[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 4.11.2005

COM(2005) 542 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 2005 and 2006, and Forecast of commitments and payments for 2007 to 2010

FOREWORD

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). Its purpose is to provide an estimate of commitments and payments for the current financial year (2005) and the following financial year (2006) and set out the schedule of calls for contributions, taking into account the estimates of the European Investment Bank (EIB) for the operations which it manages. 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 (2007 to 2010).

Since the entry into force of the 9th EDF in 2003 the Member States have made direct contributions to the EIB for the 9th EDF 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 those for the old instruments managed by the EIB).

INTRODUCTION

The Commission and the EIB have updated their forecast commitments and payments for 2005 and 2006 financial years for each of the ACP[1] countries and OCTs.[2] Particular care has been taken with payment forecasts, for two reasons: (i) to help Member States earmark as accurately as possible amounts in their national budgets; (ii) to ensure 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 European Development Fund (EDF),[3]the forecasts will be revised in the June 2006 communication.

The table in Annex 1 shows the new forecasts for commitments and payments for 2005 and 2006, and compares them to the figures presented in the communication of June 2005.[4] Annex 2 shows the financial situation for the two years in question, and in particular the total contributions payable by Member States to finance the EDF. Forecasts for commitments and payments for the years 2007 to 2010 are shown in Annex 3. Annexes 4 and 5 show contributions broken down by Member State for the years 2005 and 2006.

The graph below shows an overview of the trend in commitments and payments, made in the past and expected in the near future. It clearly indicates the upwards structural trend in payments since 2000.

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- - Commitments

___ Payments

1. COMMITMENTS IN 2005 AND 2006

Close examination of the projects in the pipeline confirms that at present the 2005 estimate, presented in the June communication (EUR 3 500 million) should be met, if not exceeded. There are, however, still a number of uncertainties that do not depend on the Commission (such as non-compliance by some ACP States with certain conditionalities, political risks, etc.). The EIB is broadly standing by its forecast, which remains at around EUR 600 million. Total combined commitments for the Commission and the EIB are estimated at EUR 4 097 million.

While the EIB is raising its 2006 forecast only slightly from EUR 550 million to EUR 571 million, the Commission is predicting a big jump from the EUR 3 100 million presented in June to EUR 3 400 million. The total volume of commitments is estimated at EUR 3 971 million.

Further details are included in the table in Annex 1.

2. PAYMENTS IN 2005 AND 2006

The Commission’s updated estimate of 2005 payments comes to some EUR 2 600 million and therefore confirms the estimate it presented in June. The EIB, by contrast, has been obliged to revise its estimate down from the EUR 445 million presented in June to EUR 292 million. Total EDF payments should amount to EUR 2 888 million.

For 2006 also, the EIB has lowered its estimate from the EUR 489 million presented in June to EUR 360 million. The Commission, for its part, estimates that it will make payments totalling EUR 2 784 million, approximately the volume announced in June (EUR 2 750 million). With a combined total for both institutions of EUR 3 144 million, 2006 should be the first year when the level of payments exceeds EUR 3 billion.

Further details are included in the table in Annex 1.

3. CALLS FOR CONTRIBUTIONS IN 2005 AND 2006

Annex 2 shows various aspects of the financial situation expected for 2005 and 2006.

It should be recalled that two types of measures do not require additional financial resources from the Member States. These are the Stabex instrument, for which Member States have already made the necessary payments in the past, and measures financed from a special account to accompany the elections in the Democratic Republic of Congo. Although the total estimated volume of payments by the Commission for 2005 remains more or less unchanged, the upwards revision in payments under the Stabex instrument and the exceptional increase in interest on Commission accounts allow a slight reduction in the last tranche of the contributions that the Commission asks from the Member States (EUR 240 million as opposed to EUR 275 million). The downwards revision in disbursements means that the EIB will no longer need additional funds in 2005. Total contributions requested by the Commission and the EIB for the whole year are EUR 2 660 million, well within the amount decreed by the Council in December 2004 (EUR 2 782 million). Annex 4 gives a breakdown of contributions by Member State.

For 2006 , as the new Commission payment forecast remains more or less unchanged since June, Member States will pay almost the same amount as forecast at that time (EUR 2 690 million for the year, as opposed to the EUR 2 720 million forecast in June). The Commission is asking the Member States to pay an initial tranche of EUR 1 400 million. This is in line with the Commission objective to spread payments across the year more effectively (and therefore decrease the payments made towards the end of the year). In line with its forecast downwards revision in payments, the EIB estimates a need for contributions totalling EUR 350 million, including EUR 150 million for the first tranche.

Current estimates from the Commission and the EIB for the second tranche of 2006 contributions are for EUR 1 000 million and EUR 130 million respectively. The last tranche should therefore require EUR 290 million and EUR 70 million respectively. In accordance with the 9th EDF Financial Regulation, the second and third tranches may be adjusted up or down in line with real requirements at the time of the call for contributions.

4. THE FUTURE

The Commission and the EIB reiterate their pledge to do their utmost to commit the funds made available by the Cotonou Agreement (including the balances remaining from the 6th, 7th and 8th EDFs transferred to the 9th EDF) by the end of 2007. It is clear that achievement of this objective is not up to the Commission and the EIB alone. Indeed, the very nature of the cooperation agreements (Lomé and Cotonou), namely the fact that they are based on partnership, means that the rate at which the EDF is implemented will depend on the absorption capacities of the ACP countries (sufficiently stable political situation, minimum governance, etc.). The Commission will continue to support them, giving national authorising officers as much technical assistance as possible, and if necessary will propose corrective measures, at latest during the reallocation of funds exercise programmed for the final review in 2006.

The annual figures, based on the assumption of full use of the available funds, can be found in Annex 3. As the financial framework for the period after 2007 has not yet been agreed, this document does not include any amounts for commitments for the years 2008 to 2010. This also affects the amounts presented as payments, and explains the significant fall in amounts starting in 2009. Payment amounts are calculated on the basis of payment rates under previous EDFs, taking into account the beneficial impact of the reform of the Commission’s external service, and in particular the devolution of management to ACP state level.

ANNEX 1

Overview of forecast commitments and payments for 2005 and 2006

2005 | 2006 |

June 2005 Communic-ation | Updated | June 2005 Communic-ation | Updated |

COMMITMENTS |

Stabex | 10 | 10 | 10 | 10 |

Water Facility | 80 | 80 | 125 | 125 |

Balance (€750 million) from the conditional million | 120 | 0 | 330 | 430 |

Other | 3 290 | 3 410 | 2 635 | 2 835 |

Total for the Commission | 3 500 | 3 500 | 3 100 | 3 400 |

Investment Facility | 537 | 537 | 511 | 511 |

Interest rate subsidies | 73 | 60 | 39 | 60 |

Total EIB instruments (9th EDF) | 610 | 597 | 550 | 571 |

TOTAL | 4 110 | 4 097 | 3 650 | 3 971 |

PAYMENTS |

Peace Facility | 80 | 88 | 95 | 45 |

Water Facility | 14 | 5 | 38 | 23 |

Risk capital[5] | 92 | 117 | 72 | 106 |

Balance (€750 million) from the conditional million | 0 | 0 | 153 | 62 |

Stabex | 17 | 52 | 20 | 45 |

DR Congo | 89 | 89 |

Other | 2 296 | 2 245 | 2 372 | 2 503 |

Total for the Commission | 2 588 | 2 596 | 2 750 | 2 784 |

Investment Facility | 372 | 247 | 450 | 300 |

Interest rate subsidies | 73 | 45 | 39 | 60 |

Total EIB instruments (9th EDF) | 445 | 292 | 489 | 360 |

TOTAL | 3 033 | 2 888 | 3 239 | 3 144 |

ANNEX 2

Estimated cash position in 2004 and 2006 (€ million)

Communication: June 2005 | Update |

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

9 FED | 9 FED |

2005 | Balance at 01.01.2005 | 62 | 8 | 70 | 62 | 8 | 70 |

2004 contributions paid in 2005 | 42 | - | 42 | 42 | - | 42 |

2005 contributions, including: | 2 385 | 460 | 2 845 | 2 350 | 310 | 2 660 |

First tranche[6] | 1 360 | 60 | 1 420 | 1 360 | 60 | 1 420 |

Second tranche | 750 | 300 | 1 050 | 750 | 250 | 1 000 |

Third tranche | 275 | 100 | 375 | 240 | 0 | 240 |

Interest and other revenue | 5 | - | 5 | 25 | - | 25 |

Recoveries | 50 | - | 50 | 42 | - | 42 |

Payments[7] | -2 482 | -445 | -2 927 | -2 455 | -292 | -2 747 |

Balance 31.12.2005 | 62 | 23 | 85 | 66 | 26 | 92 |

2006 | 2006 contributions | 2 720 | 500 | 3 220 | 2 690 | 350 | 3 040 |

First tranche | 1 400 | 150 | 1 550 |

Second tranche | 1 000 | 130 | 1 130 |

Third tranche | 290 | 70 | 360 |

Interest and other revenue | 5 | - | 5 | 10 | 10 |

Recoveries | 50 | - | 50 | 40 | 40 |

Payments | -2 780 | -489 | -3 269 | -2 739 | -360 | -3 099 |

Balance 31.12.2006 | 57 | 34 | 91 | 67 | 16 | 83 |

ANNEX 3

Forecast EDF commitments and payments 2007-2010

€ million

2007 | 2008 | 2009 | 2010 |

Commitments | 3 150 | (p.m.) | ( p.m.) | ( p.m.) |

Payments | 3 350 | 3 300 | 2 600 | 1 650 |

ANNEX 4

2005 EDF Contributions by Member State (in euros)

COUNTRY | SCALE | First tranche | 2nd tranche | 3rd tranche | TOTAL |

COUNTRY |% |payable to the EIB |payable to the Commission |payable to the EIB |payable to the Commission |payable to EIB |payable to the Commission |tranches | |GERMANY |23.36 |35 040 000 |327 040 000 |30 368 000 |233 600 000 |16 352 000 |67 744 000 |710 144 000 | |BELGIUM |3.92 |5 880 000 |54 880 000 |5 096 000 |39 200 000 |2 744 000 |11 368 000 |119 168 000 | |DENMARK |2.14 |3 210 000 |29 960 000 |2 782 000 |21 400 000 |1 498 000 |6 206 000 |65 056 000 | |SPAIN |5.84 |8 760 000 |81 760 000 |7 592 000 |58 400 000 |4 088 000 |16 936 000 |177 536 000 | |FRANCE |24.3 |36 450 000 |340 200 000 |31 590 000 |243 000 000 |17 010 000 |70 470 000 |738 720 000 | |GREECE |1.25 |1 875 000 |17 500 000 |1 625 000 |12 500 000 |875 000 |3 625 000 |38 000 000 | |IRELAND |0.62 |930 000 |8 680 000 |806 000 |6 200 000 |434 000 |1 798 000 |18 848 000 | |ITALY |12.54 |18 810 000 |175 560 000 |16 302 000 |125 400 000 |8 778 000 |36 366 000 |381 216 000 | |LUXEMBOURG |0.29 |435 000 |4 060 000 |377 000 |2 900 000 |203 000 |841 000 |8 816 000 | |NETHERLANDS |5.22 |7 830 000 |73 080 000 |6 786 000 |52 200 000 |3 654 000 |15 138 000 |158 688 000 | |PORTUGAL |0.97 |1 455 000 |13 580 000 |1 261 000 |9 700 000 |679 000 |2 813 000 |29 488 000 | |UNITED KINGDOM |12.69 |19 035 000 |177 660 000 |16 497 000 |126 900 000 |8 883 000 |36 801 000 |385 776 000 | |AUSTRIA |2.65 |3 975 000 |37 100 000 |3 445 000 |26 500 000 |1 855 000 |7 685 000 |80 560 000 | |FINLAND |1.48 |2 220 000 |20 720 000 |1 924 000 |14 800 000 |1 036 000 |4 292 000 |44 992 000 | |SWEDEN |2.73 |4 095 000 |38 220 000 |3 549 000 |27 300 000 |1 911 000 |7 917 000 |82 992 000 | |TOTAL |100 |150 000 000 |1 400 000 000 |130 000 000 |1 000 000 000 |70 000 000 |290 000 000 |3 040 000 000 | |

[1] African, Caribbean and Pacific States.

[2] Overseas Countries and Territories.

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

[4] Communication from the Commission to the Council: financial information on the European Development Funds (COM(2005) 287 final of 29.06.2005).

[5] Including interest rate subsidies under the previous EDFs

[6] Including 2005 contributions of EUR 180.4 million paid at the end of December 2004.

[7] Excluding payments for Stabex and payments to the special account created for the DR Congo