Relations between the European Union (the ‘Union’) and the Republic of Tunisia (‘Tunisia’) are developing within the framework of the European Neighbourhood Policy (ENP). Tunisia was the first Mediterranean country to sign an Association Agreement (2) with the Union on 17 July 1995, which came into force on 1 March 1998. Under that Agreement, Tunisia finalised dismantling tariffs for industrial products in 2008, thus making Tunisia the first Mediterranean country to enter into a free trade area with the Union. Bilateral political dialogue and economic cooperation have been further developed within the framework of ENP Action Plans, of which the most recent covers the period 2013-2017.
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Following the revolution and the ousting of President Ben Ali on 14 January 2011, Tunisia's first free and democratic elections took place on 23 October 2011. A new constitution was adopted in January 2014, and parliamentary and presidential elections took place in the fourth quarter of 2014, with concerted efforts by the main political actors to proceed with reforms towards a fully-fledged democratic system.
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In parallel with this political transition process, the Tunisian economy has suffered from continuous domestic unrest, regional instability (including the impact of the Libyan conflict) and a weak international environment (particularly in the Union, Tunisia's main trading partner). Those unfavourable developments have substantially weakened its growth performance, as well as its fiscal and balance of payments positions.
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Since 2011, following the political changes in Tunisia, the Union has expressed its unequivocal commitment to supporting Tunisia in its economic and political reform process. It has increased its financial support to Tunisia, strengthening its cooperation in many fields, including civil society, the electoral system, security, regional development and social and economic reforms. In addition, it has offered the possibility of concluding a Deep and Comprehensive Free Trade Area agreement, the negotiations of which were launched in October 2014.
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In this difficult economic and financial context, the Tunisian authorities and the International Monetary Fund (IMF) agreed, in April 2013, on a non-precautionary three-year Stand-By Arrangement of SDR 1 146 million (Special Drawing Rights) in support of Tunisia's economic adjustment and reform programme, which was subsequently extended until the end of 2015. In total, USD 1 500 million has been drawn under the IMF programme following six completed programme reviews.
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In August 2013, Tunisia requested complementary macro-financial assistance from the Union. In response, a decision providing macro-financial assistance of EUR 300 million in the form of loans was adopted in May 2014 (MFA-I) (3). The Memorandum of Understanding defining the policy conditions related to MFA-I entered into force on 4 March 2015. Following implementation of the agreed policy measures, the first tranche of MFA-I was disbursed on 7 May 2015 and the second tranche was disbursed on 1 December 2015.
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The Union made EUR 524 million available in grants for the period 2011-2015 under its regular cooperation programme in support of Tunisia's economic and political reform agenda. In addition, EUR 155 million was allocated to Tunisia in 2011-2013 under the ‘Support for partnership, reforms and inclusive growth’ (SPRING) programme and EUR 122 million was allocated in 2014-2015 under the ‘Umbrella’ programme. Moreover, the European Investment Bank has provided loans in the amount of EUR 1 338 million since 2011.
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In 2015, Tunisia's economy was significantly affected by several terrorist attacks which targeted key economic industries, such as tourism and transport, and aimed to disrupt the consolidation of its political transition. Those attacks have had a negative impact on the economic recovery Tunisia was beginning to experience. Together with persistent regional instability (including the reactivation of the Libyan conflict), and the still weak European and global economic environment, those events have exacerbated Tunisia's already weak balance of payments and fiscal positions. This has resulted in significant external and budgetary financial gaps.
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In this challenging context, the Union has reaffirmed its commitment to supporting Tunisia in its economic and political reform process. In particular, this commitment was expressed in the conclusions of the meeting of the Association Council between the Union and Tunisia in March 2015, as well as following the June 2015 terrorist attack near Sousse, in the Council conclusions of 20 July 2015. Political and economic support from the Union for Tunisia's reform process is consistent with the Union's policy towards the Southern Mediterranean region, as set out in the context of the ENP.
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Following the deterioration in Tunisia's economic and financial situation, the IMF and Tunisia have started discussions on a successor arrangement of a larger amount, which could take the form of an Extended Financing Facility (‘IMF programme’) and would likely cover a period of four years, starting in the spring of 2016. The new IMF programme would aim to alleviate Tunisia's short-term balance of payment difficulties while encouraging the implementation of strong adjustment measures.
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In August 2015, in view of the worsening economic situation and outlook, Tunisia requested additional macro-financial assistance from the Union.
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Given that Tunisia is a country covered by the ENP, it should be considered to be eligible to receive macro-financial assistance from the Union.
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The Union's macro-financial assistance should be an exceptional financial instrument of untied and undesignated balance-of-payments support, which aims to address the beneficiary's immediate external financing needs and should underpin the implementation of a policy programme containing strong immediate adjustment and structural reform measures designed to improve the balance-of-payments position in the short term.
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Given that there is still a significant residual external financing gap in Tunisia's balance of payments over and above the resources provided by the IMF and other multilateral institutions, the Union's macro-financial assistance to be provided to Tunisia is, in the current exceptional circumstances, considered to be an appropriate response to Tunisia's request to support economic stabilisation, in conjunction with the IMF programme. The Union's macro-financial assistance would support the economic stabilisation and the structural reform agenda of Tunisia, supplementing resources made available under the IMF's financial arrangement.
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The Union's macro-financial assistance should aim to support the restoration of a sustainable external financing situation for Tunisia thereby supporting its economic and social development.
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The determination of the amount of the Union's macro-financial assistance is based on a complete quantitative assessment of Tunisia's residual external financing needs, and takes into account its capacity to finance itself with its own resources, in particular the international reserves at its disposal. The Union's macro-financial assistance should complement the programmes and resources provided by the IMF and the World Bank. The determination of the amount of the assistance also takes into account expected financial contributions from multilateral donors and the need to ensure fair burden sharing between the Union and other donors, as well as the pre-existing deployment of the Union's other external financing instruments in Tunisia and the added value of the overall Union involvement.
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The Commission should ensure that the Union's macro-financial assistance is legally and substantially in line with the key principles, objectives and measures taken within the different areas of external action and other relevant Union policies.
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The Union's macro-financial assistance should support the Union's external policy towards Tunisia. Commission services and the European External Action Service should work closely together throughout the macro-financial assistance operation in order to coordinate, and to ensure the consistency of, Union external policy.
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The Union's macro-financial assistance should support Tunisia's commitment to values shared with the Union, including democracy, the rule of law, good governance, respect for human rights, sustainable development and poverty reduction, as well as its commitment to the principles of open, rule-based and fair trade.
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A pre-condition for granting the Union's macro-financial assistance should be that Tunisia respects effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and guarantees respect for human rights. In addition, the specific objectives of the Union's macro-financial assistance should strengthen the efficiency, transparency and accountability of the public finance management systems in Tunisia and should promote structural reforms aimed at supporting sustainable and inclusive growth, employment creation and fiscal consolidation. Both the fulfilment of the preconditions and the achievement of those objectives should be regularly monitored by the Commission and the European External Action Service.
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In order to ensure that the Union's financial interests linked to the Union's macro-financial assistance are protected efficiently, Tunisia should take appropriate measures relating to the prevention of, and fight against, fraud, corruption and any other irregularities linked to the assistance. In addition, provision should be made for the Commission to carry out checks and for the Court of Auditors to carry out audits.
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Release of the Union's macro-financial assistance is without prejudice to the powers of the European Parliament and of the Council, as budgetary authority.
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The amounts of the provision required for macro-financial assistance should be consistent with the budgetary appropriations provided for in the multi-annual financial framework.
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The Union's macro-financial assistance should be managed by the Commission. In order to ensure that the European Parliament and the Council are able to follow the implementation of this Decision, the Commission should regularly inform them of developments relating to the assistance and provide them with relevant documents.
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In order to ensure uniform conditions for the implementation of this Decision, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (4).
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The Union's macro-financial assistance should be subject to economic policy conditions, to be laid down in a Memorandum of Understanding. In order to ensure uniform conditions of implementation and for reasons of efficiency, the Commission should be empowered to negotiate such conditions with the Tunisian authorities under the supervision of the committee of representatives of the Member States in accordance with Regulation (EU) No 182/2011. Under that Regulation, the advisory procedure should, as a general rule, apply in all cases other than as provided for in that Regulation. Considering the potentially important impact of assistance of more than EUR 90 million, it is appropriate that the examination procedure be used for operations above that threshold. Considering the amount of the Union's macro-financial assistance to Tunisia, the examination procedure should apply to the adoption of the Memorandum of Understanding, and to any reduction, suspension or cancellation of the assistance,
