Providing the financing for the European Fund for Sustainable Development (EFSD) and increasing the Emergency Aid Reserve (EAR) further to the revision of the Multiannual Financial Framework regulation

The changes to the statement of revenue and expenditure by section are available on EUR-Lex ( http://eur-lex.europa.eu/budget/www/index-en.htm ). An English version of the changes to this statement is attached for information as a budgetary annex.

The European Commission hereby presents draft amending budget No 5 to the 2017 budget to the European Parliament and to the Council.

–Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union, and in particular Article 41 thereof,

–the Treaty on the Functioning of the European Union, and in particular Article 314 thereof, in conjunction with the Treaty establishing the European Atomic Energy Community, and in particular Article 106a thereof,

1.Introduction

The purpose of Draft Amending Budget (DAB) No 5 for the year 2017 is twofold:

·To provide the financing from the general budget 2017 for the European Fund for Sustainable Development (EFSD) further to the adoption of the related legal base by the European Parliament and the Council.

·To reflect in the general budget 2017 the outcome of the mid-term revision of the MFF regulation as regards the increase of the annual amount of the Emergency Aid Reserve (EAR), from EUR 280 million to EUR 300 million in 2011 prices.

Overall, this DAB increases the level of commitment appropriations by EUR 297,8 million whereas the level of payment appropriations remains unchanged.

2.European Fund for Sustainable Development (EFSD)

2.1 Context

On 7 June 2016 the Commission issued a Communication on establishing a new Partnership Framework with third countries under the European Agenda on Migration. In the document, the Commission proposed a variety of measures to address the most urgent needs of refugees and to support host communities, while emphasizing the need for a long term strategy to address the root causes of migration. The European Council endorsed the Commission's proposal on 28 June 2016, inviting the Commission to present a proposal for an ambitious External Investment Plan (EIP) by September 2016.

The Commission presented a Communication towards the new European External Investment Plan to boost investments in Africa and the Neighbourhood.

The EIP follows the same logic as the European Fund for Strategic Investments (EFSI): use of public funding as a guarantee to attract public and private investment. As part of the broader efforts the EU is pursuing on the basis of the new Partnership Framework, the EIP would complement the Union's development aid, strengthen its partnerships, promote a new model of participation of the private sector and contribute to achieving the Sustainable Development Goals.

The EIP is based on three pillars: (i) the European Fund for Sustainable Development (EFSD), (ii) technical assistance and (iii) improving investment climate and overall policy environment. The EFSD constitutes the integrated financial package of the EIP, combining financing of blending facilities and an EFSD Guarantee (EUR 1 500 million), backed by an EFSD Guarantee Fund (EUR 750 million, of which EUR 350 million from the EU budget and EUR 400 million from the European Development Fund).

On 14 September 2016, the Commission submitted a Proposal for a Regulation establishing the EFSD, the EFSD Guarantee and the EFSD Guarantee Fund.

On 17 October 2016, the Commission submitted the Amending Letter No 1 to the Draft General Budget 2017, proposing to provision the EFSD Guarantee Fund with EUR 275 million in 2017.

In their final agreement on the budget 2017, the provisioning of the EFSD was not retained pending the adoption of the legal base but the European Parliament and the Council invited "the Commission to request the necessary appropriations in an amending budget in 2017 in order to provide the financing of the EFSD from the EU budget as soon as the legal base is adopted."

A final compromise on the draft EFSD Regulation was found between the European Parliament, the Council and the Commission during their 5th trilogue on 26 June 2017. The agreed text was then endorsed by the Council (COREPER II) on 28 June 2017 and adopted by the European Parliament during its plenary session in Strasbourg on 6 July 2017. The final adoption of the EFSD Regulation by the Council will follow in September 2017.

The Commission is therefore requesting in the present DAB the necessary appropriations in order to provide for the contribution from the general budget to the EFSD Guarantee Fund in 2017 (EUR 275 million in commitment and payment appropriations). The remaining contribution of EUR 75 million from the general budget to the Fund is to be provided in 2018–2020.

2.2 Financing

Given the absence of margin under the commitment ceiling of heading 4 Global Europe in the general budget 2017 and taking into account the redeployments already made in the adopted budget 2017, the Commission proposes to mobilise the flexibility instrument in order to cover in full the reinforcement in commitment and payment appropriations requested for the financing of the EFSD (EUR 275 million). The corresponding proposal to mobilise the flexibility instrument accompanies this DAB.

As regards payment appropriations, the Commission expects under-implementation within the Asylum, Migration and Integration Fund (AMIF) under heading 3 Security and Citizenship. Some delays encountered in the start-up of the programmes caused by the late adoption of the legal bases, and therefore a delay in programming, and in the designation of national authorities, are the main cause of this situation. Moreover, the pace of implementation of the two relocation schemes under AMIF is slower than expected leading to a lower declaration of expenditure in the annual accounts of the Member States at the end of March 2017. The amount of payment appropriations available under heading 3 should therefore be reduced by the amount of EUR 275 million. At the moment of the establishment of the general budget 2017, it was not possible to take this into account.