OREANDA-NEWS. December 02, 2015. This represents the second tranche of the €300 million Macro?Financial Assistance (MFA) programme to Tunisia. The first tranche, also of €100 million, was disbursed on 7 May 2015.

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "Following the horrific terrorist attacks on their country this year, the European Union is more determined than ever to stand by the people of Tunisia. Today's financial assistance will support the agenda of economic and social reforms that Tunisia intends to implement. This is a new and tangible sign of our solidarity with Tunisia and of our support for the ongoing political transition there."

The MFA programme is part of wider efforts by the EU and other international donors to help Tunisia overcome its economic challenges. Tunisia is confronted with a weak external economic environment, regional instability and threats to its domestic security. The MFA supports the economic adjustment and reform programme agreed between Tunisia and the International Monetary Fund (IMF) (in the context of the Stand-by Arrangement) of June 2013. MFA payments are conditional on the implementation of a number of economic policy measures set out in a Memorandum of Understanding.

This assistance comes in addition to other forms of support for Tunisia from the EU, including more than €800 million in grants since the 2011 revolution, as well as substantial loans from the European Investment Bank.

Background

Macro-Financial Assistance

Macro-Financial Assistance is an exceptional EU crisis response instrument available to the EU's neighbouring partner countries. This operation supplements the assistance provided by the IMF. MFA loans are financed through EU borrowing on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries.

The assistance package for Tunisia was proposed by the European Commission on 5 December 2013 and adopted by the European Parliament and the Council on 15 May 2014 (Decision 534/2014/EU).

This second disbursement was approved by the European Commission on 16 November.

EU-Tunisia relations

Since 2011, the EU has continuously supported Tunisia in its transition to democracy and has significantly increased its financial assistance to the country. Following the terrorist attacks in Tunisia this year, the EU is intensifying its support to Tunisia.

On 20 July, President Jean-Claude Juncker and High Representative-Vice President Federica Mogherini met with the Tunisian Prime Minister Habib Essid. Vice-President Mogherini said in a statement that: "There is a strong political will in the European Union to support Tunisia in its democratic transition, at this difficult time for its economy, especially for its tourism industry, and at a difficult time in terms of security challenges and the fight against terrorism, in which we are all united."

This MFA assistance supplements the subsidies that Tunisia receives under the European Neighbourhood Policy as well as under the Development Policy of the European Union, which includes more than €800 million in grants provided to Tunisia since the 2011 revolution.

The European Commission has recently recommended that Tunisian olive oil be granted additional temporary access to the EU market in the form of a unilateral annual duty-free tariff rate quota of 35 000 tonnes for Tunisia's exports of olive oil to the EU. This measure will be in place for two years, in addition to the existing 56 700 tonnes under the EU?Tunisia Association Agreement. Olive oil is Tunisia’s main agricultural export to the EU and provides direct and indirect employment to more than one million people.

Trade is also a crucial part of the partnership with Tunisia. Trade Commissioner Cecilia Malmstr?m launched negotiations on a Deep and Comprehensive Free Trade Area between the EU and Tunisia last October to create an ambitious partnership on trade and investment matters.

In addition, Carlos Moedas, European Commissioner for Research, Science and Innovation, and the Tunisian Minister for Higher Education and Scientific Research, Mr Chiheb Bouden, are going to sign an agreement today on Tunisia's participation in the Horizon 2020 programme, which will enable various stakeholders located in Tunisia and involved in research activities to benefit from other European funds for research and innovation.