The European Commission has signed a new agreement to provide a €45m macro-financial assistance package for Georgia.
The macro-financial assistance package will provide a loan of €45m from the EU budget to help Georgia to cover part of its external financing needs, and will support the implementation of economic reforms in the country, alongside financial assistance already being provided by the International Monetary Fund (IMF).
Georgia has already made significant progress since it received its first assistance package from the EU in 2008, in the form of grants worth €46m. A second tranche, also worth €46m and comprised half of loans and half of grants, was provided between 2015-2017. The third package has now been formally agreed by the EU, and will be ratified by the parliament of Georgia.
What financial reforms will Georgia have to make in exchange for the funding?
The provision of the financial assistance will be dependent on the implementation of specific policy conditions which have been agreed by Georgia and the EU in a memorandum of understanding. These conditions include the country continuing to respect human rights and democratic mechanisms, including by reinforcing a multi-party parliamentary system and the rule of law.
Up to €10m of the funding will be provided as a grant, with the rest offered as a loan at favourable conditions, and disbursement of the funds will be contingent on Georgia making good progress with its IMF loans. The programme aims to strengthen the economy in the areas of public finance, social and labour market policies and business, to advance Georgia’s relationship with the EU under its Association Agreement.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, welcomed the opportunity for reform that the macro-financial assistance package offers: “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.”