The European Commission, on behalf of the EU, today disbursed €10 million in loans to Georgia. This represents the loan part of the first tranche of the EU's €46 million Macro-Financial Assistance (MFA) for Georgia approved in August 2013. It is part of the EU's wider engagement in Eastern Europe and serves as an exceptional crisis-response instrument for neighbouring countries.
Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxations and Customs said: "This disbursement is a further concrete sign of Europe's support to Georgia. At a time when Georgia faces a challenging external environment, the assistance should alleviate the country's financing constraints, underpin macroeconomic stability and support the government’s growth-enhancing and socially inclusive reform agenda."
The MFA programme is intended to strengthen Georgia's balance of payments and budgetary position and to support reforms in the areas of public finance management, social policy, and banking supervision. It is also intended to support measures in the trade and competition policy aimed at implementing the Deep and Comprehensive Free Trade Area agreement with the EU. It complements the assistance that the International Monetary Fund (IMF) provides in the context of the Stand-By Arrangement approved by the IMF on 30 July 2014.
The European Commission raised the funding for today's disbursement on financial markets by a private placement on 14 April 2015. This was done through the issue of a €260 million amortising bond with a final maturity of 15 years, a 10-year grace period and a yield of 0.519%. Of these funds, €10 million have been on-lent to Georgia today on effectively the same terms, offering a long maturity at an attractive interest rate. The Commission is using the remaining €250 million to finance an MFA loan to Ukraine, also disbursed today.
Today's disbursement to Georgia complements the grant part of the first MFA tranche of €13 million already disbursed on 27 January 2015. The second tranche, amounting to €23 million and consisting of €10 million in grants and €13 million in loans, is planned to be disbursed in autumn 2015, conditional on the implementation of a series of agreed reforms.
The MFA operations are part of the EU's wider engagement in Eastern Europe. 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.
This MFA to Georgia is the second of two operations that the EU pledged 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 €46 million, all in grants, was successfully implemented in 2009-2010.
Information on MFA operations, including annual reports:
EU investor relations website: