The Commission has adopted a proposal for a €3 billion macro-financial assistance (MFA) package to ten enlargement and neighbourhood partners to help them to limit the economic fallout of the coronavirus pandemic. The proposal comes on top of the ‘Team Europe‘ strategy, the EU’s robust and targeted response to support partner countries’ efforts in tackling the coronavirus pandemic. It represents an important demonstration of the EU’s solidarity with these countries at a time of unprecedented crisis.
The proposal, following a preliminary assessment of financing needs, provides for the MFA funds to be distributed as follows: the Republic of Albania (€180 million), Bosnia and Herzegovina (€250 million), Georgia (€150 million), the Hashemite Kingdom of Jordan (€200 million), Kosovo (€100 million), the Republic of Moldova (€100 million), Montenegro (€60 million), the Republic of North Macedonia (€160 million), the Republic of Tunisia (€600 million) and Ukraine (€1.2 billion).
Valdis Dombrovskis, Executive Vice-President for An Economy that Works for People said: “Supporting our neighbours is essential during this time of crisis to keep the entire region stable. As part of the EU’s global response to the coronavirus pandemic, we need to help our neighbouring countries to cushion the worst of its economic impact. These ‘crisis MFA programmes’ will assist 10 countries in ensuring macro-economic stability and protecting their people and companies during the crisis.”
Paolo Gentiloni, Commissioner for Economy, said: “European solidarity must not stop at the borders of our Union. Because in this global crisis, we stand or fall together. Today the European Commission is taking a decisive step to help ten of our neighbours in their fight against the Coronavirus. I call on the European Parliament and the Council to swiftly agree this important package.”
The MFA funds will be made available for 12 months in the form of loans on highly favourable terms to help these countries cover their immediate, urgent financing needs. Together with the International Monetary Fund’s support, the funds can contribute to enhancing macroeconomic stability and creating space to allow resources to be allocated towards protecting citizens and mitigating the coronavirus pandemic’s negative socio-economic consequences. This instrument also remains available for other eligible countries experiencing balance-of-payments difficulties.
The Commission’s proposal is subject to adoption by the European Parliament and the Council of the EU. Given the urgent need for this support, the Commission counts on the cooperation of the co-legislators to ensure swift adoption of the proposal.
Following the adoption of the proposal, the Commission stands ready to disburse the first instalment as swiftly as possible after the adoption of the MFA decision and upon the agreement on a Memorandum of Understanding with each partner country. The second instalment could be disbursed in the fourth quarter of 2020 or in the first half of 2021, provided that the policy measures attached to it have been implemented in a timely manner.
The EU’s response follows a ‘Team Europe‘ approach, aimed at saving lives by providing quick and targeted support to our partners to face this pandemic. It combines resources from the EU, its Member States and financial institutions, in particular the European Investment Bank and the European Bank for Reconstruction and Development, to support partner countries and address their short-term financing needs, as well as the longer-term structural impacts on societies and the economy. The overall figure of the ‘Team Europe’ package reaches more than €20 billion. The first Team Europe packages are already being implemented in the EU’s immediate neighbourhood: the Western Balkans, in the East and to the South.
The EU, as global actor and major contributor to the international development system, promotes a coordinated multilateral response, in partnership with the United Nations, International Financial Institutions, as well as the G7 and the G20.
MFA is part of the EU’s wider engagement with neighbouring and enlargement countries and is intended as an exceptional EU crisis response instrument. It is available to enlargement and EU neighbourhood countries experiencing severe balance-of-payments problems with policy conditionality. To benefit from an MFA, countries should meet certain political pre-conditions in terms of respect of democratic principles, human rights and rule of law. They should also benefit from an IMF financial assistance programme. In the implementation of the assistance, the Commission will ensure consistency with recent and ongoing MFA operations.
In addition to MFA, the EU supports the Neighbourhood and Western Balkans through several other instruments, including humanitarian aid, budget support, thematic programmes, technical assistance, blending facilities and guarantees from the European Fund for Sustainable Development to support investment in sectors most affected by the coronavirus pandemic.
Compliments of the European Commission.