Considerations on COM(2023)53 - Amendment of DECISION (EU) 2022/563 as regards the amount of macro-financial assistance to Moldova

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dossier COM(2023)53 - Amendment of DECISION (EU) 2022/563 as regards the amount of macro-financial assistance to Moldova.
document COM(2023)53 EN
date June 14, 2023
 
(1) On 6 April 2022, the European Parliament and Council adopted Decision (EU) 2022/563 1 providing new macro-financial assistance (‘MFA’) to Moldova for an amount of EUR 150 million, in medium term-loans and through a grant element. The MFA entered into force on 18 July for two and a half years. On 1 August 2022, following successful fulfilment of all policy actions agreed with the Union in the Memorandum of Understanding, the first instalment of EUR 50 million was disbursed.

(2) The MFA was adopted in parallel with a new IMF programme for Moldova of 20 December 2021 (Extended Credit Facility/Extended Fund Facility worth USD 564 million). On 11 May 2022, as a result of the growing financing needs stemming largely from the effects of the war in Ukraine on the Moldovan economy, the IMF adopted a decision to increase the arrangement by USD 267 million. On 9 January 2023, the IMF announced that Moldova has successfully completed the second programme review, which allowed the immediate disbursement of another USD 27 million under the arrangement.

(3) The Union’s indicative allocation for Moldova under the European Neighbourhood Instrument was EUR 518.15 million for the 2014-2020 period, including budgetary support and technical assistance. The Single Support Frameworks for 2014-2017 and 2017-2020 identified the priority sector for cooperation with Moldova funded by the European Neighbourhood Instrument for the previous budgetary period. The priorities for 2021-2027 are set out in the new Multiannual Indicative Programme, which has been prepared in close consultation with all relevant stakeholders.

(4) Given that there is still a significant residual external financing gap in Moldova's balance of payments for 2023, over and above the resources provided by the IMF and other multilateral institutions, it is necessary to increase the Union macro-financial assistance provided to Moldova in accordance with Decision (EU) 2022/563. That increase is, under the current exceptional circumstances, considered to be an appropriate response to Moldova's request for support to the 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 Moldova, supplementing resources made available under the IMF's financial arrangement. Therefore Decision (EU) 2022/563 should be amended accordingly.

(5) The determination of the amount of the Union’s additional macro-financial assistance is based on an updated quantitative assessment of Moldova’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 determination of the amount of the assistance takes into account expected financial contributions from multilateral donors, including the IMF and World Bank, 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 Moldova and the added value of the overall Union involvement.

(6) The increase of the Union's macro-financial assistance should be subject to economic policy conditions, to be added to the existing Memorandum of Understanding which will as a consequence have to be amended accordingly. In addition, the detailed financial terms of the Union's macro-financial assistance will have to be laid down in an addendum to the Loan Agreement and the Grant Agreement that was signed on 22 June 2022 by the Commission and Moldova.