European Commission President, Ursula von der Leyen, on behalf of the European Union, and International Monetary Fund’s Managing Director Kristalina Georgieva concluded a new Financial Framework Partnership Agreement that will boost their cooperation to tackle key challenges including climate change, and help countries achieve the Sustainable Development Goals. The European Union is the IMF’s main partner in capacity development since 2016.
To mark the signature of the new Agreement, President von der Leyen said: “The European Union and IMF are strong partners. We jointly want to find solutions to global issues, notably in Africa. Today’s new Agreement will allow us to focus better on climate change and digital challenges. I am particularly grateful to Kristalina Georgieva for her leadership. Together we are going to further strengthen our cooperation and partnership.”
IMF Managing Director, Kristalina Georgieva, added: “We appreciate the EU’s leadership on sustainable development for all. We have a history of working together in building strong economic institutions to improve economic performance and the livelihoods of people in our partner countries. This Agreement will deepen our collaboration and help us do more together, especially where it matters the most — in low-income countries and fragile states.”
The International Monetary Fund and the European Commission are longstanding partners, inside and outside the European Union. This new Agreement will strengthen, simplify and accelerate the conclusion of contractual arrangements for the numerous joint activities undertaken to support good economic governance, public finance management and domestic revenue mobilisation, institution building, as well as the wider 2030 Agenda for Sustainable Development.
Supporting macroeconomic and public finance institutions and policies in the EU partner countries has long been a common objective of the EU and IMF. Financial Framework Partnership Agreements facilitate this cooperation and stabilize the contractual terms of a long-term cooperation between the Commission and its key partners. The new Agreement will replace the one from 2017 and will allow both the Commission and the IMF to take full advantage of the novelties introduced in the 2018 EU Financial Regulation, such as increased simplification and bigger focus on results.
The EU–IMF partnership has intensified over the years with the organizations supporting each other’s work, through regular consultations at staff and management level, and complementarities of EU budget support and IMF programmes, as well as through developing capacity-building instruments. These include EU support for the Tax Administration Diagnostic Assessment Tool, the PIMA tool on public investment management, the management of natural wealth resources, and the strengthening of domestic revenue mobilisation.
The EU is now the largest external contributor to IMF capacity development, including the IMF’s network of ten regional technical assistance centres, particularly in Africa, and support to almost all of the IMF’s thematic and country trust funds, as well as to a range of bilateral projects.
Refugees in Greece: MEPs demand solidarity, warn about impact of health crisis
The EU and its member states must help Greece manage its borders, according to Civil Liberties MEPs, who warn about the risk of COVID-19 spreading in refugee camps.
MEPs stressed that the current pandemic is yet more evidence that no country can deal with certain challenges alone. They praised the commitment to relocate 1,600 unaccompanied minors from the Greek islands to other EU countries, but requested clarification about when precisely this will happen and about which member states will participate. Some requested that relocation should also apply to other vulnerable asylum-seekers and to families.
Critical situation in refugee camps
Many MEPs are worried about a possible outbreak of COVID-19 in the overcrowded hotspots on the Greek islands, given the already dire conditions in which people are living. Some suggested transferring people to the Greek mainland or using empty hotel rooms to ensure social distancing, while others opposed any additional relocation, to avoid creating problems of public order.
The discussion also touched upon the crisis that followed Turkey’s announcement one month ago that it would let people cross into EU territory. MEPs underlined that solidarity with frontline countries is key and that migration should not be used for political purposes. Several speakers also questioned the Greek authorities’ decision not to accept any asylum requests for a month and reiterated that, as signatories to the Geneva Convention, all member states must respect the right to seek international protection.
In a debate that you can watch again online, the Civil Liberties Committee assessed on Thursday the situation at Greece’s external borders with Greek Ministers for Migration and Asylum, Notis Mitarachi, and for Citizen Protection, Michalis Chrisochoidis. Commission Vice-President Margaritis Schinas, Commissioner for Home Affairs Ylva Johansson, and the Croatian State Secretary for European and International Affairs, Terezija Gras, presented their views to MEPs, as did Frontex Executive Director, Fabrice Leggeri, and the Director of the EU’s Fundamental Rights Agency (FRA), Michael O’Flaherty.
MEPs call for solidarity and measures to prevent Covid19 crisis in refugee camps
The situation of refugees in Greece calls for a concerted EU response to avoid a Covid-19 outbreak, according to MEPs on the civil liberties committee.
As Europe grapples with the challenges of the coronavirus crisis, concern is also growing over the living conditions of asylum-seekers in camps on the Greek islands.
The situation at the Greek-Turkish border escalated at the beginning of March when Turkey opened its borders to asylum seekers and refugees by breaking the 2016 migration pact with the EU.
In a virtual meeting, the civil liberties committee discussed the current border situation and the need to avoid this humanitarian crisis turning into a public health issue with the Greek government. Representatives from the European Commission, Frontex and the EU’s Fundamental Rights Agency joined MEPs in stressing the importance of solidarity and the unity of the European Union to help mitigate the growing crisis.
Measures in place
Together with member states and EU agencies, the Commission has set up an emergency contingency plan, regularly monitors the situation and has adopted new measures.
Two rapid border interventions were launched, additional border guards have been deployed and Greece activated the Civil Protection Mechanism, resulting in more than 90,000 items of assistance to the camps being giving to Greece by EU countries.
All migrants arriving in the hotspots undergo a mandatory health check. Newly arrived and rescued people are kept in separate areas until their medical screening has been completed.
The Commission has allocated a budget of €350 million in continued support for Greece, where most of the refugees and migrants arrive, €50 million of which will be for medical care.
After receiving a health check, 1,600 unaccompanied minors currently staying in the hotspots on the islands will be relocated to other EU countries:, namelyGermany, France, Portugal, Finland, Lithuania, Croatia, Ireland and Luxembourg. Some will be travelling to Luxembourg next week.
With the support of the International Organization for Migration and Frontex, a voluntary scheme has been set up to encourage people to go back to their home countries.
More support needed
Notis Mitarachi, the Greek Minister for Migration and Asylum, said that many special measures had been taken to prevent a Covid-19 outbreak in the camps on the islands, but that more support was needed.
MEPs called for more support, accommodation facilities and medical equipment, extending relocations to families, extending existing asylum deadlines and considering doing interviews virtually.
The Commission has proposed an additional budget of €350 million for the construction of new camps on the mainland in Greece and new apartments, which will require approval from Parliament.
Margaritis Schinas, Commission Vice-President for Promoting the European way of life, said it was imortant to stick to our values and respect fundamental human rights and EU law. He added that the EU should also continue its work on the New Pact on Migration and Asylum, set to be presented in the coming months.
Explainer: SURE, a new temporary instrument to help protect jobs and people in work
What is SURE and why is the Commission proposing it?
The new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) is designed to help protect jobs and workers affected by the coronavirus pandemic. It will provide financial assistance, in the form of loans granted on favourable terms from the EU to Member States, of up to €100 billion in total. These loans will assist Member States to address sudden increases in public expenditure to preserve employment. Specifically, these loans will help Member States to cover the costs directly related to the creation or extension of national short-time work schemes, and other similar measures they have put in place for the self-employed as a response to the current coronavirus pandemic.
What are short-time work schemes?
Short-time work schemes are programmes that under certain circumstances allow firms experiencing economic difficulties to temporarily reduce the hours worked by their employees, which are provided with public income support for the hours not worked. Similar schemes apply for income replacement for the self-employed.
SURE would provide additional EU support to finance Member States’ short-time work schemes, and other similar measures, helping to protect jobs.
All Member States already have some form of national short-time work schemes in place.
Why is the Commission focusing on supporting short-time work schemes?
The SURE instrument is just one element of the Commission’s comprehensive strategy to protect citizens and mitigate the pandemic’s severely negative socio-economic consequences.
Many businesses experiencing difficulties are being forced to temporarily suspend or substantially reduce their activities and the working hours of their employees. By avoiding wasteful redundancies, short-time work schemes can prevent a temporary shock from having more severe and long-lasting negative consequences on the economy and the labour market in Member States. This helps to sustain families’ incomes and preserve the productive capacity and human capital of enterprises and the economy as a whole.
How much funding will be available for the EU as a whole and for individual Member States?
Up to €100 billion in total financial assistance will be available to all Member States.
There are no pre-allocated envelopes for Member States.
How will the Commission secure and provide funding for the SURE instrument?
Financial assistance under the SURE instrument will take the form of a loan from the EU to the Member States that request support.
To finance the loans to Member States, the Commission will borrow on financial markets. The Commission would then provide the loans to Member States on favourable conditions. Member States would, therefore, benefit from the EU’s strong credit rating and low borrowing costs.
The loans will be underpinned by a system of voluntary guarantees from Member States committed to the EU. The instrument will start to function once all Member States have committed to those guarantees.
How will the conditions of each loan be decided?
These loans should be used by Member States to finance short-time work schemes for employees or similar measures for the self-employed.
Following a request by a Member State for financial assistance, the Commission would consult the Member State concerned to verify the extent of the increase in public expenditure that is directly related to the creation or extension of short-time work schemes and similar measures for self-employed. This consultation will help the Commission to properly evaluate the terms of the loan, including the amount, the maximum average maturity, pricing, and the technical modalities for implementation.
On the basis of the consultation, the Commission would present a proposal for a decision to the Council to provide financial assistance.
Once approved, the financial assistance will take the form of a loan from the European Union to the Member State requesting support.
How will the guarantee system work?
Loans provided to Member State under the SURE instrument would be underpinned by a system of voluntary guarantees from Member States. This will allow the Commission to expand the volume of loans that can be provided to Member States.
This guarantee system is necessary to achieve the necessary capacity while at the same time ensuring a prudent financing of the SURE instrument.
To this end, a minimum amount of committed guarantees (i.e. 25% of the maximum amount of loans of €100 billion) is needed.
How does this instrument relate to the previously announced European Unemployment Reinsurance Scheme?
In the Communication setting out its coordinated economic response to the coronavirus pandemic, the Commission committed to accelerating the preparation of its legislative proposal for a European Unemployment Reinsurance Scheme.
The SURE instrument is the emergency operationalisation of the European Unemployment Reinsurance Scheme and is designed specifically to respond immediately to the challenges presented by coronavirus pandemic.
It in no way precludes the establishment of a future permanent unemployment reinsurance scheme.
What are the next steps?
The Commission’s proposal for a SURE instrument will need to be swiftly approved by the Council.
The new instrument will be of a temporary nature. Its duration and scope are limited to tackling the consequences of the coronavirus pandemic.
African Development Bank launches record breaking $3 billion “Fight COVID-19” Social Bond
The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.
The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest dollar denominated Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.
The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.
“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.
The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems.
It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.
Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.
The Bank established its Social Bond framework in 2017 and raised the equivalent of $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.
“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.
Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).
Explainer: EU Emergency Support Instrument for the healthcare sector
What does the Commission propose to support the healthcare sector?
The Commission wants to directly support the healthcare systems of EU Member States in their fights against the coronavirus pandemic through measures that can best be taken at EU level. For this purpose and based on the solidarity principle, the Commission will complement in a fast, flexible and direct way the ongoing efforts at national level.
More concretely and as a first stage, the Commission has drawn up an initial needs assessment and will be working with Member States to further detail and prioritise their necessities.
To finance this action, the Commission is mobilising €3 billion from the EU budget, of which €2.7 billion will be channelled through the Emergency Support Instrument and €300 million though the rescEU medical equipment capacity. Additional contributions will be possible from Member States and also individuals, foundations and even crowd funding.
In this way, the Commission will be able to:
-directly purchase or procure emergency support on behalf of Member States and distributing medical supplies such as masks and respirators;
-financially support and co-ordinate pressing needs such as the transportation of medical equipment and of patients in cross-border regions;
-support the construction of mobile field hospitals.
To make use of efficiency gains and generate economies of scale, wherever possible, the Commission will directly procure on behalf of Member States and focus the help where the needs are.
In the medium- to long-term and thanks to these tools, the EU will be able to support testing capacities of its Member States and to support any relevant medical research. In this way, the Commission will be providing an EU response throughout the health crisis, until its exit.
To implement the initiative, the Commission will work with Member States national health authorities, international organisations and with the non-governmental sector.
What action can be undertaken via the Emergency Support Instrument?
The Emergency Support Instrument will allow the EU to provide a coordinated EU response throughout the different stages of the crisis.
The concrete action will depend on the needs of the EU countries. For example, the Commission will work to:
-support the imports, transport and distribution of protective gear, focusing on worst hit regions;
-assist the transportation of patients in need to cross-border hospitals which can offer free capacity;
-boost the swift development of medication and testing methods.
Other actions will also be possible, according to the evolving needs of Member States, hospitals, doctors and patients.
How will this action be financed?
To secure the necessary financing, the Commission is relying entirely on the EU budget for 2014-2020 and mobilising all available resources within the spending limits for 2020.
This is why today the Commission has also put forward a Draft Amending Budget – a proposal to reorganise part of the EU spending for the year in line with the latest priorities – to secure:
€300 million for the rescEU-medical equipment capacity.This will help to procure and distribute further medical supplies across the EU. The funding comes on top of the €80 million already allocated last month.
€2.7 billion directly to the European Union’s Emergency Support Instrument – whose general purpose is to complement the other EU instruments, where they cannot act alone, by directly respond to crisis situations across the EU – and to amend it so that it can be used in the context of the coronavirus pandemic.
The Commission will activate the remaining flexibility of the current long-term budget – reserves which go beyond the annual ceilings – to finance this operation.
The needs are obviously bigger than the budget you have. How are you going to bridge the gap?
Given the medium- to long-term perspective of the proposed action, the Commission will explore further avenues to attract financing. These include donations by individuals, foundations and even crowd funding. The Commission is looking into putting in place all necessary modalities to allow speedy collection of contributions and donations. The budget could be further reinforced through these means as well as fresh budget appropriation in 2021 once a budget for 2021 is in place (based on an agreement on the MFF 2021-2027).
How will this money be distributed among Member States?
The objective of the initiative will be to provide targeted support to the Member States and regions most concerned.
Given the rapid evolution of the health crisis across the Union, there cannot be a pre-determined allocation per Member State. The team running the initiative will monitor the ongoing developments and respond based on the relative severity of the crisis in the different Member States as well as already existing measures and instruments.
To map EU countries’ most pressing necessities and be able to direct money where the needs are, the Commission has already started working with Member States’ national health authorities. This preliminary assessment will serve to identify the first steps to make and the decisions to take. Additional consultations with Member States and specific requests from their part will also be taken into account.
Who will be implementing the initiative?
The Commission will have a central role in implementing the initiative. For this purpose, the Commission is setting up a Task Force from across its departments, which will work, on a full time basis, to turn the ideas into action. The team in charge will include experts in crisis management, health policy, transport, EU public procurement and financial management.
Of course, the Commission will work closely with Member States’ national authorities as well as international organisations and the non-governmental sector.
Which will be the next steps?
Today, the Commission has put forward a comprehensive legislative proposal to finance and implement its action to directly support Member States’ healthcare sectors. The Commission is inviting the European Parliament and the Council to endorse this initiative as soon as possible.
In the meantime, the Commission will be working to identify and prepare the first actions that need to be undertaken so that implementation can start as soon as the legislative proposals have been adopted.
What other actions have been supported by the EU budget?
The EU has already taken a series of action to address the coronavirus pandemic across the EU, in the Western Balkans and in the Eastern Partnership countries.
Measures taken so far notably include unlocking €37 billion of investments from the EU cohesion funds to enable Member States buy medical supplies, pay doctors and help small and medium-sized enterprises keep paying their staff; creating the first-ever RescEU medical capacity and financing the repatriation of EU nationals stranded around the world. So far, the Union Civil Protection Mechanism has facilitated the repatriation of 10,017 EU citizens to Europe on 47 flights.
However, the scale and scope of the challenge requires an even more robust co-ordinated response, targeted directly at the health care systems, which builds on the solidarity and enhances cooperation between EU Member States.
Today’s initiative will be complementary to and consistent with the action taken so far. It will seek to add to what national healthcare authorities are already doing by creating synergies and making best use of economies of scale.
How the rescEU medical capacity works?
The medical capacity will be hosted by one or several Member States. The hosting State will be responsible for procuring the equipment. The Commission will finance 100% of the medical capacity. The Emergency Response Coordination Centre will manage the distribution of the equipment to ensure it goes where it is needed most.
The initial EU budget of the capacity is €80 million, of which €70 million is subject to the approval of the budgetary authorities.
Who can use strategic capacity of critical medical assets under rescEU?
rescEU capacities are primarily available to complement national capacities of all countries that are part of the Union Civil Protection Mechanism (UCPM): all EU Member States, the UK during the transition period and six Participating States (Iceland, Norway, Serbia, North Macedonia, Montenegro and Turkey).
If national capacities and including those pre-committed to the European Civil Protection Pool under the Mechanism are not sufficient to ensure an effective response to an emergency, rescEU capacities can be activated as a last resort and strategic reserve at European level.
Other countries can in principle also request support to the EU Civil Protection Mechanism. If no assistance is offered on spontaneous basis or through the European Civil Protection Mechanism, rescEU capacities such as the newly created stockpile can be deployed in third countries but only for an emergency with a major impact on Member States or EU citizens.
However, in view of current high demand for medical capacities under the Union Civil Protection Mechanism from countries participating in the Mechanism, it is at this stage unlikely that the rescEU capacity can be used for response operations in countries not participating in the Mechanism.
How are you going to report on how the project is being implemented and on how the money has been spent?
In full transparency, the Commission is going to set up a dedicated section on its website where it will report on the progress made and on the steps ahead
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