EN

Brussels, 13.6.2007

COM(2007) 326 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Financial Information on the European Development Funds

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Financial Information on the European Development Funds

Foreword

This document is to be annexed to the draft budget for 2008, in accordance with the 1979 agreements on budgetary procedure.

Article 8(3) of the Financial Regulation of 27 March 2003 applicable to the 9th European Development Fund (EDF) [1] requires the Commission to make this document available to the Council by 15 June, stipulating that this information serve as the basis for an interim estimate of commitments and payments.

As in previous years, this document sets out:

– implementation of the EDFs (6th to 9th) at 31.12.2006;

– financial implementation forecasts for the current year;

– expenditure forecasts for 2008.

The Member States contribute funds directly to the European Investment Bank (EIB) for the instruments which it manages under the 9th EDF (the Investment Facility and interest-rate subsidies). Contributions for other instruments, including contributions for the old instruments managed by the EIB (risk capital and interest-rate subsidies), go through the Commission.

Unless otherwise indicated, all the commitments and payments listed in this Communication are gross amounts, i.e. no decommitments or recoveries have been deducted. This is in keeping with the approach adopted for the European Union’s general budget.

Introduction

The Commission and the EIB have updated their commitment and payment forecasts for 2007 and 2008 for each of the ACP countries [2] and the OCTs [3]. The payment forecasts in particular have been compiled with great care with the aim of helping the Member States to assess as accurately as possible the amounts they need to earmark in their national budgets while ensuring that sufficient financial resources are available for the EDF to avoid liquidity problems. In accordance with Article 8 of the Financial Regulation applicable to the 9th EDF [4], these forecasts will be adjusted in the October 2007 Communication.

In line with the joint statement made 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 shows the general trend in commitments and payments, including projections for 2007-2008 (Commission and EIB): it clearly illustrates the upwards structural trend in payments since 2000.

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- - Commitments; ―Payments

1. Implementation of the European Development Funds at 31 December 2006

1.1. Funds available at 31 December 2006

Annex 1 gives an overview of the funds available to the Commission and EIB under the EDFs (6th to 9th), commitments and payments at the end of 2006. Of the amount not committed (EUR 3 607 million), EUR 3 163 million fall within the remit of the Commission and will be committed by the end of 2007.

Unlike the figures in the rest of this document, the figures given above and in Annex 1 are “net” figures. They are obtained after deduction of decommitments and recoveries. This is necessary to determine the amount of available funds.

1.2. Implementation of the EDFs in 2006 (commitments and payments)

Annex 2 gives a breakdown of commitments and payments by instrument and compares them with the 2005 figures.

Annex 3 shows actual implementation in 2006 compared with the forecasts made in October 2006. The two institutions met their targets. Note that the Commission's objectives had hardly changed since October 2005.

1.3. Calls for contributions in 2006

Annex 4 shows the financial situation and projections The table does not include payments made under Stabex or payments for special measures for the Democratic Republic of Congo. This expenditure was made from separate accounts which had already been credited by the Member States.

The cash balance available to the Commission at the end of 2006 was approximately EUR 131 million [5], more than expected (EUR 74 million). However, at 31 December 2006, a high volume of payments (some EUR 110 million) had been initiated, against EUR 23 million the year before. And the Commission needed all of this EUR 131 million to cover the period between 1 and 27 January when the first tranche of the 2007 contributions was scheduled.

2. Financial implementation forecasts for 2007 and 2008

The new forecasts are set out in Annex 3.

Note that:

(1) 2007 payments have been revised markedly upwards for both the Commission and the EIB.

(a) For the Commission the increase is attributable to:

– the beneficial impact of devolution: following the completion of this process in 2005 there was a greater than forecast speeding-up of contract awards in 2006 (20% up on 2005), which led to a greater volume of payments than forecast in 2007;

– the end-of-term review of the 9th EDF and decisions to reassign resources, which should lead to additional payments as early as this year (for the Peace Facility);

– better than expected progress in certain "risky"countries.

(b) The EIB has also made faster progress than expected. This is because a number of projects approved since 2003 are now becoming operational and there was a marked increase in the loans agreed in 2006, especially for the private sector.

(2) Since 2008 will see the start to implementation of a new EDF the forecasts are inevitably less reliable than usual. This is particularly true of commitments, for which the estimate is purely speculative at present. The figures are based on the assumption that the 10th EDF will enter into force on 1 January 2008.

3. Financial situation forecast for 2007 and 2008

The new forecasts are set out in Annex 4, which calls for the following comments:

· To meet the rise in forecast payments in 2007 the EIB asked for an additional contribution of EUR 80 million in May this year. As this proposal was rejected by the Council, the amount has been integrated in the proposal on the second instalment. The amount of the third tranche forecast in October 2006 is confirmed for the present;

· Contributions for the Commission should rise from EUR 2 640 million to EUR 2 935 million. The Commission proposes a slightly higher second tranche of EUR 1 050 million, EUR 200 million more than estimated in October. According to current estimates the third tranche will be in the order of EUR 385 million.

· A preliminary estimate of the contributions required for 2008 gives a figure of EUR 3 672 million.

Annex 1: Consolidated situation of the EDFs (6th to 9th) for the ACP countries and OCTs at 31 December 2006 (EUR million)

| Allocations | Commitments | Payments |

COMMISSION | | | |

National and Local programmes | 15 607 | 15 607 | 14 143 |

Interest-rate subsidies | 382 | 382 | 353 |

Risk capital (6th to 8th EDFs) | 2 514 | 2 514 | 2 261 |

Structural adjustment facility | 2 669 | 2 669 | 2 651 |

Emergency aid | 722 | 722 | 722 |

Aid for refugees | 296 | 296 | 278 |

Stabex | 3 871 | 3 871 | 3 667 |

Sysmin | 685 | 685 | 594 |

Debt relief (EDFs 7 and 8) | 1 100 | 1 100 | 1 100 |

Use of interest | 37 | 37 | 32 |

Transfers from 4th and 5th EDFs | 411 | 411 | 399 |

Subtotal - Lomé | 28 296 | 28 296 | 26 199 |

Envelope A | 9 824 | 8 304 | 3 078 |

Envelope B | 1 734 | 1 314 | 542 |

Regional allocation | 980 | 741 | 85 |

Intra-ACP allocation | 2 902 | 2 390 | 944 |

CDE [6], CTA [7] and JPA [8] | 141 | 109 | 92 |

Studies and TA [9] for OCTs | 2 | 2 | 0 |

Implementation expenditure | 125 | 117 | 111 |

DRC special assistance | 108 | 108 | 105 |

Miscellaneous revenue | 76 | 28 | 4 |

Transfer 6th EDF | 37 | 36 | 4 |

Reserves | 384 | | |

Subtotal Cotonou | 16 313 | 13 150 | 4 966 |

Total for the Commission | 44 609 | 41 446 | 31 165 |

EIB | | | |

Interest-rate subsidies | 188 | 95 | 91 |

Investment Facility | 2 057 | 1 706 | 402 |

Total for the EIB | 2245 | 1 801 | 493 |

Conditional billion | 1 | | |

GRAND TOTAL (6th to 9th EDFs) | 46 854 | 43 247 | 31 658 |

The figures in this table are net figures, i.e. after de-commitments and recoveries.

Annex 2

Breakdown of expenditure by instrument for the years 2005 and 2006

EUR million

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| 2005 | 2006 |

| Commitments | Payments | Commitments | Payments |

COMMISSION | | | | |

6th to 8th EDFs | | | | |

Indicative Programmes | - | 887.7 | - | 612.0 |

Outside indicative programmes | | | | |

Interest-rate subsidies | - | 0.4 | - | 1.6 |

Emergency aid | - | 1.9 | - | 0.3 |

Aid for refugees | - | 9.4 | - | 8.0 |

Risk capital | - | 60.8 | - | 63.1 |

Mining products | - | 15.0 | - | 16.0 |

Stabex | 8.8 | 70.8 | 9.1 | 189.5 |

Structural adjustment facility | - | 15.9 | - | 1.1 |

Unexpended balances (4th + 5th EDFs) | - | 5.6 | - | 1.1 |

Implementation expenditure | - | 1.9 | - | 0.7 |

Subtotal | 8.8 | 1 069.4 | 9.1 | 893.2 |

| | | | |

9th EDF + transitional measures | | | | |

Envelope A | 2 806.3 | 950.5 | 1 744.1 | 1 240.9 |

Envelope B | 288.0 | 192.8 | 353.7 | 154.0 |

Regional projects | 217.2 | 23.8 | 222.8 | 49.6 |

Intra-ACP Cotonou projects | 143.0 | 131.5 | 1 037.0 | 431.2 |

Implementation expenditure DRC | 7.30.0 | 54.089.2 | 21.016.2 | 5.915.9 |

Unexpended balances 6th EDF | | | | 4.5 |

Other | 40.5 | 33.2 | 4.0 | 31.0 |

Subtotal | 3 502.3 | 1 475.0 | 3 398.7 | 1 933.0 |

| | | | |

Total managed by Commission | 3 511.1 | 2 544.3 | 3 407.9 | 2 826.2 |

EIB (9th EDF) | | | | |

Investment Facility + interest-rate subsidies | 508.8 | 159.5 | 628.8 | 236.0 |

EDF TOTAL | 4 019.9 | 2 703.8 | 4 036.7 | 3 062.2 |

Annex 3: Commitments and payments made in 2006 and forecast for 2007 and 2008 (EUR million)

| 2006 | 2007 | 2008 |

| Communication Oct 06 | Outturn | Communication Oct 06 | Revised | Communication Oct 06 | Revised |

Regions | | | | | | |

East Africa | 843 | 590 | 680 | 703 | | |

West Africa | 709 | 595 | 715 | 770 | | |

Central Africa | 441 | 558 | 285 | 293 | | |

Caribbean | 236 | 286 | 241 | 239 | | |

Pacific | 50 | 22 | 158 | 150 | | |

South Africa | 342 | 298 | 365 | 351 | | |

Subtotal | 2 621 | 2 349 | 2 444 | 2 506 | | |

Other | | | | | | |

Peace Facility | 50 | 50 | 0 | 80 | | |

Water Facility | 185 | 216 | 86 | 172 | | |

Debt relief (HIPC) | 0 | 0 | 0 | 0 | | |

Other | 544 | 792 | 920 | 692 | | |

Total for the Commission | 3 400 | 3 408 | 3 450 | 3 450 | 2 900 | 2 900 |

Investment Facility | 582 | 576 | 325 | 350 | | 450 |

Interest-rate subsidies | 40 | 53 | 90 | 77 | | 50 |

Total for EIB instruments (9th EDF) | 622 | 629 | 415 | 427 | 587 | 500 |

TOTAL | 4 022 | 4 037 | 3 865 | 3 877 | 3 487 | 3 400 |

* Taking account of the updated figures notified by the EIB at the discussions in the Council in November 2006.

Annex 3 (cont'd): Payments made in 2006 and forecast for 2007 and 2008 (EUR million)

| 2006 | 2007 | 2008 |

| Communication Oct 06 | In practice | Communication Oct 06 | Revised | Communication Oct 06 | Revised |

Regions | | | | | | |

East Africa | 514 | 554 | 418 | 658 | | 672 |

West Africa | 710 | 605 | 763 | 837 | | 904 |

Central Africa | 301 | 297 | 240 | 304 | | 411 |

Caribbean | 209 | 185 | 190 | 264 | | 306 |

Pacific | 77 | 54 | 68 | 76 | | 80 |

South Africa | 354 | 386 | 354 | 398 | | 412 |

All regions 6th, 7th and 8th EDFs | - | 126 | - | - | | - |

Subtotal | 2 165 | 2 207 | 2 033 | 2 535 | | 2 785 |

Other | | | | | | |

Peace Facility | 124 | 110 | 12 | 75 | | 18 |

Water Facility | 69 | 42 | 107 | 62 | | 159 |

Risk capital (**) | 75 | 63 | 71 | 72 | | 72 |

Debt relief (HIPC) | 60 | 80 | 100 | 100 | | 100 |

Other | 157 | 119 | 384 | 220 | | 139 |

SUBTOTAL | 2 650 | 2 621 | 2 707 | 3 064 | | 3 273 |

Stabex | 100 | 190 | 127 | 72 | | 27 |

DR Congo | 0 | 16 | 16 | 0 | | 0 |

Total for the Commission | 2 750 | 2 826 | 2 850 | 3 136 | 3 200 | 3 300 |

Investment Facility | 195 | 188 | 250 | 330 | | 400 |

Interest-rate subsidies | 30 | 48 | 50 | 30 | | 72 |

Total for EIB instruments (9th EDF) | 225 | 236 | 300 | 360 | 430 | 472 |

TOTAL | 2 975 | 3 062 | 3 150 | 3 496 | 3 630 | 3772 |

* Taking account of the updated figures notified by the EIB at the discussions in the Council in November 2006. **Including interest-rate subsidies.

Annex 4: Financial Situation in 2006 and forecast for 2007 and 2008 – excluding Stabex and Special RDC Account(***) (EUR million) |

| | Communication Oct 2006 | Revised |

| | Commission | EIB | TOTAL | Commission | EIB | TOTAL |

| | | 9th EDF | | | 9th EDF | |

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2006 | Balance at 31.12.2005 | 138* | 142 | 280 | 138* | 138 | 276 |

| 2005 contributions paid in 2006 | 14 | | 14 | 14 | | 14 |

| 2006 contributions, of which: | 2 510 | 160 | 2 670 | 2 510 | 160 | 2 670 |

| First tranche | 1 400 | 60 | 1 460 | 1 400 | 60 | 1 4600 |

| Second tranche | 910 | 100 | 1 .010 | 910 | 100 | 1 0100 |

| Third tranche | 200 | | 200 | 200 | | 200 |

| Recoveries, interest and other | 62 | | 62 | 90 | | 90 |

| Payments | -2 650 | -225 | -2 875 | -2 621 | -236 | -2 857 |

| Balance at 31.12.2006 | 74 | 77 | 151 | 131** | 62 | 193 |

| 2007 contributions, of which: | 2 640 | 225 | 2 865 | 2 935 | 305 | 3 240 | | 42 | 42 | | 42 |

2007 | First tranche | 1 500 | 70 | 1 570 | 1 500 | 70 | 1 570 |

| Second tranche | 850 | 110 | 960 | 1 050 | 190 | 1 240 |

| Third tranche | 290 | 45 | 335 | 385 | 45 | 430 |

| Recoveries, interest and other | 72 | | 72 | 75 | | 75 |

| Payments | -2 707 | -300 | -3 007 | -3 064 | -360 | -3 424 |

| Balance at 31.12.2007 | 79 | 2 | 81 | 77 | 7 | 84 |

2008 | 2008 contributions | | | | 3 200 | 472 | 3 672 |

| Recoveries, interest and other | | | | 75 | | 75 |

| Payments | | | | -3 273 | -472 | -3 745 |

| Balance at 31.12.2008 | | | | 79 | 7 | 86 |

* Excluding EUR 1.4 million in 2006 contributions.

** Excluding EUR 3.5 million in 2007 contributions.

***Funds available for operations.

Annex 5: Contributions to the EDF for 2007 (euro)

COUNTRY | SCALE | 1st tranche | 2nd tranche | 3rd tranche | TOTAL |

| | paid | paid | payable to | payable to | payable to | payable to | for all |

| % | EIB | Commission | EIB | Commission | EIB | Commission | tranches |

GERMANY | 23.36 | 16 352 000 | 350 400 000 | 44.384.000 | 245 280 000 | 10 512 000 | 89 936 000 | 756 864 000 |

BELGIUM | 3.92 | 2 744 000 | 58 800 000 | 7.448.000 | 41 160 000 | 1 764 000 | 15 092 000 | 127 008 000 |

DENMARK | 2.14 | 1 498 000 | 32 100 000 | 4.066.000 | 22 470 000 | 963 000 | 8 239 000 | 69 336 000 |

SPAIN | 5.84 | 4 088 000 | 87 600 000 | 11.096.000 | 61 320 000 | 2 628 000 | 22 484 000 | 189 216 000 |

FRANCE | 24.30 | 17 010 000 | 364 500 000 | 46.170.000 | 255 150 000 | 10 935 000 | 93 555 000 | 787 320 000 |

GREECE | 1.25 | 875 000 | 18 750 000 | 2.375.000 | 13 125 000 | 562 500 | 4 812 500 | 40 500 000 |

IRELAND | 0.62 | 434 000 | 9 300 000 | 1.178.000 | 6 510 000 | 279 000 | 2 387 000 | 20 088 000 |

ITALY | 12.54 | 8 778 000 | 188 100 000 | 23.826.000 | 131 670 000 | 5 643 000 | 48 279 000 | 406 296 000 |

LUXEMBOURG | 0.29 | 203 000 | 4 350 000 | 551.000 | 3 045 000 | 130 500 | 1 116 500 | 9 396 000 |

NETHERLANDS | 5.22 | 3 654 000 | 78 300 000 | 9.918.000 | 54 810 000 | 2 349 000 | 20 097 000 | 169 128 000 |

PORTUGAL | 0.97 | 679 000 | 14 550 000 | 1.843.000 | 10 185 000 | 436 500 | 3 734 500 | 31 428 000 |

UNITED KINGDOM | 12.69 | 8 883 000 | 190 350 000 | 24.111.000 | 133 245 000 | 5 710 500 | 48 856 500 | 411 156 000 |

AUSTRIA | 2.65 | 1 855 000 | 39 750 000 | 5.035.000 | 27 825 000 | 1 192 500 | 10 202 500 | 85 860 000 |

FINLAND | 1.48 | 1 036 000 | 22 200 000 | 2.812.000 | 15 540 000 | 666 000 | 5 698 000 | 47 952 000 |

SWEDEN | 2.73 | 1 911 000 | 40 950 000 | 5.187.000 | 28 665 000 | 1 228 500 | 10 510 500 | 88 452 000 |

TOTAL | 100.00 | 70 000 000 | 1 500 000 000 | 190.000.000 | 1 050 000 000 | 45 000 000 | 385 000 000 | 3 240 000 000 |

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

[2] African, Caribbean and Pacific States.

[3] Overseas Countries and Territories.

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

[5] Excluding EUR 3.5 million in 2007 contributions paid in at the end of December 2006.

[6] Centre for the Development of Enterprise.

[7] Technical Centre for Agricultural and Rural Cooperation.

[8] Joint Parliamentary Assembly.

[9] Technical assistance.

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