EUROPEAN COMMISSION Brussels, 9.10.2020 COM(2020) 962 final DRAFT AMENDING BUDGET N°10

TO THE GENERAL BUDGET 2020 Increase of payment appropriations in line with updated forecasts of expenditure and other adjustments to expenditure and revenue



Having regard to: –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, –Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union (…), and in particular Article 44 thereof, –the general budget of the European Union for the financial year 2020, as adopted on 27 November 2019, –amending budget No 1/2020, adopted on 17 April 2020, –amending budget No 2/2020, adopted on 17 April 2020, –amending budget No 3/2020, adopted on 17 June 2020, –amending budget No 4/2020, adopted on 17 June 2020, –amending budget No 5/2020, adopted on 10 July 2020, –amending budget No 6/2020, adopted on 17 September 2020, –amending budget No 7/2020, adopted on 5 October 2020, –draft amending budget No 9/2020, adopted on 9 October 2020, The European Commission hereby presents to the European Parliament and to the Council Draft Amending Budget No°10/2020 to the 2020 budget. CHANGES TO THE STATEMENT OF REVENUE AND EXPENDITURE BY SECTION The changes to the general statement of revenue and in section III are available on EUR-Lex ( https://eur-lex.europa.eu/budget/www/index-en.htm ). TABLE OF CONTENTS 1. Introduction

2. Additional needs in payment appropriations 2.1. Competitiveness of enterprises and small and medium-sized enterprises (COSME) 2.2. Connecting Europe Facility (CEF) — CF contribution 2.3. European Agricultural Fund for Rural Development (EAFRD) 2.4. Global EU response to Covid-19 2.4.1 Instrument for Pre-Accession Assistance (IPA II) 2.4.2 European Neighbourhood Instrument (ENI) 2.4.3 Development Cooperation Instrument (DCI) 3. Other adjustments on expenditure 3.1. European Agricultural Guarantee Fund (EAGF) 3.2. Decentralised agencies 3.2.1 European Supervisory Authorities (ESAs) 3.2.2 European Labour Authority (ELA) 4. Adjustments of revenue 4.1. Exchange rate differences in own resources 4.2. Fines and penalty payments 5. Summary table by MFF heading EXPLANATORY MEMORANDUM 1.Introduction

The purpose of Draft Amending Budget (DAB) No 10 for the year 2020 is threefold: §to increase the level of payment appropriations in line with the updated forecast and after having taken into account the redeployments proposed in the "Global transfer" (DEC 16/2020 submitted to Parliament and Council early October); §to adjust the revenue side to incorporate the impact of exchange rate differences and additional fines collected; and §to budget further more limited expenditure adjustements. They concern the level of appropriations of the European Agriculture Guarantee Fund (EAGF) and some decentralised agencies (ESMA, EIOPA, EBA and ELA). The overall increase in payment appropriations (EUR 1 569,3 million) requested concerns headings 1a 'Competitiveness for Growth and Jobs', 1b 'Economic, Social and Territorial Cohesion', 2 'Sustainable Growth – Natural Resources' and 4 'Global Europe'. The increase of commitment appropriations in heading 2 is slighlty rebalanced by savings in heading 1a agencies resulting in an overall increase in commitments of EUR 36,4 million. The overall impact on the revenue side is a decrease of other revenue by EUR 588 million rebalanced by a corresponding increase in the GNI contributions. 2.Additional needs in payment appropriations The “Global transfer” is an annual exercise organised at corporate level within the Commission for which all Directorates Generals and Services are requested to review by early September their respective payment implementation of the current budget until the end of the year concerned. This exercise aims to ensure maximum implementation of the budget in payment appropriations at the end of the year by matching additional needs with expected under-implementation. An ad hoc request for transfer (under Article 31 of the Financial Regulation) is annually submitted to Parliament and Council in early October as a result. DAB No8 for the year 2020, tabled by the Commission at the end of August, was decoupled from the ‘Global transfer exercise’ and included only requests for which urgent action from the Union was requested. Therefore DAB No8, which proposed a significant request for additional payment appropriations (i.e. EUR 6 190 million), focused exclusively on two specific elements: provide additional payment appropriations (i) to the Emergency Support Instrument (ESI) to finance the COVID-19 vaccines strategy and (ii) for cohesion following the adoption of the Corona Response Investment Initiative Plus (CRII+) . In addition to the requests included in DAB No8, the 2020 ‘Global transfer’ exercise resulted in additional gross payment needs of EUR 2 125,2 million, only partially offset by expected payment under-implementation of EUR 595,4 million. The additional payments requested in this DAB No10 aims at closing the gap of EUR 1 529,8 million as detailed under the sections 2.1 through 2.4. 2.1.Competitiveness of enterprises and small and medium-sized enterprises (COSME) As a result of the COVID-19 crisis, many Small and Medium-Sized Enterprises (SMEs) across the Union experienced a sudden lack of liquidity. As announced in the Communication of 13 March 2020 on the coordinated economic response to the COVID-19 crisis, the Commission decided to redirect EUR 1 billion from the European Fund for Strategic Investment (EFSI) to existing guarantee facilities. As part of this initiative, the Loan Guarantee Facility within COSME was reinforced by EUR 714 million to incentivise banks to provide liquidity finance to companies with the aim of helping at least 100 000 European businesses to access around EUR 8 billion of financing. The implementing partner, the European Investment Fund (EIF), published a revised call for expression of interest for financial intermediaries to apply for the specific COVID measure, which was successfully closed end of May this year. This reinforcement results in an increased need for payment appropriations as any cash-needs by the EIF have to be paid first through the COSME Loan Guarantee Facility (the first-loss piece) before cash-calls are being made under EFSI (the second-loss piece). Internal redeployments have partially covered these unforeseen needs but additional payment appropriations of EUR 93,8 million are needed to allow the European Commission to honour its contractual obligations vis-à-vis the EIF. EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 02 02 02 Improving access to finance for small and medium-sized enterprises (SMEs) in the form of equity and debt - 93 800 000 Total 0 93 800 000 2.2.Connecting Europe Facility (CEF) — CF contribution The implementation of the cohesion strand of the Connecting Europe facility for Transport (CEF-CF) is progressing faster than expected and the payment needs for the rest of the year exceed the current availabilities. Beneficiaries have an obligation to submit an interim payment claim every two years and have the possibility to submit a “voluntary” interim payment claim every year. In 2020, several large beneficiaries used this flexibility and submitted more interim payment claims than the average pattern observed in previous years. This fast implementation pace was not initially foreseen in the 2020 budget and constitutes the main reason for the increased payment needs. The Commission performed an in-depth action-by-action analysis of the payments needs and current budget availabilities, taking into account a redeployment of available payment appropriations within the chapter CEF Transport, and considers that a reinforcement of EUR 100 million in payment appropriations is needed in order to respect the payment deadlines and honour all legal obligations.





EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 06 02 01 04 Connecting Europe Facility (CEF) — Cohesion Fund allocation - 100 000 000 Total 0 100 000 000 2.3.European Agricultural Fund for Rural Development (EAFRD) The COVID-19 crisis has not slowed down the financial implementation of the programmes financed by the EAFRD. The Commission has performed an in-depth analysis of the forecasts submitted by Member States by the end of August 2020 and considers that a reinforcement of EUR 750 million in payment appropriations is needed in order to cover all expected payment applications to be paid in 2020. These forecasts also include the estimated impact of the lump-sum payment proposed by the Commission to provide relief to farmers or small-medium sized agri-businesses affected by the COVID-19 (based on the finally agreed 2 % maximum share of the Union contribution, as opposed to the 1 % initially proposed by the Commission). Some Member States have in fact already started introducing this new EAFRD measure in their rural development programmes and others are expected to follow. This translates already in 2020 in additional reimbursement requests. EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 05 04 60 01 Promoting sustainable rural development, a more territorially and environmentally balanced, climate-friendly and innovative Union agricultural sector - 750 000 000 Total 0 750 000 000 2.4.Global EU response to Covid-19 Following the publication of the joint communication on the Global EU response to Covid-19, where the Union expressed solidarity and commitment to help partner countries deal with the health, economic and social consequences of the crisis as part of the Team Europe efforts, the Commission has reprogrammed its operations under the Instrument for Pre-Accession Assistance (IPA II), the European Neighbourhood Instrument (ENI) and the Development Cooperation Instrument (DCI). As a result, there is a need for reinforcement in payment appropriations of these three instruments by EUR 586 million in total as follows: 2.4.1 Instrument for Pre-Accession Assistance (IPA II) For IPA II, budget support payments have been adjusted and advanced, pre-financing and support in indirect management increased in order to speed up implementation.



Based on the revised forecasts for payments to be made until the end of 2020, and on top of the redeployments identified, additional appropriations for a total of EUR 210 million are needed to cover payments for contracts for Montenegro, Albania, Kosovo, Serbia, North Macedonia and Turkey as well as budget support payments for Serbia, Albania and North Macedonia. EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 22 02 01 01 Western Balkans - Support for political reforms and related progressive alignment with the Union acquis - 40 000 000 22 02 01 02 Western Balkans - Support for economic, social and territorial development and related progressive alignment with the Union acquis - 70 000 000 22 02 03 01 Turkey - Support for political reforms and related progressive alignment with the Union acquis - 10 000 000 22 02 03 02 Turkey - Support for economic, social and territorial development and related progressive alignment with the Union acquis - 90 000 000 Total 0 210 000 000 2.4.2 European Neighbourhood Instrument (ENI) For ENI, the Commission has modified and increased the budget of on-going programmes in order to speed up their implementation and related payments. Besides redeployments already identified as a result of the revised forecasts, additional payment appropriations for a total of EUR 286 million are needed to cover the accelerated disbursements of several budget support programmes for Morocco, Tunisia, Jordan, Algeria, Georgia and Armenia as well as for the top up of the envelopes of several other national and regional programmes for the benefit of small and medium sized businesses (for example for resilience and stability in Ukraine East and Armenia). EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 22 04 01 02 Mediterranean countries -- Poverty reduction and sustainable development - 221 000 000 22 04 02 02 Eastern Partnership -- Poverty reduction and sustainable development - 65 000 000 Total 0 286 000 000 2.4.3 Development Cooperation Instrument (DCI) For DCI, the Commission has accelerated disbursements related to budget support operations in several countries and some funds have been reallocated to new projects specifically to respond to the Covid-19 crisis, for instance in Afghanistan. The related contracts are being signed and will lead to pre-financing payments already in 2020.

The most urgent needs have already been covered through redeployments, but only partially. Additional payment appropriations for a total of EUR 90 milion are therefore needed to cover accelerated disbursements for Nepal, Myanmar, Cambodia, Tajikistan, Uzbekistan and Afghanistan. EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 21 02 02 Cooperation with Asia - 50 000 000 21 02 03 Cooperation with Central Asia - 15 000 000 21 02 05 Cooperation with Afghanistan - 25 000 000 Total 0 90 000 000 3.Other adjustments on expenditure 3.1.European Agricultural Guarantee Fund (EAGF) In the context of exceptional measures to cope with the Covid-19 crisis, the Commission adopted before the summer two packages of measures related to agricultural markets. The first package was dedicated to provide advances and assure smooth functioning of the various direct payment schemes as well as to flexibilise controls. The second package focused on a set of provisions related to market support measures in particular in the fruits and vegetables and wine sectors. With these measures, the Commission has created the conditions for the full use of the EAGF appropriations under the Budget 2020. Both the current level of implementation and recent Member States forecasts support this assumption. The 2020 budget execution of the EAGF is already very advanced, in particular for direct payments showing an even better execution than in previous years. Market related expenditure will be largely concentrated in the very end of the financial year, with still considerable uncertainties on the actual level of spending particularly for the wine programmes, support to producer organisations in the fruit/vegetables sector and the school schemes. Based on currently available information, EAGF assigned revenue is expected to be EUR 176 million lower than the budgeted amount. This difference is explained by (a) the settlement of the financial consequences of Court of Justice case C-252/18P in favour of Greece, (b) lower assigned revenue from conformity and clearance of accounts decisions taken by the Commission and (c) the delay of some recoveries to 2021. As a result, there is the risk of a small deficit compared to the appropriations currently available in the EAGF budget for 2020, which could be covered by mobilising the remaining margin available under Heading 2. Based on the information currently available, and taking into account the forecasts of Member States, the Commission proposes to reinforce the Operational funds for producer organisations budget line under the EAGF as outlined below:



EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 05 02 08 03 Operational funds for producer organisations 48 655 078 48 655 078 Total 48 655 078 48 655 078 3.2.Decentralised agencies 3.2.1 European Supervisory Authorities (ESAs) All three European Supervisory Authorities (ESAs) identified savings as a result of the on-going Covid-19 impact on their work as well as reduced need for EU contributions linked to the implementation of: §the framework to facilitate sustainable investment for each of the three ESAs; §the legislation on European crowdfunding service providers and on Sovereign Bond-Backed Securities (SBBS) for the European Securities and Markets Authority (ESMA); and In addition a smaller need for an advance was identified for ESMA’s collection of fees stemming from the Delegated Act for the supervision of third country Central Counterparties. EUR Budget line Name Commitment appropriations Payment appropriations Section III – Commission 12 02 04 European Banking Authority (EBA) -1 416 000 -1 416 000 12 02 05 European Insurance and Occupational Pensions Authority (EIOPA) -314 636 -314 636 12 02 06 European Securities and Markets Authority (ESMA) -7 383 576 -7 383 576 Total -9 114 212 -9 114 212 3.2.2 European Labour Authority (ELA)