European Council approves €45 million in financial assistance for Georgia
13 April, 2018
European Council approves €45 million in financial assistance for Georgia
On 12 April 2018, the European Council adopted a decision providing up to €45 million in macro-financial assistance to Georgia, - says the website of the Council of the European Union.

The assistance will help cover Georgia's financing needs, supporting economic stabilization and its agenda for structural reforms.

“Georgia's economy is considered to be vulnerable due to a large current account deficit and high external debt, whilst its foreign reserves have become inadequate,” reads the website.
European Council adopted a
decision providing up to €45 million in macro-financial assistance to Georgia

Macro-financial assistance is a form or financial aid extended by the EU uses to partner countries with balance of payments difficulties. It is only available to countries benefiting from support from the IMF (International Monetary Fund).

This is the third operation for Georgia since the country's military conflict with Russia in August 2008.
This is the third operation for Georgia since the country's military conflict with Russia in August 2008

The EU's first two macro-financial assistance operations, amounting to €46 million each, were pledged at an international donors' conference in October 2008. The EU also provides assistance under its neighborhood policy.

The decision on macro-financial assistance was adopted without discussion at a meeting of the General Affairs Council. It was approved by the European Parliament on 14 March 2018.
The decision on macro-financial assistance was adopted at a meeting of the General Affairs Council

“Disbursements will be conditional on Georgia respecting democratic mechanisms and the rule of law, and guaranteeing respect for human rights. Fulfillment of these conditions is monitored by the Commission and the European External Action Service,” says the statement released by Council of the European Union.

Disbursements will also be subject to economic policy and financial conditions. These will focus on structural reforms and sound public finances, and will include a timetable for their fulfillment. They will be laid down in a memorandum of understanding between Georgia and the Commission. Implementation will be monitored by the Commission.
Disbursements will also be subject to economic policy and financial conditions

Relations between the European Union (the 'Union') and Georgia continue to develop within the framework of the European Neighborhood Policy (ENP) and the Eastern Partnership.

Georgia joined the EU's Eastern Partnership in 2009, which was followed by the negotiation of an EU-Georgia association agreement. That agreement (the 'Association Agreement'), which includes the gradual introduction of a Deep and Comprehensive Free Trade Area (DCFTA), was signed in June 2014 and entered into force on 1 July 2016.
Georgia joined the EU's Eastern Partnership in 2009

Since the military conflict with Russia in August 2008, Georgia has benefitted from two macro-financial assistance operations pledged by the Union at the International Donors' Conference in Brussels in October 2008.

The first of those operations, which was of an amount of EUR 46 million made entirely in the form of grants, was implemented in 2009-2010. The second, which was again for an amount of EUR 46 million, made half in grants and half in loans, was implemented in 2015-2017.
The Union has made EUR 610-746 million available to Georgia under the European Neighborhood Instrument

The Union has also made EUR 610-746 million available to Georgia under the European Neighborhood Instrument for the period 2014-2020, including budgetary support and technical assistance. In addition, Georgia benefits from the Neighborhood Investment Facility which contributed approximately EUR 86 million to projects in Georgia during the period of 2008-2017.

“Given that Georgia is a country covered by the ENP (European Neighborhood Policy), it should be considered to be eligible to receive macro-financial assistance from the Union.
Georgia is a country covered by the ENP

The Union's macro-financial assistance should be an exceptional financial instrument of untied and undesignated balance-of-payments support, which aims at addressing the beneficiary's immediate external financing needs and should underpin the implementation of a policy programme containing strong immediate adjustment and structural reform measures designed to improve the balance-of-payments position in the short term,” says the April 2018 decision on macro-financial assistance to Georgia.
The Union's macro-financial assistance to Georgia is under the current exceptional circumstances

According to the statement, the Union's macro-financial assistance to Georgia is under the current exceptional circumstances, considered to be an appropriate response to Georgia's request to support its economic stabilization.
Macro-financial assistance would support the economic stabilization of Georgia

The Union's macro-financial assistance would support the economic stabilization and the structural reform agenda of Georgia, supplementing resources made available under the IMF's financial arrangement.

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