Documents considered by the Committee on 2 November 2016 Contents

11Financial information on the European Development Fund

Summary and Committee’s conclusions

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; drawn to the attention of the International Development Committee

Document details

Commission Communication: European Development Fund (EDF)—forecasts of commitments, payments and contributions from Member States for 2016, 2017, 2018, 2019 and 2020

Legal base

Department

International Development

Document Numbers

(38158), 13373/16, COM(16) 652

11.1The European Development Fund (EDF) is the main instrument for supporting both social and human development in the African, Caribbean and Pacific (ACP) and Overseas Countries and Territories (OCTs), and regional cooperation and integration. It is concluded for a multi-annual period, and financed by direct contributions from EU Member States according to an agreed key. It is a key instrument for UK engagement in ACP, especially in countries where there is no UK development bi-lateral presence.

11.2Each year, the Commission produces a Communication providing estimates intended to help Member States plan and forecast national budgets. The current document relates to the period 2016–20, and confirms earlier estimates of Member State contributions for 2016, whilst also setting out corresponding contributions for 2017 and 2018, and estimated non-binding contributions in both 2019 and 2020.

11.3As we have previously observed, sustained Member State pressure has resulted in a continuing improvement in the Commission’s forecasting performance in this area, thereby providing them with a more solid basis for their own budgetary processes, and this is demonstrated by the fact that the current estimates for 2016 are the same as those made previously. Having said that, the issues which arise in this area are important, and the sums involved—including the size of the UK contribution (€533.5m in 2016, and increasing thereafter)—significant. For that reason, we are again drawing these developments to the attention of the House and of the International Development Committee.

Full details of the documents

Commission Communication: European Development Fund (EDF)—forecasts of commitments, payments and contributions from Member States for 2016, 2017, 2018, 2019 and 2020: (38158), 13373/16, COM(16) 652.

Background

11.4The European Development Fund (EDF) is the main instrument for supporting both social and human development in the African, Caribbean and Pacific (ACP) and Overseas Countries and Territories (OCTs), and regional cooperation and integration. It is concluded for a multi-annual period, with total financial resources of €30.5 billion (£26.26 billion)53 for the period 2014–20, implemented within the framework of an international agreement between the European Union and the partner countries, and financed by direct contributions from EU Member States according to an agreed key.

11.5Each year, the Commission produces a Communication providing estimates of commitments, payments and contributions, intended to help Member States plan and forecast national budgets. The current document relates to the period 2016–20, and confirms earlier estimates of Member State contributions for 2016 totalling €3.6 billion (£3.1 billion), of which €3.45 billion (£2.97 billion) is to be managed by the Commission and €150 million (£129 million) by the EIB. Also, it sets out updated overall contributions of €4 billion (£3.44 billion) and €4.8 billion (£4.13 billion) respectively for 2017 and 2018, with estimated non-binding contributions of €4.8 billion in both 2019 and 2020.

The Government’s view

11.6In his Explanatory Memorandum of 20 October 2016, the Minister of State at the Department for International Development (Rory Stewart) comments that 2015 saw a strong performance in making EDF payments, which has continued in 2016, thereby increasing pressure on the tight Commission EDF treasury situation, which at the end of 2016 is expected to reach a negative balance of -€21million. He says that the Government is exploring with the Commission the implications of this situation, which was expected, since Member States committed to disbursements for the African Peace Facility (APF) and the EU Emergency Migration Trust Fund for Africa, after estimates had been issued.

11.7The Minister goes on to note that the updated forecast confirms the overall Member State contributions for 2016 proposed in a Communication from the Commission in June 2016, with the UK contribution remaining steady at €533.5 million (£459.3 million), as do those for 2017 and 2018 (at €589.8 million (£507.8 million) and €704.9 million (£606.9 million) respectively). He adds that his department has a robust financial management framework, and can accommodate the UK contributions for these three years, observing that the higher figure in 2018 has been well publicised by the Commission, and was anticipated, since, although the EU Emergency Migration Trust Fund for Africa began committing funds for programmes in 2016, this will not have an effect on Member State contributions until 2018 (the situation being similar to that which has arisen on the African Peace Facility).

11.8The Minister concludes by saying that the EDF is a key instrument for UK engagement in 78 ACP countries, and is a source of particular strength for engaging and providing assistance in countries where there is no UK development bilateral presence, but in which it still have a strong interest (such as the Central African Republic and Burundi). He says that the UK is content with the Communication, but will continue to insist on accurate forecasting to help Member States plan their budgets and contributions and to ensure the Commission lives within its allocated ceilings. It will also continue to strongly support good financial discipline and forecasting, having argued in Council working groups against any amended proposal which would mean the Commission holding balances in excess of forecasted spending, or which would allow payments to be made in advance of need.

Previous Committee Reports

None.


53 €0.8610 = £1.




4 November 2016