EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

The Internal Agreement establishing the eleventh European Development Fund (11th EDF) entered into force on 01 March 2015 after its ratification by all the Member States.

While the 11th EDF is not included in the EU budget and its financial envelope is determined in the Internal Agreement, the funds will be implemented according to the 11th EDF Financial Regulation, which is aligned to the maximum with the Financial Regulation and its Rules of Application.

The 11th EDF Financial Regulation was adopted on 02 March 2015 and entered into force on 06 March 2015.

A clarification to the current arrangements is proposed. It reflects the most recent experience as regards EDF accounts.

The motivation for the amendment proposed by the Commission is presented hereafter.

2. CONTENT OF THE PROPOSAL

Ensuring that European Commission EDF accounts (Article 22(3) of Council Regulation (EU) 2015/323) are kept free of any charge and negative interest:

According to Article 22(3) of Council Regulation (EU) 2015/323, contributions to the EDF shall be credited by each Member State to a special account entitled ‘European Commission — European Development Fund’ opened with the central bank of the relevant Member State or the financial institution designated by it.

It should be clarified that these special accounts opened by the Member States in the name of the Commission, for the purpose of depositing EDF contributions, until they need to be used for payments, are not only to be kept free of charges, but also free of interest (positive or negative). The purpose of this provision is to prevent losses for the EDF budget. Any charge applied to those accounts would be equivalent to a reduction of the funds available to the EDF budget. In this respect, negative interest should equally be avoided as it has the same negative effect as charges. Therefore, it is proposed that the Member State concerned should compensate the EDF budget for any charge or negative interest applied to the account for EDF resources it has opened in the name of the Commission pursuant to Article 22(3) of Council Regulation (EU) 2015/323.

This amendment further ensures that the EDF budget is not negatively affected by Decision 2014/337/EU (ECB/2014/23) of the European Central Bank of 5 June 2014, providing for a negative interest rate which entails a payment obligation of the deposit holder to the relevant national central bank (NCB) including the right of that NCB to debit the relevant government deposit account accordingly, or by similar decisions by other EU central banks where EDF funds have to be kept in accordance with Article 22 of Council Regulation (EU) 2015/323. In this context, it should be recalled that, so far, the Commission has not requested Member States to remunerate EDF accounts in case of positive ECB deposit rates.

2015/0213 (NLE)

Proposal for a

COUNCIL REGULATION

amending Regulation (EU) 2015/323 of 2 March 2015 on the financial regulation applicable to the 11th European Development Fund

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on European Union and to the Treaty on the Functioning of the European Union,

Having regard to the Internal Agreement between the Representatives of the Governments of the Member States of the European Union, meeting within the Council, on the financing of European Union aid under the multiannual financial framework for the period 2014 to 2020, in accordance with the ACP-EU Partnership Agreement, and on the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the Treaty on the Functioning of the European Union applies (‘the Internal Agreement’), and in particular Article 10(2) thereof,