Helping in times of crisis: Europe's emergency loans to neighbour countries

In this episode of Real Economy, we focus on EU macro-financial assistance - emergency financial aid given to neighbouring countries in times of crisis to help stabilise their economies.

Over the last 30 years, there have been 77 MFA operations worth 16 billion euros helping 27 countries. The most recent example was the 1.2 billion euros provided to Ukraine in solidarity with the Ukrainian people.

Macro-financial assistance (MFA) comes mainly in the form of loans with highly favourable terms and low interest rates. To get the money, countries must have signed up to a financing programme with the IMF, met conditions for respecting human rights and anti-corruption, and implemented democratic, economic and governance reforms.

The wider goal is to help ensure stability and prosperity beyond the EU.

EU candidate country North Macedonia has received 160 million euros in MFA to help stabilise the country’s economy following the shock caused by the COVID-19.

The furloughing of a large number of workers resulted in a kind of scissor effect: on one hand, there was sluggish fiscal income, and on the other, it led to a sharp increase in public expenditure.

Added to that, foreign direct investment dried up, cutting the country’s trade balance.

Since 2005, North Macedonia’s youth unemployment rate has been steadily falling, but in 2020, it spiked.

Marija Sepetovska, 23, found a job, thanks to the EU’s Youth Guarantee, put in place by the country’s agency for job seekers.

"Of course, it was a stressful time to start your career in the pandemic and especially for young people. I'm actually getting more and more confident, especially seeing that there are a lot of programmes which are supporting our country."

Marija admits some of her friends