EU-Tunisia: Commission proposes further EUR 500 million in macro-financial assistance
OREANDA-NEWS. February 16, 2016. Following a request by Tunisia, the Commission has proposed today additional macro-financial assistance to Tunisia of up to EUR 500 million. This assistance will take the form of medium-term loans at favourable financing conditions.
Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "The European Commission is living up to its commitment to provide greater support for the reform efforts made by Tunisia. More than ever, it is of utmost importance that Tunisia remains an example to the region. Tunisia’s political transition process has been facing so many economic challenges since 2011. The recent terrorist attacks have exacerbated an already vulnerable balance of payments and fiscal position, creating important financing needs. Today's proposal will help Tunisia to cover external financing needs and will give its people some leeway to achieve a sustainable and inclusive growth model."
Today's proposal for additional assistance is part of a wider effort by the EU to help Tunisia overcome the severe economic difficulties it has faced since its economic and political transition process began. Terrorist attacks in 2015 worsened the situation further by affecting key economic sectors such as tourism and transport. This macro-financial assistance programme complements the significant EU development assistance which Tunisia already receives in the framework of the European Neighbourhood Policy through the European Neighbourhood Instrument (ENI) and other EU external financial instruments. This assistance amounts to more than EUR 1 billion in grants provided to Tunisia since the 2011 revolution, supporting for instance socio-economic development and job creation the democratic transition process, as well as sectorial assistance, for instance to support its olive oil production.
The EU macro-financial assistance programme will help to cover Tunisia's external financing needs in 2016 and 2017, while supporting reform measures aimed at achieving a more sustainable balance of payments and budgetary situation, improving the investment climate, and fostering economic integration and regulatory convergence with the EU. The ultimate aim is to help Tunisia lay the conditions for sustainable, inclusive and employment-generating economic growth.
The macro-financial assistance programme is meant to complement a new comprehensive economic adjustment and reform programme currently being discussed between Tunisia and the International Monetary Fund (IMF), as a follow up to the Stand-by Arrangement approved by the IMF in June 2013.
The new macro-financial assistance programme needs to be approved by the European Parliament and the Council before disbursements could start later this year.
The new assistance is due to be disbursed in three instalments during the period of the programme.
Macro-financial assistance is an exceptional EU crisis response instrument available to the EU's neighbouring partner countries. It is complementary to assistance provided by the IMF. Macro-financial assistance loans are financed through EU borrowing on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries.
A first macro-financial assistance package for Tunisia of EUR 300 million was proposed by the European Commission, and adopted by the European Parliament and the Council on 15 May 2014 (Decision 534/2014/EU).
The package supported Tunisian reform efforts in the following areas: public finance management; fiscal reforms to increase tax collection and improve the progressivity of the tax system; reforms to strengthen the social safety net; financial sector reforms; and measures to improve the regulatory framework for trade and investment. To date, the first two tranches (of EUR 100 million each) have been successfully disbursed in 2015. The final tranche, also of EUR 100 million, is expected to be disbursed in the second quarter of 2016, subject to the agreed conditions being met.
Tunisia also benefitted since 2011 from over €1 billion in grants through the European Neighbourhood Instrument and other EU external cooperation instruments. Moreover, Tunisia also received over EUR 1.3 billion in loans from the European Investment Bank since the start of the revolution.