EU concludes agreement for €45 million assistance package for Georgia

The European Commission has signed a memorandum of understanding with Georgia for macro-financial assistance (MFA) of up to €45 million to help Georgia cover part of its external financing needs and support economic reforms.

The news was shared by the European Commission press office today.

“While Georgia has made significant progress, the country's economy faces regional economic risks, as well as its own economic imbalances. This context has formed the base for the proposal for the MFA programme,” reads the statement.

"Georgia has shown strong and lasting commitment to economic reform, which the EU has consistently supported and fostered. This agreement includes policy measures that will help make the Georgian economy more resilient, with stronger and more inclusive growth for the benefit of its citizens," underlined Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

Up to €10 million will be provided in the form of grants and the remaining €35 million in medium-term loans, at favourable financing conditions.

The MFA programme is designed to help the country cover part of its financing needs and support the implementation of structural reforms. It will complement Georgia's programme with the International Monetary Fund (IMF).

The assistance will be transferred in two installments. It is conditional on the implementation of specific policy conditionality agreed between Georgia and the EU, which is elaborated on in the memorandum of understanding.

“Disbursements are also dependent on the fulfillment of the political precondition requiring Georgia to continue respecting effective democratic mechanisms, including a multi-party parliamentary system and the rule of law, and guaranteeing respect for human rights. Finally, the disbursements will also be contingent on good progress with the IMF programme,” reads the press release.

The next step in the implementation of the MFA programme is the ratification of the memorandum of understanding by the Parliament of Georgia.

The new MFA operation is the third since 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 (again 46 million - half in grants, half in loans) in 2015-2017. The last tranche of the second operation was disbursed in May 2017.