European Commission Offers EUR 45m Financial Assistance to Georgia
The European Commission has proposed a new Macro-Financial Assistance (MFA) to Georgia, worth up to €45 million.
The offer was made on September 29 and, if adopted by the European Parliament and the Council, the assistance would help Georgia cover part of its external financing needs.
“While Georgia has made significant progress with economic reforms, its macroeconomic outlook remains vulnerable,” the statement of the European Commission reads. “Georgia's economy is exposed to an uncertain regional and global economic outlook, and its international reserves are not yet adequate, not least due to the country's external debt level. This context has formed the base for the proposal for further Macro-Financial Assistance”.
The statement added the proposed Macro-Financial Assistance would accompany the country's program with the International Monetary Fund (IMF), approved on 12 April.
“Of the total €45 million, €10 million would be provided in the form of grants and up to €35 million in medium-term loans at favorable financing conditions, helping to reduce uncertainties surrounding the economy's short-term balance of payments and fiscal issues,” the Commission said.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said the proposal for additional assistance is another sign of the EU's strong support for the Georgian people.
“As Georgia continues its economic transition, we are helping the country to preserve macroeconomic stability and continue the reform process needed to achieve stronger and more inclusive growth,” he commented.
The European Commission added that disbursements under the proposed MFA program would be strictly conditional on the implementation of specific policy conditionality, to be agreed between Georgia and the EU and set out in a Memorandum of Understanding, and on good progress with the IMF program.
“These policy conditions would aim to address some of the weaknesses of the Georgian economy. They would also complement the reforms agreed in the context of the EU's budgetary and other support operations, and the EU-Georgia Association Agreement which envisages the creation of a Deep and Comprehensive Free Trade Area (DCFTA),” the statement says.
The website of the European Commission says that the new MFA operation is the third since Georgia's military conflict with Russia in August 2008. At an International Donors' Conference in Brussels in October 2008, the EU pledged two MFA operations of €46 million each. The first of those operations (€46 million, fully in the form of grants) was implemented in 2009-2010 and the second (€46 million - half in grants, half in loans) in 2015-2017. The last tranche of the second operation was disbursed in May 2017.
Thea Morrison