11 European Development Fund in 2006
and 2007 and forecasts up to 2011
| (27943)
14348/06
COM(06) 612
| Commission Communication: Estimate of commitments and payments and of contributions to be paid by the Member States for 2006 and 2007 and forecast of commitments and payments for 2008 to 2011
|
| Legal base | Article 8 of the Financial Regulation of 27 March 2003 on the 9th European Development Fund
|
| Document originated | 18 October 2006
|
| Deposited in Parliament | 26 October 2006
|
| Department | International Development
|
| Basis of consideration | EM of 10 November 2005
|
| Previous Committee Report | None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
11.1 The 2003 Cotonou Agreement (successor to the Lomé
Agreement) is the latest development assistance agreement between
the EC and the ACP (African, Caribbean and Pacific) countries.
It seeks to create a more favourable context for sustainable development
and poverty reduction, and to reverse the processes of social,
economic and technological marginalisation in the ACP States.
Political dialogue between the Community and each of the partner
States (or regions) plays a key role in determining the nature
and objectives of the assistance provided, and is based on respect
for human rights, democratic principles and the rule of law, and
on good governance. There are special consultation procedures
and appropriate sanctions for dealing with human rights violations
and serious corruption. It seeks to encourage greater participation
by civil society, the private sector and trade unions, with a
view to advancing democratic processes and transparency and ensuring
that cooperation projects prove more effective than in the past.
11.2 Through a €13.5 billion European Development
Fund (EDF) covering the Agreement's first five years, the Community
is committed to supporting the ACP governments in their attempts
to create a "balanced macro-economic context", expand
the private sector and improve both the quality and coverage of
social services. Regional integration among the ACP States, the
systematic encouragement of gender equality and the sustainable
management of the environment and of natural resources are other
important objectives. The system of ACP trade preferences will
gradually be replaced by a series of new economic partnerships
based on the progressive and reciprocal removal of trade barriers,
as part of a broader strategy to improve the ACP States' ability
to attract private sector investment. Revisions agreed in 2005
strengthened the political dimension (by adding commitments regarding
Weapons of Mass Destruction, counter-terrorism and cooperation
with the International Criminal Court), introduced greater focus
on the so-called "poverty diseases" and the UN Millennium
Development Goals and improved implementation procedures.
The Commission Communication
11.3 This Communication is produced annually under
Article 8 of the Financial Regulation applicable to the 9th
EDF.[34] It provides
financial information to Member States regarding commitments and
payments in the current year, justification for the extent of
calls for contributions for the next EC financial year (2007),
and estimates of the total annual expenditure in each of the following
four years (2008-2011). The UK's share of the current EDF is 12.69%.
11.4 The Commission notes that, since the entry into
force of the 9th EDF in 2003, the Member States have made direct
contributions to the European Investment Bank (EIB) for the instruments
it manages (the Investment Facility and interest-rate subsidies),
while contributions for the old instruments managed by the EIB
(risk capital and interest-rate subsidies) still go through the
Commission. The communication "therefore makes a clear distinction
between EIB payments under the 9th EDF, and Commission payments
(including those for the old instruments managed by the EIB)".
11.5 In line with the joint statement made by the
Council and Commission when the 9th EDF Financial Regulation
was adopted, the Communication consists mainly of tables. These
include:
— Commitments
against Payments from 1986-2007
— Commitments/Payments Estimated for 2006
and 2007
— Financial Situation estimated for 2006
and 2007
— 2006 EDF Contributions by Member States
— 2007 EDF Contributions by Member States
COMMITMENTS AND PAYMENTS ESTIMATED FOR 2006 AND 2007
11.6 The Commission says that it and the EIB have
updated their forecasts of commitments and payments for 2006 and
2007 for each of the ACP countries (and Overseas Colonies and
Territories). For the Commission, it says, these figures are the
result of a detailed estimate, project by project. Following its
experience on the Investment Facility, the EIB "bases its
estimates on a projection of the rate of commitments and payments
observed in the past". The payment estimates in particular
"have been compiled with great care with the aim of helping
the Member States to earmark amounts that are as accurate as possible
in their national budgets while ensuring that sufficient financial
resources are available for the EDF to avoid liquidity problems".
11.7 The Communication says that the overall commitment
forecast for 2006 is expected to be €3976 million (£2668
million). This total includes funds managed by the European Investment
Bank (EIB). The EIB forecast has been reduced from €586 (£394
million) to €576 million (£386 million) compared to
the information provided in June 2006. The €3450 million
(£2315 million) level of commitments for 2007 "confirms
the Commission's wish to use up all the funds made available by
the 9th EDF (including the balances remaining from previous EDFs)".
11.8 The Commission expects to make payments of €3040
(£2037 million) in 2006 and €3200 million (£2147
million) — notable in being above three billion euros for
two years running.
CALLS FOR CONTRIBUTIONS IN 2006 AND 2007
11.9 The total sum anticipated to be required from
Member States for 2007 is €2970 million (£1993 million)
of which the UK will contribute €376.9 million (£253
million). This is an increase from €2690 million (£1805
million) for 2006 (UK contribution of €341.4 million or £229
million).
THE FUTURE (2008-2011)
11.10 The Commission's forecasts for 2008-2011 include
both final payments from the current EDF9 (2003-2007) and commitments
and payments from EDF10 (2008-2013). The UK's share of EDF10 is
14.82%.
11.11 The Commission says that "it should be
remembered that the margin of error for medium-term estimates
is high", and that this "is particularly true at the
moment", noting that 2008 will see the 10th EDF coming into
operation and that "at this stage, the programming of the
10th EDF has not even been established yet". It says that
the "following figures should therefore be interpreted with
a great deal of caution". Its forecasts are (in € million):
| 2008
| 2009 |
2010 | 2011
|
| Commitments
| | | |
|
| Commission
| 2900 | 3750
| 3750 | 3750
|
| EIB |
587 | 450
| 450 | 450
|
| Total
| 3487 | 4200
| 4200 | 4200
|
|
|
| Payments
| | | |
|
| Commission
| 3200 | 3000
| 3200 | 3400
|
| EIB |
430 | 560
| 460 | 410
|
| Total
| 3630 | 3560
| 3660 | 3810
|
The Government's view
11.12 The Parliamentary Under-Secretary of State at the Department
for International Development (Mr Gareth Thomas) notes that the
Communication contains no new financial implications, these being
sums to which the UK is already committed under the ACP-EC Partnership
Agreement. He also notes the continued upward trend in the level
of real and expected expenditure, against a background in which
the UK and other Member States have in the past criticised the
slow disbursement of funds from the EDF and the main EC Budget.
He continues as follows:
"Improved levels of disbursement are a direct result of the
reforms begun by the Commission in 2000. Deconcentration of programme
implementation to the field has played an important role in achieving
this. It has also helped improve the accuracy of Commission forecasts
and so assist budget management by Member States' treasuries.
We will continue to press the EIB to improve its forecasting and
timely implementation of projects. We understand that the downward
revision of their figures for 2006-2007 is due to delays in a
project in the Caribbean".
11.13 Regarding the Commission and EIB undertaking to commit all
the funds available from the current EDF by the end of 2007, the
Minister says that they then have to be spent by the end of 2010;
any unspent funds would be subject to a future Council Decision,
and therefore to parliamentary scrutiny at that time.
11.14 On the Timetable, he says that the Presidency
will submit the Communication to the Council before the end of
the year.
Conclusion
11.15 It is gratifying to note the continued benefits
of the reforms begun in 2000 though, as the Minister rightly notes,
there always remains room for improvement.
11.16 There is to be a final review later this
year, at which time Commission proposals for any reallocation/rebalancing
of funds will be considered, taking into account needs, performance
and absorption capacity. Any resulting proposal for a Council
Decision will be submitted for scrutiny, to which we look forward.
11.17 A further major step will be the implementing
regulation for the 10th EDF, which we consider elsewhere
in this Report.[35]
11.18 In the meantime, we clear this document.
34 OJ No. L 83, 1.4.03, p. 1. Back
35
See para 12 below. Back
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