and ensure that it has the 
necessary resources: not 
fulfilled. 

Ensuring the proper functioning 
of the new Banking Deposit 
Insurance Scheme, including its 
underlying backstop financing: 
fulfilled.  

Maintaining the independence 
of the central bank and the 
integrity of the currency board 
arrangement: broadly fulfilled. 

Monitoring financial stability 
through regular (at least 
quarterly) meetings of the 
Standing Committee for 
Financial Stability: not 
fulfilled.  

Publication of regular, quarterly 
comprehensive information on 
the adoption and 
implementation of the COVID-
19 emergency support 
measures, as well as the 
conditions and allocation 
criteria for support: not 
fulfilled. 

Develop and table before the 
Parliamentary Assembly 
amendments to the Law on the 
High Judicial and Prosecutorial 
Council (HJPC), with a view to 
establishing a system of 
verification of asset declarations 
of judges and prosecutors and 
members of the HJPC: not 
fulfilled. 

41 

 
 
 
 
Economic recovery and 
employment 

Remarks 

Reform of the Law on Personal 
Income tax and the Law on 
Social Contributions in the 
Federation of Bosnia and 
Herzegovina: not fulfilled. 

Reform to increase the capacity 
of employment offices: not 
fulfilled.  

The political precondition for granting the EU’s MFA was 
respected; a positive track record on the ongoing IMF programme 
was ensured. 

The first instalment was released 
after the MoU and the Loan 
Facility Agreement (LFA) 
entered into force. The second 
instalment was set to be released 
upon completion of a set of 
policy conditions, laid down in 
the MoU. 

With a number of important 
measures remaining 
outstanding, the Commission 
decided on 6 July 2022 to 
cancel the second instalment of 
MFA to Bosnia and 
Herzegovina. 

42 

 
 
 
Annex 1: MFA operations by date of decision, 1990-202222 

22 MFA+ statistics also included in the year 2022. 

43 

 
 
 
 
                                                           
Annex 2: Status of disbursements made by date of decision at end-December 202223 

23 MFA+ statistics included in the year 2022, for information only. 

44 

Status of effective disbursements as of end-December 2021 (in millions of €) AuthorisationsDisbursementsCountry Date ofReference ofMaximumDates ofAmounts ofTotalsUndisbursedDecisionDecisionamountdisbursementsdisbursementsdisbursedHungary22.02.9090/83/EC870Apr. 1990350610260(Loan)Feb. 1991260Czech and 25.02.9191/106/EC375Mar. 1991185375Slovak Federal RepublicMar. 1992190Hungary24.06.9191/310/EC180Aug. 1991100180(Loan)Jan. 199380Bulgaria24.06.9191/311/EC290Aug. 1991150290(Loan)Mar. 1992140Romania22.07.9191/384/EC375Jan. 1992190375(Loan)Apr. 1992185Israel122.07.9191/408/EC187.5Mar. 1992187.5187.5(Loan)Algeria23.09.9191/510/EC400Jan. 1992250400(Loan)Aug. 1994150Albania28.09.9292/482/EC70Dec. 19923570(Grant)Aug. 199335Bulgaria19.10.9292/511/EC110Dec. 199470110(Loan)Aug .199640Baltics23.11.9292/542/EC22013585(Loans); of which:    Estonia(40)Mar. 199320(20)(20)    Latvia(80)Mar. 199340(40)(40)    Lithuania(100)July 199350(75)(25)Aug. 199525Romania27.11.9292/551/EC80Feb. 19938080(Loan)Moldova13.06.9494/346/EC45Dec. 19942545(Loan)Aug. 199520Romania20.06.9494/369/EC125Nov. 199555125(Loan)Sep. 199740Dec. 199730Albania28.11.9494/773/EC35June 19951535(Grant)Oct. 199620EU MACRO-FINANCIAL AND EXCEPTIONAL FINANCIAL ASSISTANCE TO THIRD COUNTRIES BY DATE OF DECISION 
 
 
 
 
 
                                                           
45 

Algeria22.12.9494/938/EC200Nov. 1995100100100(Loan)Slovakia22.12.9494/939/EC130July 1996130(Loan)Ukraine22.12.9494/940/EC85Dec. 19958585(Loan)Belarus10.04.9595/132/EC55Dec. 1995303025(Loan)Ukraine23.10.9595/442/EC200Aug. 199650200(Loan)Oct. 199650Sep. 1997100Moldova25.03.9696/242/EC15Dec. 19961515(Loan)Former Yugoslav 22.07.9797/471/EC40Sep. 19972540Republic of MacedoniaFeb. 199815(Loan)Bulgaria22.07.9797/472/EC250Feb. 1998125250( Loan)Dec. 1998125Armenia, Georgia 17.11.9797/787/EC(375)(294.5)and Tajikistan2amended by(Loans and Grants)28.3.0000/244/EC Agreed amounts with the recipent countires:328294.533.5Armenia(58)Dec. 1998 (Loan)28(58)(Loan and Grant)Dec. 1998 (Grant)8Dec.  1999 (Grant)4Feb. 2002 (Grant)5.5Dec. 2002 (Grant)5.5June 2004 (Grant)5.5Dec. 2005 (Grant)1.5Georgia(175)Jul. 1998 (Loan)110(141.5)(33.5)(Loan and Grant)Aug. 1998 (Grant)10Sep. 1999 (Grant)9Dec. 2001 (Grant)6Dec. 2004 (Grant)6.5Tajikistan(95)Mar. 2001 (Loan)60(95)(Loan and Grant)Mar. 2001 (Grant)7Dec. 2001 (Grant)7Feb. 2003 (Grant)7May. 2005 (Grant)7Oct. 2007 (Grant)7 
 
 
 
 
 
 
46 

Ukraine15.10.9898/592/EC150July 1999585892(Loan)12.07.0202/639/ECAlbania22.04.9999/282/EC2020( Loan)Bosnia310.05.9999/325/EC60Dec. 1999 (Grant)1560(Loan and Grant)amended byDec. 1999 (Loan)1010.12.0101/899/ECDec. 2000 (Grant)10Dec. 2000 (Loan)10Dec. 2001 (Grant)15Bulgaria08.11.9999/731/EC100Dec. 199940100(Loan)Sep. 200060Former Yugoslav 08.11.9999/733/EC80Dec. 2000 (Grant)2098Republic of18Dec. 2000 (Loan)10Macedonia410.12.0101/900/ECDec. 2001 (Loan)12(Loan and Grant)Dec. 2001 (Grant)10May 2003 (Grant)10June 2003 (Loan)10Dec. 2003 (Loan)18Dec. 2003 (Grant)8Romania08.11.9999/732/EC200June 200010015050(Loan)July 200350Kosovo519.02.0000/140/EC35Mar. 20002035(Grant )Aug. 200015Montenegro522.05.0000/355/EC20Aug. 2000720(Grant )Dec. 200013Moldova10.07.0000/452/EC1515(Loan)19.12.0202/1006/ECKosovo327.06.0101/511/EC30Sep. 20011530(Grant) Dec. 200215Serbia and 16.07.0101/549/EC345Oct. 2001 (Loan)225345Montenegro6Oct. 2001 (Grant)35(ex FRY)10.12.0101/901/ECJan. 2002 (Grant)40(Loan and Grant)Aug. 2002 (Grant)45Ukraine12.07.0202/639/EC110May. 2014 100110(Loan) Amendment of Decision Nov. 2014 1098/592/ECamended byamended by 
 
 
 
 
 
 
47 

Serbia and 05.11.0202/882/EC130Dec. 2002 (Grant)3010525Montenegro7Feb. 2003 (Loan)10(ex FRY)Aug. 2003 (Grant)35(Loan and Grant)Aug. 2003 (Loan)30Bosnia805.11.0202/883/EC60Feb. 2003 (Grant)1525 the rest was (Loan and Grant)Dec. 2003 (Grant)10paid under04/861/ECMoldova19.12.0202/1006/EC1515(Grant)Serbia and 25.11.0303/825/EC70Dec. 2004 101020Montenegro7 the rest was (ex FRY)paid underAmendment of Decision 02/882/EC (Grant)04/862/ECAlbania929.04.0404/580/EC25Nov. 2005 (Grant)325(Loan and Grant)Mar. 2006 (Loan)9July 2006 (Grant)13Bosnia807-12-200404/861/ECthe balance ofDec. 2004 (Loan)1035Amendment of Decision 02/883/ECJune 2005 (Grant)1502/883/EC (Loan and Grant)Feb. 2006 (Loan)10Serbia and 07.12.200404/862/ECthe balance ofApr. 2005 (Loan)1540Montenegro703/825/ECDec. 2005 (Grant)25(ex FRY)Amendment of Decision 02/882/EC (Loan and Grant)Georgia        24.01.0606/41/EC33.5Aug. 2006 112211.5(Grant)Dec. 2006 11Kosovo 30.11.0606/880/EC50Sep. 2010 303020(Grant)Moldova16.04.0707/259/EC45Oct. 2007 2045(Grant)Jun. 200810Dec. 2008 15Lebanon1010.12.0707/860/EC80Dec. 2008 (Grant) 154040(Loan and Grant)June 2009 (Loan)25Georgia30.11.0909/889/EC46Dec. 2009 15.346(Grant)Jan. 2010 7.7Aug. 2010 23Armenia1130.11.0909/890/EC100June 2011 (Grant)14100(Loan and Grant)July 2011 (Loan)26Dec. 2011 (Grant)21Feb. 2012 (Loan)39Bosnia and 30.11.0909/891/EC100Feb. 2013 50100Herzegovina (Loan)Oct. 2013 50Serbia 30.11.0909/892/EC200July 2011100100100(Loan) 
 
 
 
 
 
48 

 
 
 
 
 
 
 
49 

 
 
 
 
 
 
 
 
 
 
Annex 3: MFA amounts authorised* by year, 2006-2022 (EUR million)24 

 *Authorised amounts refer to the amounts agreed to in the MFA decisions, which may differ 
from the disbursed amounts (Annex 4).  

Chart 3A: MFA amounts authorised by year, 2014-2022 (EUR million) 

25 350,0

1 300,0 1 800,0

700,0

100,0 1 045,0

0,0

0,0

3 500,0

2014

2015

2016

2017

2018

2019

2020

2021

2022

Chart 3B: MFA amounts authorised by region, 2006-2022 (%) 

Neighbourhood 
South
7.3%

Pre-Accession
3.1%

Neighbourhood 
East 89.5%

…

24 MFA+ statistics also included in the year 2022. 

50 

 
 
  
 
 
 
                                                           
Annex 4: MFA amounts disbursed by year, 2006-2022 (EUR million) 

Chart 4A: MFA amounts disbursed by year, 2014-2022 (EUR million) 

7 550,0

1 360,0 1 268,0

1 023,0

520,0

430,0

15,0

1 690,0 1 665,0

2014

2015

2016

2017

2018

2019

2020

2021

2022

Chart 4B: MFA amounts disbursed by region, 2006-2022 (%) 

Other; 0,2%

Neighbourhood 
South; 14,4%

Accession and 
Pre-Accession; 
5,5%

Neighbourhood 
East; 79.9%

…

51