Macro-Financial Assistance (MFA)

What is macro-financial assistance?

Macro-financial assistance (MFA) is a form of financial aid extended by the EU to partner countries experiencing a balance of payments crisis. It takes the form of medium/long-term loans or grants, or a combination of these, and is only available to countries benefiting from a disbursing International Monetary Fund programme.
MFA is designed for countries geographically, economically and politically close to the EU. These include candidate and potential candidate countries, countries bordering the EU covered by the European Neighbourhood Policy (ENP) and, in certain circumstances, other third countries.

What is the purpose of MFA?

MFA is exceptional in nature and is mobilised on a case-by-case basis to help countries dealing with serious balance-of-payments difficulties. Its objective is to restore a sustainable external financial situation, while encouraging economic adjustments and structural reforms. MFA is intended strictly as a complement to International Monetary Fund (IMF) financing.
As a rule, MFA funds are paid to beneficiary countries’ central banks and in general can be used however the government sees fit, be it for reserves, foreign exchange market intervention or as direct budget support. Unlike other forms of financial aid with macroeconomic objectives from the European Commission, such as the Instrument for Pre-accession, the European Neighbourhood and Partnership Instrument, or the European Development Fund, MFA is an emergency assistance measure that is not meant to provide regular financial support for economic and social development.

Are there conditions to benefit from MFA?

A pre-condition for granting MFA is the respect of human rights and effective democratic mechanisms, including a multi-party parliamentary system and the rule of law. MFA is also conditional on the existence of a non-precautionary credit arrangement with the IMF and a satisfactory track-record of implementing IMF programme reforms.
MFA funds are released in tranches strictly tied to the fulfilment of conditions aimed at strengthening macro-economic and financial stability. These conditions tend to focus on public finance management and fiscal reform, but may also touch upon other areas such as trade, enterprise restructuring and business environment, or financial sector reform. These conditions are listed in a Memorandum of Understanding signed between the EU and the beneficiary country.

Who decides when to grant MFA?

Unlike other forms of financial aid to non-EU members, MFA programmes are decided upon under the EU’s Ordinary Legislative Procedure, which means they must be proposed by the European Commission and then approved by both the European Parliament and the Council.

MFA beneficiaries

Albania, Bosnia-Herzegovina, Egypt, Georgia, Jordan, Kosovo, Moldova, Montenegro, North Macedonia, Tunisia, Ukraine.

MFA in the context of COVID-19 pandemic

On 22 April 2020, the Commission adopted a proposal for a €3 billion MFA package to ten enlargement and neighbourhood partners to help them limit the economic fallout of the coronavirus pandemic. The decision was adopted by the European Parliament and the Council on 25 May 2020.