In this episode of Real Economy, we focus on the EU’s macro-financial assistance: emergency financial aid given to neighboring countries in times of crisis to help stabilize their economies.

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

Macro financial assistance (MFA) It mainly comes in the form of loans with very favorable terms and low interest rates. To get the money, countries must have signed a financing program with the IMF, meet conditions to respect human rights and fight corruption, and implement democratic, economic, and governance reforms.

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

north macedonia

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

The suspension of a large number of workers resulted in a kind of scissors effect: on the one hand, the sluggishness of tax revenues and, on the other, a sharp increase in public spending.

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

The impact on young people

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

Marija Sepetovska, 23, found a job thanks to the EU Youth Guaranteelaunched 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. In fact, I am becoming more confident, especially since there are many programs that support our country.”

Marija admits that some of her friends have not been so lucky.

“It was very easy for me, but unfortunately, that is not the situation with many other young Macedonians. Some of them have a much harder time finding the big opportunity. So he is still not the best here,” he adds. .

The first tranche of macro-financial assistance was sent as emergency aid. For the second payment, North Macedonia had to meet a list of conditions. That included the creation of a youth unemployment unit.

Explaining what the unit does, its head, Goran Petkovski, told Real Economy: “They are involved, first in developing the active labor market measures within the operational plan and how we can better target young people with these active labor market measures. market that we have. They are also responsible for coordinating the work of youth counselors within the local employment office and, of course, monitoring and reporting on the Youth Guarantee.”

The 160 million euros in emergency loans helped North Macedonia navigate a difficult economic period, but Shenaj Hadzimustafa, associate professor of business and economics at the University of South Eastern Europe, believes the benefits will last long into the future.

“The money was needed for that period to finance some of the budget and balance of payments needs. But on the other hand, the reforms are the ones that are staying and will have a positive impact on the country. So these reforms, I think that should have an impact not only in the short term but also in the medium and long term.”

Now in its fourth decade, the EU recently deployed €1.2 billion in macro-financial assistance to support Ukraine. The EU’s chief economist, Paolo Gentiloni, said royal economy such support is crucial.

“We have an interest in the stability of the area. Stability for migration. Stability for peace, etc. And finally, we have a huge interest as trading partners of these countries because the member states of the European Union are, in general, the main trade partner of all these countries”. he said.

To find out more about how the EU’s macro-financial assistance has helped North Macedonia, Real Economy’s Naomi Lloyd spoke with the country’s Prime Minister, Dimitar Kovačevski.

Naomi Lloyd, Euronews:

“How much difference has the EU’s macro-financial assistance made to the country?”

Dimitar Kovačevski, Prime Minister of North Macedonia:

“The EU’s macro-financial assistance helped us a lot, not only from the perspective of pure financial assistance, but it also helped to continue with the reforms that we have started in the field of public finance management and in other fields. But it also gave a clear signal to the other financial and international institutions and donors with whom we are cooperating, that we have a stable economic policy in times of crisis.”

Naomi Lloyd, Euronews:

“How difficult was it to implement those reforms?”

Dimitar Kovačevski, Prime Minister of North Macedonia:

“The fight against crime and corruption has given results as we have improved our position in Transparency International reports. Now we have entered a country that has democratic conditions because in the past, in the past there were deficiencies in democracy. procedures in the country. And we’re very, very happy about that.”

Naomi Lloyd, Euronews:

“How do you make sure the reforms don’t stop here, but are fully implemented in the future?”

Dimitar Kovačevski, Prime Minister of North Macedonia:

“We have made sure that with the institutions of the European Union and the European Commission, we have regular coordination, so we have regular reports. We also work hard on the implementation of internal mechanisms in the country and in public institutions to guarantee that these reforms are made.”

Naomi Lloyd, Euronews:

“Now, North Macedonia is a candidate to join the EU. The next step is accession talks. What hope do you have for them to start soon?”

Dimitar Kovacevsky. Prime Minister of North Macedonia:

“North Macedonia has a clear strategic goal of becoming a full member of the Euro-Atlantic partnerships. Last year we celebrated the 30th anniversary of our independence, and this was accompanied by becoming the 30th member of NATO. We are already in the 17th year and negotiations have not yet started, unfortunately last year there was another challenge that was imposed by the former bulgarian government. With the two new governments, we started a new dialogue, so together with the Prime Minister of Bulgaria, we already had a meeting in Skopje to regain confidence.

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