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DECISION OF THE EUROPEAN PARLIAMENT

of 13 June 1985

granting a discharge to the Commission in respect of the financial management of the Fifth European Development Fund during the 1983 financial year

(85/335/EEC)

THE EUROPEAN PARLIAMENT,

Having regard to the Treaty establishing the European Economic Community,

Having regard to the second ACP-EEC Convention of Lomé (1),

Having regard to the balance sheet and accounts in respect of the Fifth European Development Fund for the financial year 1983 (COM(84) 281 final),

Having regard to the report of the Court of Auditors concerning the financial year 1983 accompanied by the replies of the institutions (2),

Having regard to the Council recommendation on the granting of this discharge (Doc. C2-19/85),

Whereas the Treaty of 22 July 1975 empowers the European Parliament to grant discharge in respect of the financial activities of the Community,

Having regard to the report by the Committee on Budgetary Control and to the opinion of the Committee on Development and Cooperation (Doc. A2-39/85),

1. Grants discharge to the Commission in respect of the financial management of the Fifth European Development Fund during the financial year 1983 on the basis of the following amounts:

receipts: 480 192 381 ECU

payments: 419 234 127 ECU

2. Records its comments in the resolution which forms part of this decision;

3. Instructs its President to forward this decision and the resolution embodying its comments to the Commission, the Council, the Court of Auditors and the European Investment Bank and to ensure that they are published in the Official Journal of the European Communities (L series).

Strasbourg, 13 June 1985.

1.2 // The Secretary-General // The President // H.-J. OPITZ // Pierre PFLIMLIN

(1) OJ No L 347, 22. 12. 1980.

(2) OJ No C 348, 31. 12. 1984.

RESOLUTION

embodying comments forming part of the decisions granting discharge in respect of the financial management of the Second, Third, Fourth and Fifth European Development Funds during the 1983 financial year

THE EUROPEAN PARLIAMENT,

Having regard to Articles 137 and 206b of the Treaty establishing the European Economic Community,

Having regard to Articles 67 and 70 respectively of the Financial Regulations applicable to the Fourth and Fifth European Development Funds, which require the Commission to take all appropriate steps to act upon the comments appearing in the decisions giving discharge,

Noting that the same Articles also require the Commission, at the request of the European Parliament, to report on the measures taken in the light of Parliament's comments and, in particular, on the instructions given to those of its departments which are responsible for the management of the European Development Funds,

Deciding to make the comments mentioned in the said Articles 67 and 70 in the form of this resolution, which is part of each discharge decision in respect of the financial management of the European Development Funds for the 1983 financial year,

Adopting this resolution also, in exercise of powers necessary for the fulfilment of its supervisory role, in order to remedy weaknesses found during its discharge investigation and to achieve better management of the European Development Funds,

Having regard to the report of the Committee on Budgetary Control and other documents mentioned in the decisions granting discharge (Doc. A2-39/85),

Form of the discharge decision

1. Decides, in order to standardize the terminology used in its discharge decisions and to achieve greater clarity, to adopt again the definitions set out in paragraph 1 of its resolution of 16 April 1985, forming part of the decision granting a discharge in respect of the implementation of the budget for the 1983 financial year;

Development policy as a priority

2. Stresses the importance of development policy because:

(a) the needs of developing countries, even for the basic necessities of life such as food and clean water, are enormous;

(b) it is one of the main aspects of the Community's relationship with half the countries of the world; and

(c) it is the only Community policy involving major expenditure which is executed by the Commission rather than by the Member States;

3. Points out that the achievement of development objectives depends upon efficient financial management in order to maximize the effect of EDF resources;

4. Recalls the recommendation contained in its aforesaid resolution of 16 April 1985 that the Commission should conduct an urgent assessment of the staff levels in its Directorate-General for Development by reference to staff levels in other aid administrations and other Commission departments and then take appropriate action; and calls upon the Commission to take account of the priority attached to development policy when conducting that assessment and taking consequent action;

Parliamentary powers and responsibilities

5. Recalls its previous resolutions calling for budgetization of the EDF but also draws attention to the powers and responsibilities of the European Parliament under the Treaties, which are not precluded by the Council's failure to budgetize the EDF;

6. Reaffirms its right to be consulted on proposals for regulations relating to the EDF and, in particular, the forthcoming Financial Regulation for the Sixth EDF;

Annual accounts

7. Notes that the annual accounts of each European Development Fund (EDF) have taken the form of a balance sheet, in which a summary of the year's transactions is included, whereas both the Internal Agreement and the Financial Regulation applicable to each EDF require the accounts to be in the form of a revenue and expenditure account and a separate balance sheet, and calls upon the Commission, in order to achieve greater clarity and to comply with these requirements, to publish both a revenue and expenditure account and a balance sheet in future years; 8. Calls upon the Commission to publish with the annual EDF accounts the figures upon which they seek discharge, being a summary of the main items of the revenue and expenditure account and of the balance sheet for each EDF, and requests the Court of Auditors to comment on such figures in its annual report;

9. Regrets that the accounts for each EDF for the 1983 financial year were not approved by the Commission until 15 May 1984, whereas the relevant regulations require them to be submitted to the European Parliament, the Council and the Court of Auditors no later than 15 April; and calls upon the Commission to adhere strictly to this deadline in future;

10. Calls upon the Commission to ensure that the accounts of the European Association for Cooperation (EAC) are closed on 31 December each year and that the accounts of the EAC and other agencies responsible for managing EDF scholarships and in-service training are reconciled regularly with the EDF accounts;

The Second EDF

11. Notes with approval that the accounts for the Second EDF were closed during 1984, only one project having been outstanding at the end of 1983;

The Third EDF

12. Notes that 13,58 million ECU of the Third EDF is still not allocated and a further 34,86 million ECU awaits payment; recommends the Commission to take no further funding decisions and to transfer the balance not yet allocated to the Fifth EDF by the end of 1985;

13. Calls upon the Commission to close the accounts relating to all completed projects by the end of 1985 and thus release unused balances estimated at up to 5 million ECU;

14. Calls upon the Commission to take effective action to ensure repayment of the loan of 4,5 million ECU, which has been outstanding from an ACP-State since 1978, and to avoid any similar situation in the future;

Rate of utilization

15. Calls upon the Commission to present a written report to the European Parliament by 30 April 1986 analyzing the reasons for the slow rate of disbursement of the EDF, proposing ways by which it could be improved and appending a summary of comparable information obtained from major international development organizations;

16. Calls upon the Commission to procure an independent comparative study, to be commenced by 1 January 1986, of the procedures within the EDF, the World Bank and the United Nations Development Programme relating to information and decision-taking on projects, from identification to ex-post evaluation;

Appraisal

17. Calls upon the Commission to issue appropriate guidelines to its officials and delegations so as to emphasize that, when appraising projects proposed for EDF assistance, they must obtain adequate information to ensure that the completed project:

(a) will be appropriately sited in relation to local needs;

(b) will be financially viable, taking account of the local economy;

(c) will have adequate managerial and technical staff;

(d) will be adequately maintained and have access to all necessary spare parts; and

(e) will avoid any difficulties previously experienced with similar EDF projects;

Ex-post evaluation

18. Reaffirms the need for more thorough ex-post evaluation and improved means of collating the results of previous experience; therefore calls upon the Commission:

(a) to make arrangements for many more ex-post evaluation studies of EDF projects and programmes to be conducted as from 1 January 1986 and for every project or programme completed after 1 January 1988 to be the subject of an ex-post evaluation, in accordance with Article 224 (2) of the Third Lomé Convention;

(b) to conduct ex-post evaluations of projects managed on behalf of the EDF by the EIB, in respect of a sample of projects completed after 1 January 1987 and all projects completed after 1 January 1989;

(c) to establish not later than 30 April 1986, a data base bringing together not only the financial information relating to EDF financial and technical cooperation but also the positive and negative experience gained from implementation and ex-post evaluation; (d) to add to the data base no later than 31 December 1986 parallel information relating to Community aid for non-associated developing countries;

(e) to set in motion, as an immediate priority, the appointment of sufficient additional staff with appropriate skills to the Directorate-General for Development in order to carry out the above work;

Delegations

19. Underlines the growing importance of Commission delegations in the implementation of EDF financial and technical cooperation and calls upon the Commission to review the numbers and skills of delegation staff so as to ensure that they are sufficient to fulfil their expanding responsibilities and, in particular, to ensure improved standards of project and programme appraisal, monitoring of implementation and ex-post evaluation;

20. Recommends to the Commission that they should engage independent consultants, with relevant expertise, to assist them in the review of delegations;

21. Recommends to the Commission that they should create more possibilities for interchange between those working in delegations and officials within the Directorate General for Development in Brussels;

Stagiaires

22. Proposes to the Commission that they recruit annually as stagiaires a number of young graduates with relevant qualifications to work in Commission delegations, assisting in the tasks of project appraisal, monitoring and ex-post evaluation;

Technical expertise in ACP States

23. Observes that the capacity of certain ACP States, particularly the least developed, to absorb aid to maximum effect is limited by shortages of trained staff within their administrations; therefore calls upon the Commission to give greater emphasis to meeting these needs by reviewing the procedures whereby it offers: (a) aid in training local personnel, and (b) aid through the provision of staff to work within local ACP administrations;

Service contracts

24. Calls upon the Commission (a) to ascertain from other international development organizations how they award service contracts, particularly relating to the supervision of projects, and by what criteria they fix remuneration under such contracts; (b) to consider how the EDF might improve its procedures and enable better value to be obtained from such contracts; and (c) to report to the European Parliament not later than 30 April 1986, comparing the practices of the other organizations with those of the EDF and explaining the Commission's conclusions;

25. Recommends to the Commission: (a) that they should prepare lists of appropriately qualified consultants permanently based in ACP States (including nationals of those States) who might be employed on work associated with EDF projects and programmes, and (b) that they should encourage more use of such locally based consultants;

European Investment Bank

26. Intends to examine in a separate report the issues arising from the Court of Auditors' special report on the management of Community Development Aid Funds by the European Investment Bank;

Coordination of aid

27. Intends to examine the question of better coordination between Community bodies and with other aid donors in a separate report, based on the special report of the Court of Auditors on the coordination of Community aid to third countries;

Contributions

28. Calls upon the Commission to annex to each year's EDF accounts a list of the Member States who have failed to pay their contributions within 15 days of the due dates, showing against each the dates and amounts concerned and the dates and amounts when related payments were made;

29. Recommends to the Commission that they should propose legislation enabling interest penalties to be imposed on those Member States who make late payments of their EDF contributions;

30. Calls upon the Commission to review the system by which it estimates the EDF rates of disbursement and thereby to avoid calling up contributions unnecessarily; Control of payments

31. Calls upon the Commission to review its system of monitoring supporting documents, with particular reference to transactions involving more than 50 000 ECU, so as to improve control without adding to bureaucracy;

32. Recommends to the Commission that it should record in the EDF accounts the amount of each individual contract concluded within the framework of a special loan, so as to improve control and minimize the possibility of erroneous payments;

33. Recommends to the Commission that it should seek to further simplify its payments procedures, without prejudicing effective control, so as to ensure that payment is normally made within 60 days after the receipt of valid invoices;

Taxation

34. Calls upon the Commission to ensure that EDF contracts benefit in full from the most-favoured State or international development organization treatment stipulated in Protocol 6 of the Conventions and in particular:

(a) to cease all direct payments of taxes and customs duties in respect of EDF contracts in ACP States which normally grant such exemption to World Bank contracts or to another international development organization or relevant State;

(b) to devise procedures which will enable it to prevent the indirect payment of taxes and customs duties in such circumstances; and

(c) to take steps to ensure that the lowest rates of taxation or customs duties normally paid by international development organizations or States (other than ACP States or other developing countries, which are excluded by the Protocol) are known and applied in every other ACP State;

35. Calls upon the Commission to present a written report to the European Parliament not later than 30 April 1986 on the result of its monitoring of Protocol 6, listing any countries where taxes or customs duties have been paid on EDF contracts since 1 July 1985, with the amounts and reasons for payment;

36. Recommends to the Commission that it should press strongly in the negotiations for the next Convention for the replacement of Protocol 6 by a clear provision that all EDF contracts are exempt from taxes and customs duties similar to the stipulation made by the World Bank;

Court of Auditors' annual report

37. Requests the Court of Auditors to consider how the section of its annual report dealing with the European Development Funds might show more clearly whether criticisms of particular projects are typical of certain aspects of EDF management or of certain types of projects, possibly by the inclusion of statistics showing the number of projects found to be unsatisfactory as a percentage, both by projects and by value, of those inspected and of those financed by the EDF;

Reports on implementation of this resolution

38. Calls upon the Commission to report in writing to the European Parliament on the measures taken in the light of this resolution and, in particular, on the instructions given to those of its departments which are responsible for the management of the European Development Funds:

(a) by an interim report before 30 September 1985; and

(b) by a report annexed to the EDF revenue and expenditure accounts for the 1985 financial year;

39. Intends to appraise the implementation of this resolution in a detailed manner on the basis of these reports and to comment by further resolutions at the interim and final stages.