7. MANAGEMENT OF EUROPEAN DEVELOPMENT
FUNDS
(24196)
5348/02
COM(02)726
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Communication from the Commission to the Council, the European Parliament and the Court of Auditors: Financial information on the 6th, 7th and 8th European Development Funds 2001.
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| Legal base: | —
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| Document originated: | 20 December 2002
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| Deposited in Parliament: | 20 January 2003
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| Department: | International Development
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| Basis of consideration: | EM of 3 February 2003
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| Previous Committee Report: | None
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| To be discussed in Council: | No discussion expected
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| Committee's assessment: | Politically important
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| Committee's decision: | Cleared
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The document
7.1 The European Development Fund (EDF) finances the
EU's external assistance to the 77 African, Caribbean and Pacific
(ACP) countries. The Lomé Agreement governs the disbursement
of the 6th, 7th and 8th Funds,
which remain active as they have unspent funds available, including
those covering outstanding commitments. The 9th EDF
is expected to become operational during the first half of 2003,
according to the Secretary of State for International Development
(Clare Short). However this timing will depend on the ratification
of the Cotonou Agreement, which will succeed the Lomé Agreement.
It was signed on 23 June 2000. The report says that as of 18 January
2002, 36 ACP countries, four EU Member States and the Community
had completed the ratification.
7.2 The Communication covers the year 2001. It provides
an analysis of activities, progress on implementation and financial
information on amounts yet to be committed or spent. It has been
summarised by the Minister as follows:
"2001 was the first year of operation for the new Europe
Aid Co-operation Office responsible for programme identification,
implementation and evaluation: as such it represented a transitional
year and improvements can be expected. Commitments and payments
in 2001 met forecasts, although were lower than in 2000. The 2000
financial profile was atypical as it contained some mid-EDF payment
peaks and contained very large HIPC (Highly Indebted Poor Country)
payments.
"The greater part (63%) of payments in 2001 were from non-programmable
resources, namely STABEX, HIPC, Structural Adjustment and Risk
Capital. The slow rate of disbursement for programmable resources
(indicative amounts established within the framework of Country
and Regional Strategies) was attributed to low absorption capacity
caused by political volatility, unwillingness to reform and civil
crises.
"Overall, the backlog of outstanding commitments (RAL-reste
à liquider i.e. total funds committed but not spent) fell
by 6% in 2001 compared to the previous year. The level of non-performing
(dormant) commitments increased slightly due to implementation
delays, tendering and management complications, and political
difficulties. The proportion of very old commitments fell by 25%.
"In 2001, countries performing well were recipients of the
greater part of EDF funds, to the extent that EDF 6, 7, and 8
funds for these countries are running low. Conversely, the greatest
difficulty in disbursing funds was to under-performing countries".
7.3 The Minister says that the Commission is aware of
its lack of 'pro-poor focus' and is developing an internal staff
working paper to identify how it might remedy this. The Government
will seek to use the mid-term reviews of country strategies, due
to begin in 2003/04, to ensure a greater focus on poverty reduction.
7.4 The Communication admits that the reform of the management
of external aid has been going through a "settling in"
period, but it has established the principle that "everything
that can be better decided and managed in the field should not
be decided and managed in Brussels". It led to the Directorates-General
(DGs) for External Relations and Development retaining responsibility
for programming, while the EuropeAid Cooperation Office, established
in January 2001, was given responsibility for the management of
the project cycle.
7.5 The Communication acknowledges that the Commission
still needs to enhance its capacity to implement programmes, as
the benefits of "deconcentration"[18]
are yet to be realised. The initial analysis of the results of
the new Commission monitoring and evaluation system, introduced
and tested in 2001, suggests that factors contributing to lack
of programme impact are poor programme design, lack of organisation
and tools, poor lines of communication and poor integration of
cross-cutting/horizontal issues.
The Government's view
7.6 The Secretary of State points out that the Cotonou
Agreement, and the new EDF Financial Regulation to which the 9th
EDF will be subject, have been developed to ensure that the problems
of slow disbursements from the 6th, 7th
and 8th EDFs are not repeated. When the 9th
comes into operation, the amounts still unspent from the 6th,
7th and 8th will be incorporated into the
9th and will, therefore, be subject to the improved
legal and regulatory framework. The reform of the management of
EU external assistance also includes measures to improve effectiveness
and impact which will affect the unspent residues of the 6th,
7th and 8th EDFs.
7.7 She then comments:
"The delay in disbursing EDF funds remains a disgrace, which
the Commission and Member States need to address as a priority.
Clearing the disbursement blockage must include improved engagement
with ACP partners and measures to improve ACP capacity to make
use of funds awaiting disbursement. The report notably highlights
the fact that non-programmable funds are disbursed more rapidly,
suggesting that such instruments are more effective. We have suggested
that the Commission examine the scope to make more use of such
payment instruments. This must not be at the expense of improved
quality. The Commission's internal procedures continue to hamper
the overall reform process. However revision of the Financial
Regulation will address some of these problems."
7.8 The Secretary of State says that her officials will
be looking critically at future levels of calls to the UK and
other Member States for contributions to the EDF from the Commission.
They will wish to ensure that the Commission has made the best
use of funds already at its disposal. She says that future replenishments
of the EDF should take account of the backlog of unspent funds,
and progress on the reform programme.
Conclusion
7.9 The Secretary of State uses justifiably forthright
language in describing the delay in disbursing EDF funds as "a
disgrace". We shall raise the issue with the Court of Auditors
in Luxembourg on 12 March. Meanwhile, we shall ask officials for
a copy of the Court's response to the Communication, to which
the Secretary of State refers.
7.10 The Commissioner, Poul Nielson, told a recent
meeting of Chairmen of the Foreign Affairs Committees in the EU
and the candidate countries[19]
that one impediment to speedier progress on projects was the need
to send out tenders in all the Community languages, even where
it was evident that no company would get the contract if it was
not able to work in at least one international language spoken
in the beneficiary country — usually English. If more Member
States, including candidates, were prepared to limit to some extent
their requirement for translations, following the example of Ireland,
it would speed up the process, as well as saving the Community,
and in this case the aid budget, a good deal of money.
7.11 We ask the Government to encourage the Commission
to produce its yearly reports such as this much more quickly and
to update the report at the time of issue. It is bizarre to read
references in a report dated 14 January 2003 to the status quo
on various subjects "as of 31 December 2001" and "as
of 18 January 2002" when more up-to-date data would have
been easy to obtain and a lot more relevant, (without providing
information which belongs more properly to the 2002 progress report).
It might ask the Commission when we can expect the report for
2002.
7.12 We now clear this document.
18 The
Commission's policy of 'deconcentration' is to devolve more responsibility
for the management of projects to its delegations abroad. Back
19 The
meeting took place in Copenhagen on 3-4 November 2002. Back
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