[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 18.10.2004

COM(2004) 667 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, AND THE COURT OF AUDITORS

BALANCE SHEETS AND ACCOUNTS OF THE 6TH, 7TH, 8TH, AND 9TH EUROPEAN DEVELOPMENT FUNDS FOR THE FINANCIAL YEAR 2003

I. ACCOUNTING PRINCIPLES AND VALUATION RULES[1]

I.1 FINANCIAL REGULATIONS

The balance sheets and income and expenditure accounts were drawn up in accordance with the Financial Regulations applicable to the 6th, 7th, 8th and 9th European Development Funds (EDFs).

The relevant documents must be presented to the European Parliament, the Council and the Court of Auditors as provided for in Article 71 of the financial Regulation applicable to the 7th EDF, Articles 66, 67 and 68 of the Financial Regulation applicable to the 8th EDF and Articles 102 and 103 of the Financial Regulation applicable to the 9th EDF.

I.2 ACCOUNTING PRINCIPLES & STANDARDS

A. Principle of unit of account

EDF resources are established and implemented in euro and the accounts are presented in euro.

However, for the treasury management purposes referred to in Article 26, the accounting officer may carry out operations in euro, in other currencies and in national currencies.

B. Principle of specification

The resources of the EDF are earmarked for specific purposes according to the main instruments of cooperation, as described in the Financial Protocol of the ACP-EC Agreement and the Overseas Association Decision.

C. Principle of sound financial management

EDF resources are used in accordance with the principles of sound financial management, that is to say, in accordance with the principles of economy, efficiency and effectiveness.

D. Principle of transparency

The resources of the EDF are established and implemented and the accounts presented in compliance with the principle of transparency.

E. Revenue

The Financial contributions are paid in euro. The Commission makes transfers from the above accounts to operational accounts held in euro or a Member State's currency to meet the cash requirements of projects and programmes.

In addition, the Member States' contributions for an EDF must be used up before the contributions relating to the following EDF are called in.

F. Expenditure

Expenditure takes into account all payment orders executed by the banks up to 31 December 2003. However, in the case of local expenditure in the ACP States and for those payments for which information was not communicated to the Commission's accounting departments before the end of the financial year, payments are based on the information received for the latest period prior to 31 December. The total amount of payments in question, which are not included in the 2003 accounts, are not considered to be material.

Expenditure by delegations is not finally entered in to the EDF accounts until validated by the authorising officer and the accounting officer. Expenditure not yet validated is shown under the heading "transactions to be finalised".

G. Payment of account/advances

Payments on account (any amount paid on the basis of supporting documents pending final payment) and advances paid within the framework of the implementation of the contracts are included in the expenditure of the year and do not appear under assets in the balance sheet.

However, advances for study awards and advances for technical assistance are regarded as a receivable and consequently appear under assets in the balance sheet.

H. Recording of operations

EDF appropriations are not subject to any time limit. Once granted, they are available until they are used up or reassigned. The obligation to present a balance sheet of the EDF's assets and liabilities means that the entitlements due from the Member States (mainly contributions for which payment has been deferred or interest on late payment) must be entered in the accounts. These headings are contained in the balance sheets for the various EDFs.

In accordance with the principles of accrual-based accounting, the financial statements show the financial charges and income for the financial year regardless of the date of payment or collection, however, operational payments are at present still accounted for on a cash basis.

I. Other generally accepted accounting principles

The financial statements have been drawn up in accordance with generally accepted accounting principles, namely:

a) going concern basis;

b) prudence;

c) consistent accounting methods;

d) comparability of information;

e) materiality;

f) no netting off;

g) reality over appearance;

h) accrual-based accounting.

This last principle represents a change from prior years whereby expenditure and revenue had been registered according to the value date on the bank statement, except for operational payments which continue to be accounted for on a cash basis.

1.3. VALUATION RULES

A. Revenue

Member States' contributions are paid in euros.

Other revenue is booked at the rates applying on the date of receipt.

B. Expenditure

The rates used for the conversion into euros of payments made in local currencies for projects and programmes are those in force on the actual date of such payments. Certain contracts involve fixed exchange rates; this constitutes an exception to the general rule.

C. Bank transfers

Transfers from accounts held in euros to operational accounts held in local currencies are made at the rate of exchange in force on the date of such transfers.

D. Assigned funds

Assigned funds are converted into euros at the rate in force at the time of booking and are entered in the accounts at their historical value.

E. Cash at bank

The rates used for converting cash at bank in national currencies into euros at 31 December 2003 are those of the European Central Bank as follows:

1 euro = GBP: 0.7048

ANNEX I

TABLE OF CONTENTS

1. Financial Statements 7

1.1. - Consolidated balance sheet of the 6 th , 7 th , 8 th and 9 th EDFs 8

1.2. - 6th European Development Fund 10

1.3. - 7th European Development Fund 13

1.4. - 8th European Development Fund 16

1.5. - 9th European Development Fund 19

1.6. - Statement of sources and uses of funds for the 6th, 7th, 8th and 9th EDFs 22

1.7. - Notes to the accounts 24

2. Reports on financial implementation 40

2.1. Appropriations at 31/12/2003 44

2.2 Consolidated accounts 54

2.3. Situation by country and by instrument 63

2.4. Other management information 100

3. – Financial statements and information supplied by the EIB ………………………..111

1. Financial Statements

1.1. - Consolidated balance sheet of the 6th, 7th, 8th and 9th EDFs

Consolidated Balance Sheet of the 6th, 7th, 8th and 9th EDFs |

at 31 December 2003 |

(€’000) |

NOTES | 2003 | 2002* |

ASSETS |

Long term assets |

Contributions |

Initial allocation | 1 | 40.035.150,00 | 29.480.000,00 |

EIB special contribution | 2 | 60.000,00 | 60.000,00 |

less: amounts called up | 3 | -20.820.000,00 | -18.700.000,00 |

19.275.150,00 | 10.840.000,00 |

Amounts called up | 3 | 20.820.000,00 | 18.700.000,00 |

less: payments received | 4 | -20.724.232,50 | -18.699.999,80 |

95.767,50 | 0,20 |

Stabex contributions |

Initial allocation | 1.800.000,00 | 1.800.000,00 |

less: amounts called up and received | -1.800.000,00 | -1.800.000,00 |

0,00 | 0,00 |

Net contributions receivable | 19.370.917,50 | 10.840.000,20 |

Current assets |

Debtors | 5 | 43.999,38 | 21.234,34 |

Short-term investments | 6 | 2.971,03 | 107.247,20 |

Deferred Stabex expenditure | 7 | 427.820,81 | 342.764,48 |

Cash at bank | 8 | 526.158,03 | 764.056,88 |

Total assets | 20.371.866,74 | 12.075.303,10 |

LIABILITIES |

Fund capital |

Contributions | 1 | 40.035.150,00 | 29.480.000,00 |

EIB special contribution | 2 | 60.000,00 | 60.000,00 |

Stabex contributions | 1.800.000,00 | 1.800.000,00 |

41.895.150,00 | 31.340.000,00 |

Total inter-fund transfers | 9 | 848.735,49 | 848.735,49 |

42.743.885,49 | 32.188.735,49 |

Capitalised income | 10 | 688.819,96 | 668.267,18 |

Total Fund capital | 43.432.705,46 | 32.857.002,67 |

Other sources of funds |

Payments | 11 | -23.504.120,32 | -21.211.016,82 |

Recoveries | 5 | 27.495,82 | 3.329,28 |

Transactions to be finalised | 12 | -10.803,56 | -8.436,28 |

Doubtful debt provisions | 5,8 | -2.756,65 | 0,00 |

Creditors | 13 | 429.346,00 | 434.424,25 |

Total liabilities | 20.371.866,74 | 12.075.303,10 |

* Certain figures for 2002 have been restated. See note 16 to the accounts

1.2. - 6th European Development Fund

6th EDF |

Balance Sheet At 31 December 2003 |

(€’000) |

2003 | 2002 |

ASSETS |

Long term assets |

Contributions |

Initial allocation | 7.500.000,00 | 7.500.000,00 |

EIB special contribution | 60.000,00 | 60.000,00 |

less: amounts called up | -7.560.000,00 | -7.560.000,00 |

0,00 | 0,00 |

Amounts called up | 7.560.000,00 | 7.560.000,00 |

less: payments received | -7.560.000,00 | -7.560.000,00 |

0,00 | 0,00 |

Stabex contributions |

Initial allocation | 0,00 | 0,00 |

less: amounts called up and received | 0,00 | 0,00 |

0,00 | 0,00 |

Net contributions receivable | 0,00 | 0,00 |

Current assets |

Debtors | 16.494,68 | 17.261,41 |

Short-term investments | 107.247,20 |

Deferred Stabex expenditure |

Liaison accounts | 2.446.011,65 | 2.065.453,29 |

Cash at bank | 764.056,88 |

Total assets | 2.462.506,33 | 2.954.018,78 |

LIABILITIES |

Fund capital |

Contributions | 7.500.000,00 | 7.500.000,00 |

EIB special contribution | 60.000,00 | 60.000,00 |

Stabex contributions | 0,00 | 0,00 |

7.560.000,00 | 7.560.000,00 |

Total Inter-fund transfers | -311.290,76 | 46.200,02 |

7.248.709,24 | 7.606.200,02 |

Capitalised income | 222.880,67 | 222.880,67 |

Total Fund Capital | 7.471.589,92 | 7.829.080,70 |

Other sources of funds |

Payments | -7.282.156,38 | -7.235.114,74 |

Recoveries | 4.575,29 | 736,00 |

Transactions to be finalised | -10.803,56 | -8.436,28 |

Doubtful debt provisions | -5,89 | 0,00 |

Creditors | 0,00 | 88.446,15 |

Liaison accounts | 2.279.306,96 | 2.279.306,96 |

Total liabilities | 2.462.506,33 | 2.954.018,78 |

6th EDF |

Income & Expenditure Account for the year ended 31 December 2003 |

(€’000) |

Balance at 1/1/03 | Income/expenditure for the year ended 31/12/2003 | Balance at 31/12/2003 |

Notes |

Transfers liaison accounts | 9 | 260.053,69 | -738.049,14 | -477.995,45 |

Total income | 260.053,69 | -738.049,14 | -477.995,45 |

Programmable aid | 4.662.086,10 | 33.969,34 | 4.696.055,45 |

Aids fund | 0,00 | 10.000,00 | 10.000,00 |

Health and emergency aid | 361.226,04 | -55,45 | 361.170,59 |

Risk capital | 537.212,42 | 0,00 | 537.212,42 |

Stabex | 1.451.123,08 | 0,00 | 1.451.123,08 |

Sysmin | 128.110,70 | 0,00 | 128.110,70 |

Rehabilitation programmes | 83.122,71 | 2.407,28 | 85.529,99 |

Structural adjustment | 5.334,04 | 0,00 | 5.334,04 |

7.228.215,09 | 46.321,17 | 7.274.536,26 |

Transactions awaiting finalisation | 20.251,19 | 2.477,65 | 22.728,85 |

Total operational expenditure | 14 | 7.248.466,29 | 48.798,82 | 7.297.265,11 |

Administrative and financial costs | 15 | 6.899,65 | 720,47 | 7.620,12 |

Excess of expenditure over income | -6.995.312,24 | -787.568,43 | -7.782.880,67 |

1.3. - 7th European Development Fund

7th EDF |

Balance Sheet At 31 December 2003 |

(€’000) |

2003 | 2002 |

ASSETS |

Long term assets |

Contributions |

Initial allocation | 10.940.000,00 | 10.940.000,00 |

EIB special contribution |

less: amounts called up | -10.940.000,00 | -10.940.000,00 |

0,00 | 0,00 |

Amounts called up | 10.940.000,00 | 10.940.000,00 |

less: payments received | -10.940.000,00 | -10.939.999,80 |

0,00 | 0,20 |

Stabex contributions |

Initial allocation | 0,00 | 0,00 |

less: amounts called up and received | 0,00 | 0,00 |

0,00 | 0,00 |

Net contributions receivable | 0,00 | 0,20 |

Current assets |

Debtors | 21.791,37 | 3.166,36 |

Short-term investments |

Deferred Stabex expenditure | 9.525,75 | 10.025,75 |

Liaison accounts | 2.279.306,96 | 2.279.306,96 |

Cash at bank |

Total assets | 2.310.624,08 | 2.292.499,27 |

LIABILITIES |

Fund capital |

Contributions | 10.940.000,00 | 10.940.000,00 |

EIB special contribution | 0,00 | 0,00 |

Stabex contributions | 0,00 | 0,00 |

10.940.000,00 | 10.940.000,00 |

Total inter-fund transfers | -420.580,24 | 178.420,18 |

10.519.419,76 | 11.118.420,18 |

Capitalised income | 406.682,22 | 390.680,47 |

Total Fund capital | 10.926.101,97 | 11.509.100,65 |

Other sources of funds |

Payments | -9.605.104,84 | -9.222.394,56 |

Recoveries | 21.791,37 | 2.579,55 |

Transaction to be finalised | 0,00 | 0,00 |

Doubtful debt provisions | 0,00 | 0,00 |

Creditors | 0,00 | 3.213,63 |

Liaison accounts | 967.835,58 |

Total liabilities | 2.310.624,08 | 2.292.499,27 |

7th EDF |

Income & Expenditure Account for the year ended 31 December 2003 |

(€’000) |

Balance at 1/1/03 | Income/expenditure for the year ended 31/12/2003 | Balance at 31/12/2003 |

Notes |

Stabex Interest | 10 | 312.738,41 | 9.782,96 | 322.521,37 |

European bank interest | 10 | 19.565,82 | 5.851,73 | 25.417,56 |

EIB interest | 10 | 3.413,18 | 99,68 | 3.512,86 |

Interest late contributions | 10 | 5.963,05 | 267,37 | 6.230,42 |

Transfers liaison accounts | 9 | -2.100.886,78 | 369.079,22 | -1.731.807,56 |

Total income | -1.759.206,31 | 385.080,97 | -1.374.125,34 |

Programmable aid | 4.488.121,96 | 214.282,92 | 4.702.404,88 |

Aids fund | 0,00 | 50.000,00 | 50.000,00 |

Health and emergency aid | 690.035,45 | 2.235,73 | 692.271,18 |

Risk capital | 723.806,77 | 40.757,03 | 764.563,80 |

Stabex | 1.588.834,05 | 500,00 | 1.589.334,05 |

Sysmin | 292.152,15 | 31.055,90 | 323.208,05 |

Rehabilitation programmes | 280.374,24 | 14.520,50 | 294.894,73 |

Structural adjustment | 1.148.039,94 | 388,22 | 1.148.428,16 |

Debt relief | 11.030,00 | 28.970,00 | 40.000,00 |

Total operational expenditure | 14 | 9.222.394,56 | 382.710,28 | 9.605.104,84 |

Excess of expenditure over income | -10.981.600,87 | 2.370,69 | -10.979.230,18 |

1.4. - 8th European Development Fund

8th EDF |

Balance Sheet At 31 December 2003 |

(€’000) |

2003 | 2002 |

ASSETS |

Long term assets |

Contributions |

Initial allocation | 11.040.000,00 | 11.040.000,00 |

EIB special contribution |

less: amounts called up | -2.320.000,00 | -200.000,00 |

8.720.000,00 | 10.840.000,00 |

Amounts called up | 2.320.000,00 | 200.000,00 |

less: payments received | -2.224.232,50 | -200.000,00 |

95.767,50 | 0,00 |

Stabex contributions |

Initial allocation | 1.800.000,00 | 1.800.000,00 |

less: amounts called up and received | -1.800.000,00 | -1.800.000,00 |

0,00 | 0,00 |

Net contributions receivable | 8.815.767,50 | 10.840.000,00 |

Current assets |

Debtors | 1.129,16 | 806,57 |

Short-term investments |

Deferred Stabex expenditure | 418.295,06 | 332.738,73 |

Liaison accounts | 0,00 |

Cash at bank |

Total assets | 9.235.191,72 | 11.173.545,29 |

LIABILITIES |

Fund capital |

Contributions | 11.040.000,00 | 11.040.000,00 |

EIB special contribution |

Stabex contributions | 1.800.000,00 | 1.800.000,00 |

12.840.000,00 | 12.840.000,00 |

Total inter-fund transfers | -1.112.546,02 | 624.115,29 |

11.727.453,98 | 13.464.115,29 |

Capitalised income | 62.410,71 | 54.706,03 |

Total Fund capital | 11.789.864,70 | 13.518.821,32 |

Other sources of funds |

Payments | -6.339.201,37 | -4.753.507,52 |

Recoveries | 1.129,16 | 13,73 |

Transaction to be finalised |

Doubtful debt provisions |

Creditors | 427.820,81 | 342.764,48 |

Liaison accounts | 3.355.578,42 | 2.065.453,29 |

Total liabilities | 9.235.191,72 | 11.173.545,29 |

8th EDF |

Income & Expenditure Account for the year ended 31 December 2003 |

(€’000) |

Balance at 1/1/03 | Income/expenditure for the year ended 31/12/2003 | Balance at 31/12/2003 |

Notes |

Stabex interest | 10 | 1.859,19 | 0,00 | 1.859,19 |

Stabex interest - security accounts | 10 | 17.396,84 | 7.704,68 | 25.101,52 |

Interest | 10 | 35.450,00 | 0,00 | 35.450,00 |

Transfers liaison accounts | 9 | 2.689.568,58 | -446.536,17 | 2.243.032,40 |

Total income | 2.744.274,61 | -438.831,49 | 2.305.443,12 |

Programmable aid | 1.517.624,50 | 773.342,67 | 2.290.967,17 |

Macro-economic support | 97.674,83 | 102.199,98 | 199.874,81 |

Interest-rate subsidies | 49.605,97 | 6.305,80 | 55.911,78 |

Emergency aid | 126.047,14 | 6.365,53 | 132.412,67 |

Aid to refugees | 25.567,31 | 31.206,01 | 56.773,31 |

Risk capital | 506.188,28 | 185.854,65 | 692.042,93 |

Stabex | 250.000,76 | 113.129,88 | 363.130,65 |

Sysmin | 75.297,32 | 9.223,56 | 84.520,89 |

Structural adjustment | 1.219.480,68 | 170.611,29 | 1.390.091,97 |

Payments world bank | 200.000,00 | 180.000,00 | 380.000,00 |

Payments HIPC | 680.000,00 | 0,00 | 680.000,00 |

Interest | 6.020,72 | 7.454,48 | 13.475,19 |

Total operational expenditure | 14 | 4.753.507,52 | 1.585.693,85 | 6.339.201,37 |

Excess of expenditure over income | -2.009.232,91 | -2.024.525,34 | -4.033.758,25 |

1.5. - 9th European Development Fund

9th EDF |

Balance Sheet At 31 December 2003 |

(€’000) |

2003 | 2002 |

ASSETS |

Long term assets |

Contributions |

Initial allocation | 10.555.150,00 |

EIB special contribution | 0,00 |

less: amounts called up | 0,00 |

10.555.150,00 |

Amounts called up | 0,00 |

less: payments received | 0,00 |

0,00 |

Stabex contributions |

Initial allocation | 0,00 |

less: amounts called up and received | 0,00 |

0,00 |

Net contributions receivable | 10.555.150,00 |

Current assets |

Debtors | 4.584,17 |

Short-term investments | 2.971,03 |

Deferred Stabex expenditure |

Liaison accounts | 2.257.960,71 |

Cash at bank | 526.158,03 |

Total assets | 13.346.823,94 |

LIABILITIES |

Fund capital |

Contributions | 10.555.150,00 |

EIB special contribution | 0,00 |

Stabex contributions | 0,00 |

10.555.150,00 |

Total inter-fund transfers | 2.693.152,51 |

13.248.302,51 |

Capitalised income | -3.153,64 |

Total Fund capital | 13.245.148,87 |

Other sources of funds |

Payments | -277.657,73 |

Recoveries | 0,00 |

Transaction to be finalised | 0,00 |

Doubtful debt provisions | -2.750,75 |

Creditors | 1.525,20 |

Liaison accounts | 380.558,36 |

Total liabilities | 13.346.823,94 |

9th EDF |

Income & Expenditure Account for the year ended 31 December 2003 |

(€’000) |

Balance at 1/1/03 | Income/expenditure for the year ended 31/12/2003 | Balance at 31/12/2003 |

Notes |

Inter-EDF transfers | 2.693.152,51 |

Transfers liaison accounts | 9 | 0,00 | -1.877.402,35 | 815.505,91 |

Total income | 0,00 | 815.750,16 | 815.505,91 |

Macro-economic support | 0,00 | 49.000,00 | 49.000,00 |

Sectoral policy | 0,00 | 18.887,55 | 18.887,55 |

Humanitarian Aid | 0,00 | 37.560,90 | 37.560,90 |

Debt relief initiatives | 0,00 | 0,00 | 0,00 |

Compensation export receipts | 0,00 | 0,00 | 0,00 |

Centre for the development of enterprise | 0,00 | 0,00 | 0,00 |

Centre for the development of agriculture | 0,00 | 0,00 | 0,00 |

General Assembly | 0,00 | 0,00 | 0,00 |

Special operations | 0,00 | 0,00 | 0,00 |

Technical assistance | 0,00 | 251,36 | 251,36 |

Regional indicative programs | 0,00 | 1.600,44 | 1.600,44 |

Social sectors | 0,00 | 170.000,00 | 170.000,00 |

Methodological and developmental support | 0,00 | 0,00 | 0,00 |

Natural resources | 0,00 | 354,83 | 354,83 |

Private sector | 0,00 | 0,00 | 0,00 |

Peace building and conflict prevention | 0,00 | 0,00 | 0,00 |

Miscellaneous | 0,00 | 0,00 | 0,00 |

Debt relief | 0,00 | 0,00 | 0,00 |

Implementation expenses | 0,00 | 2,66 | 2,66 |

Total operational expenditure | 14 | 0 | 277.657,73 | 277.657,73 |

Provision for loss on short-term investments | 6 | 0 | 3.153,64 | 3.153,64 |

Provision for doubtful debts | 5,8 | 0 | 2.750,75 | 2.750,75 |

Excess of income over expenditure | 0 | 532.188,03 | 532.188,03 |

1.6. - Statement of sources and uses of funds for the 6th, 7th, 8th and 9th EDFs

Statement of sources and uses of funds for the 6th, 7th, 8th and 9th EDFs |

for the year ended 31 December 2003 |

(€’000) |

Treasury, ACP paying agents and EUR paying agents |

Treasury balance (excluding Stabex) at 01/01/2003 | 318.549,48 |

Contributions from Member States | 1.937.216,05 |

Interest paid on late contributions | 3.753,54 |

Transfer from Stabex current account | 7.635,57 |

Total receipts | 1.948.605,16 |

Operational payments | 2.179.660,83 |

Increase in provision for doubtful debts | 2.750,75 |

Increase in transactions to be finalised | 2.357,28 |

Increase in advances | 120,37 |

Total | 2.184.889,23 |

Treasury balance (excluding Stabex) at 31/12/2003 | 82.265,41 |

Stabex current account |

Stabex current account balance at 01/01/2003 | 103.535,76 |

Interest receipts | 1.678,92 |

dividends received | 1.215,91 |

receipts on portfolio sales | 108.282,34 |

Total receipts | 111.177,17 |

Transfer to security accounts | 190.981,53 |

portfolio management costs | 24,00 |

Transfer to European bank accounts | 7.635,57 |

Total | 198.641,10 |

Stabex current account balance at 31/12/2003 | 16.071,83 |

Stabex security accounts |

Stabex security accounts balance at 01/01/2003 | 342.764,48 |

Transfers from Stabex current account | 190.981,53 |

Interest received | 7.704,68 |

Total Stabex receipts | 198.686,22 |

Stabex payments | 113.629,88 |

Stabex security accounts balance at 31/12/2003 | 427.820,81 |

1.7. - Notes to the accounts

1.7.1. Initial allocation

This represents the total amount receivable from the Member States for the relevant EDF fund as laid down in the internal agreement between the Member States and the beneficiary African, Caribbean and Pacific (ACP) States and the Overseas Countries and Territories (OCT).

1.7.2. EIB special contribution

The Special EIB contribution provided for by Council Decision 87/592/EEC of 14 December 1987 has been used to finance the special programme for highly indebted countries.

1.7.3. Contributions called up

This represents the amount of the initial allocations which has been called up for transfer to the treasury accounts by the Member States in accordance with the procedure in Article 8 of the Financial Regulation, whereby each year the Commission must establish and communicate to the Council a statement of the payments to be made in the following year and a schedule of calls for contributions. The Commission must justify the amount requested on the basis of its capacity to deliver the proposed level of resources effectively.

Contributions were called up from the 8th EDF only during 2003 as detailed on page 26.

1.7.4. Contributions received

The outstanding balance of EUR 200 for the 7th EDF was received in 2003. All other contributions received during the year related to the 8th EDF, details of which are given on page 26.

8th EDF |

Contributions called up and received for the year ended 31 December 2003 |

(€’000) |

Percentage share of fund contri-butions | Contri-butions called up in 2002 | Contri-butions received in 2002 | Contri-butions outstanding at 31/12/2002 | Contri-butions called up in 2003 | Contri-butions received in 2003 | Contri-butions outstanding at 31/12/2003 | Total contributions called 8th EDF at 31/12/2003 | Total contributions received 8th EDF at 31/12/2003 |

Belgium | 3,92 | 7.840,00 | 7.840,00 | 0,00 | 83.104,00 | 83.104,00 | 0,00 | 90.944,00 | 90.944,00 |

Denmark | 2,14 | 4.280,00 | 4.280,00 | 0,00 | 45.368,00 | 45.368,00 | 0,00 | 49.648,00 | 49.648,00 |

France | 24,30 | 48.600,00 | 48.600,00 | 0,00 | 515.160,00 | 434.250,00 | 80.910,00 | 563.760,00 | 482.850,00 |

Germany | 23,36 | 46.720,00 | 46.720,00 | 0,00 | 495.232,00 | 495.232,00 | 0,00 | 541.952,00 | 541.952,00 |

Greece | 1,25 | 2.500,00 | 2.500,00 | 0,00 | 26.500,00 | 26.500,00 | 0,00 | 29.000,00 | 29.000,00 |

Ireland | 0,62 | 1.240,00 | 1.240,00 | 0,00 | 13.144,00 | 13.144,00 | 0,00 | 14.384,00 | 14.384,00 |

Italy | 12,54 | 25.080,00 | 25.080,00 | 0,00 | 265.848,00 | 265.848,00 | 0,00 | 290.928,00 | 290.928,00 |

Luxemburg | 0,29 | 580,00 | 580,00 | 0,00 | 6.148,00 | 6.148,00 | 0,00 | 6.728,00 | 6.728,00 |

Netherlands | 5,22 | 10.440,00 | 10.440,00 | 0,00 | 110.664,00 | 110.664,00 | 0,00 | 121.104,00 | 121.104,00 |

Portugal | 0,97 | 1.940,00 | 1.940,00 | 0,00 | 20.564,00 | 16.490,00 | 4.074,00 | 22.504,00 | 18.430,00 |

Spain | 5,84 | 11.680,00 | 11.680,00 | 0,00 | 123.808,00 | 123.808,00 | 0,00 | 135.488,00 | 135.488,00 |

United Kingdom | 12,69 | 25.380,00 | 25.380,00 | 0,00 | 269.028,00 | 269.028,00 | 0,00 | 294.408,00 | 294.408,00 |

Finland | 1,48 | 2.960,00 | 2.960,00 | 0,00 | 31.376,00 | 31.376,00 | 0,00 | 34.336,00 | 34.336,00 |

Sweden | 2,73 | 5.460,00 | 5.460,00 | 0,00 | 57.876,00 | 47.092,50 | 10.783,50 | 63.336,00 | 52.552,50 |

Austria | 2,65 | 5.300,00 | 5.300,00 | 0,00 | 56.180,00 | 56.180,00 | 0,00 | 61.480,00 | 61.480,00 |

100,00 | 200.000,00 | 200.000,00 | 0,00 | 2.120.000,00 | 2.024.232,50 | 95.767,50 | 2.320.000,00 | 2.224.232,50 |

1.7.5. Debtors

The detail of this heading is as follows:

6th (€’000) | 7th (€’000) | 8th (€’000) | 9th (€’000) | Total at 31/12/03 | Total at 31/12/02 |

Debtors |

Interest on late contributions | 5.1 | 0,00 | 0,00 | 0,00 | 3.290,16 | 3.290,16 | 3.890,29 |

Interest on late contributions - Stabex | 5.2 | 0,00 | 0,00 | 0,00 | 792,12 | 792,12 | 820,21 |

Interest receivable - European banks | 5.3 | 0,00 | 0,00 | 0,00 | 473,48 | 473,48 | 586,81 |

Interest receivable - Stabex main account | 5.4 | 0,00 | 0,00 | 0,00 | 28,41 | 28,41 | 0,00 |

Interest receivable - Stabex security accounts | 5.5 | 0,00 | 0,00 | 0,00 | 0,00 | 0,00 | 792,84 |

Advances | 5.6 | 11.925,28 | 0,00 | 0,00 | 0,00 | 11.925,28 | 11.814,91 |

Recoveries and VAT | 5.7 | 4.575,29 | 21.791,37 | 1.129,16 | 0,00 | 27.495,82 | 3.329,28 |

Provision for doubtful debts | 5.8 | -5,89 | 0,00 | 0,00 | 0,00 | -5,89 |

16.494,68 | 21.791,37 | 1.129,16 | 4.584,17 | 43.999,38 | 21.234,34 |

1.7.5.1 Interest on late contributions

In accordance with Article 40(4) of the Financial Regulation interest is charged to the Member States in the event of late payment of the called-up contributions. Details of interests charged and subsequently paid by the Member States are given below:

Interest for late payment of EDF contributions for the year ended 31 December 2003 |

(€’000) |

Balance at 01/01/03 | Interest charged 2003 | Interest paid 2003 | Balance at 31/12/03 |

Belgium | 0,00 | 16,58 | 0,00 | 16,58 |

Denmark | 0,00 | 0,00 | 0,00 | 0,00 |

France | 1.900,25 | 197,78 | 0,00 | 2.098,03 |

Germany | 0,00 | 0,00 | 0,00 | 0,00 |

Greece | 0,00 | 8,17 | 0,00 | 8,17 |

Ireland | 4,56 | 0,00 | 0,00 | 4,56 |

Italy | 861,23 | 0,00 | 861,23 | 0,00 |

Luxemburg | 2,02 | 1,11 | 0,00 | 3,13 |

Netherlands | 0,00 | 0,00 | 0,00 | 0,00 |

Portugal | 36,87 | 9,96 | 6,27 | 40,56 |

Spain | 61,46 | 0,00 | 0,00 | 61,46 |

United Kingdom | 1.023,90 | 0,00 | 0,00 | 1.023,90 |

Finland | 0,00 | 0,69 | 0,00 | 0,69 |

Sweden | 0,00 | 26,36 | 0,00 | 26,36 |

Austria | 0,00 | 6,72 | 0,00 | 6,72 |

3.890,29 | 267,37 | 867,50 | 3.290,16 |

1.7.5.2. Interest on late contributions – Stabex

All Stabex contributions were received prior to the beginning of this financial year. The amount shown for interest due represents the outstanding balance carried over from last year.

Interest payments of EUR 28.09 thousand were received from Italy during the year, therefore there remains only the balance of EUR 792.12 thousand from France which is still receivable.

1.7.5.3 Interest receivable – European banks

This amount represents interest earned on the European bank accounts during the financial year 2003 but only credited to the bank account in 2004.

1.7.5.4 Interest receivable – Stabex current account

This amount represents interest earned on the Stabex current accounts during the financial year 2003 but only credited to the bank account in 2004.

1.7.5.5 Interest receivable – Stabex security accounts

At the end of 2002 an amount of interest income of EUR 792.84 thousand relating to the interest for December 2002 had not been credited to the Stabex security bank accounts. In the 2003 figures the December interest income is included in the Stabex security account balance.

1.7.5.6. Advances

This amount corresponds to advances for study awards and to bodies such as GTZ, AGRER and AEC.

The figure shown in the balance sheet breaks down as follows:

31/12/2003 | 31/12/2002 |

€ | € |

Study awards | 1.534.743,35 | 1.543.961,38 |

AEC | 557.826,32 | 557.826,32 |

AGRER | 365.728,65 | 236.138,46 |

GTZ | 9.433.467,46 | 9.443.467,46 |

Adjustments | 33.516,38 | 33.516,38 |

11.925.282,16 | 11.814.910,00 |

1.7.5.7 Recoveries and VAT

The movements for the year on recoveries and VAT to be recovered may be analysed as follows:

Open recovery orders at 01/01/03 | New recovery orders issued in 2003 | Recovery orders closed in 2003 | Open recovery orders at 31/12/03 |

€ | € | € | € |

6th EDF | 537.810,57 | 904.167,61 | 903.252,92 | 538.725,26 |

7th EDF | 2.579.551,61 | 27.558.536,27 | 8.346.720,87 | 21.791.367,01 |

8th EDF | 13.731,03 | 12.236.659,01 | 11.121.229,58 | 1.129.160,46 |

VAT | 198.187,72 | 24.477,21 | 222.664,93 | 0,00 |

Transactions to be finalised | 0,00 | 4.036.564,50 | 0,00 | 4.036.564,50 |

TOTAL | 3.329.280,93 | 44.760.404,60 | 20.593.868,30 | 27.495.817,23 |

Of the total recovery orders closed during 2003 an amount of EUR 131,373.79 was written off during the year and an amount of EUR 450,167.39 was recovered via compensation.

1.7.5.8. Provision doubtful debts

In previous years recoveries which were written off were netted off against payments, meaning that they were not separately identified in the accounts. Towards the end of 2003 a new procedure was introduced whereby amounts written off will be posted to the provision for doubtful debts and if appropriate written off to a specific bad debts account. This procedure will be followed for future periods.

1.7.6. Short-term investments

The short term investments represent the investments made using the funds from the main Stabex account which have not yet been transferred to a Stabex security account (see below).

The book value of the short-term investment portfolio decreased from EUR 107,247,200.75 at the beginning of the year to EUR 2,971,028.29 at the end of the year. This movement is due to the disposal of the majority of the investments during the year and the necessity to provide for a certain loss on the disposal of shares shortly after the year end.

Details of the profit and loss on sales of investments are given below:

Cost | Sales price | Profit/(loss) |

Portfolio at 1/1/03 | 107.247.200,75 |

11/07/2003 | sale | -3.725.662,50 | 4.184.200,26 | 458.537,76 |

11/07/2003 | sale | -25.446.746,58 | 27.217.979,45 | 1.771.232,87 |

11/07/2003 | sale | -5.809.595,00 | 6.235.041,64 | 425.446,64 |

11/07/2003 | sale | -9.860.540,98 | 11.118.424,66 | 1.257.883,68 |

11/07/2003 | sale | -20.935.863,01 | 21.936.301,37 | 1.000.438,36 |

11/07/2003 | sale | -20.320.630,14 | 22.032.383,56 | 1.711.753,42 |

11/07/2003 | sale | -5.048.493,15 | 5.558.006,94 | 509.513,79 |

1/12/2003 | sale | -9.975.000,00 | 10.000.000,00 | 25.000,00 |

-101.122.531,36 | 108.282.337,88 | 7.159.806,52 |

Portfolio at 31/12/03 | 6.124.669,39 |

6/01/2004 | sale | -3.062.334,69 | 838.780,28 | -2.223.554,41 |

6/01/2004 | sale | -3.062.334,70 | 2.132.248,01 | -930.086,69 |

-6.124.669,39 | 2.971.028,29 | -3.153.641,10 |

Portfolio at 06/01/04 | 0,00 |

As can be seen from the above table the value shown for short-term investments at the year end represents the cash received on the sale of the shares after the year end.

1.7.7. Deferred Stabex expenditure

A change in accounting policy was adopted during 2003 in relation to Stabex expenditure. In prior years amounts transferred to the Stabex security accounts (see also note 8.5 below) had been treated as if they were payments and thus expensed in the income and expenditure account. However, in view of the fact that the Stabex security accounts are bank accounts under the sole control of the European Commission it was considered more appropriate not to consider these transfers as expenditure in the accounts and to amend previous transactions accordingly. These transfers have therefore been reclassified and amounts now shown in the income and expenditure accounts represent actual sums transferred to the beneficiary state only. The effect of this change in accounting policy is to reduce the brought forward Stabex expenditure by EUR 10 million in the 7th EDF and EUR 333 million in the 8th EDF. The total of the Stabex deferred expenditure therefore represents the total of Stabex funds available and which will be transferred to the relevant beneficiary ACP State at some future date. These final transfers to the beneficiaries will in future be accounted for as expenditure.

1.7.8. Cash at bank

For reasons of efficiency, there is a single treasury for all the EDFs being implemented; this leads to operations between the various EDFs, which are balanced out in the liaison accounts between the various balance sheets. Balances on the liaison accounts at 31/12/2003 were as follows:

6th (€’000) | 7th (€’000) | 8th (€’000) | 9th (€’000) | Total 31/12/03 |

Transfers to/from 6th EDF on closing | 0,00 | 2.279.306,96 | -2.065.453,29 | -380.558,36 | -166.704,69 |

Transfers to/from 7th EDF on closing | -2.279.306,96 | 0,00 | 0,00 | 0,00 | -2.279.306,96 |

Transfers to/from 8th EDF on closing | 2.065.453,29 | 0,00 | 0,00 | 967.835,58 | 3.033.288,87 |

Transfers to/from 9th EDF on closing | 380.558,36 | -967.835,58 | -1.290.125,13 | 1.290.125,13 | -587.277,22 |

Total liaison accounts | 166.704,69 | 1.311.471,38 | -3.355.578,42 | 1.877.402,35 | 0,00 |

In prior years the treasury has been presented in the balance sheet of the 6th EDF. This year the treasury has been presented in the balance sheet of the 9th EDF in accordance with Article 129 of the Financial Regulation.

Total cash at bank may be analysed as follows: | 31/12/2003 | 31/12/2002 |

Cash at bank | €’000 | €’000 |

Treasury accounts | 8.1 | 9.983,16 | 186.375,23 |

ACP Paying Agents | 8.2 | 57.867,06 | 39.234,45 |

EUR Paying Agents | 8.3 | 17.160,05 | 92.939,81 |

Stabex current accounts | 8.4 | 16.071,82 | 103.535,76 |

Stabex security accounts | 8.5 | 427.820,81 | 341.971,64 |

Provision doubtful debts | 8.6 | -2.744,86 | 0,00 |

Total | 526.158,03 | 764.056,88 |

1.7.8.1 Treasury accounts

Accounts held with the central banks of the Member States into which EDF contributions are paid.

1.7.8.2 ACP paying agents

Amounts held in bank accounts in the ACP States used for making payments locally.

The accounts are generally kept in euros, but may also be kept in a currency of a Community Member State.

1.7.8.3 EUR paying agents

All the accounts with commercial banks established in the Member States. The accounts are kept in euros and are used for payments to beneficiaries within the Union. Payments are generally made in euros, but may also be made in other currencies. These funds are also used to replenish ACP paying agent accounts.

1.7.8.4 Stabex current account

This amount represents the cash balance remaining on the principal Stabex account.

1.7.8.5 Stabex security accounts.

For the purposes of transparency and sound financial management and to secure the amounts due to the ACP countries prior to utilisation, it was decided during 2001 to open an account in the Commission’s name with the BBVA consisting of sub-accounts in the name of each beneficiary state. Detailed information on the accounts opened in the name of the various beneficiary States are given below:

STABEX MOVEMENT SCHEDULE FOR THE YEAR ENDED 31/12/2003 |

Balance per 31/12/2002 | Accrual adjustment | Balance at 31/12/2002 | Interests | Payments | Transfers | Balance at 31/12/2003 |

BENIN | 809.201,16 | 1.875,93 | 811.077,09 | 1.591,99 | 768.199,00 | 0,00 | 44.470,08 |

BURKINA FASO | 712.158,20 | 1.650,94 | 713.809,14 | 15.226,71 | 0,00 | 0,00 | 729.035,85 |

BURUNDI | 26.071.735,09 | 60.445,73 | 26.132.180,82 | 551.372,28 | 500.000,00 | 0,00 | 26.183.553,10 |

CAMEROON | 5.027.482,27 | 11.655,76 | 5.039.138,03 | 107.503,53 | 0,00 | 0,00 | 5.146.641,56 |

COMOROS | 50.597,35 | 117,16 | 50.714,51 | 1.080,11 | 0,00 | 0,00 | 51.794,62 |

DOMINICA | 4.941.377,76 | 11.456,19 | 4.952.833,95 | 105.662,30 | 0,00 | 0,00 | 5.058.496,25 |

ETHIOPIA | 5.069.134,05 | 11.752,37 | 5.080.886,42 | 77.137,95 | 4.301.574,90 | 0,00 | 856.449,47 |

GAMBIA | 939.550,46 | 2.178,15 | 941.728,61 | 20.089,12 | 0,00 | 0,00 | 961.817,73 |

GRENADA | 306.079,41 | 709,49 | 306.788,90 | 6.543,17 | 0,00 | 0,00 | 313.332,07 |

GUINEA-BISSAU | 309.988,61 | 718,53 | 310.707,14 | 6.626,87 | 0,00 | 0,00 | 317.334,01 |

COTE D'IVOIRE | 78.084.712,75 | 181.034,91 | 78.265.747,66 | 890.327,40 | 38.112.254,00 | 0,00 | 41.043.821,06 |

JAMAICA | 7.011.578,64 | 16.255,81 | 7.027.834,45 | 120.062,88 | 2.651.302,00 | 0,00 | 4.496.595,33 |

KENYA | 50.260.060,83 | 116.525,02 | 50.376.585,85 | 669.894,10 | 51.046.479,95 | 0,00 | 0,00 |

MADAGASCAR | 14.685.435,86 | 34.047,21 | 14.719.483,07 | 287.592,11 | 1.769.073,00 | 0,00 | 13.238.002,18 |

MALAWI | 852.272,14 | 1.975,80 | 854.247,94 | 18.222,76 | 0,00 | 0,00 | 872.470,70 |

MAURITANIA | 16.593.887,35 | 38.471,83 | 16.632.359,18 | 354.834,12 | 0,00 | 0,00 | 16.987.193,30 |

PAPUA-NEW GUINEA | 614.991,03 | 1.425,66 | 616.416,69 | 13.148,81 | 0,00 | 0,00 | 629.565,50 |

RWANDA | 5.362.645,28 | 12.432,86 | 5.375.078,14 | 114.670,50 | 0,00 | 0,00 | 5.489.748,64 |

SENEGAL | 9.407.425,92 | 21.810,44 | 9.429.236,36 | 201.162,20 | 0,00 | 0,00 | 9.630.398,56 |

SIERRA LEONE | 2.852.105,00 | 6.612,29 | 2.858.717,29 | 60.986,33 | 0,00 | 0,00 | 2.919.703,62 |

SAINT LUCIA | 12.794.765,31 | 29.663,79 | 12.824.429,10 | 273.595,49 | 0,00 | 0,00 | 13.098.024,59 |

SOLOMON ISLANDS | 28.159.195,78 | 65.285,41 | 28.224.481,19 | 602.141,29 | 0,00 | 0,00 | 28.826.622,48 |

ST VINCENT & GRENADINES | 3.690.430,95 | 8.555,90 | 3.698.986,85 | 78.912,63 | 0,00 | 0,00 | 3.777.899,48 |

TANZANIA | 28.893.422,80 | 66.987,63 | 28.960.410,43 | 617.841,61 | 0,00 | 0,00 | 29.578.252,04 |

TONGA | 80.512,74 | 186,53 | 80.699,27 | 1.719,81 | 0,00 | 0,00 | 82.419,08 |

HAITI | 2.732.766,72 | 6.335,64 | 2.739.102,36 | 58.434,39 | 0,00 | 0,00 | 2.797.536,75 |

UGANDA | 33.017.255,36 | 76.548,54 | 33.093.803,90 | 636.380,29 | 14.481.000,00 | 0,00 | 19.249.184,19 |

ZIMBABWE | 2.640.869,25 | 6.122,55 | 2.646.991,80 | 56.469,30 | 0,00 | 0,00 | 2.703.461,10 |

SUDAN | 0,00 | 1.755.449,29 | 0,00 | 190.981.534,00 | 192.736.983,29 |

TOTAL | 341.971.638,07 | 792.838,07 | 342.764.476,14 | 7.704.679,34 | 113.629.882,85 | 190.981.534,00 | 427.820.806,63 |

1.7.8.6 Doubtful debts

This amount represents the full balance on an old bank account in the Congo (at the time of opening the account Zaire) on which there have been no movements for several years and about which there is some doubt as to recoverability. In view of this it was considered prudent to provide for a potential loss, although every effort is being made to ensure that the amount involved is in fact recovered.

1.7.9. Inter-fund transfers

This heading shows resources transferred from other funds which increase the appropriation of the receiving fund and reduce that of the Fund of origin. The total balance may be analysed as follows:

6th (€’000) | 7th (€’000) | 8th (€’000) | 9th (€’000) | Consol. (€’000) | Total 31/12/03 |

Transfers to/from 4th EDF | 144.324,75 | 0,00 | 0,00 | 0,00 | 0,00 | 144.324,75 |

Transfers to/from 5th EDF | 177.632,24 | 526.778,50 | 0,00 | 0,00 | 0,00 | 704.410,74 |

Transfers to/from 6th EDF | 0,00 | 181.756,97 | 94.000,00 | 357.490,78 | 633.247,75 | 633.247,75 |

Transfers to/from 7th EDF | -181.756,97 | 0,00 | 532.815,29 | 596.300,43 | 947.358,74 | 947.358,74 |

Transfers to/from 8th EDF | -94.000,00 | -532.815,29 | 0,00 | 1.739.361,30 | 1.112.546,02 | 1.112.546,02 |

Transfers to/from 9th EDF | -357.490,78 | -596.300,43 | -1.739.361,30 | 0,00 | -2.693.152,51 | -2.693.152,51 |

Total inter-EDF transfers | -311.290,76 | -420.580,24 | -1.112.546,02 | 2.693.152,51 | 0,00 | 848.735,49 |

1.7.10. Capitalised income

Capitalised income may be analysed as follows:

Capitalised Income | 6th EDF | 7th EDF | 8th EDF | 9th EDF | Total |

€’000 | €’000 | €’000 | €’000 | €’000 |

Capitalised interest | 10,1 | 13.700,00 | 49.000,00 | 35.450,00 | 0,00 | 98.150,00 |

Capitalised Stabex interest | 10,1 | 24.078,12 | 322.521,37 | 1.859,19 | 0,00 | 348.458,69 |

EIB interest | 10,1 | 0 | 3.512,86 | 0,00 | 0,00 | 3.512,86 |

European bank interest | 10,1 | 0 | 25.417,56 | 0,00 | 0,00 | 25.417,56 |

Interest late contributions | 10,2 | 0 | 6.230,42 | 0,00 | 0,00 | 6.230,42 |

Replenishment of Stabex resources | 10,3 | 185.102,55 | 0,00 | 0,00 | 0,00 | 185.102,55 |

Provision for loss on short term investments | 6 | 0,00 | 0,00 | 0,00 | -3.153,64 | -3.153,64 |

Interest income Stabex security accounts | 10,4 | 0,00 | 0,00 | 25.101,52 | 0,00 | 25.101,52 |

Total capitalised income | 222.880,67 | 406.682,22 | 62.410,71 | -3.153,64 | 688.819,96 |

1.7.10.1. Capitalised interest, capitalised Stabex interest, EIB interest, European bank interest.

The interest earned on accounts with European paying agents (including the main Stabex account) can be used to finance projects in accordance with Articles 1.3 and 10 of the internal agreement.

This heading represents the amount of interest on deposited funds committed for the financing of projects. This interest leads to an effective increase in the Funds’ overall appropriations.

1.7.10.2 Interest on late contributions

This is interest from late payment of contributions which have been committed for the financing of projects. This interest leads to an effective increase in the Funds’ overall appropriations.

1.7.10.3 Replenishment of Stabex resources

This heading comprises direct contributions by the ACP States (replenishment of resources) and the amounts by which transfer entitlements have been reduced at the request of the ACP States. The obligation to replenish Stabex resources was abolished by the ACP-EDF Council Decision of 19 November 1991.

1.7.10.4 Interest income, Stabex security accounts

(See also note 7 above).

This represents the accumulated income generated by the Stabex security accounts. Whilst such income appears to increase the total of the Fund it should be borne in mind that any income generated by these accounts is earmarked for the specific beneficiary state.

The difference of EUR 24 million between these figures and the figures shown in the report on financial implementation is explained by the booking of the Stabex security account interest (25 million), Stabex main account interest (2 million) and a provision for loss in short term investments (-3 million) in the accounts. These amounts have not yet been incorporated into the Authorising Officer’s report.

1.7.11. Payments

These amount represent total project expenditure for the Fund in question and include payments to the European Investment Bank (EIB) and the World Bank (180 million in 2002; 209 million in 2003) in the context of the Heavily Indebted Poor Countries (HIPC) initiative. The amount of these advance payments which have still to be disbursed, as at 31 December 2003, is set out in table 4.2.3 of the Financial Implementation Report.

The payment figures also include so called final transfers of STABEX funds (to accounts held by the beneficiary States), amounting to 114 million in 2003 in order to fully comply with a recommendation of the Court of Auditors on the preferred accounting treatment for such transactions.

1.7.12. Transactions awaiting finalisation.

This amount comprises all payments/receipts awaiting final allocation to the appropriate projects.

These amounts concern expenditure which will be charged to the 6th, 7th 8th or 9th EDF. Considering the activity during 2003 it can be assumed that the greater part of this expenditure /revenue will be charged to the 8th EDF.

1.7.13. Creditors

The total creditor balance may be analysed as follows:

Creditors | 6th EDF | 7th EDF | 8th EDF | 9th EDF | Total |

€’000 | €’000 | €’000 | €’000 | €’000 |

Contributions received in advance | 13.1 | 0,00 | 0,00 | 0,00 | 1.429,50 | 1.429,50 |

Provisions for bank charges | 13.2 | 0,00 | 0,00 | 0,00 | 95,70 | 95,70 |

Outstanding Stabex payments | 13.3 | 0,00 | 0,00 | 427.820,81 | 0,00 | 427.820,81 |

Total creditors | 0,00 | 0,00 | 427.820,81 | 1.525,20 | 429.346,00 |

1.7.13.1 Contributions received in advance

Certain contributions were paid in advance, as follows:

Italy EUR 1,125.00 thousand

Luxembourg EUR 304.50 thousand.

1.7.13.2 Provisions for bank charges

This amount is made up of transactions relating to bank errors and bank charges for the year ended 31 December 2003, which were debited to the relevant bank accounts after the year end.

1.7.13.3 Outstanding Stabex payments

(See also notes 7, 8.5 and 10.4 above).

This balance represents the amounts due to beneficiary ACP States in respect of the Stabex aid instrument. The total balance represents the total amount on the Stabex security accounts.

1.7.14. Expenditure

These amounts show the fund expenditure by aid instrument.

1.7.15. Administrative expenditure and financial costs

These amounts may be analysed as follows:

Balance at 01/01/03 € | Charge for the year € | Balance at 31/12/2003 € |

Financial costs | 56.157,04 | 28.554,94 | 84.711,98 |

Interest on late payments | 79.995,22 | 22.265,34 | 102.260,56 |

Year end re-evaluations | 3.640.052,56 | 526.144,89 | 4.166.197,45 |

Interests and bank charges on account for advances on study grants | -63.579,00 | -35,90 | -63.614,90 |

Contract BDC | 163.350,00 | 121.275,00 | 284.625,00 |

Service contract Schlumberger-Sema | 63.891,84 | 22.269,59 | 86.161,43 |

Others | 365.827,69 | 0,00 | 365.827,69 |

TOTAL | 4.305.695,35 | 720.473,86 | 5.026.169,21 |

Audit and evaluation costs financed from interest | 2.593.952,29 | 0,00 | 2.593.952,29 |

TOTAL | 6.899.647,64 | 720.473,86 | 7.620.121,50 |

1.7.16 Re-statement of certain figures for 2002 as a result of changes in accounting policy

Certain figures for 2002 have been restated in order to comply with the generally accepted accounting principle “Comparability of information” and to implement International Accounting Standard, IPSAS no. 3, in order to reflect the change in accounting policy for Stabex and HIPC transactions. These corrections amount to 164 million Euro. By way of information, the original and the re-stated figures are shown below, together with details of the various adjustments made. (See also notes 7 and 11 to the accounts in particular).

Consolidated Balance Sheet of the 6th, 7th, 8th and 9th EDFs |

at 31 December 2002 (Mio €') |

NOTES | As originally shown in 2002 accounts | Adjustments | As re-stated in 2003 accounts |

ASSETS |

Long term assets | 10.840 | 10.840 |

Current assets |

Debtors | 5; 7 | 20 | 1 | 21 |

Short-term investments | 107 |

Deferred Stabex expenditure | 7 | 343 | 343 |

HIPC advanced payments | 11; 16 | 180 | -180 |

Cash at bank | 6; 8 | 871 | 764 |

Total assets | 11.911 | 164 | 12.075 |

LIABILITIES |

Fund capital | 31.340 | 31.340 |

Total inter-fund transfers | 849 | 849 |

32.189 | 32.189 |

Capitalised income | 10; 13 | 653 | 15 | 668 |

Total Fund capital | 32.842 | 32.857 |

Other sources of funds |

Payments | 7; 11; 16 | -21.356 | 145 | -21.211 |

Recoveries | 3 | 3 |

Transactions to be finalised | -8 | -8 |

Doubtful debt provisions |

Creditors | 10; 13 | 430 | 4 | 434 |

Total liabilities | 11.911 | 164 | 12.075 |

2. Reports on financial implementation

Introductory note

Previous EDFs

Decision No 1/2000 of the ACP-EC Council of 27 July 2000 regarding transitional measures provides for some of the unallocated resources from previous EDFs to be used for programmes consistent with the relevant provisions of the Cotonou Agreement and put into early application under transitional measures.

Commission Decision No 410/2001 of 16 March 2001, which fixes the allocations for the indicative programmes of the ACP countries under the ACP-EC Partnership Agreement, stipulates that the unallocated resources from previous EDFs up to maximum of EUR 1 200 million are to be used for implementation in accordance with the rules and procedures of the relevant EDFs pending the entry into force of the Financial Protocol to the 9th EDF.

Commission Decision No 1033/2001 of 15 June 2001 fixed the allocations for regional programmes and intra-ACP cooperation under the Financial Protocol to the ACP-EC Partnership Agreement.

Commission Decision No 1252/2002 of 11 July 2002 increased the envelope intended for intra-ACP cooperation by EUR 60 million, from the general reserves of the 6th and 7th EDFs, and also provided for the use of these additional funds pending the entry into force of the Financial Protocol to the 9th EDF, in accordance with the rules and procedures applicable to the original EDFs.

Lastly, Decision No 3/2002 of the ACP-EC Council of Ministers of 23 December 2002 took an amount of EUR 25 million from the unallocated resources of the 8th EDF (general reserve) and allocated it to regional cooperation under the ACP-EC Partnership Agreement.

As last year, to ensure transparency in the presentation of the accounts the various tables below set out separately for each of the 6th, 7th and 8th EDFs the part used for Lomé Convention programming and the part used for programming under the Cotonou Agreement. Entry in the accounts and the presentation of accounts in connection with the Cotonou Agreement is based on Article 3(2) of Annex IV of the ACP-EC Partnership Agreement, as regards countries. That Article gives the ACP countries an allocation A to cover macroeconomic support and support for programmes and projects and an allocation B to cover unforeseen needs such as emergency assistance, debt relief initiatives and support to offset the adverse effects of instability in export earnings.[2] For the regions, the accounts are set out according to the regional programming as referred to in Chapter 2 of the ACP-EC Partnership Agreement (i.e. regional indicative programme and intra-ACP cooperation).

9th EDF

The ACP-EC Partnership Agreement signed on 23 June 2000 in Cotonou by the Member States of the European Community and the States of Africa, the Caribbean and the Pacific (ACP States) entered into force on 1 April 2003.

The EU Council Decision of 27 November 2001 (2001/822/EC) on the association of the overseas countries and territories (OCT) with the European Community entered into force on 2 December 2001.

The Cotonou Agreement was concluded for a twenty-year period with a five-year review clause and a Financial Protocol for each five-year period. The EU Council Decision on the association of the OCT with the European Community is applicable for ten years.

The first five years are, therefore, financed under the 9th EDF . The 9th EDF was set at EUR 13 800 million, including EUR 13 500 million allocated to the ACP States in accordance with the first Financial Protocol included in the Cotonou Agreement, EUR 175 million allocated to the OCT (provided for by the EU Council Decision on the association of the OCT) and EUR 125 million reserved for the European Commission to cover expenses in connection with implementing the 9th EDF resources (provided for in the internal agreement for the 9th EDF).

Of the total 9th-EDF budget for the ACP States, EUR 1 000 million may only be released after examination by the EU Council in 2004, on the basis of a proposal from the European Commission. Assuming they are released, the resources will have to be distributed between the 9th EDF budgets according to need.

The breakdown of 9th EDF allocations for ACP States, including the "conditional billion" and allocations managed directly by the European Investment Bank (EIB), is as follows:

9th EDF allocation | Reduction / conditional billion | Unopened allocations (EIB-managed) | Open allocations OLAS |

Long-term development budget | 10.000.000.000 | (741.000.000) | (186.850.000) (interest-rate subsidies) | 9.072.150.000 |

Regional budget | 1.300.000.000 | (96.000.000) | 1.204.000.000 |

Investment facility | 2.200.000.000 | (163.000.000) | (2.037.000.000) | 0 |

Total | 13.500.000.000 | (1.000.000.000) | (2.223.850.000) | 10.276.150.000 |

The long-term development budget for ACP States has two components:

The A allocation for macroeconomic support for sectoral policies, programmes and projects supporting focal or non-focal areas of Community aid corresponds to the allocation for the NIPs and structural adjustment in previous EDFs.

The B allocation, intended to cover unforeseen needs such as emergency aid, contributions to debt reduction initiatives and support to offset adverse fluctuations in export earnings, generally corresponds to the Stabex, Sysmin and emergency aid allocations in previous EDFs.

The breakdown of 9th EDF allocations for the OCT, including those managed directly by the European Investment Bank (EIB), is as follows:

9th EDF allocation | Unopened allocations (EIB-managed) | Open allocations OLAS |

Long-term development budget | 127.100.000 | 127.100.000 |

C reserve | 17.900.000 | (1.000.000) (interest rate subsidies) | 16.900.000 |

Regional budget | 8.000.000 | 8.000.000 |

Budget for studies and technical assistance | 2.000.000 | 2.000.000 |

Investment Facility | 20.000.000 | (20.000.000) | 0 |

TOTALS | 175.000.000 | (21.000.000) | 154.000.000 |

The unallocated C reserve for OCTs is maintained to finance humanitarian aid, emergencies, refugee assistance and fluctuations in export earnings, and corresponds to the B allocation for the ACP countries.

Moreover, under Commission Decision E/982/2003 of 16 June 2003, all unspent balances from EDFs prior to the date of entry into force of the Cotonou Agreement (for ACP countries) and the date of entry into force of the internal agreement on the 9th EDF (for the OCT countries), and all amounts decommitted after those dates for ongoing projects under those EDFs, have been transferred to the 9th EDF . Any resource thus transferred to the 9th EDF after previously having been allocated to the indicative programme of an ACP State or region has been allocated to that State or region. On the other hand, the unallocated resources have been transferred to reserves which will subject to new programming under the 9th EDF.

The tables at Annex giving the amounts decided, contracted and paid refer to net data . Only Table 2.7. refers separately to amounts committed and decommitted and amounts paid and recovered.

2.1. Appropriations at 31/12/2003

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2.2 Consolidated accounts

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Table 2.8 Annual 2003 gross figures by instrument for decisions and payments

Annual Decision 2003 (Million EUR) | Commitments | Decommitments | Net |

Lomé | GRANTS | 213,18 | (134,13) | 79,04 |

SPECIAL LOANS | 0,00 | (6,00) | (6,00) |

TOTAL INDICATIVE PROGRAMME | 213,18 | (140,13) | 73,04 |

INTEREST RATE SUBSIDIES | 13,57 | (3,85) | 9,72 |

EMERGENCY AID | 2,31 | (1,37) | 0,94 |

AID FOR REFUGIES | 0,00 | (0,10) | (0,10) |

RISK CAPITAL | 240,30 | (138,55) | 101,75 |

SYSMIN | 2,45 | (22,60) | (20,15) |

TRANSFER FROM OTHER FUNDS | 3,00 | (5,98) | (2,98) |

STRUCTURAL ADJUSTMENT | 5,00 | (13,37) | (8,37) |

HEAVILY INDEBTED POOR COUNTRIES | 0,00 | 0,00 | 0,00 |

TOTAL NON PROGRAMMABLE AID | 266,63 | (185,82) | 80,81 |

USE OF INTERESTS | 11,54 | (8,84) | 2,70 |

Total | 491,34 | (334,79) | 156,55 |

Cotonou | A ENVELOP | 1.918,48 | (0,38) | 1.918,10 |

B ENVELOP | 220,29 | 0,00 | 220,29 |

CDE+CTA+ASS.PARITAIRE | 37,88 | 0,00 | 37,88 |

PROJETS REGIONAUX | 177,56 | 0,00 | 177,56 |

INTRA ACP | 759,80 | 0,00 | 759,80 |

DEPENSES DE MISE EN ŒUVRE | 155,45 | (29,80) | 125,65 |

Total | 3.269,45 | (30,18) | 3.239,28 |

Total | 3.760,80 | (364,97) | 3.395,83 |

Annual Payments 2003 (Million EUR) | Paid | Recovered | Net |

Lomé | GRANTS | 1.073,02 | (50,70) | 1.022,31 |

SPECIAL LOANS | 0,00 | 0,00 | 0,00 |

TOTAL INDICATIVE PROGRAMME | 1.073,02 | (50,70) | 1.022,32 |

INTEREST RATE SUBSIDIES | 8,54 | (0,08) | 8,46 |

EMERGENCY AID | 6,37 | 0,00 | 6,37 |

AID FOR REFUGIES | 32,11 | (0,87) | 31,23 |

RISK CAPITAL | 226,61 | 0,00 | 226,61 |

SYSMIN | 40,30 | (0,02) | 40,28 |

TRANSFER FROM OTHER FUNDS | 17,79 | (0,86) | 16,93 |

STRUCTURAL ADJUSTMENT | 174,48 | (3,48) | 171,00 |

HEAVILY INDEBTED POOR COUNTRIES | 208,97 | 0,00 | 208,97 |

TOTAL NON PROGRAMMABLE AID | 715,17 | (5,32) | 709,85 |

USE OF INTERESTS | 7,66 | (0,20) | 7,45 |

Total | 1.795,85 | (56,23) | 1.739,62 |

Cotonou | A ENVELOP | 162,90 | (0,01) | 162,89 |

B ENVELOP | 44,76 | 0,00 | 44,76 |

CDE+CTA+ASS.PARITAIRE | 0,00 | 0,00 | 0,00 |

PROJETS REGIONAUX | 1,60 | 0,00 | 1,60 |

INTRA ACP | 230,35 | 0,00 | 230,35 |

DEPENSES DE MISE EN ŒUVRE | 0,25 | 0,00 | 0,25 |

Total | 439,86 | (0,01) | 439,86 |

Total | 2.235,71 | (56,24) | 2.179,47 |

2.3. Situation by country and by instrument

2.3.1 6th EDF

Notes on the revenue and expenditure accounts:

1. In tables 3.1.1 to 3.1.8, the figure “0.0” indicates that the corresponding amount is between EUR –4.999 and EUR 4.999.Where no figure is given, the amount is equal to zero.Countries with a nil balance in all columns are not listed in the tables.

2. In all tables the heading “All ACP countries” refers to projects which cover a number of countries but are not financed by regional cooperation.

3. In all tables the heading “Financial and administrative expenses” represents projects financed by EDF interest which have been transferred to a financial instrument (grants, Structural Adjustment Facility) with the exception of one amount of EUR 1 million financed from the “grants” appropriation and used for posting bank charges and exchange rate differences.

4. In the first column of tables 3.1.1 and 3.1.2, the allocation for “Regional cooperation” (EUR 880.79 million) corresponds to the Commission’s regional cooperation target for ACP States only (EUR 912.23 million) minus the amount transferred during the years 2000, 2001 and 2002 to the general reserve according the transitional measures (i.e. EUR 1 million, EUR 1.36 million and EUR 0.16 million) and 28.9 million transferred to 9th EDF following the entry in force of Cotonou during 2003.

5. All the amounts of appropriations are the same of those of decisions since the amounts not committed have been transferred to 9th EDF following the entry in force of Cotonou (Commission Decision of 16 April 2003).

2.3.2 7th EDF

Notes to the revenue and expenditure accounts:

6. In tables 3.2.1 to 3.2.8, the figure "0.0" indicates that the corresponding amount is between EUR –4.999 and EUR 4.999.Where no figure is given, the amount is equal to zero.Countries with a nil balance in all columns are not listed in the tables.

7. In all tables the heading "All countries ACP" refers to projects which cover a number of countries but are not financed by regional cooperation.

8. In all tables the heading "Financial and administrative expenses" represents projects financed by EDF interest which have been transferred to a financial instrument (grants, Structural Adjustment Facility).

9. In the first column of tables 3.2.1 and 3.2.2, the allocation for "Regional Cooperation" (EUR 1,142.34 million) is composed as follows:

Commission's regional cooperation target (ACP States only) 1,125 Target overrun 67.9 Transfers from unallocated resources in order to finance the programme of assistance to ACP countries for integration within the WTO 10 Amount transferred during the year 2000 to the general reserve according the transitional measures (8.5) Amount transferred during the year 2001 to the general reserve according the transitional measures (2.2) Amount transferred during the year 2002 to the general reserve according the transitional measures (0.7) Amount transferred during the year 2003 to the 9th EDF (49.1) Following the entry in force of Cotonou

Total as at 31.12.2003 1,142.34

10. All the amounts of appropriations are the same of those of decisions since the amounts not committed have been transferred to 9th EDF following the entry into force of Cotonou (Commission Decision of 16 April 2003).

2.3.3 8th EDF

Notes to the revenue and expenditure accounts:

11. In tables 3.3.1 to 3.3.8, the figure "0.0" indicates that the corresponding amount is between EUR –4.999 and EUR 4.999.Where no figure is given, the amount is equal to zero.Countries with a nil balance in all columns are not listed in the tables.

12. In all tables the heading "All countries ACP" refers to projects which cover a number of countries but are not financed by regional cooperation.

13. In all tables the heading "Financial and administrative expenses" represents projects financed by EDF interest which have been transferred to a financial instrument (grants, Structural Adjustment Facility)

14. In the third column of tables 1 and 2, the allocation for "Regional Cooperation" (EUR 1,455.57 million) is composed as follows:

Commission's regional cooperation target (ACP States only) 1,300

Council decision 3/2000 in order to ensure the continuity of several activities waiting the entry in force of 9th EDF 306

Council decision 10/2001 dated 20/12/2001 on the use of unallocated Resources from the 8th EDF 80.7

Amount transferred during the year 2000 to the general reserve according the transitional measures (68)

Council decision 3/2002 dated 23/12/2002 on the use of unallocated Resources from the 8th EDF 54.2

Amount transferred during the year 2003 to the 9th EDF following the entry in force of Cotonou (317.33)

Total as at 31.12.2003 1,455.57

15. All the amounts of appropriations are the same of those of decisions since the amounts not committed have been transferred to 9th EDF following the entry in force of Cotonou (Commission Decision of 16 April 2003).

2.3.4 9th EDF

Notes to the revenue and expenditure accounts:

16. In tables 3.4.1 to 3.4.8, the figure "0.0" indicates that the corresponding amount is between EUR –4.999 and EUR 4.999.Where no figure is given, the amount is equal to zero.Countries with a nil balance in all columns are not listed in the tables.

17. In all tables the presentation has been made taking in account the financial resources (envelope A, envelope B and implementation costs) used and the nature of the project (macroeconomic support, sectoral policies, emergency assistance etc.).

2.3.5 All EDF

The total amount of cumulative and annual payments includes an amount of EUR 352.03 million which corresponds to Stabex payments transferred to the Stabex security account in 2001. Following a recommendation of the Court of Auditors, these treasury transfers are no longer accounted for as payments in the financial accounts. Only payments as defined by Article 31 of the Financial Regulation of the 8th European Development Fund now feature in the financial accounts.

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2.4. Other management information

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TABLE 4.1.2

Breakdown of sleeping commitments (TRO): Projects with RALs of over EUR 1 million

18. Projects suspended owing to the political situation in the country concerned

(EUR million)

Suspension | Country | Projects | Amount unspent |

Stabex 8th EDF | Togo | Green coffee/cotton/oil | 10.2 |

8th EDF | Guinea | Budgetary support for poverty reduction | 11.4 |

TOTAL | 21.6 |

19. Slow starters

These are primarily projects for which contracts have not yet been awarded. This may be because the tender procedure had to be cancelled to comply with the rules of sound financial management (non-compliant bids, procedural failures by the beneficiary administration) or the start has been delayed (e.g. amendments had to be made to the financing agreement). In the case of budgetary support/structural adjustment projects, audits on previous instalments and/or those needed for payment of instalments have not been completed yet.

(EUR million)

Contracts awarded | Country | Projects | Amount unspent |

Programmable aid 7th EDF | Burundi | Neighbouring country rehabilitation | 8.8 |

Central African Republic | Agricultural production support | 1.2 |

Ethiopia | Church conservation in Lalibela | 4 |

Fiji | Construction of a bridge | 8.4 |

Programmable aid 8th EDF Programmable aid 8th EDF | Sierra Leone | Post-conflict budget support | 18.2 |

Botswana | Vocational Training | 14.8 |

Barbados | Expansion of the Barbadian language | 4 |

Cameroon | Support for pharmaceutical policy | 2 |

Mozambique | Rural development | 30 |

Ethiopia | Church conservation in Lalibela | 5.1 |

Ethiopia | Water supply | 6 |

Kenya | District health services | 15 |

Mauritania | Roads | 3.5 |

Uganda | Health | 17 |

Fiji | Construction of a bridge | 2.6 |

Papua-New Guinea | Mining Sector Support | 50 |

Gabon | Economic reform | 4.9 |

Cameroon | Institutional support for decentralisation | 23.4 |

GRAND TOTAL 7+8th EDFs | 218.9 |

20. Ongoing projects which do not entail payments during the reference period and EIB projects for which the contract has not yet been signed

(EUR million)

Programme | Country | Projects | Amount unspent |

EIB 6th EDF | Rwanda | Kigali int. airport | 3.5 |

Mozambique | Private sector support | 1.9 |

EIB 7th EDF | Rwanda | Kigali int. airport | 6 |

Angola | Angoras | 1.1 |

Haiti | Metropolitan water | 6 |

EIB 8th EDF EIB 8th EDF | Mauritius | SSR airport extension | 3 |

Zimbabwe | Zesa v Kariba | 2 |

Malawi | Sucoma Sugar project | 4 |

Swaziland | Sugar | 1.2 |

Zimbabwe | Zesa power | 2.5 |

Central African Rep. | Tiona fund | 1.6 |

Haiti | Metropolitan water | 10 |

French Polynesia | Socredo PG V B | 4 |

Barbados | BCPC III | 2.6 |

Ghana | Financial sector | 9.5 |

Mauritius | Sewerage project | 7.5 |

Mauritius | Rodrigues power station | 2 |

Tanzania | Private sector development | 6.6 |

Guyana | Power project | 20 |

St Lucia | Bank of St. Lucia | 3 |

Trinidad | Carribean microfinance | 4 |

Madagascar | Private sector development | 5.3 |

GRAND TOTAL 7+8th EDF | 107.9 |

21. Projects currently under dispute with suppliers or contractors, which, under the rules of sound financial management, precludes payment or closure

(EUR million)

Disputes | Country | Projects | Amount unspent |

Programmable aid 6th EDF | Guinea | Rehabilitation of aluminium factory | 5.7 |

Programmable aid 7th EDF | Congo Braz. | Tractebel | 1.2 |

Nigeria | Oban Hills programe | 1.7 |

Nigeria | Carl bro/EPK/DHV | 1.6 |

Suriname | Roads rehabilitation | 8.3 |

Ethiopia | Amarti Diversion project | 5.6 |

Nigeria | Katsina Arid Zone programme | 1.8 |

GRAND TOTAL 6th+7th EDF | 25.9 |

22. Technically completed projects for which financial advances were granted but remain either unaccounted for or refundable. Projects for which, despite regularisation measures undertaken in particular by the National Authorising Officers of the ACP countries concerned, supporting documents or repayment had not been received by 31 December 2003

(EUR million)

Financial instrument | Country | Projects | Amount unspent |

Programmable aid 6th EDF | Burkina Faso | Sahel country, gas use | 1.3 |

Papua-New Guinea | Roads & bridges rehabilitation | 4.6 |

Programmable aid 7th EDF | Tanzania | Support of Coffee research | 1.3 |

Tanzania | Human resources development | 1.2 |

Mozambique | Support for municipal elections | 1.2 |

Eritrea | Water resources | 2.3 |

Chad | Primary education | 2.3 |

Regional project | Fight against AIDS | 2.6 |

Regional project | Public health staff training | 1.3 |

Programmable aid 8th EDF | Guinea | Rural programme Haute Guinée | 1.3 |

Zimbabwe | Agricultural Services | 3.2 |

Mozambique | Support for general elections | 2 |

GENERAL TOTAL | 24.6 |

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3. – Financial statements and information supplied by the EIB

INVESTMENT FACILITY

BALANCE SHEET AS AT 31 DECEMBER 2003

(EUR ’000)

ASSETS | 31.12.2003 |

Loans and advances to credit institutions |

repayable on demand | 0 |

other loans and advances [note D] | 67 473 |

Shares and other variable-yield securities |

Investments in venture capital enterprises [note C] | 3 693 |

Subscribed capital unpaid | 133 487 |

TOTAL ASSETS | 204 653 |

LIABILITIES |

Facility Capital |

Subscribed capital [note F] | 205 000 |

Loss for the financial year [note G] | - 347 |

TOTAL LIABILITIES | 204 653 |

OFF-BALANCE SHEET ITEMS |

Commitments |

In respect of investments in venture capital enterprises | 52 010 |

Undisbursed loans [note E] |

credit institutions | 40 000 |

customers | 44 100 |

136 110 |

The bracketed notes refer to the notes to the Financial Statements.

PROFIT AND LOSS ACCOUNT for the period ended 31 December 2003 (in EUR’000) | 31.12.2003 |

Result on financial operations [note G] . . . . . . . . . . . . . . . . . . . . . . . . . . | - 347 |

Loss for the financial period | - 347 |

INVESTMENT FACILITY

NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2003

GENERAL

The Investment Facility (the “Facility”) has been established within the framework of the Cotonou Agreement (the “Agreement”) on cooperation and development assistance negotiated between the African, Caribbean and Pacific Group of States (“the ACP States”) and the European Union and its Member States on 23 June 2000.

The Facility is managed by the European Investment Bank (the “EIB” or the “Bank”). Under the terms of the Agreement up to EUR 2,200 million may be allocated to finance the Facility.. Within the framework of the Agreement, The EIB also manages loans granted from its own resources. All other financial resources and instruments under the Agreement are administered by the European Commission.

These financial statements comprise only the operations of the Facility. Under Council Decision of 8 April 2003, the Member States agreed to cover in full the expenses incurred by the Bank for the management of the Facility. Accordingly, these financial statements exclude such expenses. Interest on bank deposits placed by the Facility with the EIB is not accounted for by the Facility, as it is payable directly to the European Commission.

SIGNIFICANT ACCOUNTING POLICIES

Accounting standards

These financial statements have been prepared in accordance with the general principles of the Directive 86/635/EEC of the Council of the European Communities of 8 December 1986 (as amended by Directive 2001/65/EC of 27 September 2001) on the annual accounts and consolidated accounts of banks and other financial institutions (the “Directive”).

Foreign currency translation

The accounts of the Facility are expressed in euro.

For the presentation of the financial statements, assets, liabilities and off balance-sheet items denominated in foreign currencies are translated into Euro at the spot rates of exchange prevailing on the balance sheet date except for loans or participating interests denominated in currencies other than euro for which the rates used for the translation into euro of payments made are those in force at the actual date of such payments.

The profit and loss accounts are translated into euro monthly on the basis of the exchange rates prevailing at the end of each month.

Exchange differences arising on translation are recorded as a currency gain or loss in the profit and loss account.

Financial assets

Financial assets are accounted for using the settlement date basis.

Shares and other variable yield securities

Investments in venture capital enterprises

Investments in venture capital enterprises represent shares and other variable-yield securities acquired for the longer term in the normal course of the Facility’s activities and are shown in the balance sheet at their original purchase cost.

Based on the reports received from fund managers up to the balance sheet date, the portfolio of Venture Capital Investments is valued on a line-by-line basis at the lower of cost or attributable net asset value (“NAV”), thus excluding any attributable unrealised gain that may be prevailing in this portfolio.

The attributable NAV is determined through applying either the Facility’s percentage ownership in the underlying vehicle to the NAV reflected in the most recent report or, to the extent available, the value per share at the same date, submitted by the respective Fund Manager. The attributable NAV is adjusted for events having occurred between the date of the latest available NAV and the balance sheet date to the extent that such adjustment is considered to be material.

Unrealised losses due solely to administrative expenses of venture capital funds in existence for less than two years at the balance sheet date are not taken into consideration in determining the attributable NAV.

Taxation

The Protocol on the Privileges and Immunities of the European Communities, appended to the Treaty of 8 April 1965 establishing a Single Council and a Single Commission of the European Communities, stipulates that the assets, revenues and other property of the Communities are exempt from all direct taxes.

SHARES AND OTHER VARIABLE-YIELD SECURITIES (IN EUR '000)

Purchase price at the beginning of the period | Additions | Disposals | Foreign exchange adjustments | Purchase price at the end of the period | Cumulative value adjustments at the end of the period | Carrying amount at the end of the period |

Investments in venture capital enterprises: | 0 | 4 127 | 0 | (434) | 3 693 | 0 | 3 693 |

LOANS AND ADVANCES TO CREDIT INSTITUTIONS (IN EUR '000)

As at 31 December 2003, loans and advances to credit institutions were as follows:

Less than 3 months |

Term deposits: |

European Investment Bank (*) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 67 473 |

67 473 |

(*): Under the terms of the Facility and according to the Financial Regulation applicable to the 9th European Development Fund, the funds received by the EIB on behalf of the Facility are recorded in an account in the Commission’s name. Interest on these deposits is not accounted for by the Facility but is payable by the EIB to European Commission

SUMMARY STATEMENT OF LOANS AND GUARANTEES AS AT 31 DECEMBER 2003 (IN EUR ’000)

Analysis of aggregate loans granted (1) | to intermediary credit institutions | directly to final beneficiaries (2) | Total 2003 |

Disbursed portion . . . . . . . . . . . . . . . . . . . . . . | 0 | 0 | 0 |

Undisbursed loans . . . . . . . . . . . . . . . . . . . . . | 40 000 | 44 100 | 84 100 |

Aggregate loans granted | 40 000 | 44 100 | 84 100 |

(1): Aggregate loans granted comprise both the disbursed portion of loans and the portion still to be disbursed.

(2): Of which EUR 3.3 million is subordinated

SUBSCRIBED CAPITAL (IN EUR)

The subscribed capital of the Investment Facility amounts to EUR 205 million of which EUR 71.5 million has been called and is paid-in.

The statement of subscriptions to the capital as at 31 December 2003 is as follows:

Member States | Subscribed Capital | Unpaid Capital | Paid-in Capital |

Austria | 5 432 500 | 3 312 500 | 2 120 000 |

Belgium | 8 036 000 | 4 900 000 | 3 136 000 |

Denmark | 4 387 000 | 2 675 000 | 1 712 000 |

Finland | 3 034 000 | 1 850 000 | 1 184 000 |

France | 49 815 000 | 37 665 000 | 12 150 000 |

Germany | 47 888 000 | 29 200 000 | 18 688 000 |

Greece | 2 562 500 | 1 562 500 | 1 000 000 |

Ireland | 1 271 000 | 775 000 | 496 000 |

Italy | 25 707 000 | 15 675 000 | 10 032 000 |

Luxembourg | 594 500 | 449 500 | 145 000 |

Netherlands | 10 701 000 | 6 525 000 | 4 176 000 |

Portugal | 1 988 500 | 1 503 500 | 485 000 |

Spain | 11 972 000 | 7 300 000 | 4 672 000 |

Sweden | 5 596 500 | 4 231 500 | 1 365 000 |

United Kingdom | 26 014 500 | 15 862 500 | 10 152 000 |

TOTAL | 205 000 000 | 133 487 000 | 71 513 000 |

RESULT ON FINANCIAL OPERATIONS

The investments in venture capital operations were disbursed and are denominated in USD; the exchange loss recorded results from the depreciation of the USD against the EUR between the time of disbursement and the financial year-end [see note B2 concerning the foreign currency translation policy].

As at 31 December 2003, the result of financial operations comprised:

EUR |

Unrealised exchange loss | - 433 673 |

Realised exchange profit | 86 891 |

- 346 782 |

INVESTMENT FACILITY - ANNUAL REPORT 2003 – MAIN FEATURES OF SIGNED PROJECTS |

Name | Country / Region | Sector | Nature of operation | Amount |

(in EUR million) |

Burkina Faso Global Loan II | Burkina Faso | Financial sector | Local currency loan | 12,00 |

Private Sector |

Development – |

Global Loan II | Cameroon | Financial sector | Local currency loan | 28,00 |

Bel Ombre Hotel | Mauritius | Tourism | Indirect equity and | 6,10 |

Subordinated loan |

EBTR | Mauritania | Infrastructure | Local currency loan | 4,00 |

African Bank Holdings,LLC | Regional - Africa | Financial sector | Equity | 30,00 |

Aureos East Africa Fund | Regional - Africa | Financial sector | Equity | 6,80 |

Aureos Southern Africa | Regional - Africa | Financial sector | Equity | 10,50 |

Aureos West Africa Fund | Regional - Africa | Financial sector | Equity | 8,75 |

Kansanshi Copper Mine | Zambia | Industry & mining | Subordinated loan | 34,00 |

Total | 140,15 |

Note: Disbursements generally follow somewhat behind signature, hence IF disbursements by the end of 2003 amounted to just EUR 4 million, for the equity investments in the regional Aureos funds and African Bank Holdings. |

RECONCILIATION TO FINANCIAL STATEMENTS |

EUR million |

Shares and other variable-yield securities |

Investments in venture capital enterprises | 3,70 |

OFF-BALANCE SHEET ITEMS |

Commitments |

In respect of investments in venture capital enterprises | 52,00 |

Undisbursed loans (Note E) | 40,00 |

a) Credit institutions | 44,10 |

b) Customers |

Result on financial operations (exchange) | 0,35 |

TOTAL | 140,15 |

[1] Translator’s note: for reasons of expediency, in the English version figures in running text are given using the decimal point but the tables show figures using the decimal comma , with the point used to separate thousands.

[2] The unallocated resources from the previous EDFs include the balance of the Sysmin funds, which by decision 3/2000 of the ACP-EC Ambassadors' Committee was set at 410 926 million. Council Decision E410/2001 includes these resources in programming for the national indicative allocations (part B) under the financial protocol to the ACP-EC Partnership Agreement.