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European Commission - Press release

Commissioner Moscovici signs Memorandum of Understanding on Macro-Financial Assistance for Georgia

Brussels, 11 December 2014

Georgia can count on continuing support from the European Union. Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, Taxation and Customs, today signed the Memorandum of Understanding for a €46 million Macro-Financial Assistance (MFA) programme to Georgia. The assistance will be distributed evenly between grants and loans and will be disbursed in two equal tranches in 2015. The MFA programme is intended to strengthen Georgia's balance of payments and budgetary position and to support reforms aimed at reinforcing economic governance, increasing social inclusiveness and promoting closer economic integration with the European Union.

"The EU is helping Georgia ease its financing constraints while supporting the government's economic reform agenda. We support Georgia's efforts to maintain macroeconomic stability while implementing growth-enhancing reforms and facilitating closer economic integration with the EU", said Commissioner Moscovici.

The disbursement of the assistance will be conditional on a number of economic policy measures outlined in the Memorandum of Understanding and on the successful implementation of an IMF Stand-By Arrangement, approved by the IMF Executive Board on 30 July 2014. The policy measures focus on public finance management, strengthening the social safety net, reinforcing banking regulation and trade and competition policy measures to support the implementation of the Deep and Comprehensive Free Trade Area with the EU.

The next step necessary in the implementation of the MFA assistance is the ratification of the Memorandum of Understanding and the Loan Facility Agreement by the Georgian Parliament.

 

Background:

MFA is an exceptional EU crisis-response instrument available to EU neighbouring partner countries experiencing severe balance of payments problems. It is complementary to the assistance provided by the IMF. MFA loans are financed through EU borrowings on the capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries.

This MFA to Georgia is the second of two operations pledged by the EU at the International Donor Conference in Brussels in October 2008, in the aftermath of that year's military conflict with Russia. It was approved by the European Parliament and the EU Council of Ministers on 12 August 2013. A previous MFA, amounting to EUR 46 million, all in grants, was successfully implemented in the course of 2009-2010.

 For more information:

Information on past MFA operations, including annual reports, can be found here:

http://ec.europa.eu/economy_finance/eu_borrower/macro-financial_assistance/index_en.htm

 

IP/14/2602

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