European Council adopted a decision providing up to €45 million in macro-financial assistance to Georgia.
The assistance will help cover Georgia’s financing needs, supporting economic stabilisation 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.
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. 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 neighbourhood policy.
Georgia joined the EU’s Eastern Partnership in 2009. An EU-Georgia association agreement, which provides for the gradual introduction of free trade provisions, entered into force on 1 July 2016.
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.
Disbursements will be conditional on Georgia respecting democratic mechanisms and the rule of law, and guaranteeing respect for human rights. Fulfilment of these conditions is monitored by the Commission and the European External Action Service.
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 fulfilment. They will be laid down in a memorandum of understanding between Georgia and the Commission. Implementation will be monitored by the Commission.