FLEX

Fluctuations in Export Earnings (FLEX)

FLEX was introduced in 2000 in the framework of EU ACP co-operation to assist governments facing sudden losses of revenues. It provides additional budgetary support to ACP countries that have registered: (i) A 10% loss in exports earnings (2% in the case of LDCs); and (ii) a 10% worsening of the programmed public deficit.

The FLEX mechanism can also support national budgets in case of significant losses of government revenues due to a shortfall in export earnings.

As a response to the global financial crisis in the most affected ACP countries during the period 2009-2010, the EU on 8 April 2009 proposed a set of measures to mitigate the economic and social consequences of the financial crisis. It will assist developing countries that are hit worst by the downturn in trade and falling revenues. This instrument focuses on ensuring spending on social safety nets and will be based on the forecast of fiscal losses and other vulnerability criteria, helping to cushion the blow rather than acting after the event. This EU instrument against vulnerability is one of the few substantial tools that could make a real difference for those countries that cannot access IMF or World Bank resources. It works in full complementarity with the World Bank, the IMF and Regional Development Banks (e.g CDB), sharing analysis and indicators and using the same reporting tools.