Financial Regulation of 16 June 1998 applicable to development finance cooperation under the fourth ACP-EC Convention
Date: 1998-06-16
Institutions: Council of the European Union
Subjects: ACP-EU Convention, European Development Fund, Member States' contribution, development aid, financial cooperation

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II

(Acts whose publication is not obligatory)

COUNCIL

FINANCIAL REGULATION

of 16 June 1998

applicable to development

finance cooperation under the fourth ACP-EC

Convention

(98/430/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, hereinafter referred to
as ‘the EC Treaty',

Having regard to the fourth ACP-EC Convention, signed at Lomé on 15 December 1989,
hereinafter referred to as ‘the Convention', as amended by the Agreement signed in
Mauritius on 4 November 1995,

Having regard to the Internal Agreement on the financing and administration of
Community aid under the Fourth ACP-EEC Convention (1), signed in Brussels on 20
December 1995, hereinafter referred to as ‘the Internal Agreement', and in particular
Article 32 thereof,

Having regard to Council Decision 91/482/EEC of 25 July 1991 on the association of the
overseas countries and territories with the European Economic Community (2), hereinafter
referred to as ‘the Decision',

Having regard to the general regulations and general conditions for works, supplies and
service contracts financed by the European Development Fund (3) which were approved by
the ACP-EEC Council of Ministers on 29 March 1990, hereinafter referred to as ‘the
General Regulations and Conditions of Contract',

Having regard to the proposal submitted by the Commission,

Having regard to the opinion of the European Investment Bank, hereinafter referred to as
‘the Bank',

Having regard to the opinion of the Court of Auditors (4),

Whereas, pursuant to Article 1(1) of the Internal Agreement, the Member States have set
up an eighth European Development Fund, hereinafter referred to as ‘the EDF';

(1) OJ L 229, 17. 8. 1991, p. 288.
(2) OJ L 263, 19. 9. 1991, p. 1. Decision as amended by Decision 97/803/EC (OJ L 329, 29. 11. 1997,

p. 50).

(3) OJ L 382, 31. 12. 1990, p. 3.
(4) OJ C 223, 22. 7. 1997, p. 1.

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Whereas, under Article 32 of the Internal Agreement, the provisions for implementing this
Internal Agreement shall be the subject of a Financial Regulation adopted, upon the entry
into force of the Convention, by the Council acting by the qualified majority laid down in
Article 21(4) of the said Agreement,

HAS ADOPTED THIS FINANCIAL REGULATION:

TITLE I

FINANCIAL ESTIMATES, RULES FOR PAYMENT OF CONTRIBUTIONS TO
THE EDF BY THE MEMBER STATES AND GENERAL PRINCIPLES

Article 1

The amount of the EDF set in Article 1 of the Internal
Agreement shall be allocated as indicated in Annex I. The
allocation of appropriations and the rules of transfer shall
be laid down by the Convention and the Internal Agree-
ment.

two percentage points above the interest rate for short-
term financing applicable on the date on which the
instalment is due on the money market of the Member
State for the ecu. This rate shall be increased by a quarter
of a percentage point
for each month of delay. The
increased rate shall be applicable to the entire period of
delay. Amounts received by the Commission in respect of
such late payment
interest shall be credited to the
account provided for in Article 9(2) of the Internal Agree-
ment.

Article 2

1. Annual contributions to the EDF shall be called up
in four instalments payable on:

Article 3

(cid:190) 20 January,
(cid:190) 1 April,
(cid:190) 1 July,
(cid:190) 1 November.

The financial contributions of the Member States

1.
shall be expressed in ecus.

2.
its
Each Member State shall pay the amount of
contribution in ecus. The Member States may, however,
their contributions in their
make actual payments of
national currencies.

for

the

Supplementary contributions
financial year
decided on by the Council in accordance with Article 6(3)
of the Internal Agreement shall, unless otherwise decided
by the Council, be due and be made within as brief a
period as possible which shall be laid down in the
decision to call for such contributions and which may not
exceed three months.

2.
The Commission shall notify the Member States as
soon as possible, not later than the beginning of each
financial year, and on the basis of the Council decision
referred to in Article 6(1) of the Internal Agreement, of
the amount of the instalments of contributions to be paid
on each of the due dates. The Commission shall set the
amounts to be paid by each Member State so that they are
in proportion to its contributions to the EDF as fixed in
Article 1(2) of the Internal Agreement.

The Commission shall inform the Member States of any
alteration to the amount of the calls for contributions as
soon as possible before the date on which each instalment
of contributions is due, on the basis of the cash situation
of
the
remainder of the year.

the EDF and its expenditure estimates

for

3. Where an instalment of contributions payable under
this Article is not paid within 15 days of the due date, the
Member State concerned shall be required to pay interest
in respect of the amount not paid on the basis of a rate of

3.
Financial contributions shall be credited by each
Member State to a special account entitled ‘Commission
of the European Communities (cid:190) European Development
Fund' opened with the bank of issue of that Member State
or the financial institution designated by it. The amount
of
remain in these special
accounts until required to meet payments needs provided
for in Article 319 of the Convention.

such contributions

shall

4. Upon expiry of the Convention, that part of the
contributions which the Member States remain obliged to
make shall be called up by the Commission, as required,
on the conditions laid down in this Financial Regulation.

Article 4

1.
The ecu is the sum of specified amounts of the
currencies of the Member States as set out in Council
Regulation (EC) No 3320/94 of 22 December 1994 on the
consolidation of the existing Community legislation on
the definition of the ecu following the entry into force of
the Treaty on European Union (1).

Any change in the composition of the ecu decided on by
the Council pursuant to the EC Treaty shall automatically
apply to this provision.

(1) OJ L 350, 31. 12. 1994, p. 27.

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2.
The value of the ecu in a given currency shall be
equal to the sum of the equivalents of the amounts of the
currencies which make up the ecu.

It shall be determined by the Commission on the basis of
the exchange rates recorded each day on the exchange
markets.

The daily rates for conversion into the various national
currencies shall be available each day and shall be
published in the Official Journal of
the European
Communities.

3. Any operations involving conversions of the ecu into
a national currency shall, in principle, be effected on the
basis of the exchange rate applicable on that day; deroga-
tions from this principle may be permitted in duly justi-
fied exceptional cases,
in accordance with the imple-
menting rules of
the Financial Regulation of 21
December 1977 applicable to the general budget of the
European Communities (1).

Article 5

In order to make payments provided for in Article 319(1)
and (4) of the Convention, the Commission shall open
accounts with financial institutions in the ACP States and
the OCT, for payments in the national currencies of the
ACP States or in the local currencies of the OCT, and in
the Member States,
for payments in ecus and other
currencies. Subject to Article 319(3) of the Convention,
deposits in these accounts shall bear interest. Subject to
Article 192 of the Convention, such interest shall be
credited to the account provided for in Article 9(2) of the
Internal Agreement.

Article 6

The Commission shall

1.
transfer from the special
accounts opened pursuant to Article 3(3) amounts needed
to replenish the accounts opened in its name in accord-
ance with Article 5. Such transfers shall be made on the
basis of the cash needs of the projects and programmes.

The Commission shall endeavour to make any with-
2.
drawals from the special accounts referred to in Article
3(3) in such a way as to maintain a distribution of its
assets in those accounts corresponding to the proportions
in which the various Member States contribute to the
EDF.

(1) OJ L 356, 31. 12. 1977, p. 1. Regulation as last amended by
Regulation (EC) No 2444/97 (OJ L 340, 11. 12. 1997, p. 1).

Article 7

The signatures of the Commission officials and agents
who are empowered to carry out operations on the EDF’s
accounts shall be lodged with the banks concerned when
the accounts are opened or, in the case of officials and
agents who are authorised subsequently, when they are
designated. This procedure also applies to the lodging of
signatures of national and regional authorising officers
and their deputies for operations in paying agent accounts
opened in the ACP States or the OCT and, where appro-
priate, in the accounts opened in the Member States.

Article 8

1.
EDF resources must be used in accordance with the
principles of sound financial management, and in partic-
ular those of economy and cost effectiveness. Qualitative
and quantitative objectives must be identified and the
realisation monitored by means of
progress of
appropriate indicators.

their

2.
To this end the use of EDF resources must be
preceded by an ex ante evaluation of the operation to be
undertaken with a view to ensuring that the expected
results justify the means deployed.

3. All operations must be periodically examined and
their grounds checked, particularly with a view to the
estimates of calls for contributions referred to in Article
6(1) of the Internal Agreement.

Article 9

1.
The financing decisions taken pursuant to Articles
25 to 27 of the Internal Agreement, with regard to aid
administered by the Commission, and the financing
agreements, have a time limit for starting implementation
of the project. Beyond this date, the financing decision
and agreement no longer apply.

2.
The financing decisions referred to in paragraph 1
and the financing agreements also have a time limit for
implementation of the operation. Continuation of the
operation beyond this date must be justified by the third-
party beneficiary and accepted by the Commission before
the implementation time limit expires.

3.
The termination of a project and the non-commit-
ment of the funds committed under Article 20 shall be
carried out when the legal commitment entered into by
the Commission in connection with that project with
respect to the beneficiary is concluded and the related
payments and collections have been recorded in the
accounts.

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TITLE II

FINANCIAL ADMINISTRATION OF EDF-APPROPRIATIONS BY THE
COMMISSION

S e c t i o n I

GENERAL PROVISIONS

Article 10

Subject to Article 15(3)(c) and Article 39, the provisions of
this Title are not applicable to risk capital and interest
rate subsidies managed by the Bank.

Article 11

1. Appropriations shall be administered by authorising
officers, who alone shall have the power to enter into
commitments regarding expenditure, establish sums due
to be collected and issue recovery orders and payment
orders.

2. Collection and payment operations shall be carried
out by the accounting officer.

3.
The duties of authorising officer, financial controller
and accounting officer shall be mutually incompatible.

Article 12

Where revenue and expenditure operations are managed
by means of integrated computer systems, the provisions
of Sections II and III of this Title shall apply with due
allowance for the possibilities and requirements deriving
from computerised management.

To this end:
(cid:190) the supporting documents may remain with the chief
authorising officer or the accounting officer or their
deputies for the purposes of checking,

(cid:190) signatures and approvals may be added in appropriate

computerised form.

The financial controller shall be consulted on the setting
up of the EDF accounting system and shall have access to
the data of the system.

Article 13

The chief authorising officer of

1.
the EDF, whose
duties are laid down in Article 311 of the Convention,
shall be appointed by the Commission.

implementation of

The chief authorising officer of the EDF may del-
2.
egate his powers of
the EDF to
authorised persons, whom he shall appoint, subject to
approval by the Commission. The rules governing
responsibilities adopted under this Title shall apply to
such persons within the limits of the powers delegated to
them. Each decision to delegate powers shall state the
extent and, where appropriate, the duration of the delega-
tion.

3.
Those to whom powers are delegated may act only
within the limits of the powers expressly conferred upon
them. Decisions to delegate powers shall be notified to
those to whom powers are delegated, to the accounting
officer,
the chief authorising
officer and the Court of Auditors.

the financial controller,

Article 14

The financial controller of the EDF shall be the
1.
financial controller of
the Commission. He shall be
responsible for monitoring the commitment and author-
isation of expenditure and for monitoring the recording
revenue and debts. The financial
and collection of
controller may be assisted in his duties by one or more
assistant financial controllers.

2. Monitoring shall be carried out by the financial
if
controller by means of inspection of the files and,
necessary, on the spot. In this connection he shall have
access to files and to the original supporting documents
relating to commitments, expenditure and revenue and,
where appropriate, to files relating to appropriations and
assigned funds. Any document or information drawn up
or kept on a magnetic medium which the financial
controller deems necessary for the performance of his
work shall be sent to him at his request.

The

rules

special

financial
3.
controller are those laid down in the Financial Regulation
applicable to the general budget of
the European
Communities.

applicable

to the

Article 15

1.
The accounting officer shall be appointed by the
Commission. He may be assisted in his duties by one or
more assistant accounting officers appointed, on the basis
of a reasoned opinion by the accounting officer, under the
same conditions as the accounting officer.

2.
The accounting officer shall be responsible for the
collection of revenue and the payment of expenditure, the
recovery of debts and the management of the cash flow.
Subject to Article 36, the accounting officer alone shall be
empowered to manage funds and assets. He shall be
responsible for their care.

The accounting officer shall be responsible for main-

3.
taining the accounts for:

(a)

the appropriations referred to in Article 1;

(b) the commitments referred to in Article 20;

(c) the risk capital decisions and interest-rate subsidies

referred to in Article 39;

(d) payments, revenue and debts.

The accounting officer shall be responsible for the
the financial statements referred to in

4.
preparation of
Article 66(2) of this Financial Regulation.

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Article 16

(a)

the revenue is booked to the correct item;

the chief authorising officer,

The Court of Auditors shall be notified of the appoint-
ment of
the accounting
officer, the assistant accounting officer and the adminis-
trator of advance funds referred to in Article 36 and of the
accounting plan referred to in Article 40. The Commis-
sion shall forward to the Court any rules of procedure
drawn up by it in respect of financial matters.

S e c t i o n I I

REVENUE AND DEBTS

Article 17

1.
EDF revenue consists of payments made by the
Member States in accordance with the Internal Agree-
ment, the income generated by deposits and any other
sum whose acceptance is established by the Council.

2.
The accounting officer shall be responsible for the
monitoring and entry in the accounts of payments by the
Member States and other revenue.

3.
For all other revenue, the accounting officer shall
draw up a revenue order which is sent to the financial
controller for prior approval. The purpose of the approval
of the financial controller shall be to establish that:

(b) the debt estimate is in order and conforms to the
relevant provisions relating to the management of the
EDF and all acts made in implementation thereof and
to the principles of sound financial management
referred to in Article 8.

The financial controller may withhold his approval if he
considers that the conditions laid down in paragraph 1(a)
and (b) above have not been met.

The Commission may, by a decision stating the full
reasons therefor, and on its sole responsibility, overrule
this refusal. This decision shall be final and binding; it
shall be communicated for information to the financial
controller. The Commission shall inform the Court of
Auditors of all such decisions within one month.

2. Without prejudice to Article 12, the chief author-
ising officer shall draw up, in respect of every established,
liquid and payable debt due to the EDF in the context of
the implementation of EDF appropriations, a recovery
order which shall be sent with supporting documents to
the financial controller
for his prior approval. Such
recovery orders shall, after they have received the approval
of the financial controller, be recorded in the accounts by
the accounting officer.

The purpose of the approval shall be to establish that:

(a)

the revenue is booked to the correct item;

(b) the order is in order and conforms to the relevant

provisions;

(a)

the revenue is booked to the correct item;

(c) the supporting documents are in order;

(b) the order is in order and conforms to the relevant

(d) the debtor is correctly described;

provisions;

(c) the supporting documents are in order;

(d) the order conforms to the principles of sound finan-

cial management;

(e) the due date is indicated;

(f)

the order conforms to the principle of sound financial
management referred to in Article 8;

(g) the amount and currency of the sum to be recovered

(e) the amount and currency of the revenue are correct.

are correct.

Entry in the accounts of revenue becomes final after the
approval of the financial controller.

Article 18

1. All measures or situations which may give rise to or
modify a debt due to the EDF and are brought to the
attention of the Commission by the national authorising
officer must be preceded by a debt estimate from the
chief authorising officer. Such estimates shall be sent to
for his approval and to the
the financial controller
accounting officer
recording in the
for provisional
accounts. They shall mention, in particular, the type of
debt, the estimated amount thereof and the budget item
to which it is to be booked and also the name and
description of the debtor. The purpose of the approval of
the financial controller shall be to establish that:

If approval is withheld, the third subparagraph of para-
graph 1 shall apply.

3.
If the chief authorising officer waives the right to
recover a debt as referred to in paragraph 1, he shall send
beforehand a proposal for cancellation to the financial
controller for his approval and to the accounting officer
for his information. The purpose of approval by the finan-
cial controller shall be to establish that the waiver is in
order and conforms with the principles of sound financial
management. The proposal concerned shall be registered
by the accounting officer.

If approval is withheld, the third subparagraph of para-
graph 1 shall apply.

4. Where the financial controller finds that a recovery
order has not been drawn up or that a sum due has not
been recovered, he shall inform the Commission thereof.

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Article 19

(a)

the proposal conforms to Article 20(1);

The accounting officer shall assume responsibility

1.
for recovery orders that have been duly drawn up.

2.
The accounting officer shall do all in his power to
ensure that the debts referred to in Article 18 are recov-
ered at the due dates indicated in the recovery orders and
shall ensure that the relevant rights of the Community are
safeguarded.

3.
The accounting officer shall inform the chief author-
ising officer and the financial controller of any debts not
recovered within the time limits laid down.

4.

If necessary, he shall initiate the recovery procedure.

S e c t i o n I I I

COMMITMENT,

VALIDATION, AUTHORISATION

AND PAYMENT OF EXPENDITURE

1. Commitment of expenditure

Article 20

1. All measures which may give rise to expenditure
payable by the EDF must be preceded by a proposal for
commitment of expenditure from the chief authorising
officer and can create legal obligations vis-à-vis third
parties only after approval by the financial controller of
the proposal for commitment and after a Commission
financing decision.

2.
Financing decisions taken by the Commission in
accordance with Articles 25 to 27 of the Internal Agree-
ment and the provisions authorising it to grant financial
aid from the EDF shall give rise to commitments of
expenditure.

Article 21

for
1. Without prejudice to Article 12, proposals
commitments, accompanied by the supporting docu-
ments, shall be transmitted to the financial controller.
They shall show in particular the purpose of the expend-
iture, the estimated amount involved, the item to which it
is to be charged and the name and description of the
recipient of the financing.

Proposals

for commitments

2.
to
endorsement by the accounting officer after approval by
the financial controller and a Commission financing
decision.

shall be subject

Article 22

1.
The purpose of approval of proposals for commit-
ment by the financial controller shall be to establish that:

(b) the expenditure has been charged to the correct item;

(c) appropriations are available;

(d) the financing proposal is correct and in conformity

with the provisions applicable to the EDF;

(e) the principles of sound financial management referred

to in Article 8 have been applied.

2. Approval may not be conditional.

Article 23

1.
The financial controller may withhold his approval if
he considers that the conditions laid down in Article 22
are not met. If he withholds his approval, he shall furnish
a written statement giving the reasons therefor. The chief
authorising officer shall be notified accordingly.

Where approval
is withheld and the chief authorising
officer maintains his proposal, the refusal shall be referred
for a decision to the Commission.

2.
Except where the availability of appropriations is in
doubt, the Commission may, by means of a decision
stating the full reasons therefor and taken on its sole
responsibility, overrule such a refusal. This decision shall
be final and binding; it shall be communicated for infor-
mation to the financial controller. The Commission shall
inform the Court of Auditors of all such decisions within
one month.

2. Assigned funds

Article 24

1.
The contracts concluded by the beneficiary for the
implementation of a project or programme which was the
subject of a financing decision referred to in Article 20(2)
and approved by the Head of Delegation,
shall be
recorded in the accounts by the chief authorising officer.
This recording is called assigned funds. The same holds
for contracts and estimates concluded directly or on
behalf of
the beneficiary by the Commission for the
implementation of such projects and programmes.

2.
The assigned funds recorded shall be set off against
commitments of expenditure of the financing decisions
referred to in Article 20(2).

3. Validation of expenditure

Article 25

The validation of expenditure shall be the act whereby
the chief authorising officer:

(a) verifies the existence of the creditor’s claim;

(b) determines or verifies the existence and the amount of

the sum due;

(c) verifies the conditions under which payment falls due.

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Article 26

Article 30

1.
Validation of any expenditure shall be subject to the
submission of supporting documents showing the cred-
itor’s claim and, where appropriate, the service rendered
or the existence of a document justifying payment. The
nature of the supporting documents to be enclosed with
the payment orders and the particulars they shall include
shall be such as to make it possible to carry out the
checks provided for in Articles 25 and 29.

1.
Subject to Article 35, payment orders shall be sent to
the financial controller for prior approval. The purpose of
this prior approval shall be to establish that:

(a)

the payment order was properly issued;

(b) the payment order agrees with the creditor’s claim;

(c) the expenditure is charged to the correct item;

For certain categories of expenditure, advances may

2.
be granted.

(d) the appropriations are available;

3.
The chief authorising officer empowered to validate
expenditure shall personally check the supporting docu-
ments or shall, on his own responsibility, ascertain that
this has been done.

4. Authorisation of expenditure

Article 27

Authorisation is the act whereby the chief authorising
officer, by the issue of a payment order, authorises the
accounting officer to pay an item of expenditure which
he has validated.

Article 28

The payment order shall state:

(a)

the item against which payment shall be charged;

(b) the amount

to be paid,

in figures and in words,

showing the currency;

(c) the name and address of the beneficiary;

(d) the bank account;

(e) the method of payment;

(f)

the purpose of the expenditure.

The payment order shall be dated and signed by the chief
authorising officer.

Article 29

1.
The payment order shall be accompanied by the
original supporting documents, which shall bear or be
accompanied by a statement confirming that the amounts
to be paid are correct and that the supplies have been
received or the service performed. The payment order
shall
the relevant
approvals of commitment.

show the numbers and dates of

2. Copies of the supporting documents, certified as true
copies by the chief authorising officer or the head of the
Commission delegation, may, in duly warranted cases, be
accepted in place of the originals.

(e) the supporting documents are in order;

(f)

the payee is correctly named and described.

2.

Should approval be withheld, Article 23 shall apply.

3. After approval by the financial controller, the ori-
ginal of the payment order, together with all supporting
documents, shall be forwarded to the accounting officer.

5. Payment of expenditure

Article 31

1. Without prejudice to Article 313 or Article 319(8) of
the Convention concerning respectively the responsibil-
ities of the national authorising officer and the financial
liabilities of the agents responsible for the management
and execution of development
finance cooperation,
payment
the final action whereby the EDF is
discharged of its obligations towards its creditors.

is

2.
Subject to Article 36, payment shall be made by the
accounting officer within the limits of the funds available.

Article 32

In the event of a substantive error or of the validity of the
discharge being contested or of failure to observe the
formalities prescribed by this Financial Regulation, the
accounting officer shall suspend payment.

Article 33

1.
If payment is suspended, the accounting officer shall
give the reasons for his decision in a written statement
which he shall send forthwith to the chief authorising
officer and, for information, to the financial controller.

Except where the validity of

2.
the discharge is
the chief authorising officer may, where
contested,
payment is suspended, refer the matter to the Commis-
sion. The latter may require, in writing and on its own
responsibility, that payment be effected.

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Article 34

Payments

1.
shall be effected through the bank
accounts described in Article 5. The procedures for
opening, administering and using such accounts shall be
determined by the Commission.

in particular

These conditions shall

2.
require two
signatures on cheques and on transfer orders, one sig-
nature being that of the accounting officer, an assistant
accounting officer or an administrator of advance funds;
these conditions shall, moreover, require the specification
of the expenditure in respect of which payment must
necessarily be made either by cheque or by transfer.

6. Payments effected locally

(e) the responsibility of the administrators of advance

funds.

4.
The chief authorising officer and the accounting
officer shall take the necessary steps towards clearing, in
respect of the exact amounts and within the appropriate
period, advances granted under this Article.

S e c t i o n I V

ACCOUNTS

Article 37

Article 35

Accounts shall be kept
method and on the basis of the calendar year.

in ecus by the double entry

1.
In cases where the chief authorising officer has del-
egated his responsibilities to the head of delegation in
accordance with Article 13, the corresponding payments
may be effected by an assistant accounting officer, on the
spot, appointed under the conditions referred to in Article
15.

The assistant accounting officer shall effect payments in
local currency from the paying agent account in the ACP
State or OCT and, where appropriate, payments in foreign
currency from one or more paying agent accounts in the
Community.

The entry in the EDF accounts of the payments
2.
effected pursuant to paragraph 1 may also be entrusted to
the assistant accounting officer.

3.
For payments made by the assistant accounting
officer, the financial controller will carry out checks after
they are effected or possibly after their entry in the
accounts.

7. Imprest accounts

Article 36

For the payment of certain categories of expenditure,
1.
advance funds may be set up at the decision of the chief
authorising officer following a favourable opinion of the
accounting officer and of the financial controller.

2. Only the accounting officer may replenish the
imprest accounts.

The rules governing the management of the advance

3.
funds shall cover in particular:

(a)

the appointment of administrators of advance funds;

(b) the nature and maximum amount of each item of

expenditure to be incurred;

(c) the maximum amounts which may be advanced;

(d) the procedures for the production of supporting docu-
ments and the time within which they must be
produced;

They shall show all:

(a) appropriations,

(b) commitments,

(c) assigned funds,

(d) revenue, payments, established debts and collection
operations for the year in full and without any adjust-
ment against each other.

They shall be substantiated by supporting documents.

When assigned funds, revenue, payments and debts are
expressed in national currencies, the accounting system
should make it possible, where necessary, for them to be
recorded in national currencies as well as in ecus.

Article 38

1.
The commitments defined in Article 20(2) shall be
recorded in ecus for the value of the financing decisions
taken by the Commission.

2.
The assigned funds defined in Article 24 shall be
recorded in ecus at the equivalent of the value of the
contracts and estimates concluded by the beneficiary ACP
State or OCT or by the Commission in the performance
of the project. This value shall include where appropriate:

(a) provision for the payment of (reimbursable) expenses

on presentation of supporting documents;

(b) provision for the revision of prices and contingencies

as defined in EDF-funded contracts;

(c) financial provision for exchange rate fluctuations.

3.
The conversion rates to be used for final accounting
of payments made under the projects or programmes
referred to in Part 3, Title III, of the Convention shall be
the rates applicable on the actual date of such payments.
That date shall correspond to the date on which the
Commission accounts referred to in Article 5 of this
Financial Regulation were debited.

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4. All accounting records referring to the fulfilment of
a commitment shall be kept for a period of five years
from the date of the decision giving discharge in respect
of implementation of the EDF, referred to in Article 33(3)
of the Internal Agreement, concerning the financial year
during which the commitment was closed for accounting
purposes.

Article 39

1.
The Commission shall keep accounts of the risk
capital and interest-rate subsidies administered by the
Bank on behalf of the Community.

Before the financing decision is adopted by the
2.
Bank’s board of directors in accordance with Article 29(3)
and (4) of the Internal Agreement, a proposal to enter the
decision in the accounts shall be sent to the financial
controller and to the accounting officer by the chief
authorising officer.

3.
The proposal shall indicate, inter alia, the purpose,
the estimated amount and the item to which the expend-
iture is to be booked as well as the beneficiary of the
financing.

The purpose of the approval of the financial controller
shall be to establish that:

(a)

the expenditure is booked to the correct item;

(b) appropriations are available.

Validation by the accounting officer shall take place after
the Bank’s Board of Directors has adopted the financing
decision.

4.

(a) Financing decisions relating to risk capital adopted
by the Bank shall be entered in the accounts at
their nominal value.

(b) In the case of interest-rate subsidies, a provisional
entry shall be made in the accounts based on a
value estimated by the Commission when the
decision was adopted. This shall be finalised in the
accounts on receipt of the estimate of the amount
of the interest-rate subsidy from the Bank when
the contract
shall be
adjusted at the end of the contract.

signed. This amount

is

5. Requests for payments of funds as referred to in
Articles 59(2) and 61 (3) shall be sent to the financial
controller for approval by the chief authorising officer.

The following shall be indicated in requests for payment:

(a)

the item against which payment shall be charged;

(b) the amount

to be paid,

in figures and in words,

showing the currency;

(c) the name and address of the payee;

(d) the bank account and the method of payment;

(e) the purpose of the expenditure;

(f)

the value date of the payment.

The payment shall be made and entered in the

6.
accounts by the accounting officer.

7.
The termination of a financing decision and the
repayment of the balance available to the relevant appro-
priation shall be effected at the request of the EIB.

Article 40

1.
Entries in the accounts shall be made on the basis of
an accounting plan comprising a nomenclature of bud-
getary items which makes a clear distinction between the
and expenditure
financial
accounts.

and revenue

statements

2.
The detailed conditions for drawing up and oper-
ating the accounting plan shall be defined by the
Commission on a proposal from the accounting officer.

Article 41

The accounts shall be closed at the end of the financial
year to enable the financial statements and revenue and
expenditure accounts of the EDF to be drawn up. These
shall be submitted for the financial controller’s opinion.

S e c t i o n V

RESPONSIBILITIES OF AUTHORISING OFFICERS,
FINANCIAL CONTROLLERS, ACCOUNTING OF-
FICERS AND ADMINISTRATORS OF ADVANCE
FUNDS

Article 42

Without prejudice to Article 313(1)(f) or Article 319(8) of
the Convention, authorising officers who, when estab-
lishing entitlements to be recovered for the EDF, entering
into commitments of expenditure,
signing payment
orders, or
issuing recovery orders, do so without
complying with this Financial Regulation, shall render
themselves liable to disciplinary action, and where appro-
priate, to payment of compensation. The same shall also
apply if they neglect to issue recovery or payment orders
or are, without justification, late in issuing them, thereby
rendering the Commission liable to civil action by third
parties.

Article 43

Financial controllers shall be liable to disciplinary action
and, where appropriate, to payment of compensation for
any action taken during their terms of office, in particular
where they approve expenditure in excess of appropria-
tions.

Article 44

1.
The accounting officer and assistant accounting of-
ficers shall be liable to disciplinary action and, where
regards
appropriate,
payments they make in disregard of Article 32.

to payment of compensation as

They shall render themselves liable to disciplinary action
and to payment of compensation as regards any loss or
deterioration of the monies, assets and documents in their
charge where such loss or deterioration was caused by
intentional mistake or was due to serious negligence on
their part.

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Under the same conditions, they shall be responsible for
the correct execution of orders received by them in
respect of the use and administration of accounts held
with recognised financial institutions and, in particular:

(a) where the recoveries or payments made by them do
not agree with the amounts on the corresponding
recovery or payment orders;

(b) where they effect payments to a party other than the

entitled payee.

2. Administrators of advance funds shall be liable to
disciplinary action and, where appropriate, to payment of
compensation:

(a) where they cannot show due warrant with proper

documents for payments made by them;

(b) where they effect payments to a party other than the

entitled payee.

They shall be liable to disciplinary action and to payment
of compensation in respect of any loss or deterioration of
the monies, assets and documents in their charge where
such loss or deterioration was caused by intentional
mistake or was due to serious negligence on their part.

3.
The accounting officer, assistant accounting officers
and administrators of advance funds shall insure them-
selves against any risk they may incur under this Article,
and which cannot be covered by the guarantee fund
provided for in paragraph 4. The Commission shall cover
the relevant insurance costs.

4.
Special allowances shall be granted to accounting
officers, assistant accounting officers and administrators of
advance funds. The amount of these allowances shall be
determined by the Commission. The sums corresponding
to these allowances shall be credited each month to an
account opened by the Commission on behalf of each of
these officials in order to establish a guarantee fund to
cover any cash or bank shortage for which the person
concerned might render himself liable.

The credit balance in these guarantee accounts shall be
paid over to the persons concerned after they terminate
their appointment as accounting officer or administrator
of advance funds. In the case of accounting officers, this
shall be conditional upon receipt of the final discharge
referred to in Article 46.

Article 45

The liability of the chief authorising officer and his dep-
uties, financial controllers, accounting officers and admin-
istrators of advance funds to payment of compensation
and disciplinary action may be determined in accordance
with Articles 22 and 86 to 89 of the Staff Regulations of
officials of the European Communities.

Article 46

The Commission shall be allowed a period of two years
from the date on which the financial statements are
submitted to the Council to take a decision on the final
discharge to be given to accounting officers for the trans-
actions relating thereto.

TITLE III

IMPLEMENTING MEASURES

S e c t i o n I

2. Tenders and contracts

EDF OPERATIONS

ADMINISTERED BY

THE

COMMISSION

1. General

Article 47

Where aid accorded is onlent to the final borrower in
accordance with Articles 219(5), 233(3) and 266 of the
the financial agreement shall specify the
Convention,
terms of such lending, inter alia rates of interest, dura-
tion of loan, grace period, and arrangements for the util-
isation of funds provided by reimbursement of capital and
interest. In fixing these terms, due regard will be paid to
all relevant provisions of the Convention, and in partic-
ular, to Articles 233(4)(b), 240(1)(a) and Article 291.

Article 48

Claims for delayed payments for which it is responsible
by virtue of Article 319 of the Convention shall be borne
by the Commission from the account provided for in
Article 9(2) of the Internal Agreement.

Article 49

1.
The Commission shall take all appropriate measures
to ensure the effective dissemination of information for
the economic operators concerned, notably through peri-
odical publication of forecasts of contracts to be financed
from the resources of the EDF.

The Commission shall ensure that the following are

2.
published by the most appropriate means:

(a)

indicating the purpose, content and value of each
contract forecast:

(cid:190) once a year, forecasts of the contracts for services
and technical cooperation projects to be awarded
after
to tender during the twelve
months following publication,

invitations

(cid:190) once every three months, any changes in the fore-

casts referred to in the first indent;

(b) the results of
opportunity.

invitations to tender at

the earliest

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3. A similar procedure shall be followed in commun-
icating decisions to intervene in respect of carrying out
studies and supplying technical assistance.

Article 50

The Commission shall inform the Council each year of
any contract concluded during that year. Where appro-
priate, it shall notify the Council of any measures it has
been led to take or proposes to take to improve the terms
of competition for participation in invitations to tender
issued by the EDF.

In its report, the Commission shall provide the Council
with information enabling it to assess whether the meas-
ures taken by the Commission have in fact first given all
undertakings of the various Member States, of the ACP
the associated countries and territories equal
and of
opportunity of access
supply and services
contracts financed by the EDF.

to works,

2. Contracts arising in the case of import programmes
which take the form of provision of foreign exchange may
be expressed in currencies other than those of ACP States
or the ecu, such other currencies to include those of
to the
countries which are not Contracting Parties
Convention.

3. On the occasion of each advance of funds provided
in structural adjustment programmes, the Commission
shall check regularity and conformity with respect to the
justification of the use of funds and the rules applicable
pursuant to Articles 246, 248 and 294(1)(b) of the Conven-
tion and to Article 20 of the Internal Agreement.

4. Management of the export earnings stabilisation

system (Stabex)

Article 51

Article 54

and services

Information relating to direct agreement contracts, works,
supply
concluded following
contracts
restricted invitation to tender or direct labour contracts
shall be contained in the annual report to the Council
referred to in Article 50.

Article 52

1. Without prejudice to Article 20(1)(c) of the Internal
Agreement, the provisions of the General Regulations and
Conditions of Contract shall apply to all tenders and
contracts financed from the EDF. The payments arrange-
ments and the currency or currencies of payment shall be
specified in the wording of the relevant contracts.

2.
The price offered in tenders for contracts financed
by the EDF shall take into account the applicable tax
arrangements provided for in Articles 308, 309 and 310 of
the Convention.

3. Where payment is made in the national currency of
an ACP State, it shall be made through the intermediary
of a bank established in that State or in the country where
the contractor’s registered office is located.

Where payment is made in ecus or in a foreign currency,
it shall be made through the intermediary of an approved
bank or agency established in a Member State, in an ACP
State or in the country where the contractor’s registered
office is located.

3. Structural adjustment support

Article 53

for

Support

1.
adjustment programmes
provided under the Convention shall be implemented in
accordance with Articles 243 to 248 of the Convention.

structural

The annual resources available to the Stabex system
provided for in Article 191 of the Convention shall be
managed by the Commission in accordance with the
following procedures:

instalment

(a) half of each annual instalment shall be credited to the
system on 1 April and 1 July respectively and trans-
ferred to a special Stabex bank account. However, the
first half annual
in each year shall be
reduced by any amount used in advance in the
preceding year under Article 194(1) of the Conven-
tion. The second half annual instalment in each year
shall be increased by any amount used in advance on
the following year under Article 194(1) of the Conven-
tion. Any sums due to the Stabex system in the year in
which the Convention came into force shall be trans-
ferred to the Stabex account on the date of entry into
force of this Financial Regulation, with effect from the
due dates laid down above. Each Member State may,
however, convert the contribution owed by it into an
open debt producing interest for the benefit of the
system in accordance with the arrangements laid
down in Annex II;

(b) interest shall be provided on the amounts of annual
instalments credited to the Stabex system’s resources
as follows:

(cid:190) from 1 April each year on the amount of the first
half of each annual instalment less any advance
and transfers paid from the Stabex system’s
resources,

(cid:190) in like manner, from 1 July each year in respect of
the second half of each annual instalment;

(c) any part of an annual instalment which has not been
paid by way of advance or transfer shall continue to
bear
interest which shall accrue to the system’s
resources until its utilisation in the following year;

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(d) the transfers referred to in Article 211 of the Conven-
tion shall be made in ecus into an interest-bearing
bank account, opened in a Member State of
the
Community
agreement
and chosen by mutual
between the ACP State and the Commission. All
interest accruing shall be credited to that account. All
withdrawals from the account shall require two sig-
natures, one being that of a person designated by the
ACP State concerned, the other that of the Commis-
sion’s head of delegation. The funds in the account,
including interest, shall be mobilised in accordance
with Article 186(2) of the Convention.

Article 55

Where advance use is made of the following year’s instal-
ment as provided for in Article 194 of the Convention,
the advances referred to in Article 206 of the Convention
shall be reduced proportionately.

Article 56

The quarterly report to the Member States on the cash
situation of the EDF treasury, provided for in Article 2(1),
shall include specific information on the financial situ-
ation of the Stabex system.

Article 57

Wherever the calculation of the amount of a transfer or
advance requires the conversion of statistics expressed in
the national currency of the ACP State concerned, or of
any other currency, into ecus, the exchange rate applic-
able shall be the average annual rate in force in the
calendar year to which the statistics concerned refer.

S e c t i o n I I

AID MANAGED BY THE BANK

Article 58

The Bank shall forward to the Commission at the begin-
ning of each quarter estimates of all amounts expected to
be claimed from the EDF in that quarter in respect of the
risk capital and interest-rate subsidies that it administers
in accordance with Article 10 of the Internal Agreement.

1. Risk capital

Article 59

Each decision to grant risk capital shall set a limit to
1.
the Community’s commitment and financial responsibil-
ities and, in the case of shareholdings, to the extent of the
rights in the company to which such operations relate.

The decision shall also take into account the provisions of
Article 234(2) of the Convention relating to responsibility
for exchange-rate risks.

The instruments giving effect to risk-capital operations
shall be concluded by the Bank acting as the Commun-
ity’s authorised agent.

2. When each disbursement takes place, the Bank shall
request the Commission to pay in ecus the amount of the
risk capital disbursed. The Commission shall pay this
amount within 21 days of receipt of
for
payment with the same value date as that of the disburse-
ment by the Bank.

the request

3. When the disbursement takes place in currencies
other than the ecu, the exchange rates used to determine
the amounts to be disbursed shall be those obtained by
the Bank from the correspondent responsible for the
exchange transaction.

The ecu exchange rates to be used by the borrower to
calculate the amounts due in respect of products, income
and reimbursements from risk capital operations shall be
those in force one month before the date of payment.

income and
4. Amounts due in respect of receipts,
repayments relating to risk capital operations shall be
collected by the Bank on behalf of the Community, in
accordance with Article 60.

Article 60

The sums collected by the Bank in the form of receipts,
income or repayments from risk-capital operations shall
be credited to a special account opened on behalf of the
Community for the Member States in proportion to their
contributions to the EDF. The account shall be denom-
inated in ecus and managed by the Bank in accordance
with Article 9(1) of the Internal Agreement. The Bank
shall agree with the Member States on the information to
be supplied concerning the account.

the
The technical procedures for the management of
account, including those relating to the fixing of the rates
of interest on it, shall be decided upon by the Council
and the Bank in agreement with the Commission.

2. Subsidised loans

Article 61

1.
The aggregate amount of interest-rate subsidies on
each loan from the Bank shall be calculated in ecus in
accordance with Article 235 of the Convention on the
basis of the composite interest rate to be fixed in accord-
ance with the procedures set out in paragraph 3(c) of this
Article.

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2. On the signing of each loan contract, the Bank shall
communicate to the Commission the estimated total
amount of the interest-rate subsidy expressed in ecus.

3. Upon the disbursement of each instalment of the
loan, the Bank shall request the Commission to pay the
interest subsidy relating to the instalment based on the
following calculations:

(a)

the equivalent in ecus of the amounts of currencies in
which the loan instalment was disbursed at
the
conversion rate for those currencies and the ecu as
published in the Official Journal of the European
Communities in operation on the date on which the
amount of currencies to be disbursed is determined,
which date shall be communicated to the Commis-
sion;

(b) application of the percentage rate of interest subsidy
to the declining annual capital balance due at each
repayment date;

(c) the present value of the interest subsidies relating to
the loan disbursement. Calculation of
the present
value shall be made by reference to a composite
discount rate equal to the annual interest rate(s) which
the Bank would in fact receive in the currency or
currencies used for the relevant disbursement of the

the loan did not benefit

loan if
from an interest
subsidy. The actual calculation of present value shall
use this composite discount rate reduced by four
tenths of a percentage point.

4.
The Commission shall pay in ecus the amount of
subsidy, discounted in accordance with the procedures
described in paragraph 3, within 21 days of receipt of the
request for payment, the value date being that of the
disbursement of the relevant loan instalment.

5. Where the whole of an interest subsidised loan is
repaid in advance, the Bank shall pay to the Commission
the total balance of the discounted subsidy, adjusted for
the period between receipt and payment by the Bank, on
the first contractual repayment date subsequent to the
advance payment. Where only part of such a loan is
repaid, the payment by the Bank to the Commission shall
relate to that part of the loan which has been repaid.

6.
The sums reimbursed to the Commission shall be
added to the appropriations available for the financing of
interest-rate subsidies provided for in Article 4 of the
Internal Agreement.

7. All payments provided for in this Article shall be
made in ecus.

TITLE IV

EXECUTIVE AGENTS

1. The chief authorising officer

Convention, temporary replacement of that officer by the
chief authorising officer.

Article 62

Article 64

The chief authorising officer of the EDF, referred to in
Article 311 of the Convention, shall take all measures
necessary for the implementation of Articles 294 to 307
of the Convention.

Article 63

1.
The chief authorising officer shall take all measures
to ensure that national or regional authorising officers
perform the tasks for which they are responsible by virtue
of the Convention, and in particular Articles 312 to 315
thereof.

2. Where the chief authorising officer of
the EDF
becomes aware of problems in the carrying out of pro-
cedures relating to management of EDF resources, he
shall, in conjunction with the national or regional author-
ising officer, make all contacts necessary to remedy the
situation and take any steps appropriate, including where
the national or regional authorising officer does not or
cannot perform the duties incumbent on him under the

Transactions relating to the execution of projects shall be
carried out by the national or regional authorising officer
in close cooperation with the head of delegation in
accordance with Articles 313 and 317 of the Convention.

In performing the duties laid down in Article 316 the
head of delegation shall comply with this Financial Regu-
lation.

2. The paying agent

Article 65

The relations between the Commission and the paying
agents provided for in Article 319 of the Convention shall
be the subject of contracts which shall require the prior
approval of the financial controller. Once signed, these
contracts shall be sent to the Court of Auditors.

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TITLE V

PRESENTING AND AUDITING ACCOUNTS

Article 66

1.
The Commission shall draw up, not later than 1 May
each year, the financial statements and the revenue and
expenditure accounts of the EDF describing the financial
situation of the Fund as at 31 December of the preceding
year.

The financial statements shall be drawn up by the

2.
accounting officer and include:

(a) a balance sheet of the EDF’s assets and liabilities at

the end of the preceding financial year;

(b) a statement of sources and uses of funds covering the

preceding financial year;

(c) a statement of revenue and payments in the preceding

financial year;

(d) a table of revenue showing:

(cid:190) estimated revenue for the calendar year,
(cid:190) amendments to the revenue estimates,
(cid:190) entitlements established in the course of

the

calendar year,

(cid:190) amounts still to be received at the end of the

calendar year,
(cid:190) additional revenue;

(e) a table of debts showing:

(cid:190) debts still to be recovered at the beginning of the

calendar year,

(cid:190) entitlements established in the course of

the

calendar year,

(cid:190) amounts recovered in the course of the calendar

year,

(cid:190) cancellation of established entitlement,
(cid:190) debts still

to be recovered at

the end of

the

calendar year;

(f) notes indicating which accounting principles were
applied in the preparation and presentation of the
accounts providing, where appropriate, additional
explanations of various headings in the tables referred
to in points (a),

(d) and (e).

(b),

(c),

Article 67

1.
The revenue and expenditure account referred to in
Article 68 shall be drawn up by the chief authorising
officer in conjunction with the accounting officer and
shall include:

(a) a table showing changes during the preceding year in

the appropriations referred to in Article 1;

(b) a table showing the total by appropriation of commit-
ments, assigned funds and payments effected during
the financial year and aggregate totals since the
opening of the EDF;

(c) tables showing by appropriation, country,

territory,
region or sub-region, the total commitments, assigned
funds and payments effected during the financial year
and aggregate totals since the opening of the EDF.

2.
The revenue and expenditure accounts shall be pre-
faced by an analysis of financial management during the
preceding year.

Article 68

Without prejudice to Article 33(5) of the Internal Agree-
ment, the Commission shall forward the financial state-
ments and revenue and expenditure accounts to the Euro-
pean Parliament, the Council and the Court of Auditors
not later than 1 May of the following financial year.

Article 69

The Court of Auditors and its Members may seek the
assistance of the Court’s staff in the discharge of their
duties.

The tasks delegated to such staff shall be notified by the
Court of Auditors itself, or by one of its Members, to the
authorities with which the staff in question are required
to work.

Article 70

1. Without prejudice to Article 33(5) of the Internal
Agreement, the audit carried out by the Court of Auditors
shall be based on records and, if necessary, be performed
on the spot. Its purpose shall be to establish that all
revenue has been received and all expenditure incurred in
a lawful and regular manner with regard to the provisions
applicable and that the financial management has been
sound.

In the performance of its tasks, the Court of Auditors
2.
may, under the conditions laid down in paragraph 6,
consult all documents and information relating to the
financial management of the departments subject to its
inspection;
it has the power to hear any official res-
ponsible for revenue and expenditure operations and to
use any of the auditing procedures appropriate to those
departments.

3.
The Court of Auditors shall ensure that all securities
and cash on deposit or in hand are checked against
vouchers signed by the depositaries or against official
memoranda of cash and securities held. The Court may
itself carry out such checks.

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4. At the request of the Court of Auditors, the Commis-
sion shall authorise financial institutions holding EDF
deposits to enable the Court to ensure that the external
data tally with the accounts.

5.
The Commission shall afford the Court of Auditors
all the facilities and give it all the information which the
Court may consider necessary for the performance of its
tasks, and shall in particular provide all the information
available to the Commission as a result of the checks
which it has carried out, pursuant to the regulations in
force, within the departments responsible for the manage-
ment of EDF finances and for effecting expenditure on
behalf of the Community. In particular, it shall place at
the disposal of the Court all documents concerning the
conclusion and implementation of contracts and all
accounts of cash or materials, all accounting records or
supporting documents and also the administrative docu-
ments pertaining thereto, all documents
relating to
revenue and expenditure, all inventories, and all lists of
posts in the departments which the Court of Auditors
may consider necessary and all documents and data
created or stored on a data medium.

To this end, officials subject to audit by the Court of
Auditors shall in particular:

and materials of

(a) disclose their records of cash in hand, any other cash,
securities
any kind and the
supporting documents in respect of their management
of which they are the depositaries and any books,
registers and other documents relating thereto;

(b) present the correspondence or any other document
the audit

implementation of

required for the full
referred to in paragraph 1.

the second
The information referred to under (b) of
subparagraph may be requested only by the Court of
Auditors.

The Court of Auditors shall be empowered to audit the
documents in respect of EDF revenue and expenditure
which are held by the Commission’s departments and, in
particular, by the departments responsible for decisions
on such revenue and expenditure.

The task of establishing that

6.
revenue has been
received and expenditure incurred in a lawful and regular
manner and that the financial management has been
sound shall also encompass the utilisation by bodies
outside the Commission of Community funds they have
received. Any grant of EDF funds to beneficiaries outside
the Commission shall be subject to the agreement in
writing by the recipients to an audit being carried out by
the Court of Auditors on the utilisation of the amounts
paid out.

Article 71

The Court of Auditors shall draw up an annual

1.
report at the end of each financial year.

2.
The Court of Auditors may also, at any time, submit
observations, notably in the form of special reports, on
specific questions and deliver opinions at the request of
one of the institutions of the Communities.

The special reports shall be transmitted to the insti-

3.
tution or body concerned.

The institution concerned shall have two and a half
months within which to inform the Court of Auditors of
any comments it wishes to make on the observations in
question.

Should the Court of Auditors decide to have such obser-
vations published in the Official Journal of the Euro-
pean Communities,
them any
shall
comments submitted by the institution or institutions
concerned.

include after

it

The special reports shall be transmitted to the European
Parliament and the Council, each of which shall decide,
in conjunction with the Commission if appropriate, what
action is to be taken in response.

Article 72

1.
The annual report of the Court of Auditors provided
for in Article 188c of the EC Treaty shall be governed by
the following provisions:

(a)

the Court of Auditors shall communicate to the
Commission, not later than 15 July, any observations
which it considers should appear in the annual report.
These observations must remain confidential. The
Commission shall forward its replies to the Court of
Auditors not later than 31 October of the relevant
year;

(b) the annual report shall contain an assessment of the

soundness of the financial management.

2.
The Court of Auditors shall send its annual report,
together with the Commission’s replies, not later than 30
November, to the Commission and to the authorities
responsible for giving discharge pursuant to Article 33(3)
of the Internal Agreement, and shall ensure its publica-
tion in the Official Journal of the European Commun-
ities.

Article 73

At the same time as the annual report referred to in
Article 71, the Court of Auditors shall provide the Euro-
pean Parliament and the Council with a statement of
assurance as to the reliability of the accounts and to the
legality and regularity of the underlying transactions.

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Article 74

1.
Before 30 April of the following year, the European
Parliament, upon a recommendation from the Council,
which shall act by a qualified majority, shall give the
Commission discharge in respect of the execution of the
financial management of
the EDF for the preceding
financial year, in accordance with Article 33(3) of the
Internal Agreement. If this date cannot be complied with,
the European Parliament or the Council shall inform the
Commission of the reasons for which this decision has
had to be deferred. Should the European Parliament post-
pone the decision giving discharge, the Commission shall
make every effort to take measures, as soon as possible, to
facilitate removal of the obstacles to this decision.

2.
The discharge decision shall include an assessment
of the responsibility of the Commission in the execution
of the financial management during the preceding period.

3.
The financial controller shall take account of the
observations appearing in the decision giving discharge.

4.
The Commission shall take all appropriate steps to
act on the comments appearing in the decision giving
discharge.

5. At the request of the European Parliament or the
Council, the Commission shall report on the measures
taken in the light of these comments, and, in particular,
on the instructions given to those of its departments
which are responsible for the management of the EDF.
This report shall also be sent to the Court of Auditors.

The financial statements and the revenue and ex-
6.
penditure accounts
for each financial year and the
decision giving the discharge shall be published in the
Official Journal of the European Communities.

TITLE VI

GENERAL AND FINAL PROVISIONS

Article 75

Unless otherwise specified, references in this Financial Regulation to the provisions of the
Convention shall be deemed to refer to the corresponding provisions of Decision 91/
482/EEC.

This Regulation shall be applicable to the aid specified in the Financial Protocol to the
Convention. This Regulation shall enter into force on the day following that of its
adoption and shall be applicable for the same period as the Internal Agreement.

Article 76

Done at Luxembourg, 16 June 1998.

For the Council

The President
M. MEACHER

7. 7. 98

EN

Official Journal of the European Communities

L 191/69

ANNEX I

In accordance with Article 1 of the Internal Agreement, the eighth EDF shall consist of ECU 13 132 million,
of which:

1. ECU 12 967 million, for the ACP States, allocated as follows:

(a) grants reserved for structural adjustment support:

ECU 1 400 million

(b) grants reserved for the Export Earnings Stabilisation System (Stabex):

ECU 1 800 million

(c) grants reserved for Sysmin:

(d) grants reserved for emergency aid:

(e) grants reserved for refugee aid:

(f) grants reserved for regional cooperation:

ECU 575 million

ECU 140 million

ECU 120 million

ECU 1 300 million

including:
(cid:190) an amount reserved to finance the budget of the Centre for the

Development of Industry,

(cid:190) an amount
Convention,

reserved for

the purposes of Annex LXVIII to the

(cid:190) an amount reserved to finance regional programmes pertaining to
trade development as referred to in Article 138 of the Convention,
(cid:190) an amount reserved for the incentive financing of institutional support

as referred to in Article 224(m) of the Convention;

(g) grants reserved for the financing of interest-rate subsidies as referred to in

ECU 370 million

Article 235 of the Convention:

(h) grants reserved for the financing of national programmable aid:

(i)

risk capital:

2. ECU 165 million, for the OCT, allocated as follows:

(a) grants reserved for the Export Earnings Stabilisation System (Stabex):

(b) grants reserved for Sysmin:

(c) grants reserved for emergency aid:

(d) grants reserved for refugee aid:

(e) grants reserved for regional cooperation:

ECU 6 262 million

ECU 1 000 million

ECU

ECU

5,5 million

2,5 million

ECU

3,5 million

ECU 10 million

(f) grants reserved for the financing of interest-rate subsidies as referred to in

ECU

8,5 million

Article 157 of Decision 91/482/EEC:

(g) grants reserved for the financing of national programmable aid: British

OCT:

(h) grants reserved for the financing of national programmable aid: French

OCT:

ECU 105 million (1)

(i) grants

reserved for

the financing of national programmable aid:

Netherlands OCT:

(j)

risk capital:

ECU 30 million

(1) It should be noted that the allocation of this amount among the three groups of OCT will have to be determined in the

context of the revised Decision on the association of the OCT.

L 191/70

EN

Official Journal of the European Communities

7. 7. 98

ANNEX II

In accordance with Article 54(a) each Member State may convert the contribution owed by it to finance the
annual instalments referred to in Article 191 of the Convention into an open debt producing interest for the
benefit of the Stabex system; such contributions would be recorded in the Treasury accounts of Member States
that operate this system in accordance with the eighth EDF allocation scale determined in the Internal
Agreement.

The compound interest on the debt owed by the Member State concerned will be calculated by the EDF
accounting officer on the basis of the annual average rate in force at the Bank for international settlements
plus quarter of a percentage point.

The mobilisation of the debt will be effected gradually as and when the need arises.

In practice the Member States are liable for the payment of the following amounts on account of Stabex under
this proposal:

1998:

(cid:190) 1 July 1998:

(a) ECU 720 million liable for payment in terms of debt or cash for the years of

application 1995 and 1996;

(b) ECU 180 million liable for payment in terms of debt or cash under the first

tranche of the year of application 1997,

(cid:190) 1 November 1998: ECU 180 million liable for payment in terms of debt or cash

under the second tranche of the year of application 1997,

1999:

(cid:190) 1 April 1999: ECU 180 million liable for payment in terms of debt or cash under

the first tranche of the year of application 1998,

(cid:190) 1 July 1999: ECU 180 million liable for payment in terms of debt or cash under the

second tranche of the year of application 1998,

2000:

(cid:190) 1 April 2000: ECU 180 million liable for payment in terms of debt or cash under

the first tranche of the year of application 1999,

(cid:190) 1 July 2000: ECU 180 million liable for payment in terms of debt or cash under the

second tranche of the year of application 1999.

2001 and thereafter: Call for funds on the basis of forecasts of actual expenditure by mobilisation of the debt

and up to the amount of the capital as increased by the interest accrued.