CELEX: 52013PC0860
Language: en
Date: 2013-12-05
Title: Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing macro-financial assistance to the Republic of Tunisia

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		52013PC0860
		
			Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing macro-financial assistance to the Republic of Tunisia /* COM/2013/0860 final - 2013/0416 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
·      Grounds for and objectives of the proposal 
The Tunisian
economy has been negatively affected by the domestic unrest that followed the
2011 revolution, regional instability (notably the war in Libya), and a weak
international environment, particularly in the euro area, with which Tunisia
maintains close trade and financial links. The economy experienced a recession
in 2011 and, despite the moderate economic recovery witnessed in 2012, when
tourism and foreign direct investment (FDI) rebounded and economic activity
picked up, the macroeconomic situation remains very vulnerable. In
particular, the fiscal and balance of payments situation has deteriorated quite
markedly, generating important financing needs.
At the same time, following the ousting of
President Ben Ali on 14 January 2011, the country is taking significant steps
towards the establishment of democratic mechanisms, including the organisation
of free elections and the creation of a National Constituent Assembly. Although
the political transition has not been without difficulties and episodes of
instability, the process is expected to result in the approval of a new
Constitution and the organisation of new elections in the first half of 2014.
Against this
background, the Tunisian authorities reached in mid-April 2013 an agreement
with the International Monetary Fund (IMF) staff on a 24-month Stand-By
Arrangement (SBA) in the amount of USD 1.75 billion (400% of quota), which
was approved by the IMF Board in June. The aim of the SBA is to support the
government’s economic reform programme, reduce economic vulnerabilities and
foster sustainable and inclusive growth.
In this
context, the Tunisian government requested Macro-Financial Assistance (MFA)
from the EU in the amount of EUR 500 million on 28 August 2013, with a
portion in the form of a grant (see the request letter in Annex). The European
Commission submits to the European Parliament and the Council a proposal to
grant a MFA to the Republic of Tunisia amounting to a maximum of EUR 250 million.
The assistance would take the form of medium-term loans, with no
grant component being envisaged given that Tunisia does not meet the
eligibility criteria for the use of grants in MFA operations. 
The proposed EU MFA
would help Tunisia cover part of its residual external financing needs for
the period 2014-15 in the context of the IMF programme, estimated at USD
3.0 billion. It would reduce the economy’s short-term balance of
payments and fiscal vulnerabilities, while supporting the adjustment and reform
programme agreed with the IMF and the World Bank, as well as the reforms agreed
under the EU’s budgetary support operations, in particular the State Building
Contract Programme d’Appui à la Relance (PAR), which is financed in part
by the EU’s Support for Partnership Reform and Inclusive Growth (SPRING) programme.
The proposed MFA is
in line with the aims of the G8’s Deauville Partnership initiative and the
orientations of the new European Neighbourhood Policy (ENP). It would signal to
the other countries in the region that the EU is ready to support countries
embarking on political reforms, in moments of economic difficulties.
In this context, the
Commission considers that the political and economic pre-conditions for a MFA
operation of the proposed amount and nature are satisfied.
·      General context
After a severe
recession in 2011, when the economy contracted by 1.9% due to the domestic
political unrest and the Libyan conflict, a moderate recovery started in 2012
despite an adverse international and domestic environment, with real GDP
growth picking up to an estimated 3.6%, helped mainly by the rebound in
tourism and FDI inflows. Despite the promising pick-up in manufacturing
activity and increase in tourism shown by mid-2013, the ongoing political stalemate,
lower than expected growth in the EU (Tunisia’s main trading partner) and
emerging markets, and a bad harvest have slowed down economic activity. The IMF
recently revised its forecast for GDP growth in 2013 to 3% from 4%. The growth forecast
for 2014 has also been revised downwards from 4.5% to 3.7%, with risks strongly
tilted to the downside reflecting the domestic political situation.
Unemployment
remains a key concern with an unemployment rate of 15.9%
at end-June 2013 compared with 13.5% before the revolution, and is particularly
high among young people and women. There have been
inflationary pressures since early 2012, largely explained
by increases in administered energy prices, and by higher food prices.. However,
inflation has dropped back to 5.7% (and core inflation to 4.4%) by September and
is expected to remain stable at around that level.
Monetary
policy was accommodative during 2011 and the first
months of 2012 in response to the existence of a large output gap and
relatively stable core inflation. However, as inflation started to accelerate
and external and fiscal balances further deteriorated, the Central Bank of
Tunisia (CBT) took some tightening measures, increasing its benchmark policy
rate by 50 bps since August 2012 (to 4%). 
Regarding the public
finances, the IMF programme envisaged a modest fiscal adjustment for 2013,
with the fiscal deficit targeted to increase to 7.3% of GDP, broadly reflecting
the cost of the planned recapitalisation of banks and the repayment of arrears.
However, recent trends suggest that in the absence of new measures, there will
be a considerable fiscal slippage (the deficit is now projected to reach 8.4%
of GDP unless corrective measures are taken). This fiscal deterioration in 2013
is expected to be partially compensated, like last year, by a lower execution
rate of public investments.
For 2014, the
IMF is calling for an additional adjustment of about 2 percentage points of GDP
in order to reach the programmed deficit target of 6.4% of GDP. Corrective
measures are likely to include adjusting energy tariffs while developing a
better targeted social safety net, increasing control over the public wage bill
(which represents about 13% of GDP and 60% of revenues), increases in excises
and measures to improve the efficiency of public expenditures. The
recapitalisation needs for the financial sector should also be properly
budgeted in the law. 
The general government debt remained at 44% of GDP in 2012, but
it is projected to increase slightly to 45.3% of GDP by the end of this year
and to peak at 49.5% of GDP in 2014. Debt service remains at a manageable 6% of
total budget expenditures.
The rebound in growth
throughout 2012 amid subdued world demand (particularly from the EU) and persistently
high commodity prices contributed to a widening of the current account
deficit to 8.1% of GDP. The deficit has further increased in 2013, with the
latest projections indicating a worsening to around 8.3% of GDP compared with
the 7.5% of GDP targeted under the IMF programme. In addition, so far in 2013
FDI inflows have been about 40% below those initially assumed in the IMF
programme. Moreover, disbursements of official assistance are well below what
had been programmed. As a result of these shortfalls in financing and the
higher than programmed current account deficit, Tunisia faces a significant
balance of payments gap (of around USD 750 million) for 2013, although a
potential loan from Qatar may contribute to reducing it. The IMF expects this shortfall
to be covered by a decline of USD 600 million in foreign reserves compared to
the original programme targets and by a further compression in public
investment (which has high import content).
After
recovering partially in 2012, official foreign exchange reserves started to
decline rapidly in early 2013. By end-October 2013, reserves stood at USD
6.9 billion, covering only 104 days of imports. They are expected to
finish 2013 at USD 7.5 billion, a decrease of USD 1.1 billion in 2013,
which compares to an originally targeted increase of USD 400 million for
the year. The dinar has depreciated, in nominal effective terms, by around 12%
since the revolution, and by around 6% since the beginning of 2013.
The 2011 crisis had a negative impact on a
number of key banks, notably the public ones, who were more exposed to the
hard-hit tourism sector. This led the CBT to provide substantial liquidity to
the commercial banks during 2012 to help them cover their refinancing needs,
although a gradual unwinding of liquidity injections has already been
initiated. Under the programme agreed with the IMF, the authorities intend to
proceed with the recapitalisation and rehabilitation of the banks affected by
the crisis.
In addition to the need to restructure and
strengthen the banking system, other key structural reform challenges include
reducing unemployment while raising participation rates (notably among women),
reducing income and regional disparities, reducing the excessive reliance on
the development of a low value-added export industry located in the coastline,
and reforming the inefficient price subsidy system while strengthening the
social safety net.
On 7 June 2013 the IMF Board approved, as
noted, an USD 1.75 billion (400% of the Tunisian quota), two-year, SBA. The main objectives of the
IMF programme are: i) to maintain macroeconomic
stability, partly through the implementation of structural reforms and the
selective recapitalisation of banks; ii) to support inclusive growth;
iii) to reduce external vulnerabilities; and iv) to strengthen
investor and donor confidence. 
Revised
projections point towards significant balance of
payments needs for the 2014-2015 period, with the overall external financing
gap estimated at USD 4.4 billion. This financing gap is broadly attributed
to two factors; a persistently large current account deficit and the need to
build up foreign exchange reserves over the period 2014-2015. Net of
disbursements under the SBA and the World Bank's Development Policy Loan (DPL),
Tunisia faces a residual external financing gap of USD 3.0 billion over this
period. The proposed EU MFA would contribute to cover some 10.8% of the
residual financing gap for the 2014-2015 period.
·      Existing provisions in the area of the proposal
None
·      Consistency with the other policies and objectives of the Union
The EU seeks to
develop a close relationship to Tunisia and to support Tunisia’s economic and
political reforms. In 1995, Tunisia became the first country in the Southern
Mediterranean to sign an Association Agreement with the EU. This agreement
continues to be the legal basis for bilateral cooperation. Bilateral relations
have been further reinforced under the EU’s ENP, including through the adoption
of five-year ENP Action Plans establishing strategic objectives for this
cooperation, the latest of which covers 2013-2017. Tunisia is also a member of
the Union for the Mediterranean. Economic ties with the EU are important. Tunisia
conducts the largest share of its trade with the EU. In 2012, the EU was the
source of 59.3% of Tunisia’s imports and the destination of 68.1% of its exports.
Tunisia has also a high dependence on the EU in terms of FDI and other
financial flows, remittances and tourism inflows. Tunisia finalized the
dismantling of tariffs for industrial products in 2008, thus becoming the first
Mediterranean country to conclude a free trade agreement with the EU. The EU
has offered Tunisia to negotiate a Deep and Comprehensive Free Trade Agreement
with the goal to allowing the full access of Tunisia to the EU’s single market,
although negotiations have not yet started. 
The EU MFA would
complement the total EUR 445 million in grants mobilised under the ENPI and the
SPRING Programme, and in particular the conditionalities envisaged under the
PAR III package in which the EU is participating. Close coordination will be
ensured in the implementation of these two programmes, since both are
complementary and mutually reinforcing. While the envisaged MFA will provide
short term balance of payments support the state building contract will support
the completion of the democratic transition process through economic and
political governance measures. By supporting the adoption by the Tunisian
authorities of an appropriate framework for macroeconomic policy and structural
reforms, the EU’s MFA would enhance the added value and effectiveness of the
EU's involvement through other financial instruments. In addition, it would
complement the resources made available by the international financial
institutions, bilateral donors and other EU financial institutions, thus
contributing to the overall effectiveness of the package of financial support
agreed by the international donor community in the aftermath of the crisis.
In sum, while
Tunisia’s road to full democracy is not without difficulties and significant
uncertainties remain, the country has taken significant steps towards political
reform, with the aim of strengthening democratic institutions and mechanisms,
including a multi-party parliamentary system, the rule of law and the respect
for human rights. The country is also envisaging an economic reform programme
aimed at laying the ground for a sustainable, employment generating and
equitable growth model. 
The MFA proposal is
consistent with the EU's commitment to support Tunisia's economic and political
transition. It is also consistent with the wording of two MFA decisions on the
Kyrgyz Republic and Hashemite Kingdom of Jordan[1].
In particular, and as explained in more detail in the accompanying Staff
Working Document, the Commission's proposal is consistent with the following
principles: exceptional character, political preconditions, complementarity,
conditionality and financial discipline. 
The Commission will
continue to monitor and assess during the life of the MFA operation
satisfaction of these criteria. Regarding the assessment of the political
preconditions, Commission services will work in close liaison with the European
External Action Service.
2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
·      Consultation of interested parties
MFA is provided as an integral part of the
international support to the economic stabilisation of Tunisia. In the
preparation of this proposal for MFA, the Commission services have consulted
with the International Monetary Fund and the World Bank, which have already put
in place sizeable financing programs. The Commission has also been in regular
contact with the Tunisian authorities.
·      Collection and use of expertise
An Operational Assessment verifying the
quality and reliability of Tunisia's public financial circuits and
administrative procedures will be carried out by the Commission with the
assistance of external experts during the month of December 2013.
·      Impact assessment
The MFA and the economic adjustment and
reform programme attached to it will help alleviate Tunisia's short-term
financing needs while supporting policy measures aimed at strengthening the
balance of payments and fiscal positions and raising sustainable growth, as
agreed with the IMF. It will notably help improve the efficiency and
transparency of public finance management; promote fiscal reforms to increase
tax collections and improve the progressivity of the tax system; support
existing efforts to strengthen the social safety net; promote labour market
reforms (to reduce unemployment and raise participation rates, notably among
women); and facilitate the adoption of measures to improve the regulatory
framework for trade and investment.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
·      Summary of the proposed action
The European Union shall make available to
Tunisia MFA for a total maximum amount of  EUR 250 million, provided in the
form of a medium term loan. The objetives of the assistance will be to: (i)
contribute to cover Tunisia's residual external financing needs in 2014-15, as
identified by the Commission based on the estimates of the IMF; (ii) support
the fiscal consolidation effort and external stabilisation in the context of
the IMF programme; (iii) facilitate and encourage efforts of the authorities of
Tunisia to implement measures identified under the EU-Tunisia ENP Action Plan,
and; (iv) support structural reform efforts aimed at improving the overall
macroeconomic management, strenghening economic governance and transparency,
and improving conditions for sustainable growth.
The assistance is planned to be disbursed
in three loan instalments. The disbursement of the first instalment (EUR 90
million) is expected to take place in mid-2014. The second instalment (EUR 80
million), conditional on a number of policy measures, could be disbursed towards
the end of 2014. The third and last instalment (EUR 80 million) could be made
available, provided the policy measures are met, during the first half of 2015.
The assistance will be managed by the Commission. Specific provisions on the
prevention of fraud and other irregularities, consistent with the Financial
Regulation, are applicable. 
As usual with the MFA instrument, the
disbursements would be conditional on successful programme reviews under the
IMF's financial arrangement (the SBA). In addition, the Commission and the Tunisian
authorities would agree on specific structural reform measures in a Memorandum
of Understanding. The Commission will target structural reforms aimed at
improving the overall macroeconomic management and the conditions for
sustainable growth (e.g. targeting the transparency and efficiency of public
finance management; fiscal reforms; reforms to strengthen the social safety
net; labour market reforms; and reforms to improve the regulatory framework for
trade and investment).
The decision to disburse the full MFA in the form of loans is
justified by Tunisia's level of development (as measured by its per-capita
income) and debt indicators. It is also consistent with the treatment given to Tunisia
by the World Bank and the IMF. Indeed, Tunisia is not eligible for concessional financing from
either the IDA or the IMF's Poverty Reduction and Growth Trust.
·      Legal basis
The
legal basis for this proposal is Article 212 of the TFEU. 
·      Subsidiarity principle
The subsidiarity principle applies to the
extent that the objectives of restoring short-term macroeconomic stability in Tunisia
cannot be sufficiently achieved by the Member States alone and can therefore be
better achieved by the European Union. The main reasons are the budgetary
constraints faced at the national level and the need for strong donor
coordination in order to maximise the scale and effectivenes of the assistance.

·      Proportionality principle
The proposal complies with the
proportionality principle: it confines itself to the minimum required in order
to achieve the objectives of short-term macroeconomic stability and does not go
beyond what is necessary for that purpose. 
As identified by the Commission based on
the estimates of the IMF in the context of the SBA, the amount of the
assistance corresponds to 10.8% of the residual financing gap for the period
2014-2015. Given the assistance pledged to Tunisia by other bilateral and
multilateral donors and creditors, it is deemed an appropriate level of
burden-sharing for the EU.
·      Choice of instruments
Project finance or technical assistance
would not be suitable or sufficient to address these macroeconomic objectives.
The key value added of the MFA in comparison to other EU instruments would be
to alleviate the external financial constraint and to help create a stable
macroeconomic framework, including by promoting a sustainable balance of
payments and budgetary situation, and an appropriate framework for structural
reforms. By helping to put in place an appropriate overall framework for
macroeconomic and structural policies, MFA can increase the effectiveness of
the actions financed in Tunisia under other, more narrowly focused EU financial
instruments.
The proposed programme will also strengthen
the government's reform commitment and its aspiration towards closer relations
with the EU. This result will be achieved, inter alia, through appropriate
conditionality for the disbursement of the assistance. In a larger context, the
programme will signal to the other countries in the region that the EU is ready
to support countries embarking on a clear path towards political reforms in times
of economic difficulties.
4.           BUDGETARY IMPLICATIONS
The
planned assistance would be provided in the form of a loan and should be
financed through a borrowing operation that the Commission will conduct on
behalf of the EU. The budgetary costs of the assistance will correspond to the
provisioning, at a rate of 9%, of the amounts disbursed in the guarantee fund
for external lending of the EU, from budget line 01 03 06 ("the
provisioning of the Guarantee Fund")[2]. Assuming that the
first and second loan disbursements will be made in 2014 for a total amount of
EUR 170 million and the third loan disbursement in 2015 for the amount of EUR 80
million, and according to the rules governing the guarantee fund mechanism, the
provisioning will take place in the 2016-17 budgets.
5.           OPTIONAL ELEMENTS
·      Review/revision/sunset clause
The proposal includes a sunset clause. The
proposed MFA would be made available for two and a half years, starting from
the first day after the entry into force of the Memorandum of Understanding.
2013/0416 (COD)
Proposal for a
DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
providing macro-financial assistance to
the Republic of Tunisia
THE
EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to
the Treaty on the Functioning of the European Union, and in particular Article 212
thereof,
Having regard to
the proposal from the European Commission[3],

After transmission
of the draft legislative act to the national parliaments,
Acting in
accordance with the ordinary legislative procedure[4],
Whereas:
(1)       Relations between the
European Union ('the Union') and the Republic of Tunisia ('Tunisia') are
developing within the framework of the European Neighbourhood Policy (ENP). The
Euro-Med Association Agreement between the European Community and its Member
States, on the one hand, and Tunisia, on the other hand, came into force on 1
March 1998. Under this Association Agreement, Tunisia finalized dismantling
tariffs for industrial products in 2008, thus making Tunisia the first
Mediterranean country to enter in a free trade area with the Union. Bilateral
political dialogue and economic cooperation have been further developed within
the framework of ENP Action Plans, of which the most recent under discussion
would cover the period 2013-2017.
(2)       Tunisia's economy has been
significantly affected by domestic events related to the events in the Southern
Mediterranean since the end of 2010, known as the "Arab Spring", and
by the regional unrest that followed, notably in neighbouring Libya. These
events and the weak global economic environment, in particular the recession in
the euro area (Tunisia's main trading and financial partner), has had a very
negative impact on the Tunisian economy, leading to a slowdown in growth and
generating large external and budgetary financing gaps.
(3)       Following the ousting of
President Ben Ali on 14 January 2011, Tunisia’s first free and democratic
elections took place on 23 October 2011. A National Constituent Assembly has
been in place since then, and although the political transition has not been
without difficulties, there are concerted efforts from the main political
actors to proceed with reforms towards a fully-fledged democratic system. 
(4)       Since the Arab Spring
began, the Union has declared on various occasions its commitment to support
Tunisia in its economic and political reform process. This commitment was
reaffirmed in the conclusions of the meeting of the Association Council between
the Union and Tunisia in November 2012. Financial support from the Union to
Tunisia's reform process is consistent with the Union's policy towards the
Southern Mediterranean region, as set out in the context of the
ENP.
(5)       Union macro-financial
assistance should be an exceptional financial instrument of untied and
undesignated balance-of-payments support, which aims at restoring a
beneficiary's sustainable external finance situation and should underpin the
implementation of a policy programme containing strong adjustment and
structural reform measures designed to improve the balance of payment position,
in particular over the programme period, and reinforce the implementation of
relevant agreements and programmes with the Union. 
(6)       In April 2013, the Tunisian
authorities and the International Monetary Fund (IMF) agreed on a
non-precautionary three-year Stand-By-Arrangement ('IMF programme') of SDR 1,150
million (Special Drawing Rights) in support of Tunisia's economic adjustment
and reform programme. The objectives of the IMF programme are consistent with
the purpose of the Union macro-financial assistance, namely to alleviate
short-term balance of payment difficulties, and the implementation of strong
adjustment measures consistent with the aim of Union macro-financial
assistance. 
(7)       The Union has made available
EUR 290 million in grants for the period 2011-13 under its regular cooperation
programme in support of Tunisia's economic and political reform agenda. In
addition, EUR 155 million has been allocated to Tunisia in 2011-2013 under the
"Support for partnership, reforms and inclusive growth" (SPRING)
programme.
(8)       In August 2013, in view of
the worsening economic situation and outlook, Tunisia requested Union
macro-financial assistance.
(9)       Given that Tunisia is a
country covered by the ENP, it should be considered to be eligible to receive
Union macro-financial assistance.
(10)     Given that there is still a
significant residual external financing gap in Tunisia's balance of payments
over and above the resources provided by IMF and other multilateral
institutions, the Union macro-financial assistance to be provided to Tunisia
("the Union's macro-financial assistance") is, under the current
exceptional circumstances, considered to be an appropriate response to Tunisia's
request to support economic stabilisation in conjunction with the IMF
programme. The Union's macro-financial assistance would support the economic
stabilisation and the structural reform agenda of Tunisia, supplementing
resources made available under the IMF's financial arrangement.
(11)     The Union's macro-financial
assistance should aim to support the restoration of a sustainable external
financing situation for Tunisia thereby supporting its economic and social
development.
(12)     The determination of the
amount of the Union's macro-financial assistance is based on a complete
quantitative assessment of Tunisia's residual external financing needs, and
takes into account its capacity to finance itself with its own resources, in
particular the international reserves at its disposal. The Union's
macro-financial assistance should complement the programmes and resources
provided by the IMF and the World Bank. The determination of the amount of the
assistance also takes into account expected financial contributions from
multilateral donors and the need to ensure fair burden sharing between the
Union and other donors, as well as the pre-existing deployment of the Union's
other external financing instruments in Tunisia and the added value of the
overall Union involvement. 
(13)     The Commission should
ensure that the Union's macro-financial assistance is legally and substantially
in line with the key principles, objectives and measures taken within the
different areas of external action and other relevant Union policies.
(14)     The Union's macro-financial
assistance should support the Union's external policy towards Tunisia.
Commission services and the European External Action Service should work
closely together throughout the macro-financial assistance operation in order
to coordinate, and to ensure the consistency of, Union external policy. 
(15)     The Union's macro-financial
assistance should support Tunisia's commitment to values shared with the Union,
including democracy, the rule of law, good governance, respect for human
rights, sustainable development and poverty reduction, as well as its
commitment to the principles of open, rule-based and fair trade.
(16)     A pre-condition for
granting the Union's macro-financial assistance should be that Tunisia respects
effective democratic mechanisms, including a multi-party parliamentary system
and the rule of law, and guarantees respect for human rights. In addition, the
specific objectives of the Union's macro-financial assistance should strengthen
the efficiency, transparency and accountability of the public finance
management systems in Tunisia and to promote structural reforms aimed at
supporting sustainable and inclusive growth, employment creation and fiscal
consolidation. Both fulfilment of the preconditions and the achievement of
those objectives should be regularly monitored by the Commission.
(17)     In order to ensure that the
Union’s financial interests linked to the Union’s macro-financial assistance
are protected efficiently, Tunisia should take appropriate measures relating to
the prevention of, and fight against, fraud, corruption and any other
irregularities linked to the assistance. In addition, provision should be made
for the Commission to carry out checks and for the European Court of Auditors
to carry out audits.
(18)     Release of the Union's
macro-financial assistance is without prejudice to the powers of the European
Parliament and the Council. 
(19)     The amounts of the
provision required for macro-financial assistance should be consistent with the
budgetary appropriations provided for in the multi-annual financial framework.
(20)     The Union's macro-financial
assistance should be managed by the Commission. In order to ensure that the
European Parliament and the Council are able to follow the implementation of
this Decision, the Commission should regularly inform them of developments
relating to the assistance and provide them with relevant documents.
(21)     In order to ensure uniform
conditions for the implementation of this Decision, implementing powers should
be conferred on the Commission. Those powers should be exercised in accordance
with Regulation (EU) No 182/2011 of the European Parliament and of the Council[5].
(22)     The Union's macro-financial
assistance should be subject to economic policy conditions, to be laid down in
a Memorandum of Understanding. In order to ensure uniform conditions of
implementation and for reasons of efficiency, the Commission should be
empowered to negotiate such conditions with the Tunisian authorities under the
supervision of the committee of representatives of the Member States in
accordance with Regulation (EU) No 182/2011. Under that Regulation, the
advisory procedure should, as a general rule, apply in all cases other than as
provided for in that Regulation. Considering the potentially important impact
of assistance of more than EUR 90 million, it is appropriate that the
examination procedure be used for operations above that threshold. Considering
the amount of the Union's macro-financial assistance to Tunisia, the
examination procedure should apply to the adoption of the Memorandum of
Understanding, and to any reduction, suspension or cancellation of the
assistance,
HAVE ADOPTED THIS DECISION:
Article 1
1.           The Union shall make macro-financial
assistance available to Tunisia ("the Union's macro-financial
assistance") of a maximum amount of EUR 250 million, with a view to
supporting Tunisia's economic stabilisation and reforms. The assistance shall
contribute to covering Tunisia's balance of payments needs as identified in the
IMF programme. 
2.           The full amount of the
Union's macro-financial assistance shall be provided to Tunisia in the form of
loans. The Commission shall be empowered on behalf of the Union to borrow the
necessary funds on the capital markets or from financial institutions and to
on-lend them to Tunisia. The loans shall have a maximum maturity of 15 years.
3.           The release of the Union's
macro-financial assistance shall be managed by the Commission in a manner
consistent with the agreements or understandings reached between the IMF and Tunisia,
and with the key principles and objectives of economic reforms set out in the
EU-Tunisia Association Agreement and the EU-Tunisia Action Plan for 2013-2017 agreed
under the ENP. The Commission shall regularly inform the European Parliament
and the Council of developments regarding the Union's macro-financial
assistance, including disbursements thereof, and shall provide those
institutions with the relevant documents in due time.
4.           The Union's macro-financial
assistance shall be made available for a period of two and a half years from
the first day after the entry into force of the Memorandum of Understanding
referred to in Article 3(1).
5.           Where the financing needs
of Tunisia decrease fundamentally during the period of the disbursement of the
Union's macro-financial assistance compared to the initial projections, the
Commission, acting in accordance with the examination procedure referred to in
Article 7(2), shall reduce the amount of the assistance or suspend or cancel
it.
Article 2
A pre-condition for granting the Union's
macro financial assistance shall be that Tunisia respects effective democratic
mechanisms, including a multi-party parliamentary system and the rule of law,
and guarantees respect for human rights. The Commission shall monitor the
fulfilment of this pre-condition throughout the life-cycle of the Union's
macro-financial assistance. This Article shall be applied in accordance with
Council Decision 2010/427/EU[6].
Article 3
1.           The Commission, in
accordance with the examination procedure referred to in Article 7(2), shall
agree with the Tunisian authorities on clearly defined economic policy and
financial conditions, focusing on structural reforms and sound public finances,
to which the Union's macro-financial assistance is to be subject, to be laid
down in a Memorandum of Understanding ("the Memorandum of
Understanding") which shall include a timeframe for the fulfilment of
those conditions. The economic policy and financial conditions set out in the
Memorandum of Understanding shall be consistent with the agreements or
understandings referred to in Article 1(3), including the macro-economic
adjustment and structural reform programmes implemented by Tunisia, with the
support of the IMF. 
2.           Those conditions shall
aim, in particular, to enhance the efficiency, transparency and accountability
of the public finance management systems in Tunisia, including for the use of
the Union's macro-financial assistance. Progress in mutual market opening, the
development of rules-based and fair trade and other priorities in the context
of the Union's external policy shall also be duly taken into account when
designing the policy measures. Progress in attaining those objectives shall be
regularly monitored by the Commission.
3.           The detailed financial
terms of the Union's macro-financial assistance shall be laid down in a Loan
Agreement to be agreed between the Commission and the Tunisian authorities. 
4.           The Commission shall
verify at regular intervals that the conditions in Article 4(3) continue to be
met, including that the economic policies of Tunisia are in accordance with the
objectives of the Union's macro-financial assistance. In so doing, the
Commission shall coordinate closely with the IMF and the World Bank, and, where
necessary, with the European Parliament and the Council.
Article 4
1.           Subject to the conditions in
paragraph 3, the Union's macro-financial assistance shall be made available by
the Commission in three loan instalments. The size of each instalment shall be
laid down in the Memorandum of Understanding. 
2.           The amounts of the Union's
macro-financial assistance shall be provisioned, where required, in accordance
with Council Regulation (EC, Euratom) No 480/2009[7]. 
3.           The Commission shall
decide on the release of the instalments subject to the fulfilment of all of
the following conditions:
(a)         
the pre-condition set out in Article 2;
(b)         
a continuous satisfactory track record of
implementing a policy programme that contains strong adjustment and structural
reform measures supported by a non-precautionary IMF credit arrangement; and
(c)         
the implementation, within a specific
time-frame, of the economic policy and financial conditions agreed in the
Memorandum of Understanding. 
The disbursement of the second instalment shall
not take place earlier than three months after the release of the first
instalment. The disbursement of the third instalment shall not take place
earlier than three months after the release of the second instalment.
4.           Where the conditions in
paragraph 3 are not met, the Commission shall temporarily suspend or cancel the
disbursement of the Union's macro-financial assistance. In such cases, it shall
inform the European Parliament and the Council of the reasons for that
suspension or cancellation. 
5.           The Union's
macro-financial assistance shall be disbursed to the Central Bank of Tunisia.
Subject to provisions to be agreed in the Memorandum of Understanding,
including a confirmation of residual budgetary financing needs, the Union funds
may be transferred to the Tunisian Ministry of Finance as the final
beneficiary.
Article 5
1.           The borrowing and lending
operations related to the Union's macro-financial assistance shall be carried
out in euro using the same value date and shall not involve the Union in the
transformation of maturities, or expose it to any exchange or interest rate
risk, or to any other commercial risk.
2.           Where the circumstances
permit, and if Tunisia so requests, the Commission may take the steps necessary
to ensure that an early repayment clause is included in the loan terms and
conditions and that it is matched by a corresponding clause in the terms and
conditions of the borrowing operations. 
3.           Where circumstances permit
an improvement of the interest rate of the loan and if Tunisia so requests, the
Commission may decide to refinance all or part of its initial borrowings or may
restructure the corresponding financial conditions. Refinancing or
restructuring operations shall be carried out in accordance with paragraphs 1
and 4 and shall not have the effect of extending the maturity of the borrowings
concerned or of increasing the amount of capital outstanding at the date of the
refinancing or restructuring.
4.           All costs incurred by the
Union which relate to the borrowing and lending operations under this Decision
shall be borne by Tunisia. 
5.           The Commission shall
inform the European Parliament and the Council of developments in the
operations referred to in paragraphs 2 and 3.
Article 6
1.           The Union's
macro-financial assistance shall be implemented in accordance with Regulation
(EU, Euratom) No 966/2012 of the European Parliament and of the Council[8] and Commission Delegated Regulation (EU) No
1268/2012[9].
2.           The implementation of the
Union's macro-financial assistance shall be under direct management. 
3.           The Memorandum of
Understanding and the Loan Agreement to be agreed with the Tunisian authorities
shall contain provisions: 
(a)         
ensuring that Tunisia regularly checks that
financing provided from the budget of the Union has been properly used, takes
appropriate measures to prevent irregularities and fraud, and, if necessary,
takes legal action to recover any funds provided under this Decision that have
been misappropriated;
(b)         
ensuring the protection of the Union's financial
interests, in particular providing for specific measures in relation to the
prevention of, and fight against, fraud, corruption and any other
irregularities affecting the Union's macro-financial assistance, in accordance
with Council Regulation (EC,Euratom) No 988/95[10],
Council Regulation (EC, Euratom) No 2185/96[11]
and Regulation (EU, Euratom) No 883/2013 of the
European Parliament and of the Council[12];
(c)         
expressly authorising the Commission, including
the European Anti-Fraud Office, or its representatives to carry out checks,
including on-the-spot checks and inspections; 
(d)        
expressly authorising the Commission and the European
Court of Auditors to perform audits during and after the availability period of
the Union's macro-financial assistance, including document audits and
on-the-spot audits, such as operational assessments;
(e)         
ensuring that the Union is entitled to early
repayment of the loan where it has been established that, in relation to the
management of the Union's macro-financial assistance, Tunisia has engaged in
any act of fraud or corruption or any other illegal activity detrimental to the
financial interests of the Union.
4.           During the implementation
of the Union's macro-financial assistance, the Commission shall monitor, by
means of operational assessments, the soundness of Tunisia's financial
arrangements, the administrative procedures, and the internal and external
control mechanisms which are relevant to the assistance.
Article 7
1.           The Commission shall be
assisted by a committee. That committee shall be a committee within the meaning
of Regulation (EU) No 182/2011.
2.           Where reference is made to
this paragraph, Article 5 of Regulation (EU) No 182/2011 shall
apply.
Article 8
1.           By 30 June of each year,
the Commission shall submit to the European Parliament and to the Council a
report on the implementation of this Decision in the preceding year, including
an evaluation of that implementation. The report shall:
(a)         
examine the progress made in implementing the
Union's macro-financial assistance;
(b)         
assess the economic situation and prospects of Tunisia,
as well as progress made in implementing the policy measures referred to in
Article 3(1);
(c)         
indicate the connection between the economic
policy conditions laid down in the Memorandum of Understanding, Tunisia’s
on-going economic and fiscal performance and the Commission’s decisions to
release the instalments of the Union's macro-financial assistance.
2.           Not later than two years
after the expiry of the availability period referred to in Article 1(4), the
Commission shall submit to the European Parliament and to the Council an ex
post evaluation report, assessing the results and efficiency of the completed
Union's macro-financial assistance and the extent to which it has contributed
to the aims of the assistance.
Article 9
This Decision shall enter into force on the
third day following that of its publication in the Official Journal of the
European Union.
Done at …, 
For the European Parliament                                                 For
the Council
The President                                                                          The
President
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE
PROPOSAL/INITIATIVE 
              1.1.    Title of the proposal/initiative 
              1.2.    Policy
area(s) concerned in the ABM/ABB structure
              1.3.    Nature
of the proposal/initiative 
              1.4.    Objectives

              1.5.    Grounds
for the proposal/initiative 
              1.6.    Duration
and financial impact 
              1.7.    Management
mode(s) envisaged 
2.           MANAGEMENT MEASURES
              2.1.    Monitoring
and reporting rules 
              2.2.    Management
and control system 
              2.3.    Measures
to prevent fraud and irregularities 
3.           ESTIMATED FINANCIAL
IMPACT OF THE PROPOSAL/INITIATIVE 
              3.1.    Heading(s)
of the multiannual financial framework and expenditure budget line(s) affected 
              3.2.    Estimated
impact on expenditure 
              3.3.    Estimated impact on revenue
LEGISLATIVE FINANCIAL STATEMENT
1.           FRAMEWORK OF THE
PROPOSAL/INITIATIVE 
1.1.        Title of the
proposal/initiative 
Macro-financial assistance to the Republic of
Tunisia
1.2.        Policy area(s) concerned
in the ABM/ABB structure[13] 
Policy area:   Title 01 – Economic and
Financial Affairs
Activity:        03 – International economic
and financial affairs
1.3.        Nature of the
proposal/initiative 
X The proposal/initiative relates to a new action 
1.4.        Objectives
1.4.1.     The Commission's
multiannual strategic objective(s) targeted by the proposal/initiative 
"To promote prosperity beyond the EU"
The major area of DG ECFIN related activity
pertains to: 
1. Fostering the implementation of the European
Neighbourhood Policy by deepening economic analysis and strengthening policy
dialogue and advice on the economic aspects of the Action Plans.
2. Developing, monitoring and implementing
macro-financial assistance for partner third countries, in co-operation with
the relevant international financial institutions. 
1.4.2.     Specific objective(s) and
ABM/ABB activity(ies) concerned
Specific objective No 1: "Providing macro-financial assistance to third countries in
resolving their balance of payment crises and restoring external debt
sustainability"
ABM/ABB activity(ies) concerned: International Economic and Financial Relations, global governance. 
1.4.3.     Expected result(s) and
impact
The proposed assistance consists of an EU loan
of EUR 250 million to the Republic of Tunisia ('Tunisia'), with a view to
contributing to a more sustainable balance of payments situation. The assistance,
to be disbursed in three instalments, will help the country overcome the
economic and social hardships endured as a result of the domestic and regional
unrest. It will also promote structural reforms aimed at raising sustainable
economic growth and improving public finance management. 
1.4.4.     Indicators of results and
impact 
The authorities will be required to report on a
set of indicators to the Commission services on a regular basis and provide a
comprehensive report on the compliance with the agreed policy conditions ahead
of the disbursement of the second and third instalments of the assistance. 
The Commission services will continue to
monitor public finance management, following the operational assessment of the
financial circuits and administrative procedures in Tunisia that will be
carried out in preparation of this operation. The EU Delegation in Tunisia will
also provide regular reporting on issues relevant for the monitoring of the
assistance. The Commission services will remain in close contact with the IMF
and the World Bank to benefit from their insights from their on-going
activities in Tunisia. 
An annual report to the Council and European
Parliament is foreseen in the proposed legislative decision, comprising an
assessment of the implementation of this operation. An independent ex-post
evaluation of the assistance will be carried out within two years after the
expiry of the implementation period.
1.5.        Grounds for the
proposal/initiative 
1.5.1.     Requirement(s) to be met in
the short or long term 
The disbursement of the assistance will be
conditional upon a satisfactory track record in the implementation of the
Stand-By Arrangement (SBA) between Tunisia and the IMF. In addition, the
Commission shall agree with the Tunisian authorities on specific policy
conditions, listed in a Memorandum of Understanding, to be met before the
second and third instalments are released by the Commission. 
1.5.2.     Added value of EU
involvement
By helping the country overcome the economic
shock caused by the domestic and regional unrest, the proposed MFA will
contribute to promoting macroeconomic stability, economic reforms and political
progress in the country. By complementing the resources made available by the
international financial institutions, the EU and other donors, it will contribute
to the overall effectiveness of the package of financial support agreed by the
international donor community in the aftermath of the crisis. 
The proposed programme will also strengthen the
government's reform commitment and its aspiration towards closer relations with
the EU. This result will be achieved, inter alia, through appropriate
conditionality for the disbursement of the assistance. In a larger context, the
programme will signal to the other countries in the region that the EU is ready
to support countries embarking on a clear path towards political reforms in times
of economic difficulties.
1.5.3.     Lessons learned from
similar experiences in the past
Since 2004, a total of fifteen ex-post
evaluations have been carried out on macro-financial assistance operations.
These evaluations conclude that MFA operations do contribute, albeit sometimes
modestly and indirectly, to the improvement of the external sustainability, the
macroeconomic stability and the achievement of structural reforms in the
recipient country. In most cases, MFA operations had a positive effect on the
balance of payments of the beneficiary country and helped to relax their
budgetary constraints. They also led to a somewhat higher economic growth.
1.5.4.     Compatibility and possible
synergy with other appropriate instruments
The EU is among the major donors of Tunisia. The EU has made available EUR 290 million in grants for the period
2011-13 under its regular cooperation, in support of Tunisia's
political and economic reform agenda. In addition, EUR 140 million has been
allocated to Tunisia in the period 2011-13 under the SPRING programme.
The key value added of the MFA in comparison to
other EU instruments would be to help create a stable macroeconomic framework,
including by promoting a sustainable balance of payments and budgetary
situation, and an appropriate framework for structural reforms. MFA does not
provide a regular financial support nor is meant to support the economic and
social development of the recipient countries. The MFA is to be discontinued as
soon as the country's external financial situation has been brought back into a
sustainable path. Afterwards, regular EU cooperation assistance instruments are
meant to take over.
MFA is also meant to be complementary to
interventions by the international financial institutions, in particular the
adjustment and reform programme supported by the IMF's SBA and the Development
Policy Loan of the World Bank.
1.6.        Duration and financial
impact 
X Proposal/initiative of limited
duration 
X Proposal/initiative in effect for 2.5 years
from the entry into force of the Memorandum of Understanding, as stated in
Article (1.4) of the Decision 
X Financial impact from 2014 to 2017 
1.7.        Management mode(s)
envisaged[14] 
X Centralised direct management by the
Commission 
2.           MANAGEMENT MEASURES 
2.1.        Monitoring and reporting
rules 
This assistance is of macroeconomic nature and
its design is consistent with the IMF-supported economic programme. The
monitoring of the action by the Commission services will take place on the
basis of progress in the implementation of the SBA and specific reform measures
to be agreed with the Tunisian authorities in a Memorandum of Understanding
(see also point 1.4.4). 
2.2.        Management and control system

2.2.1.     Risk(s) identified 
There are fiduciary, policy and political risks
related to the proposed MFA operation. 
There is a risk that the macro-financial
assistance, which is not dedicated to specific expenses, could be used in a
fraudulent way. In general terms, this risk is related to factors such as the
quality of management systems in the central bank and the ministry of finance and
the appropriatedness of internal and external audit capabilities. 
Another key risk to the operation stems from the
regional economic and political uncertainty, notably in Libya, which has direct
implications for the Tunisian economy. On the domestic front, the main risk is
instability related to difficulties in the political and economic reform
process. The full implementation of the stabilisation and reform measures
supported by the international community, including the proposed MFA operation,
might be undermined by social dissatisfaction. 
Finally, there are risks stemming from a
possible weakening of the European and global economic environment and an
increase in international energy and food prices. 
2.2.2.     Control method(s) envisaged

The macro-financial assistance will be liable
to verification, control and auditing procedures under the responsibility of
the Commission, including the European Antifraud Office (OLAF), and by the
European Court of Auditors. 
2.2.3.     Costs and benefits of
controls and probable non-compliance rate
The basic costs for the Commission related to
the methods of verification and control, as well as the cost of the Operational
Assessment of financial and administrative circuits conducted prior to the
operation, are described in Table 3.2.1. In addition, there are costs for the
European Court of Auditors and of possible interventions of the OLAF. The
Operational Assessment not only helps assess risks of misuse of the funds but,
as a collateral benefit, it provides useful information on the necessary
reforms in the area of public finance management, which are reflected in the
policy conditionality of the operation. Regarding the probable non-compliance
rate, the risk of non-compliance (in the form of non-repayment of the loan or misuse
of the funds) is judged to be low, based on the experience with the MFA
instrument since its creation. 
2.3.        Measures to prevent fraud
and irregularities 
To mitigate the risks of fraudulent use several
measures will be taken: 
First, the proposed legal basis for
macro-financial assistance to Tunisia includes a provision on fraud prevention
measures. These measures will be elaborated further in the Memorandum of
Understanding and the Loan Agreement, envisaging a set of provisions on
inspection, fraud prevention, audits, and recovery of funds in case of fraud or
corruption. It is further envisaged that a number of specific policy conditions
will be attached to the assistance, mainly in the area of public finance
management, with a view to strengthening efficiency, transparency and
accountability. 
Second, before the agreement on the Memorandum
of Understanding is reached, the Commission services, with the support of duly
mandated external experts, will carry out an Operational Assessment of the
financial circuits and administrative procedures at the Ministry of Finance and
the Central Bank of Tunisia, in order to fulfil the requirements of the
Financial Regulation applicable to the General Budget of the European
Communities. This review will determine
whether the framework for sound financial management of macro-financial
assistance is sufficiently effective in Tunisia by covering areas such
as management structure and organisation, management and control of funds,
security of IT systems, internal and external audit capacity as well as the
independence of the central bank. In the light of this assessment, specific
mechanisms applying to the management of the funds by the beneficiaries may be
introduced in agreement with the national authorities. Also, the assistance
will be paid to a dedicated account at the Central Bank of Tunisia.
Finally, the
assistance will be liable to verification, control and auditing procedures
under the responsibility of the Commission, including OLAF, and the European
Court of Auditors.
3.           ESTIMATED FINANCIAL
IMPACT OF THE PROPOSAL/INITIATIVE 
3.1.        Heading(s) of the
multiannual financial framework and expenditure budget line(s) affected 
·      Existing budget lines
01 03 02: Macro-financial assistance
01 03 06– Provisioning of the Guarantee Fund[15]
In order of
multiannual financial framework headings and budget lines.
 Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution 
 Number [Description………………...……….] || Diff./non-diff. ([16])   || from EFTA countries[17]   || from candidate countries[18]   || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation 
 4 || 01 03 02 Macro-financial assistance || Diff. || NO || NO || NO || NO 
 4 || 01 03 06 Provisioning of the Guarantee Fund || Diff. || NO || NO || NO || NO 
01 03 06 –
European Union guarantee for EU loans raised for macro-financial assistance to
third countries: The Guarantee Fund for external actions has to be provisioned
according to the Fund Regulation, as amended. In line with this Regulation,
loans are based on the outstanding amount at the end of a year. The
provisioning amount is calculated at the beginning of the year "n" as
the difference between the target amount and the Fund's net assets at the end
of the year "n-1". This provisioning amount is introduced in the year
"n" to the "n+1" preliminary budget and effectively paid in
one transaction at the beginning of the year "n+1" from "the
provisioning of the Guarantee Fund" (budget line 01 03 06). As a result,
9% (maximum of EUR 22.5 million) of the effectively disbursed amount will be
considered in the target amount at the end of the year "n-1" for the
calculation of the provisioning of the Fund.
The budget entry ("p.m.") reflecting the budget guarantee
for the loan will be activated only in the case of an effective call on the
guarantee. It is not expected that the budget guarantee be called.
¨¨New budget
lines requested: not applicable.
3.2.        Estimated impact on
expenditure 
3.2.1.     Summary of estimated impact
on expenditure 
EUR million (to three decimal places)
 Heading of multiannual financial framework: || 4 ||   ||   || [Heading: The EU as a global partner] 
 DG: <ECFIN> ||   ||   || Year 2013[19] || Year 2014 || Year 2015 || Year 2016 || Year 2017 || TOTAL 
  Operational appropriations ||   ||   ||   ||   ||   ||   
 Budget line 01 03 06 Provisioning of the Guarantee Fund || Commitments || (1a) ||   ||   ||   || 15.3 || 7.2 || 22.5 
 Payments || (2a) ||   ||   ||   || 15.3 || 7.2 || 22.5 
 Appropriations of an administrative nature financed from the envelope of specific programmes[20] (operational assessment and ex-post evaluation) ||   ||   ||   ||   ||   ||   
 Budget line 01 03 02 || Commitments || (3) || 0.05 ||   ||   || 0.15 ||   || 0.20 
   || Payments || (3a) ||   || 0.05 ||   || 0.05 || 0.10 || 0.20 
 TOTAL appropriations for DG ECFIN || Commitments || =1+1a +3 || 0.05 ||   ||   || 15.45 || 7.2 || 22.7 
 Payments || =2+2a +3 ||   || 0.05 ||   || 15.35 || 7.3 || 22.7 
  TOTAL operational appropriations || Commitments || (4) || 0.05 ||   ||   || 15.45 || 7.2 || 22.7 
 Payments || (5) ||   || 0.05 ||   || 15.35 || 7.3 || 22.7 
  TOTAL appropriations of an administrative nature financed from the envelope for specific programmes || (6) ||   ||   ||   ||   ||   ||   
 TOTAL appropriations under HEADING 4 of the multiannual financial framework || Commitments || =4+ 6 || 0.05 ||   ||   || 15.45 || 7.2 || 22.7 
 Payments || =5+ 6 ||   || 0.05 ||   || 15.35 || 7.3 || 22.7 
If more than
one heading is affected by the proposal / initiative:
EUR million (to three decimal places)
 Heading of multiannual financial framework: || 5 ||   || ‘Administrative expenditure’ 
   ||   ||   || Year 2013 || Year 2014 || Year 2015 || Year 2016 || Year 2017 || TOTAL 
 DG: <…….> ||   || 
  Human resources || 0.030 || 0.028 || 0.021 || 0.010 || 0.016 || 0.105 
  Other administrative expenditure || 0.015 || 0.015 || 0.010 ||   ||   || 0.040 
 TOTAL DG ECFIN || Appropriations || 0.045 || 0.043 || 0.031 || 0.010 || 0.016 || 0.145 
 TOTAL appropriations for HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 0.045 || 0.043 || 0.031 || 0.010 || 0.016 || 0.145 
EUR million (to three decimal places)
   ||   ||   || Year 2013[21] || Year 2014 || Year 2015 || Year 2016 || Year 2017 || TOTAL 
 TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 0.095 || 0.043 || 0.031 || 15.46 || 7.216 || 22.845 
 Payments || 0.045 || 0.093 || 0.031 || 15.36 || 7.316 || 22.845 
3.2.2.     Estimated impact on
operational appropriations 
–     
¨  The proposal/initiative does not require the use of operational
appropriations 
–     
X The proposal/initiative requires the use of
operational appropriations, as explained below:
Commitment appropriations in EUR million (to three
decimal places)
 Indicate objectives and outputs   ò ||   ||   ||   ||   ||   ||   ||   ||   
   || 
   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 SPECIFIC OBJECTIVE NO 1[22] ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   ||   
   ||   || Year 2013 || Year 2014 || Year 2015 || Year 2016 || Year 2017 ||   ||   
   || Type || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Number || Cost || Total number || Total Cost 
 - Output 1 || Operational assessment || 1 || 0.05 ||   ||   ||   ||   ||   ||   ||   ||   || 1 || 0.05 
 - Output 2 || Ex-post evaluation ||   ||   ||   ||   ||   ||   || 1 || 0.15 ||   ||   || 1 || 0.15 
 - Output 3 || Provisioning of the Guarantee Fund ||   ||   ||   ||   ||   ||   || 1 || 15.3 || 1 || 7.2 || 2 || 22.5 
 Subtotal for specific objective No 1 || 1 || 0.05 ||   ||   ||   ||   || 2 || 15.45 || 1 || 7.2 || 4 || 22.7 
 TOTAL COST || 1 || 0.05 ||   ||   ||   ||   || 2 || 15.45 || 1 || 7.2 || 4 || 22.7 
3.2.3.     Estimated impact on
appropriations of an administrative nature
3.2.3.1.  Summary 
–     
¨  The proposal/initiative does not require the use of appropriations
of an administrative nature 
–     
X The proposal/initiative requires the use of
appropriations of an administrative nature, as explained below:
EUR million (to
three decimal places)
   || Year 2013[23]   || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Enter as many years as necessary to show the duration of the impact (see point 1.6) || TOTAL 
 HEADING 5 of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources || 0.030 || 0.028 || 0.021 || 0.010 || 0.016 ||   ||   ||   || 0.105 
 Other administrative expenditure || 0.015 || 0.015 || 0.010 ||   ||   ||   ||   ||   || 0.040 
 Subtotal HEADING 5 of the multiannual financial framework || 0.045 || 0.043 || 0.031 || 0.010 || 0.016 ||   ||   ||   || 0.145 
 Outside HEADING 5[24] of the multiannual financial framework   ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Human resources ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Other expenditure of an administrative nature ||   ||   ||   ||   ||   ||   ||   ||   ||   
 Subtotal outside HEADING 5 of the multiannual financial framework ||   ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL || 0.045 || 0.043 || 0.031 || 0.010 || 0.016 ||   ||   ||   || 0.145 
The administrative
appropriations required will be met by the appropriations of the DG which are
already assigned to management of the action and/or which have been redeployed
within the DG, together if necessary with any additional allocation which may
be granted to the managing DG under the annual allocation procedure and in the
light of budgetary constraints.
3.2.3.2.   Estimated
requirements of human resources 
–     
¨  The proposal/initiative does not require the use of human
resources. 
–     
X The proposal/initiative requires the use of
human resources, as explained below:
Estimate to be expressed in full time
equivalent units
   || Year 2013 || Year 2014 || Year 2015 || Year 2016 || Year 2017 || Enter as many years as necessary to show the duration of the impact (see point 1.6) 
  Establishment plan posts (officials and temporary agents) || 
 01 01 01 01 (Headquarters and Commission’s Representation Offices) || 0.227 || 0.212 || 0.159 || 0.076 || 0.121 ||   ||   ||   
 XX 01 01 02 (Delegations) ||   ||   ||   ||   ||   ||   ||   ||   
 XX 01 05 01 (Indirect research) ||   ||   ||   ||   ||   ||   ||   ||   
 10 01 05 01 (Direct research) ||   ||   ||   ||   ||   ||   ||   ||   
  External personnel (in Full Time Equivalent unit: FTE)[25]   
 XX 01 02 01 (CA, INT, SNE from the "global envelope") ||   ||   ||   ||   ||   ||   ||   ||   
 XX 01 02 02 (CA, INT, JED, LA and SNE in the delegations) ||   ||   ||   ||   ||   ||   ||   ||   
 XX 01 04 yy[26]   || - at Headquarters ||   ||   ||   ||   ||   ||   ||   ||   
 - in delegations ||   ||   ||   ||   ||   ||   ||   ||   
 XX 01 05 02 (CA, SNE, INT - Indirect research)   ||   ||   ||   ||   ||   ||   ||   ||   
 10 01 05 02 (CA, SNE, INT - Direct research) ||   ||   ||   ||   ||   ||   ||   ||   
 Other budget lines (specify) ||   ||   ||   ||   ||   ||   ||   ||   
 TOTAL || 0.227 || 0.212 || 0.159 || 0.076 || 0.121 ||   ||   ||   
XX is the policy area or budget title
concerned.
The human resources
required will be met by staff from the DG who are already assigned to
management of the action and/or have been redeployed within the DG, together if
necessary with any additional allocation which may be granted to the managing
DG under the annual allocation procedure and in the light of budgetary
constraints.
Description of tasks
to be carried out:
 Officials and temporary staff || HoU: Supervise and manage the operation, agree on the Loan Agreement review reports, lead missions and assess progress with conditionality compliance. Desk: Prepare the Memorandum of Understanding, liaise with the authorities and the IFIs, liaise with external experts for the operational assessment and ex-post evaluation, conduct review missions, prepar Commission staff reports and Commission procedures related to the management of the assistance. 
 External staff || N/A 
3.2.4.     Compatibility with the current
multiannual financial framework 
–     
X Proposal/initiative is compatible the current
multiannual financial framework.
3.2.5.     Third-party contributions 
–     
X The proposal/initiative does not provide for
co-financing by third parties. 
3.3.        Estimated impact on revenue

X       Proposal/initiative has no financial
impact on revenue.
[1]               Decision No 1025/2013/EU of
22 October 2013 providing macro-financial assistance to the Kyrgyz Republic;
Draft Decision providing macro-financial assistance to the Hashemite Kingdome
of Jordan, adoption of which is foreseen for December 2013.
[2]               Budget line 01 04 01 14
becomes budget line 01 03 06 as from the 2014 budget.
[3]               OJ C […], […], p. […].
[4]               Position of the European Parliament of … 2012 and
Decision of the Council of … 2012.
[5]              Regulation (EU) No 182/2011 of the European Parliament
and of the Council of 16 February 2011 laying down the rules and general
principles concerning mechanisms for control by Member States of the
Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).
[6]               Council Decision 2010/427/EU of 26 July 2010 establishing the organisation and
functioning of the European External Action Service (OJ L 201, 3.8.2010, p. 30).
[7]               Council Regulation (EC,
Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for external
actions (OJ L 145, 10.6.2009,
p. 10).
[8]               Regulation (EU, Euratom) No 966/2012
of the European Parliament and of the Council of 25 October 2012 on the
financial rules applicable to the general budget of the Union and repealing
Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).
[9]               Commission Delegated
Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of
Regulation (EU, Euratom) No 966/2012 on the financial rules applicable to the
general budget of the Union (OJ L 362,
31.12.2012, p. 1).
[10]             Council Regulation (EC,
Euratom) No 2988/95 of 18 December 1995 on the protection of the European
Communities financial interests (OJ L 312, 23.12.1995, p. 1).
[11]             Council Regulation (EC,
Euratom) No 2185/96 of 11 November 1996 concerning on-the-spot checks and
inspections carried out by the Commission to protect the Communities' financial
interests against fraud and other irregularities (OJ L 292, 15.11.1996, p. 2).
[12]             Regulation
(EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the
European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of
the European Parliament and of the Council and Council Regulation (Euratom) No
1074/1999 (OJ L 248, 18.9.2013, p. 1).
[13]             ABM: Activity-Based Management – ABB: Activity-Based
Budgeting.
[14]             Details of management modes and references to the
Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html
[15]             Budget line 01 04 01 14 becomes
budget line 01 03 06 as from the 2014 budget.
[16]             Diff. = Differentiated appropriations / Non-Diff. =
Non-differentiated appropriations.
[17]             EFTA: European Free Trade Association. 
[18]             Candidate countries and, where applicable, potential
candidate countries from the Western Balkans.
[19]             Year N is the year in which implementation of the
proposal/initiative starts.
[20]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former ‘BA’ lines), indirect research, direct research.
[21]             Year N is the year in which implementation of the
proposal/initiative starts.
[22]             As described in point 1.4.2. ‘Specific objective(s)…’ 
[23]             Year N is the year in which implementation of the
proposal/initiative starts.
[24]             Technical and/or administrative assistance and
expenditure in support of the implementation of EU programmes and/or actions
(former ‘BA’ lines), indirect research, direct research.
[25]             CA= Contract Agent; LA = Local Agent; SNE = Seconded
National Expert; INT = agency staff (‘Intérimaire’); JED= ‘Jeune Expert en
Délégation’ (Young Experts in Delegations). 
[26]             Sub-ceiling for external staff covered by operational
appropriations (former "BA" lines).