19. We consider that the following raises questions of political importance,
but make no recommendation for its further consideration:-
Overseas Development Administration
(17714)
-- |
Commission Communication on the European Development Fund: estimate of contributions required
for 1997 and forecasts for expenditure up to 2001. |
| Legal base: |
Article 6 of the Internal Agreement on the Financing and Administration of Community development
assistance under the Fourth ACP-EEC Convention of 16 July 1990; qualified majority
voting. |
Introduction
19.1 We reported on 13 December 1995[25] on the
Commission's Communication on the estimate of contributions required for 1996 European Development
Fund (EDF) expenditure, which we suggested would be relevant to a debate on overseas aid. On 29
November 1995 we considered a Commission Communication on financing and management of EDF VIII[26] and made the same recommendation. No appropriate debate has
yet taken place.
19.2 In his Explanatory Memorandum on the previous Communication the Minister of
State at the Foreign and Commonwealth Office (Mr. Hanley) noted that his comments were based on an
early draft of the expected document because of the tight timing between consideration of the draft
by the Working Group and the need for it to be approved by the Council of Ministers before 1 January
so that payments could continue. Exactly the same situation has arisen this year. The draft text
has, however, been attached to the EM.
The Communication
19.3 This document sets out expected expenditure for 1996 and non-Stabex[27] payments as they stood at the end of October. It also gives
the Commission's current assessment of the financial requirements for the EDF in 1997 and
preliminary estimates of expenditure from 1998 to 2001.
19.4 In her Explanatory Memorandum (dated 6 December) the Minister of State at the
Overseas Development Administration (Baroness Chalker of Wallasey) says that the final depositable
document will be in the form of a formal call for contributions from Member States. The EM
summarises the document as follows:
"...total EDF expenditure during 1996 is likely to come to 1,460 million ECU
(£1,142m)[28] -- of which around 13% (190 million ECU;
about £149m) will be Stabex and the rest general EDF payments. At the end of 1996, the
provisional current account balance is expected to show 156 million ECU (about £122m), with
a Stabex balance of 66 million ECU (about £52m). Since the first call for contributions will
not be until 20 January 1997 these amounts will have to cover financing needs until mid
February."
1997 forecast
"The Commission's forecasts for 1997 are strongly influenced by the expected date of
ratification of the eighth EDF (EDF VIII)[29]. They therefore
identify two contributions, one of which (for 200 million ECU, about £156m) is expected to be
called only if EDF VIII enters into force before the end of June 1997. Further delays in
ratification would also affect the level of spending from the other contribution, projected at 1,560
million ECU (about £1,220m).
"The Commission forecasts decisions to rise from 1,550 million ECU (about
£1,212m) in 1996 to 1,763 million ECU (some £1,379m) in 1997. Because of the expected
delay in ratification of EDF VIII, payments are forecast to fall from 1,460 million ECU
(about £1,142m) in 1996 to 1,325 million ECU (£1,036m) in 1997. The total contribution
forecast in 1997 is, however, higher than this because of the Stabex mechanism. The second
contribution, of 200 million ECU, would if called be additional to these amounts."
"The paper gives very initial forecasts for EDF expenditure in the years 1998 to 2001,
but stresses that these should be treated with great caution, as EDF VIII is not yet under way.
It predicts expenditure in 1998 at around 2000 million ECU (£1,560m), in 1999 at 2200 million
ECU (£1,720m), in 2000 at 2100 million ECU (£1640m), and in 2001 at 2000 million ECU
(£1,560)."
The Government's view
19.5 The Minister says that there are no policy implications, since the total level
of contributions for EDF VII, and the objectives and terms of the Fourth Lom Convention have
already been agreed and ratified by Parliament.
"The UK's total contribution to EDF VII will be 1.79 billion ECU (about £1.4
billion), or 16.37% of the contributions by all Member States to the total EDF of 10.9 billion ECU
(£8.5 billion).
"... During 1997 . . . the UK will be called upon to contribute approximately 255
million ECU, (£199.5m at current exchange rate, although actual payments in sterling will
depend upon the exchange rates prevailing at the time of the calls.)
"Provision for the UK contribution, which is made by quarterly payments, is included
in the Estimates for Overseas Aid for 1996/97, and will be sought in the estimates for 1997/98.
The UK's first quarterly payment for 1997 is expected to be due on 20 January."
19.6 We understand that the delay in ratification of EDF VIII is not due to any
dispute of substance, but to administrative dilatoriness. The UK Government expect to be ready to
ratify by the end of the year. Others are not expected to be ready before mid-1997.
Conclusion
19.7 Whilst the question of the total British overseas aid budget is
undoubtedly a matter of political importance, EDF VII is coming to an end and cannot now be regarded
as of current political importance.
19.8 The contributions to EDF VIII were agreed at the European Council in June
1995. As the only outstanding points are minor, and as we have seen a draft of the text, we are
clearing the document.
25.(16657) 12506/95; see HC 51-iv (1995-96), paragraph 18. Back
26.(16597) see HC 51-ii (1995-96), paragraph 12 (29 November 1995). Back
27.Stabilisation of Export earnings: a Community programme aimed at countering the
effects of sudden falls in production earnings in African, Caribbean, Pacific countries. Back
28.At an exchange rate of 1 ECU = £0.7822. Back
29.(16656) 12506/95; see HC 51-iv (1995-96), paragraph 17 (13 December 1996). Back
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