[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 5.10.2007

COM(2007) 599 final

COMMUNICATION FROM THE COMMISSION

EUROPEAN DEVELOPMENT FUND (EDF) Estimate of commitments and payments and of contributions to be paid by the Member States for 2007 and 2008, and Forecast of commitments and payments for 2009 to 2012

COMMUNICATION FROM THE COMMISSION

EUROPEAN DEVELOPMENT FUND (EDF) Estimate of commitments and payments and of contributions to be paid by the Member States for 2007 and 2008, and Forecast of commitments and payments for 2009 to 2012

Introduction

The Commission draws up this communication to the Council each year in accordance with Article 8 of the Financial Regulation applicable to the 9th European Development Fund (EDF)[1]. Its purpose is to provide an estimate of commitments and payments for the current financial year (2007) and the following financial year (2008) and set out the schedule of calls for contributions, taking into account the forecasts of the European Investment Bank (EIB). As provided for in Article 8 of the Financial Regulation, the communication also gives estimates of commitments and payments for each of the following four years (2009 to 2012).

Since the entry into force of the 9th EDF in 2003 the Member States have made direct contributions to the 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. This communication therefore draws a clear distinction between EIB payments under the 9th EDF and Commission payments (including payments under old instruments managed by the EIB).

In line with the joint statement made by the Council and Commission when adopting the Financial Regulation for the 9th EDF, this document consists mainly of tables accompanied by a few explanations to help interpretation.

The graph below gives an overview of the trend in commitments and payments (Commission[2] and EIB). It clearly illustrates the upwards structural trend in payments since 2000.

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- - Commitments ― Payments

1. Commitments and payments estimated for 2007 and 2008

The Commission and the EIB have updated their commitment and payment forecasts for 2007 and 2008 for each of the ACP[3] countries and the OCTs[4].

The payment forecasts 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.

Annexes 1 and 2 show the new estimates for commitments and payments for 2007 and 2008, and compares them to the figures presented in the communication of June 2007.

The volume of commitments for 2007 (EUR 3 450 million) reflects the Commission’s pledge to use up all the funds made available by the 9th EDF (including the balances remaining from previous EDFs). For 2008, it is very difficult for the Commission and the EIB to fix an amount, since the volume of commitments will depend on when the 10th EDF enters into force. For this reason, the Commission and the EIB have not included an amount in this document. Further information is provided at the foot of Annex 1.

The Commission's figures for payments in 2007 are slightly lower than estimated. This is primarily attributable to the situation in the Democratic Republic of the Congo, which has delayed the payment of the second tranche of EUR 100 million for the Highly Indebted Poor Countries initiative (HIPC), and the carrying-over of certain less urgent expenditure in order to reduce the third tranche of 2007 contributions as much as possible. As with commitments, the Commission and the EIB have yet to include figures for the 10th EDF for 2008 (see also the note at the foot of Annex 2).

In accordance with Article 8 of the Financial Regulation applicable to the 9th EDF, the estimates will be revised in the June 2008 communication.

2. Calls for contributions in 2007 and 2008

Annex 3 gives an overview of the financial situation for 2006 and 2007 and shows the annual contributions payable into the EDF by the Member States.

It should be recalled that two types of measures do not require additional financial resources from the Member States. The related payments are therefore not included in this table. These are the Stabex instrument, for which Member States have already made the necessary payments in the past, and that part of the Peace Facility financed by voluntary contributions from the Member States.

For 2007, the Commission proposes that the Council decide a third tranche of EUR 325 million. This would overrun the annual amount decided by the Council in December 2006 by EUR 135 million (as opposed to the EUR 295 million overrun announced in the spring). Thanks to the considerable revenue from reflows and the revision of the management agreement between the EIB and the Commission to enable these reflows to be used from the end of September 2007, contributions to the EIB-managed Investment Facility for 2007 should remain within the envelope decided by the Council in December 2006.

The tranches presented for the Commission and the EIB for 2008 do not yet take account of needs for the 10th EDF . As with commitments and payments, there is a risk that any estimate would be inaccurate. Moreover, entry into force at the start of 2008 should not result in significant additional needs for the first 2008 tranche, the only one that has to be decided in the months ahead. It is only the second and third tranches that might have to be increased to take account of the impact of the 10th EDF (see also the note at the foot of Annex 3).

The Commission would also stress the following: if the decision taken by the Council on the third 2007 tranche falls short of the EUR 325 million requested, the first 2008 tranche will have to be increased accordingly. Otherwise the EDF will be forced to suspend payments in June/July 2008 pending the payment of the second tranche by the Member States.

As stipulated by the 9th EDF Financial Regulation, the Commission and the EIB will produce a fresh estimate of the second and third tranches of contributions for its communications of June and October 2008.

3. The future (2009-2012)

It should be remembered that the margin of error for medium-term estimates is high. The following figures should therefore be interpreted with a great deal of caution.

Forecast EDF commitments and payments* 2009-2012

EUR million

2009 | 2010 | 2011 | 2012 |

Commitments |

Commission | 3750 | 3750 | 3750 | 3750 |

EIB | 500 | 530 | 600 | 650 |

Total | 4250 | 4280 | 4350 | 4400 |

Payments |

Commission | 3075 | 3325 | 3450 | 3500 |

EIB | 430 | 470 | 500 | 510 |

Total | 3505 | 3795 | 3950 | 4010 |

* including the 10th EDF

ANNEX 1 - Commitments estimated for 2007 and 2008 (EUR million)

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ANNEX 2 - Payments estimated for 2007 and 2008 (EUR million)

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ANNEX 3

Financial situation estimated for 2007 and 2008 – not including Stabex and the Peace Facility financed by voluntary contributions* (EUR million)

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ANNEX 4 - 2007 EDF contributions by Member State (EUR)

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ANNEX 5 - 2008 EDF Contributions by Member State (EUR)

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[1] OJ L 83, 1.4.2003, p. 1.

[2] The commitments and payments for the Commission are “gross” figures, i.e. without deducting decommitments and recoveries.

[3] African, Caribbean and Pacific States.

[4] Overseas Countries and Territories.