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In support of Ukraine and Georgia, Commission disburses EUR 260 million in Macro-Financial Assistance
On 21 April, the European Commission, on behalf of the EU, disbursed a loan of EUR 250 million in Macro-Financial Assistance (MFA) to Ukraine, and a further loan of EUR 10 million in MFA to Georgia. The Commission raised the funding on financial markets through a private placement on 14 April 2015 in which it issued a EUR 260 million amortising bond with a final maturity of 15 years, a 10-year grace period and a yield of 0.519%. The disbursement to Ukraine was the last under the first MFA, totalling EUR 610 million based on two decisions of 2002 and 2010. Prior disbursements under the first MFA of EUR 100 million and EUR 260 million were made on 20 May and 12 November 2014, respectively. The financial assistance for Ukraine forms part of a wider package of support that the Commission announced on 5 March 2014 and EU leaders endorsed on 6 March 2014. A second MFA operation for Ukraine totalling EUR 1 billion was disbursed in 2014. A third MFA, proposed by the Commission on 8 January 2015, was adopted by the European Parliament and the Council on 15 April as an important step towards swift disbursement of up to EUR 1.8 billion in medium-term loans in 2015 and 2016. The MFA operations are part of the EU’s commitment to continue its unprecedented support for Ukraine and Georgia and its broader engagement in the region, notably through the Eastern partnership and European Neighbourhood Policy.
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Europe stands together with Ukraine during these difficult times, both politically and financially. […] The EU is also supporting Georgia through Macro-Financial Assistance to help the country develop its economy and strengthen its governance.
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Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue
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EU approves disbursement of EUR 100 million in Macro-Financial Assistance to Tunisia
The European Commission, on behalf of the EU, approved the disbursement of EUR 100 million in the form of loans to Tunisia on 15 April. This amount represents the first tranche of the EUR 300 million Macro-Financial Assistance (MFA) programme to Tunisia approved by the EU in May 2014. The assistance is part of the EU’s and other international donors’ efforts to help Tunisia overcome its economic challenges as it undergoes an historical political transition. Apart from a weak external economic environment, Tunisia is also facing regional instability and threats to its domestic security. The MFA supports the comprehensive economic adjustment and reform programme agreed between Tunisia and the International Monetary Fund (IMF). Disbursement of MFA funds is linked to the implementation of economic policy measures as set out in a Memorandum of Understanding signed by the EU and Tunisia. The disbursement of the loan is expected for the near future. This assistance supplements more than EUR 800 million in grants already provided to Tunisia since the 2011 revolution, as well as substantial lending operations by the European Investment Bank.
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Vice-President Dombrovskis visits Italy and Germany to discuss the European Semester and reforms underway
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, paid official visits to Italy on 13 April and to Germany on 22 to 23 April to discuss the European Semester of economic policy coordination and the reforms underway in the country. In Italy, he met with Minister of Economy and Finance Pier Carlo Padoan, Minister of Labour Giuliano Poletti, Governor of the Bank of Italy Ignazio Visco and social partners. He said the Commission was glad to see that Italy’s reform momentum has picked up. In Germany, Vice-President Dombrovskis met with Finance Minister Wolfgang Schäuble and President of the Bundestag Norbert Lammert, social partners, key think tanks and experts in addition to addressing parliamentary committees at the Bundestag and delivering a keynote speech at a monetary conference. Mr Dombrovskis is travelling to Member States as part of the Commission’s outreach on the European Semester, which is based on the Commission’s Country Reports of February that assessed Member States’ fiscal, economic and social developments. The purpose of the visits is to engage national authorities and social partners in a constructive dialogue on the issues raised in the reports. After Germany, the Vice-President will visit Belgium on 30 April.
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Investment Plan for Europe: Vice-President Katainen takes road show to the Netherlands, Bulgaria, Hungary, Poland and Greece
European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, visited the Netherlands on 14 April as part of his road show to promote the Investment Plan for Europe. He then travelled to Bulgaria on 16 April and Hungary on 17 April. The following week on 20-21 April he visited Poland accompanied by Commissioner Bieńkowska and participated in the European Economic Congress in Katowice. Poland announced that it would contribute EUR 8 billion to projects benefiting from finance by the European Fund for Strategic Investments (EFSI) of the EUR 315 billion Investment Plan. Poland is the sixth country to contribute to the Plan even before the EFSI has been formally set up, following Germany, Spain, France, Italy and Luxembourg. Mr Katainen will be joined by Commissioner Avramopoulos for a visit to Greece on 23-24 April to host a citizens’ dialogue in Athens to answer questions from the general public. Vice-President Katainen is meeting Heads and Members of Government, business leaders, SMEs, investors and students as part of the 28-country road show to promote and explain the EUR 315 billion Investment plan. “ On each road show, I learn something new,” said Katainen, “and I get to visit some of the projects which already benefit from EU funding, which is very inspiring.” The road show can be followed in detail on Twitter. The European Investment Bank on 22 April announced that it had approved up to EUR 300 million in financing for the first four projects in the sectors of R&D, health care, industrial innovation, and transport, thus serving as examples of possible future investments.
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Finance ministers at G20 and IMFC meetings discuss economic growth and risks to global recovery
Vice-President Dombrovskis and Commissioner Moscovici participated in the G20 Ministerial and the meeting of the IMF International Monetary and Financial Committee (IMFC) on 17-19 April in Washington. The key message from the IMFC meeting was the need for further measures to lift actual and potential growth, and support a more robust, balanced, and job-rich global economy. At the G20 meeting discussions focused on the global economy and the main risks to the global recovery including volatility in exchange rates and prolonged low inflation, persistent internal and external imbalances, high public debt, and geopolitical tensions. The G20 and the IMFC also jointly discussed the IMF 2010 Quota and Governance Reform and agreed that while implementation of the 2010 Reform remains the highest priority an interim solution should be pursued.
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Council adopts rules to stimulate long-term investment by creating new type of fund vehicle
On 20 April, the Council adopted a regulation aimed at increasing the pool of capital available for long-term investment in the EU economy by creating a new form of fund vehicle. European long-term investment funds (ELTIFs), by virtue of the asset classes that they will be allowed to invest in, are expected to provide investors with long-term, stable returns while they provide firms with “patient capital”. Based on the Commission proposal of June 2013, the creation of ELTIFs will help tackle barriers to long-term investment in, for example, infrastructure projects, thereby stimulating employment and economic growth. ELTIFs will target both professional and retail investors in the EU, and will include rules to protect investors, in particular retail investors. Adoption of the regulation follows an agreement reached with the European Parliament in December 2014. The regulation will enter into force on the twentieth day following its publication in the Official Journal.
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March 2015: Annual inflation up to -0.1% in both the euro area and EU
Euro area annual inflation was -0.1% in March 2015, up from -0.3% in February. In March 2014 the rate was 0.5%. European Union annual inflation was also
-0.1% in March 2015, up from -0.3% in February. A year earlier the rate was 0.6%. These figures were released on 17 April by Eurostat, the EU’s statistical office. In March 2015, negative annual rates were observed in 12 Member States. The lowest annual rates were registered in Greece (-1.9%), Cyprus (-1.4%), Poland (-1.2%), Bulgaria and Lithuania (both -1.1%). The highest annual rates were recorded in Austria (0.9%), Romania (0.8%) and Sweden (0.7%). Compared with February 2015, annual inflation fell in three Member States, remained stable in three and rose in 22. The largest upward impacts to euro area annual inflation came from restaurants & cafés (+0.11 percentage points), rents (+0.09 pp) and tobacco (+0.07 pp), while fuels for transport (-0.44 pp), heating oil (-0.16 pp) and telecommunications (-0.06 pp) had the biggest downward impacts.
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A balancing act: addressing macroeconomic imbalances – ECFIN video explains the why and the how
The 4th video in the series “European Economy Explained” was released on 16 April. “A balancing act: addressing macroeconomic imbalances” uses the metaphor of gymnastics to help viewers understand the importance of each EU Member State maintaining a healthy economic balance. Like a group of gymnasts forming a human pyramid, Europe's economies are interdependent and when one of them gets out of balance, its “risky wobbles” – such as high unemployment or persistently low investment – may affect others too by lowering the demand for their goods. The European Commission works with countries to identify risks early on and correct them before they threaten the economic stability of the EU “because a healthy economy is a balanced economy”. DG ECFIN launched the series of videos to explore key economic policy topics. Using animations in a storytelling format, the videos make understanding complex economic policies easy and entertaining.
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Marking 30 years of the EU flag, the vote on a new € common commemorative coin is open
In July 2015, the 19 euro area Member States will jointly issue a commemorative €2-coin to celebrate 30 years of the EU flag. Regardless of which euro area country issues the coin, it will bear the same design on its national side, otherwise reserved for a motif specific to that country. To select the winning design, euro area citizens and residents are invited to take part in the public voting on the web until 27 May 2015 at www.coin-competition.eu. This is the fourth time euro area countries have decided to collectively issue a commemorative coin: the other three common commemorative €2-coins were issued in 2007 (50 years of the Treaty of Rome), 2009 (10 years of Economic and Monetary Union) and 2012 (10 years of euro cash).
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Volume 14 (2015) Issue 1 - Quarterly report on the euro area. March 2015
The first section of this issue of the QREA analyses recent developments in cross-border capital flows into and out of euro area Member States. Between 2008 and the summer of 2012 – when the ECB announced its Outright Monetary Transactions (OMT) programme – a substantial proportion of cross-border financial flows was taken over by official financing by central banks or governments. Since the summer of 2012, however, net private financial flows have resumed, while official flows have generally come down, a sign of regained confidence in the euro area. Nonetheless, the analysis of gross financial flows also indicates that the strong dynamics of cross-border financial asset acquisition observed in pre-crisis years have yet to return. Other sections of the report deal with labour mobility as an adjustment mechanism, the design and impact of housing taxation and investment dynamics in the euro area since the crisis.
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What’s wrong with property taxation in the EU?
Property taxes are more growth-friendly than labour or income taxes, so shifting some of the tax burden born by workers to homeowners could be a wise option for many countries where labour and income taxes are high but property taxes raise relatively little revenue.
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Directorate-General for Economic and Financial Affairs
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