The European Commission on behalf of the EU has signed a Memorandum of Understanding (MoU) with Macedonia to pave the way for the disbursement of €80 million in macro-financial assistance (MFA). This is the first MoU signed as part of €3 billion MFA package that the Commission proposed for ten enlargement and neighbourhood partners to help them limit the economic fallout of the coronavirus pandemic, the EU Delegation said in a press release on Thursday.
MFA funds will be made available in the form of long-term loans on highly favourable terms. The funds will contribute to enhance macroeconomic stability and create space to allocate resources towards mitigating the severe negative socio-economic consequences of the coronavirus pandemic. The MFA programme for Macedonia is worth up to €160 million.
Paolo Gentiloni, Commissioner for the Economy, said: “Today we signed a Memorandum of Understanding with Macedonia, paving the way for the disbursment of 80 million euros in financial support. This is the first MoU signed as part of the 3 billion euros macro-financial assistance package in support of 10 countries in the EU’s neighbourhood. The EU is committed to fighting the coronavirus pandemic both within and beyond our borders. We stand in solidarity with Macedonia: we are stronger together.”
The disbursement of the second and final instalment will be conditional on the implementation of the policy actions agreed between the EU and Macedonia and set out in the MoU. Specifically, the MoU includes nine policy conditions related to strengthening fiscal governance and transparency, the fight against corruption, enhancing financial sector supervision, improving the business environment, and tackling youth unemployment. The assistance programme will be available for a period of 12 months.
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. It demonstrates the EU’s solidarity with these countries at a time of unprecedented crisis.
To benefit from MFA, countries must meet the political pre-condition of respect of democratic principles, human rights and the rule of law. They should also benefit from an IMF financial assistance programme. In the context of the COVID‐19 pandemic, MFA is also available to partners that benefit from emergency funding from the IMF, such as through the Rapid Financing Instrument (RFI).
The Decision on providing macro-financial assistance to ten enlargement and neighbourhood countries in the context of the COVID-19 pandemic was proposed by the Commission on 22 April and adopted by the co-legislators on 25 May 2020.
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.