Legal provisions of COM(2024)460 - Providing short-term macro-financial assistance to Egypt - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2024)460 - Providing short-term macro-financial assistance to Egypt. |
|---|---|
| document | COM(2024)460  |
| date | April 12, 2024 |
Article 1
1. The Union shall make macro-financial assistance of a maximum amount of EUR 1 000 000 000 available to Egypt (the ‘Union’s macro-financial assistance’), with a view to supporting Egypt’s economic stabilisation and substantive reform agenda. The Union’s macro-financial assistance shall contribute to covering Egypt’s balance-of-payments needs as identified in the IMF programme.
2. In order to finance the Union’s macro-financial assistance, the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds in the capital markets or from financial institutions and to on-lend them to Egypt.
3. The release of the Union’s macro-financial assistance shall be managed by the Commission in a manner consistent with the agreements or understandings reached between the IMF and Egypt, and with the key principles and objectives of economic reforms set out in the Association Agreement.
The Commission shall regularly inform the European Parliament and the Council of any developments regarding the Union’s macro-financial assistance, including disbursements thereof, and shall provide those institutions with the relevant documents in due time.
4. The Union’s macro-financial assistance shall be made available for a period of nine months, starting from the first day after the entry into force of the MoU referred to in Article 3(1).
5. If the financing needs of Egypt decrease fundamentally during the period of the disbursement of the Union’s macro-financial assistance compared to the initial projections, the Commission, acting in accordance with the examination procedure referred to in Article 7(2), shall reduce the amount of the assistance or suspend or cancel it.
Article 2
1. A precondition for granting the Union’s macro-financial assistance shall be that Egypt continues to make concrete and credible steps towards respecting effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and guaranteeing respect for human rights.
2. The Commission and the EEAS shall monitor Egypt’s fulfilment of the precondition set out in paragraph 1 throughout the life-cycle of the Union’s macro-financial assistance.
3. Paragraphs 1 and 2 of this Article shall apply in accordance with Council Decision 2010/427/EU (6).
Article 3
1. The Commission, in accordance with the examination procedure referred to in Article 7(2), shall agree with the Egyptian authorities on clearly defined economic policy and financial conditions, focusing on structural reforms and sound public finances, to which the Union’s macro-financial assistance is to be subject. Those economic policy and financial conditions shall be set out in a memorandum of understanding (MoU) which shall include a time frame for their fulfilment. Those economic policy and financial conditions shall be consistent with the agreements or understandings referred to in Article 1(3), including the macroeconomic adjustment and structural reform programmes implemented by Egypt with the support of the IMF.
2. The conditions referred to in paragraph 1 shall aim, in particular, to enhance the efficiency, transparency and accountability of the public finance management systems in Egypt, including for the use of the Union’s macro-financial assistance. Progress in mutual market opening, the development of rule-based and fair trade, and other priorities in the context of the Union’s external policy shall also be duly taken into account when designing the policy measures. The Commission shall regularly monitor Egypt’s progress in attaining those objectives.
3. The detailed financial terms of the Union’s macro-financial assistance shall be laid down in a loan agreement to be concluded between the Commission and the Egyptian authorities (‘the loan agreement’).
4. The Commission shall verify, at regular intervals, that the conditions referred to in Article 4(3) continue to be met, including whether the economic policies of Egypt are in accordance with the objectives of the Union’s macro-financial assistance. For the purposes of that verification, the Commission shall coordinate closely with the IMF and the World Bank, and, where necessary, with the European Parliament and with the Council.
Article 4
1. Subject to the conditions referred to in paragraph 3, the Union’s macro-financial assistance shall be made available by the Commission in a single instalment, in the form of a loan. The Commission shall decide on the timeframe for the disbursement of the instalment. The instalment may be disbursed in one or more tranches.
2. The amounts of the Union’s macro-financial assistance provided in the form of loans shall be provisioned, where required, in accordance with Regulation (EU) 2021/947 of the European Parliament and of the Council (7).
3. The Commission shall decide on the release of the instalment subject to the fulfilment of the following conditions:
| (a) | the precondition set out in Article 2(1); |
| (b) | a continuous satisfactory track record of implementing a policy programme that contains strong adjustment and structural reform measures supported by a non-precautionary IMF credit arrangement; |
| (c) | the satisfactory implementation of the economic policy conditions and financial conditions agreed in the MoU. |
4. Where the conditions referred to in paragraph 3 are not met, the Commission shall temporarily suspend or cancel the disbursement of the Union’s macro-financial assistance. In such cases, it shall inform the European Parliament and the Council of the reasons for the suspension or cancellation.
5. The Union’s macro-financial assistance shall be disbursed to the Central Bank of Egypt. Subject to the agreed provisions set out in the MoU, including a confirmation of residual budgetary financing needs, the Union funds may be transferred by the Central Bank of Egypt to the Egyptian Ministry of Finance as the final beneficiary.
Article 5
1. In order to finance the Union’s macro-financial assistance in the form of loans, the Commission shall be empowered, on behalf of the Union, borrow the necessary funds on the capital markets or from financial institutions in accordance with Article 220a of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (8).
2. The Commission shall enter into the loan agreement referred to in Article 3(3) in respect of the amount referred to in Article 1. The loan agreement shall lay down the availability period and the detailed terms of the Union’s macro-financial assistance, including in relation to the internal control systems. The loan shall be granted on terms that allow Egypt to repay the loan over a long period. The maximum duration of the loan shall be 35 years.
3. The Commission shall inform the European Parliament and the Council of developments in the operations referred to in paragraph 2.
Article 6
1. The Union’s macro-financial assistance shall be implemented in accordance with Regulation (EU, Euratom) 2018/1046.
2. The implementation of the Union’s macro-financial assistance shall be under direct management.
3. Before the implementation of the Union’s macro-financial assistance, the Commission shall assess, by means of an operational assessment, the soundness of Egypt’s financial arrangements, administrative procedures and internal and external control mechanisms which are relevant to the assistance.
Article 7
1. The Commission shall be assisted by a committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.
2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.
Article 8
1. By 30 June of each year, the Commission shall submit to the European Parliament and to the Council a report on the implementation of this Decision in the preceding year, including an evaluation of that implementation. That report shall:
| (a) | examine progress made in implementing the Union’s macro-financial assistance; |
| (b) | assess the economic situation and prospects of Egypt, as well as progress made in implementing the policy measures referred to in Article 3(1); |
| (c) | indicate the connection between the economic policy and financial conditions set out in the MoU, Egypt’s ongoing economic and fiscal performance and the Commission’s decisions on the release of the instalment of the Union’s macro-financial assistance. |
2. Not later than two years after the expiry of the availability period referred to in Article 1(4), the Commission shall submit to the European Parliament and to the Council an ex post evaluation report, assessing the results and efficiency of the completed Union’s macro-financial assistance and the extent to which it has contributed to the aims of the assistance.
Article 9
This Decision shall enter into force on the day following that of its publication in the Official Journal of the European Union.