MULTIANNUAL FINANCIAL FRAMEWORK 2008-2013:
ACP COUNTRIES (7625/06)
Letter from the Chairman to Gareth Thomas
MP, Parliamentary Under-Secretary of State, Department for International
Development
Thank you for your Explanatory Memorandum dated
7 April which Sub-Committee C considered at its meeting on 27
April. The Sub-Committee cleared the document from scrutiny.
We would like to thank you for the particularly
well-written and clear explanation of the proposal to be found
in the Explanatory Memorandum which proved very helpful in our
scrutiny of the document.
We wish to receive, in due course, further information
on the decisions taken by the Commission in relation to the allocations
to particular ACP countries and regions. In particular, how will
the €300 million allocated to the African Peace Facility
be allocated? Will that amount be specifically set aside from
one of the three main funding areas (to be spent as and when required),
or will it be taken in separate amounts from allocations to the
relevant countries and regions (so that only a specified amount
from the APF could be spent in each)? As we are currently conducting
an inquiry into the EU's Strategy for Africa, detailed answers
to these questions, if available, would be extremely helpful.
Finally, we note that under the 9th EDF there
was a conditional €1 billion euros, partly used to finance
the Water Facility. Will there be a similar sum set aside under
the 10th EDF?
28 April 2006
Letter from Gareth Thomas MP to the Chairman
Thank you for your letter of 28 April 2006 responding
to my Explanatory Memorandum dated 7 April and informing me that
the Committee met on 27 April and cleared the document from scrutiny.
You asked for further information in due course about three issues:
the allocations between countries; the African Peace Facility;
and a conditional funding tranche. I would also like to take this
opportunity to update you on negotiations of the Multiannual Financial
Framework (MAFF) and the other EDF 10 implementing documents.
You will be aware that the House of Commons European Scrutiny
Committee also cleared the document in April and asked to be kept
informed about managerial and budgetisation issues in particular.
This letter also covers those issues for your information.
The Commission has yet to finalise the allocations
to individual ACP countries and regions. They presented the EDF
Committee on 17 May with provisional allocations, but stressed
that this information is sensitive and should not be shared with
the partner countries. The indications are however that Africa
will receive a slightly higher share of the funds compared to
EDF 9 (90.6%) while the Caribbean and the Pacific regions will
receive slightly lower shares. On the basis of this information
around 90% of the baseline allocation funds are likely to go to
Low-income Countries.
The €300 million (£208.2 million)
earmarked for the African Peace Facility will be allocated using
the same procedure as under EDF 9. The allocation process is triggered
by a request to the European Commission from the African Union
or the relevant sub-regional organisation for support for a particular
operation. Once the Commission is satisfied with the proposal,
they seek political approval to support the mission from the EU
Council of Ministers—usually via the Political and Security
Committee. Assuming approval is granted, the EDF Committee is
asked to approve a financing proposal. The €300 million is
included under the heading of Intra-ACP cooperation. An additional
€300 million has been set aside in a Reserve under that heading
in case the Council decides during the review of the Peace Facility
envisaged for 2010 to provide a further €300 million for
2011-2013 from the 10th EDF.
As you rightly noted, the 9th EDF included a
conditional €1 billion, half of which is being used to fund
the Water Facility. Member States made the release of the funds
to the Commission conditional on improved performance of the EDF.
There is no similar "conditional" funding under the
10th EDF. However, Member States are able to increase their contributions
to the 10th EDF on an individual and voluntary basis, thereby
providing a continuing incentive to the Commission to improve
the EDF's performance.
On 17 May the Committee of Ambassadors (COREPER)
agreed the MAFF. The overall amount of direct financial assistance
for the ACP countries will be €23,966 million (£16,637.2
million). The Overseas Countries and Territories (OCTs) will be
allocated €316 million (£219.4 million) of which €286
million (£198.5 million) in grants. An additional €430
million (£298.5 million) will be for administrative costs.
This gives a total of €24, 712 million (£17,155.1 million).
This breaks down between the €22,682 million (£15,745.9
million) agreed by the December 2005 European Council and €2,030
million (£1,409.2 million) in own resources for loans to
be provided by the European Investment Bank (EIB) of which €2,000
million is for ACP countries and €30 million for the OCTs.
The €21,966 million (£15,248.8 million)
grant funding available to ACP countries (€22,682 million,
minus OCT and administrative costs) will be divided as follows:
— €17,766 million (£12,333.2
million) is for national and regional indicative programmes (80.9%);
— €2,700 million (£1,874.3
million) is for intra-ACP and inter-regional programmes (12.3%);
— €1,500 million (£1,041.3
million) will finance the Cotonou Investment Facility, managed
by the EIB (6.8%).
Compared to the Commission's original proposal,
there is a slight increase in the share going to the intra-ACP
and inter-regional envelope at the expense of national and regional
programmes. This is partly because of the funding for the Africa
Peace Facility as set out above.
The UK and other Member States removed any reference
to possible future budgetisation. Managerial issues remain unfinalised,
reflecting the continuing negotiations on the Development Instrument
with the European Parliament. The MAFF was agreed by Council as
an "A" point shortly before the ACP-EC Council of Ministers
meeting in Papua New Guinea on 1-2 June where it was agreed by
the ACP countries.
During the latter stages of the MAFF negotiations,
the Commission requested that Member States agree to decommit
any unspent funds from the 9th EDF and transfer them to the Reserve
of the 10th EDF. The Government supports this idea providing that
adequate safeguards are in place for the use of the money including
agreement by unanimity of their use. In the event, the proposal
was not approved. Instead, COREPER agreed a Statement noting that
"Based on the performance review in 2010 and a proposal by
the Commission, the Council of the European Union will consider
a decision by unanimity on the transfer of any funds de-committed
from ACP projects funded out of the 9th and previous EDFs into
the reserves of the 10th EDF." This does not affect the sunset
clause, and all funds from the 9th EDF still need to be committed
by the end of 2007. Underspends may occur on some projects and
so the Government believes that it is useful to retain the possible
option of rolling over these funds to the 10th EDF. At the Council
meeting in Papua New Guinea, the ACP highlighted costs related
to the implementation of Economic Partnership Agreements and structural
adjustment as priority areas for any rolled over funds.
On 28 June COREPER agreed the Internal Agreement
on Financing following several months of negotiation. It is set
to be formally signed at the 17 July GAERC. The document sets
out the operational modalities for MAFF. The Government secured
a number of changes to the original Commission text to reflect
development best practice. Discussions on the Financial Regulation
and the Implementation Regulation linked to the Internal Agreement
on financing have not started. I attach a copy of the texts agreed
by COREPER on 17 May and 28 June. Relevant documents will be submitted
to Parliament later in the year for ratification.
6 July 2006
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