The European Commission approved the first financing decisions under the EUR 264 million 2010 allocation for the so-called Vulnerability FLEX mechanism to help the most vulnerable African, Caribbean and Pacific countries cope with the impact of the global financial crisis and economic downturn.
The European Commission approved the first financing decisions under the EUR 264 million 2010 allocation for the so-called Vulnerability FLEX mechanism to help the most vulnerable African, Caribbean and Pacific (ACP) countries cope with the impact of the global financial crisis and economic downturn. The V-FLEX mechanism is a short-term instrument which provided for EUR 500 million over two years (2009-2010).
“Developing countries continue to face important difficulties, including funding gaps in their government's budgets, as a direct consequence of the global financial crisis. This year, this EU mechanism will help 19 ACP countries maintain their level of public spending in priority areas, and therefore mitigate the social impact of the economic downturn,” said Andris Piebalgs, Commissioner for Development
The Vulnerability FLEX (V-FLEX) mechanism is the European Union's swift response to help countries most affected by the economic downturn due to their poor resilience to external shocks. In 2010, it will provide, upon their request, support to: Antigua & Barbuda, Benin, Burundi, Burkina Faso, Cape Verde, Central African Republic, Grenada, Guinea Bissau, Haiti, Lesotho, Liberia, Malawi, Democratic Republic of Congo, Samoa, Sierra Leone, Togo, Tonga, Tuvalu and Zimbabwe. The financing decisions in favour of Burkina Faso (EUR 14 million) and Grenada (EUR 3,5 million) have been adopted today. Financing decisions in favour of other countries will follow during the course of autumn 2010.
15 countries have previously benefited from EUR 236 million funding under V-FLEX: Benin, Burundi, the Central African Republic, the Comoros, Dominica, Ghana, Grenada, Guinea Bissau, Haiti, Malawi, Mauritius, the Seychelles, Sierra Leone, Solomon Island, and Zambia.
Background:
The V-FLEX instrument works pre-emptively, based on forecasts of fiscal losses and other vulnerability criteria, helping to ease the impact rather than acting after the damage is done. It provides rapid and targeted grants and is acting as a complement to the loan-based assistance of the World Bank, the International Monetary Fund and regional development banks with whose support it was developed.
V-Flex is demand-driven and targeted at countries with a high degree of economic, social and political vulnerability, the right policies in place to fight the crisis and sufficient absorptive capacity as well as a financing gap in their budgets where EU support can make a difference by closing or significantly reducing this gap.
The EUR 500 million V-FLEX comes in addition to the EUR 1 billion Food Facility adopted on 30 March 2009 and the allocation of EUR 200 million under the EDF in 2008 to help developing countries cope with higher food prices. At country level, it complements other financial instruments under the budget of the EU and the European Development Fund.