Proposal for a Council Regulation on a Financial Regulation applicable to the 9th European Development Fund
Date: 2002-06-11
Institutions: European Commission
Subjects: European Development Fund, European Investment Bank, administrative transparency, cooperation agreement, development plan, financial management, financial policy, financial regulation, general budget (EU)

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Proposal for a Council Regulation on a Financial Regulation applicable to the 9th European
Development Fund

(2002/C 262 E/39)

COM(2002) 290 final — 2002/0183(CNC)

(Submitted by the Commission on 18 July 2002)

EXPLANATORY MEMORANDUM

1. A vital factor for implementing the EDF — its Financial Regulation

The successive European Development Funds (EDFs) have been set up by internal agreements concluded
between the Member States and then submitted for ratification.

In these agreements the Member States have established the financial resources required to honour the
commitments they have made vis-à-vis the African, Caribbean and Pacific States (ACP States) and the
financial resources reserved for the overseas countries and territories (OCTs) under association decisions.

By the Internal Agreement of 18 September 2000 (1) the Member States set up the 9th EDF, which is
designed to ensure the financial implementation of:

— the Partnership Agreement concluded with the ACP States in Cotonou (Benin) in 2000 (2),

— the Decision on the association of the OCTs, adopted by the Council in November 2001 (3),

Article 31 of that Internal Agreement states that, ‘the provisions for implementing this Agreement shall be
the subject of a Financial Regulation adopted, before the entry into force of the ACP-EC Agreement, by the
Council, acting by a qualified majority . . . on the basis of a proposal from the Commission’.

So if operations to assist the ACP States and the OCTs are to get under way, the Financial Regulation also
needs to be adopted in good time.

2. Political context of the new EDF: internal reforms and recasting of the Financial Regulation

The proposal for a new Financial Regulation for the EDF has been drafted in the dynamic context of the
internal reform undertaken by the Commission, which includes in particular the revision and modern-
isation of its financial procedures. The key element of this process is the proposal to recast the Financial
Regulation applicable to the general budget of the Communities, which was adopted by the Commission in
July 2000 and is now in the final stages of examination by the legislative authority (4). The European
Council wanted the recast Regulation to be finally adopted by the end of 2002.

Since the Financial Regulation applicable to the general budget sets out rules governing financial
its recasting is inextricably linked to the process of administrative reform.
management and control,
The main aspects of
this reform cannot be implemented without substantial amendments to the
Financial Regulation.

On a number of points, the same applies to the EDF. The adoption of the new Financial Regulation for the
9th EDF presents an opportunity to take into account, as far as is compatible with the legal framework
(Cotonou Agreement, Association Decision, Internal Agreement), the amendments made to the Financial
Regulation applicable to the general budget.

(1) OJ L 314, 30.11.2001, p. 1.
(2) OJ L 317, 15.12.2000, p. 3.
(3) OJ L 314, 30.11.2001, p. 1 and OJ L 324, 7.12.2001, p. 1.
(4) With a view to the consultations with Parliament, the Council adopted a joint guideline on 22 May 2002 (see

8730/02 FIN 169).

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3. Main aspects of the recasting of the Financial Regulation applicable to the general budget

The initial recasting proposal adopted in July 2000 (1) and the amended proposal adopted in December
2001 (2) were essentially inspired by the following principles:

The recasting of the Financial Regulation is an essential complement to the internal reform process on
which the Commission has embarked. The recasting proposal provides a whole legislative framework for
key strands of that reform, such as the assertion of the responsibility of authorising officers, under the
supervision of an internal audit service, with the abolition of centralised ex ante controls (in particular
approval of the Financial Controller) as the quid pro quo (3).

However, the recasting exercise goes beyond the objectives identified by the Commission's internal reform
and encompasses all
the topics currently covered by the Financial Regulation, which is the basic
instrument for implementing all aspects of the general budget of the European Communities — from
its establishment and execution to its accounting system right through to the external audit procedures and
the discharge. The aim of the recasting exercise is therefore to modernise the Commission's management
methods in order to make budgetary implementation more effective and to enforce more rigorously the
principle of sound financial management.

4. The special nature of financial management under the EDF

Before considering how the Commission proposes to apply the content of the recasting proposals to the
EDF Financial Regulation, it is worth recalling briefly the main features of the system of financial coop-
eration between the Union and the ACP States and the OCTs.

Long years of cooperation, dating from the Yaoundé Conventions of the 1960s and 70s, have produced a
system of financial cooperation that is rather special, if not unique — a tendency further accentuated by
the fact that it has evolved outside the Community budget and the EDF continues to exist outside the
system of own resources.

4.1. Parallels between the EDF and the budget

At first sight the system for managing the EDF shares a number of features with the management system
applicable to the general budget. The various financial actors (authorising officer, accounting officer,
financial controller) play the same roles as regards both expenditure and amounts receivable, since the
Financial Regulation for the 8th EDF (4) was inspired by the general Financial Regulation currently in force.
One major point they have in common is that operations carried out by the Commission under the EDF
are subject to the same rules as the budget as regards external scrutiny by the Court of Auditors and the
discharge granted by Parliament on the Council's recommendation.

4.2. Divergences between the EDF and the budget

However, EDF resources are not entered in the general budget, so their financial execution is subject
neither to the procedure for establishing the general budget nor to the various mechanisms for
implementing it. Each year the Commission provides the Council with ‘estimates’ of commitments and
payments for the following financial year, which are indicative. Should the real outturn of commitments or
payments not reach the anticipated level, there are no legal consequences for the use of the appropriations
concerned.

(1) COM(2000) 461 final, 17 October 2001.
(2) COM(2001) 691 final 2, 10 January 2002 — the reference here is to the amended proposal.
(3) With a view to the consultations with Parliament, the Council adopted a joint guideline on 22 May 2002 (see

8730/02 FIN 169).

(4) OJ L 191, 7.7.1998, p. 53.

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The EDF is therefore not bound by the same constraints as a budget based on the principle of annuality
and the concept of a budgetary ‘year’.

4.3. Methods of EDF management

As regards the method of implementation, the EDF system can be described as a very advanced case of
‘decentralised management’ to use the terminology of the Financial Regulation applicable to the general
budget (1), the powers of implementation being already conferred on the ACP States by the Cotonou
Agreement. Most of the funds available are implemented directly by the Member States concerned in
the form of specific programmes and projects. The Commission's role includes taking financing decisions
on the financing agreements concluded with beneficiary States. Under these agreements, decentralised
implementation is carried out largely under their responsibility, although the Commission — through
its heads of delegation on the ground and its central departments — provides support and exercises ex ante
supervision.

This large measure of decentralisation reflects the goals of association and partnership which mark out
relations between the ACP countries and the Member States. This is also evident in the joint permanent
institutions, which in certain cases have the power to adopt rules that are binding on the partners.

Complex mechanisms and procedures have been developed to such an extent that even the duties of
authorising officers are laid down in the Lomé Conventions and in the present Partnership Agreement.
Specific provision is made for the very close involvement of the heads of Community delegations in
financial management, from the joint preparation of projects through to the endorsement of decisions to
award contracts and other requests for funding proposed by the National Authorising officer of the ACP
State. There is also a body of rules specific to ACP-EC cooperation concerning the award and performance
of contracts (2).

Financial partnership with non-member countries under the EDF is more developed than in any other
expenditure programmes administered by the Commission in the external relations field.

5. Scope for applying the recasting exercise to the EDF

Provided there are no obstacles in the specific legal arrangements governing the EDF, the same reforms will
be applied to the financial management of the EDF as to programmes financed from the general budget.
The Commission's proposal seeks, as far as possible, to apply the same rules as will apply to the general
budget from 1 January 2003, as described in detail below.

5.1. Budgetary principles

In the absence of a budgetary act as defined in Article 4(1) of the Financial Regulation applicable to the
general budget, it is not possible to apply the principles of unity, annuality, equilibrium and universality to
EDF resources. The principles of specification (Article 3) and transparency (Article 5) are however
introduced for the first time and the principle of sound financial management is aligned on the recast
Financial Regulation applicable to the general budget (Article 4).

Certain aspects of annuality have, however, been reinforced. Under current regulations the Commission
only has to communicate to the Council its ‘estimates’ of expenditure for the forthcoming year. These
estimates must now be published in the Official Journal (Article 5) and include both commitments and
payments (Article 8 — until now only the estimates for payments were mandatory). Every payment order
must now also mention the financial year to which it is booked (Article 62).

(1) See Articles 53 and 165 of the amended proposal COM(2001) 691.
(2) Decision 3/90 of 29 March 1990 of the ACP-EEC Council of Ministers adopting general regulations and general

conditions(OJ L 382, 31.12.1990, p. 1).

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5.2. Financial actors and procedures; function of internal auditor

The rules applying to financial actors (authorising officer, accounting officer: see Articles 10-11 and 18-37)
will be exactly the same as those in the Financial Regulation applicable to the general budget, as will the
basic rules for the validation, authorisation and payment of expenditure (Articles 56-69). The rules
concerning amounts receivable and the recovery of debts are aligned on those in the rules applicable
to the general budget (Articles 42-48). The internal auditor is given the same functions with regard to the
EDF as he enjoys in relation to the general budget (see Articles 70-72).

Expenditure already committed under previous EDFs will continue to be managed under the previous
financial regulations, but with the exception of centralised ex ante financial control which will be discon-
tinued in favour of the new regulation (Article 132). The internal reform will therefore fully encompass the
EDF, making it possible to apply — within the Commission — a uniform system across all the expenditure
it manages, while respecting the specific duties of the authorising officer as recognised in the ACP-EC
Agreement.

5.3 Commitment of expenditure and methods of management

The same definitions of the different types of management which exist under the recast Financial Regu-
lation applicable to the general budget are applied to the EDF (see Articles 13-17). The most important
category is decentralised management by the ACP States (Article 14). There is also a smaller category of
centralised management by the Commission (Article 15) under which the same rules regarding externali-
sation will apply as for the budget. The rules on the commitment of expenditure (Articles 49-55) are
differentiated according to the type of management concerned:

— under centralised management by the Commission, the commitment of expenditure is governed by
exactly the same rules as the budget (Articles 49-54, and the same deadlines for implementation apply
(Article 54));

— under decentralised management, the financing agreement with the ACP partner State is subject to the
same basic rule (conclusion within the deadline of N+1, year N being the year of the financial
commitment made by the Commission). Thereafter,
legal commitments which
implement the financing agreement should also respect the deadline of three years for contractual-
isation following the financial commitment.

the individual

As with the reforms under the recasting of the Financial Regulation applicable to the general budget,
implementation of these new rules will have some impact on the Commission's internal organisation and
its human resources. The Commission will do its utmost to ensure effective implementation of the new
management system, which entails new tasks for its departments both at headquarters and in local
delegations.
including provisions in the
Internal Agreement, to ensure it has enough resources at its disposal for administrative expenditure on
implementing the EDF.

the necessary proposals,

It reserves the right

to make all

These proposals should also help achieve other objectives laid down in the Commission communication
on the reform of the management of external assistance (SEC(2000) 814 of 16 May 2000). One of the
aims should be to ensure that ACP delegations are successfully integrated into the decentralisation process.

5.4. Contracts and grants

It is not appropriate to use the EDF Financial Regulation to define the rules applicable to contracts
financed by EDF resources. The reason for this is twofold. First, the Cotonou Agreement itself contains
extensive rules (Articles 20-31 of Annex IV). Second, the Cotonou agreement reserves the rules on
contracts to a specific instrument to be adopted by the joint ACP-EC Council of Ministers (Article 28
of Annex IV). The same provision specifies, however, that the ACP rules must respect EC rules. The
Commission has already proposed the specific instrument for ACP contracts (COM(2002) 183 final of
12 April 2002).
It proposed to take the existing 1999 RELEX manual on contracts as a basis for
negotiation with the ACP countries. Article 3 of the draft ACP-EC decision will allow the ACP rules to
be adapted to ensure they conform to the new Financial Regulation applicable to the general budget once
it enters into force in January 2003.

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In this proposal for the EDF Financial Regulation, the Commission therefore confines itself (Articles 73-79)
to certain essential definitions and a reference to the rules which will be adopted by the ACP-EC Council of
Ministers (Article 75).

As regards grants, under centralised management by the Commission exactly the same rules will apply as
for the general budget (Articles 82-94). Under decentralised management, where the ACP countries award
grants, the Commission shall promote the application of the same standards (Article 95).

In line with an undertaking given in the 2000 discharge procedure, the proposal contains rules applicable
to direct labour operations (‘marchés en régie’), where work normally subject to procurement rules is
conducted directly by the ACP State, that is by its ministries or agencies (Articles 80-81). A particular
problem posed by this method of implementation is that the ACP States often have recourse to technical
assistance offices (TAOs) and this is allowed by the Cotonou Agreement (Article 35(1) of Annex IV).
However, Article 81 of the proposal requires the Commission to ensure that the contracts between an ACP
State and a TAO contain a series of minimum guarantees. Moreover, where the Commission acts on behalf
of the ACP State, the recourse to a TAO will still be prohibited, just as if the Commission was acting on its
own behalf (Article 80(3)).

5.5. Accounts, Court of Auditors and discharge

The provisions on the accounts (Articles 96-111) and on control and discharge procedures (Articles
112-120) apply the same rules and deadlines as those contained in the recast Financial Regulation
applicable to the general budget.

As regards the Court's powers of access, in addition to the provisions of Article 115, Article 52(4) lays
down, on the model of the Financial Regulation applicable to the general budget, that all financing
agreements must include the right of the Court to have access to all contractors and sub-contractors
financed by the EDF and the acceptance of this right is a pre-condition for financing (Article 115(6)).

Another issue in these provisions concerns the rules to be applied to the European Investment Bank. The
Internal Agreement (Article 32) gives the Commission responsibility for presenting the accounts of the EDF
to the Council. However, the same agreement entrusts the management of the EDF Investment Facility
including interest-rate subsidies to the European Investment Bank (see Articles 121-128).

Article 9 makes clear what the respective responsibilities of the EIB and the Commission are under the
terms of the Financial Regulation. Article 112 refers to the possibility of updating the tripartite agreement
between the Commission, the Court of Auditors and the EIB.

The provisions concerning the contributions of the Member States (Articles 39-41), the accounts, and the
control and discharge procedures have therefore been drafted to reflect this new division of responsibilities.

6. Conclusions

The Commission has every hope that, by applying to the EDF the same reforms as those contained in the
Financial Regulation applicable to the general budget, the financial management of the EDF can become
more transparent and more efficient over the long term. This intention of the Commission should also be
seen in the context of the eventual inclusion of the EDF in the general budget, an objective to which the
Commission remains attached.

For the reasons set out above, the Commission proposes that the attached Financial Regulation applicable
to the EDF be adopted.

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THE COUNCIL OF THE EUROPEAN UNION,

(2) It is necessary to lay down the conditions in accordance
with which the Court of Auditors must exercise its powers
in respect of the EDF.

Having regard to the Treaty establishing the European
Community,

Having regard to the Partnership Agreement between the
the African, Caribbean and Pacific Group of
members of
States of the one part, and the European Community and its
Member States, of the other part, signed in Cotonou on 23 June
2000 (1),

regard

to Council Decision

2001/822/EC of
Having
27 November 2001 on the association of
the overseas
countries and territories with the European Community
(‘Overseas Association Decision’) (2),

Having regard to the Internal Agreement between Represen-
tatives of the Governments of the Member States, meeting
within the Council, on the Financing and Administration of
Community Aid under the Financial Protocol to the Partnership
Agreement between the African, Caribbean and Pacific States
and the European Community and its Member States signed in
Cotonou (Benin) on 23 June 2000 and the allocation of
financial assistance for the overseas countries and territories
to which Part Four of the EC Treaty applies, and in particular
Article 31 thereof (3),

Having regard to the proposal from the Commission,

Having regard to the opinion of the Court of Auditors,

Having regard to the opinion of
Bank,

the European Investment

Whereas:

(1) It

is necessary to determine the detailed rules for the
payment of contributions by the Member States to the
9th European Development Fund (hereinafter ‘the EDF’),
set up by the Internal Agreement between Representatives
of the Governments of the Member States, meeting within
the Council, on the Financing and Administration of
Community aid under
to the
Parnership Agreement between the African, Caribbean
and Pacific States and the European Community and its
Member States signed in Cotonou (Benin) on 23 June
2000, and to the allocation of financial assistance for the
overseas countries and territories to which Part Four of the
EC Treaty applies (hereinafter ‘the Internal Agreement’).

the Financial Protocol

(1) OJ L 317, 15.12.2000, p. 3.
(2) OJ L 314, 30.11.2001, p. 1.
(3) OJ L 317, 15.12.2000, p. 355.

(3) Rules should be laid down for the treatment of any
balances remaining from previous EDFs,
in particular as
regards the detailed arrangements for their transfer to the
their allocation to the various cooperation
9th EDF,
instruments provided for by the Partnership Agreement
the African, Caribbean and
between the members of
and the
Pacific Group of States of
European Community and its Member States, of
the
other part, signed in Cotonou on 23 June 2000 (hereinafter
‘the ACP-EC Agreement’) or by the Overseas Association
Decision, and the rules applicable for their implementation.

the one part,

(4) It is necessary to ensure consistency as between this Regu-
lation and the measures adopted by the Commission for
the implementation of the Overseas Association Decision.

(5) It is appropriate to ensure the proper, prompt and efficient
execution of programmes and projects financed under the
establish management
ACP-EC Agreement
procedures which are transparent and easy to apply, and
which facilitate the decentralisation of tasks and responsi-
bilities.

and

to

(6) Decision [. . .] of the ACP-EC Council of Ministers of [. . .]
on the implementation of Articles 28, 29 and 30 of Annex
IV to the Cotonou Agreement has specified the general
regulations and general conditions applicable to works,
supply and service contracts financed by the European
Development Fund,
rules governing
procedure, conciliation and arbitration in relation to such
contracts.

as well

the

as

(7) It is necessary to establish the detailed rules in accordance
with which the Chief Authorising Officer of the EDF, to be
appointed by the Commission with responsibility inter alia
for the clearance of expenditure under the EDF, must, in
close cooperation with the National Authorising Officer,
make such arrangements as prove necessary to ensure the
proper execution of operations.

(8) As

far as possible, Council Regulation (EC, Euratom)
No [. . .] of [. . .] on the Financial Regulation applicable
to the general budget of
the European Communities
must, as the cornerstone of the reform of the Commission's
internal management, be taken into account in drawing up
the Financial Regulation for the EDF, particularly with a
view to the possible integration of EDF resources into the
general budget of the Communities. In the light of the
experience acquired from the implementation of this Regu-
lation, the Commission may propose amendments thereto,

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HAS ADOPTED THIS REGULATION:

2(2) of
costs linked to implementation under Article 4 thereof.

that Agreement and of

the resources reserved for

P A R T O N E

M A I N P R O V I S I O N S

TITLE I

GENERAL PROVISIONS

CHAPTER 1

SUBJECT MATTER AND SCOPE

Article 1

In respect of the overseas countries and territories, hereinafter
‘the OCTs’, those instruments are laid down in Annex II A to
the Overseas Association Decision. Earmarking of
those
resources shall also take account of the non-allocated reserve
provided for in Article 3(3) of that Annex and of the resources
reserved for studies or technical assistance measures under
Article 1(1)(c) thereof.

CHAPTER 4

PRINCIPLE OF SOUND FINANCIAL MANAGEMENT

Article 4

This Regulation lays down the rules for the establishment
the 9th

1.
the resources of
and financial
European Development Fund (hereinafter ‘the EDF’).

implementation of

Unless otherwise specified, references in this Regulation
2.
to the ACP States shall be deemed to refer also to the bodies or
representatives defined in Articles 13 and 14 of Annex IV to
the ACP-EC Agreement, which they may duly mandate to
exercise their responsibilities under that Agreement.

CHAPTER 2

PRINCIPLE OF THE UNIT OF ACCOUNT

Article 2

The resources of the EDF shall be established and implemented
in euros and the accounts shall be presented in euros.

However, for the treasury management purposes referred to in
Article 27 of this Regulation, the accounting officer may carry
out operations in euros,
in other currencies and in national
currencies.

CHAPTER 3

PRINCIPLE OF SPECIFICATION

Article 3

The resources of
the EDF shall be earmarked for specific
purposes according to the main instruments of cooperation,
long-term development,
that
is
integration, and the
support
Investment Facility.

to say,
for cooperation and regional

support

for

for

In respect of the African, Caribbean and Pacific States, here-
inafter ‘the ACP States’), those instruments are laid down by the
Financial Protocol
to the ACP-EC
Agreement. Earmarking of resources shall also be based on
the provisions of
take
account of the non-allocated reserve provided for in Article

the Internal Agreement and shall

in Annex I

set out

EDF resources shall be used in accordance with the prin-
1.
ciples of sound financial management,
in
accordance with the principles of economy, efficiency and
effectiveness.

is to say,

that

The principle of economy requires that

2.
the resources
used for the pursuit of activities be made available in due
time, in appropriate quantity and quality and at the best price.

The principle of
concerned with the best
relationship between resources employed and results achieved.

efficiency is

The principle of effectiveness is concerned with attaining the
specific objectives set and achieving the intended results.

set

shall be

Objectives

and achievement of

those
3.
objectives
shall be monitored by means of measurable
indicators. To that 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 intended results
justify the means deployed.

Programmes or operations shall be periodically examined,
4.
for
particularly
contributions referred to in Article 39(1), so that it can be
established that they are justified.

in relation to the

estimates of

calls

CHAPTER 5

PRINCIPLE OF TRANSPARENCY

Article 5

1.
The resources of the EDF shall be established and imple-
mented and the accounts presented in compliance with the
principle of transparency.

The annual estimates of commitments and payments
2.
under Article 10 of the Internal Agreement,
together with
the EDF accounts referred to in Article 96 of this Regulation,
shall be published in the Official
the European
Communities.

Journal of

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TITLE II

COMPOSITION AND STRUCTURE OF EDF RESOURCES

CHAPTER 1

COMPOSITION OF EDF RESOURCES

Article 6

1.

The EDF shall consist of:

(a) the amount
Agreement;

laid down in Article 1 of

the Internal

(b) pursuant to Article 1(2)(b) of the Internal Agreement, any
balances remaining from previous EDFs as defined in Title I
of Part Three of this Regulation.

2.
The revenue accruing from interest on the appropriations
referred to in paragraph 1 deposited with the paying agents in
Europe referred to in Article 37 of Annex IV to the ACP-EC
Agreement shall be credited to one or more bank accounts
opened in the name of the Commission, and shall be used in
accordance with Article 9 of the Internal Agreement and with
this Regulation.

3.
The breakdown of allocations laid down by the ACP-EC
Agreement and by the Internal Agreement is indicated in the
Annex to this Regulation for information purposes.

Article 7

The amount laid down in Article 4 of the Internal Agreement
shall be reserved for the financing of costs linked to implemen-
tation incurred by the Commission in the framework of the
ACP-EC Agreement. It shall be utilised in accordance with the
principles set out in Article 9 of the Internal Agreement.

Those resources shall be used inter alia to reinforce the admin-
istrative capacities of the Commission and its Delegations in
order to ensure the smooth preparation and implementation of
operations financed from the EDF.

CHAPTER 2

CONTRIBUTIONS TO THE EDF

Article 8

shall

Each

year,

establish

the Commission

1.
and
communicate to the Council, by 15 October at the latest, a
statement of
the payments to be made in the following
financial year and a schedule of the calls for contributions. In
so doing, the Commission shall take into account the estimates
submitted to it by the European Investment Bank (EIB),
in
accordance with Article 121 concerning operations, including
interest rate subsidies, managed by the EIB.

The Commission shall
justify the amount requested on the
basis of its capacity to deliver the proposed level of resources

effectively. The EIB shall justify the amount requested on the
basis of its operational requirements. The Council shall decide
on those justifications and on each call for contributions in
accordance with the rules referred to in Article 10 of the
Internal Agreement and laid down in Article 39 of this Regu-
lation.

2.
As regards balances remaining from previous EDFs which
are transferred to the 9th EDF in accordance with Article 6, the
contributions of each Member State shall be calculated in
proportion to the contribution of that State to the EDF in
question.

The Commission's annual estimates of contributions shall

3.
cover:

(a)

its estimates of commitments for the following financial
year, and those of the EIB;

(b) its estimates of commitments and disbursements for each
of the four years following the year relating to the call for
contributions, and those of the EIB. The schedule shall be
approved and reviewed annually by the Council.

Should the contributions prove insufficient to meet the
4.
EDF's actual needs in the financial year in question, any
supplementary payments may be decided upon in accordance
with Article 10(4) of the Internal Agreement.

Payments of contributions by the Member States shall be

5.
made in accordance with Article 39.

TITLE III

IMPLEMENTATION OF EDF RESOURCES

CHAPTER 1

GENERAL PROVISIONS

Article 9

The Commission shall assume the Community's respon-
1.
sibilities defined in Article 57 of the ACP-EC Agreement and in
the Overseas Association Decision. To that end,
shall
undertake the financial
implementation of operations carried
out with EDF resources allocated in the form of non-repayable
aid, excluding interest rate subsidies, and make payments in
accordance with this Regulation.

it

In applying this Regulation, the Commission shall act on its
own responsibility and within the limits of
the resources
allocated.

The EIB, acting on behalf of

the Community, shall
2.
rate
manage the Investment Facility, as well as
in
subsidies,
accordance with the rules set out
In that
context, the Bank shall act on behalf of and at the risk of
the Community.

interest
thereunder,

conduct operations

in Part Two.

and shall

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The EIB shall undertake the financial
operations carried out by means of
resources, where
applicable
subsidies drawn from the EDF's grant resources.

implementation of
loans from its own
rate

combined with interest

3.
The provisions of this Part, together with those of Part
Three, shall apply exclusively to the financial implementation
of
the EDF resources managed by the Commission. Those
provisions may not be interpreted as giving rise to any obli-
gations on the Commission's part in respect of the financial
implementation of EDF resources managed by the EIB.

Article 10

The Commission may, within its own departments, delegate its
powers to implement EDF resources, in accordance with the
conditions laid down by this Regulation and within the limits
set by the Commission in the instrument of delegation.
the powers
Delegates may act only within the limits of
expressly conferred upon them.

Article 11

All financial actors as defined in Chapter 3 shall be prohibited
from taking any measures implementing EDF resources which
may bring their own interests into conflict with those of the
Community. Should such a case arise, the actor in question
must refrain from such measures and refer the matter to the
competent authority.

Article 12

In accordance with the procedures

1.
laid down for
financing proposals in Articles 24(1) and (3) of the Internal
Agreement, and in order to speed up those procedures, the
Commission shall submit financing proposals concerning the
authorisation of overall amounts allocated to the financing of
the activities referred to in Article 16(7) of Annex IV to the
ACP-EC Agreement. After the proposal has been adopted, the
Commission may take financing decisions on the basis of the
global authorisation.

2.
The financing proposals referred to in paragraph 1 must
specify the objectives and, where appropriate,
the intended
impact of
the Community contribution. They must also
the activities, previous experience
describe the viability of
and earlier evaluations, and coordination with other donors.

CHAPTER 2

METHODS OF IMPLEMENTATION

Article 13

The Commission shall undertake the financial implementation
of EDF resources by means of decentralised management with
the ACP States in accordance with the conditions set out in the
ACP-EC Agreement and applying the breakdown of responsi-
bilities provided for in Article 57 of
that Agreement and
Articles 34, 35 and 36 of Annex IV thereto.

The Commission shall undertake the financial implementation
of EDF resources by means of decentralised management with
the OCTs in accordance with the conditions set out in the

Overseas Association Decision
implementing that Decision.

and

in

the measures

In certain specific cases provided for in the ACP-EC Agreement,
in the Overseas Association
in the Internal Agreement,
Decision and in the measures implementing that Decision,
the Commission may undertake the financial implementation
of EDF resources by centralised management.

In certain specific cases provided for in the ACP-EC Agreement,
in the Internal Agreement,
in the Overseas Association
Decision and in the measures implementing that Decision,
the Commission may undertake the financial implementation
of EDF resources by means of joint management with inter-
national organisations.

EDF resources may also be associated with funds from other
sources in order to achieve a joint objective.

Article 14

In the

context of decentralised management,

the
1.
Commission shall undertake the financial
implementation of
EDF resources in accordance with the detailed rules laid
down in paragraphs 2, 3 and 4.

The Commission and the beneficiary ACP States or OCTs

2.
shall:

(a) check regularly that the operations financed by the EDF

have been properly implemented;

(b) take appropriate measures to prevent

fraud and if necessary bring prosecutions
funds wrongly paid.

irregularities and
to recover

3.
In order to ensure that funds are used in accordance with
the applicable rules and within the limits of powers thereby
conferred upon it, the Commission shall implement clearance
of account procedures or financial correction mechanisms
to discharge its obligations under the ACP-EC
enabling it
in particular under Article 34(1) of Annex IV
Agreement,
thereto, and under
in
particular under Articles 20 and 32 thereof, for the clearance
of expenditure financed from EDF resources.

the Overseas Association Decision,

The implementation by ACP States and OCTs of operations
financed from EDF resources shall be subject to Commission
scrutiny, which may be exercised by prior approval, by ex post
checks or by a combined procedure,
in accordance with the
provisions of the ACP-EC Agreement, the Overseas Association
Decision and the measures implementing that Decision.

4.
Depending on the degree of decentralisation provided for
in the ACP-EC Agreement and in the Overseas Association
Decision and the measures implementing that Decision, the
Commission shall strive to encourage the beneficiary ACP
States and the OCTs to adhere, when exercising the powers
entrusted to them under the ACP-EC Agreement and under the
to the principle of sound
Overseas Association Decision,
financial management set out in Article 4,
in particular the
progressive application of the following criteria:

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(a) effective segregation of the duties of authorising officer and

accounting officer;

(b) existence of an effective system for the internal control of

management operations;

(c) separate procedures

for

the presentation of accounts

showing the use made of EDF resources;

(d) existence of an independent, public or private external

audit system;

(e) transparent, non-discriminatory procurement procedures

which prevent any conflict of interests;

(f)

in the case of the direct-labour operations referred to in
Article 80(2), adequate provisions for the management and
scrutiny of imprest accounts and for the definition of the
responsibilities of
imprest administrator and the
accounting officer.

the

the purposes of applying the first subparagraph,

For
Commission shall,
States and OCTs,
financing agreements referred to in Article 52(3).

the
in agreement with the beneficiary ACP
incorporate appropriate provisions in the

Article 15

1. Where the Commission implements EDF resources on a
centralised basis, implementing tasks shall be performed either
in accordance with
directly in its departments or indirectly,
paragraphs 2 to 7 of this Article and with Articles 16 and 17.

The Commission may not entrust

2.
to third parties its
implementing powers under the ACP-EC Agreement or the
Overseas Association Decision where those powers involve a
large measure of discretion implying political choices.

The first subparagraph shall apply in particular to the financing
decisions provided for in Article 52(2).

Subject

to the limits laid down in paragraph 2,

the
3.
involving the exercise of
tasks
Commission may entrust
public authority, in particular financial implementation tasks,
to:

(a) the executive agencies referred to in Article 16;

(b) national bodies governed by public law or private sector
bodies with a public service mission and offering adequate
financial guarantees for the implementation of the tasks
assigned to them within the framework defined in this
paragraph.

In the case, referred to in point (b) of the first subparagraph, of
programmes or projects cofinanced by the Member States or
their implementing bodies and reflecting the priorities laid
down in the Country Cooperation Strategies provided for in
Chapter III of the Internal Agreement and in Article 20 of the
Overseas Association Decision, the Commission may entrust
responsibility for managing Community aid to Member States

or to their implementing bodies. The Commission may draw
on the EDF resources provided for in Article 1(2)(a)(i) and (ii)
of the Internal Agreement in order to pay financial compen-
sation for the administration costs incurred.

Implementing tasks may be entrusted to the bodies referred to
in point (b) of the first subparagraph only if a prior analysis
shows that the delegation of such tasks is the best way of
if
meeting the requirements of sound financial management,
the principle of non-discrimination is applied and if the visi-
bility of the Community's contribution is fully guaranteed. The
implementing tasks thus delegated must not give rise to
conflicts of interests. If the analysis indicates that the delegation
of tasks will meet the needs of sound financial management,
the EDF
the Commission shall
Committee provided for
Internal
Agreement before proceeding to implement such delegation.
The EDF Committee may also give its views on the planned
application of the selection criteria.

in Article 21 of

the opinion of

request

the

The financial guarantees referred to in point (b) of the first
subparagraph shall apply inter alia to the full recovery of any
amounts payable by the bodies concerned.

4. Where indirect methods of implementation are used, as
provided for in paragraph 3, the implementing tasks entrusted
must be clearly defined and supervised. The bodies responsible
for implementation shall:

(a) conduct regular checks to ensure that the operations to be

financed have been implemented correctly;

(b) take appropriate measures to prevent

fraud and if necessary bring prosecutions
funds lost, wrongly paid or badly used.

irregularities and
to recover

5.
The decisions, referred to in paragraph 3, entrusting
implementing tasks shall cover all appropriate arrangements
for ensuring the transparency of operations carried out and
must provide for:

(a) an independent external audit;

(b) an effective
operations;

internal control

system for management

(c) accounting

for

arrangements

operations
and
procedures for the presentation of
the accounts which
will enable the correct use of EDF resources to be ascer-
tained and the true extent of that use to be reflected in the
accounts;

those

(d) procurement and grant award procedures which comply

with the provisions of Titles IV and VI.

The Commission may accept that the audit, accounting and
procurement systems of
the national bodies referred to in
paragraph 3 are equivalent to its own, with due account for
internationally accepted standards.

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The Commission shall

ensure periodic
the implementation of

supervision,
6.
evaluation and control of
the tasks
entrusted to the bodies referred to in paragraph 3. The
European Anti-Fraud Office (OLAF)
shall enjoy the same
powers with regard to such bodies as it does with regard to
Commission departments. The bodies in question shall adopt
the necessary measures to help OLAF carry out internal inves-
tigations. Any act undertaken by such bodies for the financial
implementation of EDF resources, and in particular any
decision or any contract concluded by them, must specifically
provide for the same controls as Article 52(4).

The Commission may not entrust measures implementing
7.
funds deriving from EDF resources, such as payment and
recovery, to external private sector entities or bodies other
than those referred to in point (b) of the first subparagraph
of paragraph 3.

The tasks which the Commission may entrust by contract to
external private sector entities or bodies other than those
subparagraph of
referred to in point
paragraph 3 shall be technical expertise tasks and adminis-
trative, preparatory or ancillary tasks involving neither the
exercise of public authority nor the use of discretionary power.

(b) of

first

the

Article 16

The executive agencies shall be legal persons under Community
law created by Commission decision, to which power may be
delegated to implement all or part of a Community programme
or project on behalf of the Commission and on its responsi-
bility, in accordance with the Council Regulation laying down
the statute for executive agencies to be entrusted with certain
tasks relating to the management of Community programmes.

Article 17

In the context of joint management with international organi-
sations, the latter shall, in their accounting, audit, control and
procurement procedures, apply standards which offer guar-
to internationally accepted standards. The
antees equivalent
implementation by international organisations of operations
financed from EDF resources shall be subject to scrutiny by
the Commission. Such scrutiny shall be exercised by prior
approval, by ex post checks or by a combined procedure.

CHAPTER 3

FINANCIAL ACTORS

S e c t i o n 1

Principle of segregation of duties

Article 18

The duties of authorising officer and accounting officer

1.
shall be segregated and mutually incompatible.

Save where otherwise indicated, references in this Regu-
2.
lation to the authorising officer or to the authorising officer
responsible shall be deemed to refer to the Commission's auth-
to the
orising officers defined in Section 2. References
to the
to refer
accounting officer
Commission's accounting officers defined in Section 3.

deemed

shall

be

S e c t i o n 2

Authorising officer

Article 19

In the context of the financial

implementation of the
1.
operations referred to in Article 9(1), the Commission shall
perform the duties of authorising officer.

The Commission shall determine the staff of an appro-
2.
priate level to whom it shall delegate the duties of authorising
officer, and shall delimit the powers delegated and the circum-
stances in which delegates may subdelegate those powers.

In accordance with Article 34 of Annex IV to the ACP-EC
3.
Agreement,
the Commission shall appoint an authorising
officer by delegation as Chief Authorising Officer of the EDF.
It shall also define his duties in respect of the implementation
of the Overseas Association Decision. The Chief Authorising
Officer may delegate his powers to authorising officers by
subdelegation.

4.
The powers of authorising officer shall be delegated or
subdelegated only to persons covered by the Staff Regulations
of officials and the conditions of employment of other servants
the European Communities (hereinafter ‘the Staff Regu-
of
lations’).

5.
The rules on spheres of competence adopted in this Title
shall apply to authorising officers by delegation or subdel-
egation. Authorising officers by delegation or subdelegation
may act only within the limits set by the instrument of
delegation or subdelegation. Each delegation or subdelegation
decision shall indicate the limits and, where appropriate, the
duration of
authorising officer by
delegation or subdelegation may be assisted in his task by
one of more members of staff entrusted, under the responsi-
bility of the former, with certain operations required for the
implementation of the budget and production of the accounts.

the delegation. The

6.
Decisions taken pursuant to paragraphs 2, 3 and 5 shall
be notified to the delegates, the accounting officer, the internal
auditor and the Court of Auditors.

Article 20

The authorising officer entrusted with the management of EDF
resources shall be responsible for implementing revenue and
expenditure in accordance with the principle of sound financial
management and for ensuring that the requirements of legality
and regularity are complied with.

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Article 21

To implement expenditure, the Chief Authorising Officer
1.
and
shall make
authorising
by
commitments, validate expenditure and authorise payments
and shall undertake the preliminaries for the implementation
of EDF resources.

subdelegation

officers

Implementation of revenue shall comprise drawing up
2.
estimates of amounts receivable, establishing entitlements to
be recovered and issuing recovery orders.
involve
waiving established entitlements where appropriate.

It shall

Article 22

is

Save

in cases where management

1.
centralised,
operations relating to the implementation of programmes or
projects shall be carried out by the national or regional auth-
orising officer, as defined in Article 35 of Annex IV to the
ACP-EC Agreement and in the measures implementing the
Overseas Association Decision,
in the
ACP States, with the head of delegation in accordance with
Articles 35 and 36 of Annex IV to the ACP-EC Agreement.

in close cooperation,

The head of delegation shall be an authorising officer by
2.
subdelegation and, in exercising the powers delegated to him,
he shall be subject to this Regulation. He shall receive the
necessary instructions and powers to perform his duties as
defined in Article 36 of Annex IV to the ACP-EC Agreement
and in the measures implementing the Overseas Association
Decision.

Article 23

The Chief Authorising Officer shall

1.
take all measures
necessary for the implementation of Annex IV to the ACP-EC
Agreement and Articles 18 and 33 of the Overseas Association
Decision and Annexes II A to II D thereto.

The Chief Authorising Officer shall

2.
take all measures
necessary to ensure that national, regional or local authorising
officers perform the tasks for which they are responsible by
virtue of the ACP-EC Agreement, and in particular Annex IV
thereto, and by virtue of the Overseas Association Decision or
In close cooperation
measures implementing that Decision.
take such
with the National Authorising Officer, he shall
commitment decisions
as prove
and financial measures
necessary, from an economic and technical point of view, to
ensure the proper execution of operations.

Article 24

Where the Chief Authorising Officer becomes aware of
problems in carrying out procedures relating to management
of EDF resources, he shall, in conjunction with the national or
regional authorising officer, make all contacts necessary to
remedy the situation and take any steps appropriate. For
instance,
in cases where the national or regional authorising
officer does not or is unable to perform the duties incumbent

on him under the ACP-EC Agreement, the Chief Authorising
Officer may temporarily take his place,
in which case, the
Commission may receive, from the resources allocated to the
ACP State in question, financial compensation for the extra
administrative workload incurred.

Any measure taken by the Chief Authorising Officer pursuant
to the first paragraph shall be taken in the name of and on
behalf of the national or regional authorising officer concerned.

Article 25

the organisational

1.
In compliance with the minimum standards adopted by
the Commission and having due regard to the risks associated
with the management environment and the nature of
the
operations financed, the Chief Authorising Officer shall put
in place
internal
management and control systems and procedures suited to
the performance of his duties, including where appropriate ex
post checks. Before an operation is authorised, the operational
and financial aspects shall be verified by staff other than the
member of staff who initiated the operation. Initiation of an
operation and the ex ante and ex post verification of
that
operation shall be separate functions.

and the

structure

2.
All staff responsible for controlling the management of
financial operations must have the necessary professional skills.
They shall respect a specific code of professional standards
established by the Commission.

staff

in the

involved

Any member of

financial
3.
management and control of operations who considers that a
decision which his superior requires him to apply or to agree
to is irregular or contrary to the principles of sound financial
management or the professional rules by which he is bound
shall inform the Chief Authorising Officer in writing and, if the
latter fails to take action, the panel referred to in Article 36(3).
In the event of fraud, corruption or any other illegal activity
which may harm the interests of the Community, he shall
inform OLAF and the authorities designated by the Staff Regu-
lations.

Article 26

The Chief Authorising Officer shall report to the Commission
on the performance of his duties in the form of an annual
activity report, which shall include financial and management
information. The report shall cover the results of his operations
by reference to the objectives set, the risks associated with
those operations, the use made of the resources provided and
the functioning of the internal control system. The annual
specified information shall be
activity report and other
the
the internal auditor of
brought
Commission. By 15 June
the
latest,
Commission shall send the European Parliament and the
Council a summary of
for the
previous year.

the annual activity report

to the attention of

each year

the

at

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S e c t i o n 3

Accounting officer

Article 27

S e c t i o n 4

Paying agent

Article 29

1.

The accounting officer shall be responsible for:

(a) proper implementation of payments, collection of revenue
and recovery of amounts established as being receivable;

(b) preparing and presenting the financial

statements and
implementation in accordance with

reports on financial
Articles 100 and 101;

(c) keeping the accounts for:

(i) the allocations referred to in Article 6, except those for
the Investment Facility, and interest rate subsidies;

(ii) the commitments referred to in Article 52;

(iii) payments, revenue and debts;

(d) laying down, in accordance with Title VII, the accounting

rules and methods and the chart of accounts;

(e) defining and validating the accounting systems and, where
appropriate, validating systems defined by the Chief Auth-
orising Officer for the purpose of supplying or explaining
accounting information;

(f)

treasury management.

2.
The accounting officer shall obtain from the Chief Auth-
orising Officer and from the EIB, who shall, each for their own
part, guarantee its reliability, all the information necessary for
the production of accounts giving a true image of the financial
implementation of EDF resources.

3.
The accounting officer is alone empowered to handle
monies and other assets. He shall be responsible for their
safekeeping.

In order to make the payments provided for in Article 37(1)
and (4) of Annex IV to the ACP-EC Agreement or in the
measures implementing the Overseas Association Decision,
the accounting officer shall open accounts with financial insti-
tutions in the ACP States and the OCTs, for payments in the
national currencies of the ACP States or in the local currencies
of the OCTs, and with financial
institutions in the Member
States, for payments in euros and other currencies. Subject to
Article 37(2) of Annex IV to the ACP-EC Agreement, deposits
in those accounts shall bear interest. Such interest shall be
credited to the one of the accounts provided for in Article
1(3) of the Internal Agreement.

Article 30

The relations between the Commission and the paying agents
provided for
in Article 37 of Annex IV to the ACP-EC
Agreement or in the measures implementing the Overseas
Association Decision shall be the subject of contracts. Once
signed, copies of those contracts shall be sent to the Court
of Auditors for information purposes.

Article 31

The Commission shall transfer from the special accounts
1.
opened pursuant
the amounts needed to
replenish the accounts opened in its name in accordance
with Article 29. Such transfers shall be made on the basis of
the cash needs of the projects and programmes.

to Article 41(3)

2.
The Commission shall endeavour to make any with-
drawals from the special accounts referred to in the first
subparagraph of Article 41(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.

Article 28

Article 32

The accounting officer shall be appointed by the Commission.
The accounting officer may, for the performance of his duties,
delegate certain tasks to subordinates who are subject to the
Staff Regulations. The instrument of delegation shall define the
tasks entrusted to the delegates.

Decisions taken pursuant to the first paragraph shall be notified
to the delegates, the Chief Authorising Officer, the internal
auditor and the Court of Auditors.

The signatures of the Commission officials and staff 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 staff who are authorised
subsequently, when they are designated. That 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 OCTs and,
where appropriate,
in the accounts opened in the Member
States.

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CHAPTER 4

LIABILITY OF THE FINANCIAL ACTORS

without justification,
the institution liable to civil action by third parties.

late in issuing them, thereby rendering

S e c t i o n 1

General rules

Article 33

1. Without prejudice to any disciplinary action, the Chief
Authorising Officer and authorising officers by subdelegation
may at any time have their delegation or
subdelegation
withdrawn temporarily or definitively by the authority which
appointed them.

2. Without prejudice to any disciplinary action, accounting
officers may at any time be suspended temporarily or
definitively from their duties by the Commission.

Article 34

The provisions of this Chapter are without prejudice to
1.
law liability which the persons referred to in
the criminal
Article 33 may incur under the applicable national
law and
the legislation in force on the protection of the European
Communities'
interests and on the fight against
corruption involving officials of the European Communities
or officials of Member States.

financial

Each authorising officer or accounting officer shall be
2.
liable to disciplinary action and payment of compensation as
provided for in the Staff Regulations, without prejudice to
Articles 35, 36 or 37 of this Regulation.
In the event of
fraud, corruption or any other illegal activity which may
authorities
harm Community
designated by the Staff Regulations shall be informed.

interests, OLAF

and the

S e c t i o n 2

Rules applicable to authorising officers

Article 35

Authorising officers shall be liable to pay compensation in
accordance with the conditions laid down in the Staff Regu-
lations, under which an official may be required to make good,
in whole or in part, any damage suffered by the Communities
as a result of serious misconduct on his part in the course of or
in connection with the performance of his duties, in particular
in the event of failure to comply with the Financial Regulation
implementation when establishing
and the
issuing recovery orders,
entitlements
entering into a commitment of expenditure or signing a
payment order. The same shall apply if they omit to draw
up a document establishing a debt or if they neglect to issue
recovery orders or are, without justification,
late in issuing
to issue payment orders or are,
them, or if

to be recovered or

they neglect

rules

for

its

Article 36

1. Where the Chief Authorising Officer or an authorising
officer by subdelegation considers that a decision which it is
his responsibility to take is irregular or contrary to the prin-
inform the
ciples of sound financial management, he shall
delegating authority in writing.
the delegating authority
then gives a reasoned instruction in writing to the Chief Auth-
orising Officer or authorising officer by subdelegation to take
the decision in question, the latter may not be held liable.

If

2.
In the event of internal subdelegation, the Chief Auth-
orising Officer shall continue to be responsible for the effec-
tiveness of the internal management and control systems put in
place and for the choice of the authorising officer by subdel-
egation.

The specialised panel set up by the Commission in
3.
accordance with Regulation (EC, Euratom) No [. . .] (hereinafter
‘the General Financial Regulation’), shall have competence to
determine, in relation to the EDF, whether a financial irregu-
larity has occurred and, if so, the consequences entailed, if any.
the management of EDF resources by the
In respect of
Commission, cases shall be referred to that panel as provided
for in the detailed rules for implementing the General Financial
Regulation.

On the basis of the panel's opinion, the Commission shall
decide whether to initiate proceedings entailing liability to
disciplinary action or to payment of compensation.
the
it shall send a report with
panel detects systemic problems,
recommendations to the Chief Authorising Officer and to the
internal auditor.

If

S e c t i o n 3

Rules applicable to accounting officers

Article 37

An accounting officer shall be liable to disciplinary action and
payment of compensation, as provided for and in accordance
with the procedures laid down in the Staff Regulations,
in
particular where:

(a) he loses or damages monies, assets and documents in his

keeping;

(b) he unduly alters bank accounts or postal giro accounts;

(c) he recovers or pays amounts which are not in conformity
with the corresponding recovery or payment orders;

(d) he fails to collect revenue due.

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CHAPTER 5

REVENUE OPERATIONS

S e c t i o n 1

Making available of EDF resources

Article 38

EDF revenue consists of payments made by the Member States
in accordance with the Internal Agreement and this Regulation,
the income generated by deposits in accordance with Article
6(2) of this Regulation and any other sum whose acceptance is
established by the Council and which must be earmarked for
the same purposes as the resources defined in Articles 6(2) and
7 of this Regulation.

Article 39

annual

The Member States'

1.
shall be
determined by the Council, acting by the qualified majority
provided for in Article 21 of the Internal Agreement, on a
four
proposal
instalments payable on:

from the Commission, and shall consist of

contributions

(a) 20 January;

(b) 1 April;

(c) 1 July;

(d) 1 November.

The Commission shall
Council no later than 15 days before the due dates.

lay the relevant proposals before the

Supplementary contributions for the financial year decided on
by the Council in accordance with Article 10(4) of the Internal
Agreement shall, unless the Council decides otherwise, 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.

Each call for contributions shall specify,

2.
with Article 9:

in accordance

Article 40

This Part and Part Three shall apply only to revenue collected
by the Commission pursuant to Article 41.

Article 41

The financial contributions of the Member States shall be

1.
expressed in euros.

Each Member State

2.
contribution in euros.

shall pay the

amount of

its

In respect of the amount due to the Commission under
3.
Article 39(2)(a),
financial contributions shall be credited by
each Member State to a special account entitled ‘Commission
of the European Communities — European Development Fund’
opened with the bank of issue of that Member State or the
financial
institution designated by it. The amount of such
contributions shall remain in those special accounts until the
payments provided for in Article 37 of Annex IV to the
ACP-EC Agreement or in the measures implementing the
Overseas Association Decision need to be made.

In respect of the amount due to the EIB under Article 39(2)(b),
financial contributions shall be credited by each Member State,
in accordance with the detailed rules laid down in Article 122,
to an account opened with the EIB in the name of each
Member State.

Where necessary, the Commission shall provide appropriate
technical assistance in the implementation of
the Council
decisions referred to in Article 39.

4. Where an instalment of contributions payable under this
Article is not paid on the due date,
the Member State
concerned shall be required to pay interest in respect of the
unpaid amount at a rate of two percentage points above the
interest rate applied by the European Central Bank to its main
refinancing operations, as published in the C series of the
first
Official
working day of the month in which the amount falls due.
That 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.

the European Community, on the

Journal

of

(a) the amount of the contributions required to finance the

EDF operations managed by the Commission;

In respect of the amount due to the Commission under Article
39(2)(a), such late payment interest shall be credited to one of
the accounts provided for in Article 6(2).

(b) the amount of the contributions required to finance the
including interest

EDF operations managed by the EIB,
rates subsidies.

In respect of the amount due to the EIB under Article 39(2)(b),
such late payment interest shall be credited to the EIB.

The amounts to be paid by each Member State and
3.
referred to in paragraph 2 of this Article shall be set in such
a way as to be in proportion to that State's contributions to the
EDF as fixed in Article 1(2) of the Internal Agreement and
indicated in the Annex to this Regulation, for each of the
amounts referred to in paragraph 2 of this Article.

Upon expiry of the financial protocol set out in Annex I
5.
to the ACP-EC Agreement, that part of the contributions which
the Member States remain obliged to pay in accordance with
this Regulation shall be called up by the
Article 39 of
Commission, as required,
in accordance with the conditions
laid down in this Regulation.

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S e c t i o n 2

Estimates of amounts receivable

Article 42

The authorising officer responsible shall first make an estimate
of the amount receivable in respect of any measure or situation
which may give rise to or modify an amount owing to the EDF
and is brought to the Commission's attention by the National
Authorising Officer or is noticed by the Commission itself.
Such estimates shall be sent
to the accounting officer for
recording in the accounts. They shall mention the type of
revenue and the budget item to which it is to be booked
and also, as far as possible, the estimated amount involved
and the name and description of the debtor. When drawing
up estimates of amounts receivable,
the accounting officer
responsible shall check that:

(a) the revenue is booked to the correct item;

officer, by issuing a recovery order, to recover an amount
receivable which he has established.

2. Without prejudice to the responsibilities of
the ACP
States or the OCTs, the Commission may formally establish
an amount as being receivable from persons other
than
States by means of a decision which shall be enforceable
within the meaning of Article 256 of the Treaty.

Article 46

Every debt that is identified as being certain, of a fixed amount
and due in the context of the implementation of EDF resources
shall be established by means of a recovery order given to the
accounting officer, followed by a debit note sent to the debtor,
both drawn up by the authorising officer responsible. The
recovery
supporting
established entitlements. When
documents
drawing up the
authorising officer
responsible shall ensure that:

recovery order,

certifying the

accompanied

order

shall

the

by

be

(b) the estimated amount receivable is in order and conforms
to the relevant provisions relating to the management of
the EDF and all acts adopted pursuant thereto and to the
principle of sound financial management referred to in
Article 4.

(a) the revenue is booked to the correct item;

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

provisions;

S e c t i o n 3

(c)

the supporting documents are in order;

Establishment of amounts receivable

Article 43

(d) the particulars of the debtor are correct;

Establishment of an amount receivable is the act by which the
authorising officer responsible:

(e)

the due date is indicated;

(a) verifies that the debt exists;

(f)

the order conforms to the principle of sound financial
management referred to in Article 4;

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

debt;

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

correct.

(c) verifies the conditions in which the debt is due.

Such recovery orders shall be recorded in the accounts by the
accounting officer.

S e c t i o n 4

Principle of recovery

Article 44

1.

Amounts wrongly paid shall be recovered.

The Commission shall lay down the conditions in which

2.
interest on late payment is due to the Communities.

S e c t i o n 5

Authorisation of recovery

Article 45

1.
authorising officer

The authorisation of recovery is the act whereby the
accounting

responsible

instructs

the

S e c t i o n 6

Recovery

Article 47

1.
The accounting officer shall act on recovery orders for
amounts receivable that have been duly established by the
authorising officer responsible. He shall exercise due diligence
to ensure that the EDF receives its revenue by the due dates
indicated in the recovery orders and ensure that the relevant
rights of the Communities are safeguarded.

If recovery has not actually taken place by the due date
2.
specified in the recovery order, the accounting officer shall
inform the authorising officer responsible and immediately
initiate the procedure for effecting recovery by any means
offered by the law, including, where appropriate, by offsetting
or, if this is not possible, by enforced recovery.

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The

accounting officer

amounts by
3.
offsetting them against equivalent claims that the EDF or the
Communities has on any debtor who himself has a claim on
the EDF or the Communities that is certain, of a fixed amount
and due.

recover

shall

4.
In connection with the direct labour operations referred
to in Title V, where claims that the EDF has on the National
Authorising Officer via the public or semi-public bodies or
the ACP State or OCT concerned are not
departments of
recovered within the prescribed time-limits,
the authorising
the necessary measures to
officer responsible shall take all
including, where
obtain actual repayment of the sums due,
appropriate, suspension by the Chief Authorising Officer of
the use of that type of arrangement for that State or OCT.

Article 48

1. Where the authorising officer responsible is planning to
waive recovery of an established amount receivable, he shall
ensure that the waiver is in order and complies with the prin-
ciples of sound financial management and proportionality in
accordance with procedures and criteria previously laid down
by the Commission for that purpose. The waiver decision must
be substantiated and taken by the Chief Authorising Officer,
who may delegate the decision only as laid down by the
Commission.

The detailed rules for implementing the General Financial
2.
Regulation shall apply mutatis mutandis to the implementation
of this Article.

Article 51

1.
The financial commitment by the Commission is the
operation reserving the appropriation necessary to cover
subsequent payments to honour a legal commitment.

The legal commitment by the Commission is the act whereby
the authorising officer responsible enters into an obligation
with regard to third parties which may result in expenditure
being charged to the EDF.

The financial commitment and the legal commitment shall be
adopted by the same authorising officer. That rule may be
waived:

(a)

in the case of administrative expenditure incurred by the
Commission within the meaning of paragraph 4 in respect
of which the financial commitments have been divided in
accordance with paragraph 3;

(b) where global commitments relate to financing agreements

under Article 52(3).

The Commission's financial commitment

2.
is individual
when the beneficiary and the amount of the expenditure are
known.

The Commission's financial commitment is global when at least
one of
the elements necessary to identify the individual
commitment is still not known.

Financial commitments for Commission administrative
3.
expenditure may be divided over several years into annual
instalments. The
shall
stipulate that division.

corresponding legal

commitments

CHAPTER 6

EXPENDITURE OPERATIONS

S e c t i o n 1

General provisions

Article 49

4.
The following shall be regarded as administrative expen-
diture for the purposes of point (a) of the third subparagraph
of paragraph 1:

(a)

expenditure on human resources other than regular staff;

(b)

training expenditure;

(c) mission expenses;

Every item of expenditure shall be committed, validated,

1.
authorised and paid.

(d)

representation expenses;

The decisions and procedures for commitment of expen-

2.
diture by the Commission are defined in this Chapter.

(e) meeting expenses;

(f)

expenses
translators;

relating

to

freelance

interpreters

and/or

S e c t i o n 2

(g)

expenses relating to exchanges of officials;

Commitment of expenditure: principles and definitions

(h) cost of

recurring rentals of movable and immovable

Article 50

property;

The commitment of expenditure shall be preceded by a
financing decision adopted by the Commission or by the auth-
orities delegated by the Commission.

(i)

cost of miscellaneous insurance;

(j)

cost of cleaning and maintenance;

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(k) costs related to the use of telecommunications services;

(l)

cost of water, gas and electricity;

(m) outlay for periodical publications.

Article 52

The authorising officer responsible must

1.
first make a
financial commitment before entering into a legal obligation,
binding upon the the Commission, with third parties.

Financing decisions

taken by the Commission,

in
2.
accordance with the ACP-EC Agreement or
the Overseas
Association Decision, which authorise it to grant financial aid
from the EDF, shall give rise to financial commitments by the
Commission.

The following shall constitute legal commitments by the

3.
Commission:

(a) a financing agreement between the Commission, acting for
the Community, and the beneficiary ACP State or States or
the beneficiary OCTs or the bodies they have designated;

(b) a contract or grant agreement between the Commission
and national or
international public-sector bodies or
natural or legal persons responsible for carrying out the
operations.

4.
Each financing agreement, contract or grant agreement
shall provide expressly for the Commission, including OLAF,
and the Court of Auditors, to exercise their powers of control,
on documents and on the spot, over all contractors and
subcontractors who have
from EDF
resources.

received financing

Article 53

legal

Individual

relating to individual
commitments
2.
financial commitments shall be concluded by the Commission
by 31 December of year N at the latest, year N being the year
in which the Commission's individual financial commitment
was adopted, subject to Article 51(3).

As a general rule, global financial commitments shall cover the
total cost of the corresponding individual legal commitments
concluded by the Commission up to 31 December of year
N+1, year N being the year
in which the Commission's
global financial commitment was adopted, subject to Article
51(3).

However, where the global commitments referred to in Article
52(3) are implemented, the Commission shall conclude the
corresponding individual contracts and agreements by no
later
financial
commitment. Individual contracts and agreements relating to
audit and evaluation may be concluded later.

from the date of

than three years

the

At the end of the periods referred to in the first and second
subparagraphs,
financial
commitments shall be decommitted by the authorising officer
responsible.

balance

unused

those

the

of

The

amount of

each individual

3.
commitment
adopted by the Commission following a global commitment
shall, prior to signature, be registered by the authorising officer
responsible in the EDF financial accounts and booked to the
global commitment.

legal

When adopting a financial commitment, the authorising officer
responsible shall ensure that:

(a) the expenditure has been charged to the correct item in the

budget;

4.
The legal commitments entered into for operations
extending over more than one financial year and the corre-
sponding financial commitments shall have a final date for
implementation set in accordance with the requirements of
sound financial management, save in the case of the adminis-
trative expenditure referred to in Article 51(3).

(b) the appropriations are available;

(c) the expenditure conforms to the relevant provisions,

in
particular of
the Overseas
the ACP-EC Agreement,
Association Decision, the Internal Agreement, this Regu-
lation, and all acts adopted in implementation of those
provisions;

(d) the principle of sound financial management is complied

with.

S e c t i o n 3

Commitment of expenditure under centralised
management

Article 54

1. Where EDF resources are managed by the Commission
on a centralised basis or jointly, the commitment of expen-
diture shall be subject to the provisions of this Section.

Any parts of such commitments which have not been imple-
mented six months after that date shall be decommitted and
the corresponding appropriations cancelled.

Where a legal commitment has not given rise to any payment
during a period of three years, the authorising officer shall
proceed to decommit the financial commitment and cancel
the appropriations.

The termination of a project and the decommitment of
5.
the funds committed in accordance with paragraphs 1 to 4
shall be carried out when the legal commitments entered
into by the Commission in connection with that project with
respect to third parties are concluded and the related payments
and collections have been recorded in the accounts.

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S e c t i o n 4

Commitment of expenditure under decentralised
management

Article 55

1. Where EDF resources are managed on a decentralised
basis,
the commitment of expenditure by the Commission
shall be subject to the provisions of this Section.

2.
Financing agreements with the beneficiary ACP States or
OCTs shall be concluded by 31 December of year N+1 at the
latest, N being the year in which the Commission's financial
commitment was adopted.

Where financing agreements are not concluded by the deadline
laid down in the first subparagraph, the corresponding appro-
priations shall be decommitted.

3.
The Commission shall be under an obligation to effect
payment from EDF resources whenever the head of delegation,
acting as authorising officer by subdelegation:

(a) endorses contracts and programme estimates, as provided
for in Article 80(4) of this Regulation, in accordance with
Article 36(2)(i) of Annex IV to the ACP-EC Agreement, or
the relevant provisions of the measures implementing the
Overseas Association Decision,

beneficiary ACP States
provisions
paragraph 2.

in the

and OCTs,

financing

agreements

incorporate

relevant
referred to in

The termination of a project and the decommitment of
5.
the funds committed in accordance with paragraphs 1 to 4
shall be carried out after conclusion of the legal commitments
entered into by the ACP State or OCT or its authorities, and/or
by the Commission acting in their name and on their behalf in
connection with that project with respect to third parties, and
after the related payments and collections have been recorded
in the accounts.

S e c t i o n 5

Validation of expenditure

Article 56

Validation of expenditure is the act whereby the authorising
officer responsible:

(a) verifies the existence of the creditor's entitlement;

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

claim;

(c) verifies the conditions in which payment is due.

(b) endorses grant agreements.

Article 57

each endorsement

In respect of
responsible shall record in the accounts the value of
contract, programme estimate or grant
recording shall be called ‘assigned funds’.

authorising officer
the
in question. This

the

The assigned funds recorded shall be set off by the Commission
against the global commitments corresponding to the financing
decisions concerned.

4.
In accordance with the principle of sound financial
management referred to in Article 4 and acting within its
powers, the Commission shall endeavour to see that:

(a) the

the
commitments
legal
individual
financing agreements
referred to in paragraph 2 are
concluded no later than three years from the date of the
corresponding financial commitment by the Commission;

implementing

(b) the assigned funds corresponding to individual

legal
commitments entered into for the implementation of a
financing agreement referred to in paragraph 2 which
have not given rise to any payment during a period of
three years are decommitted.

shall

legal commitments as
be

referred to in the first
Individual
subparagraph
or
contracts,
programme estimates concluded by the ACP State or OCT or
its authorities or by the Commission acting in their name and
on their behalf.

agreements

grant

the purposes of

For
second
applying
subparagraphs, the Commission shall, in agreement with the

first

and

the

to the
Validation of any expenditure shall be subject
1.
existence of valid supporting documents attesting the creditor's
entitlement, on the basis of a statement of services actually
rendered, supplies actually delivered or work actually carried
out or on the basis of other documents justifying payment. The
nature of the supporting documents to be enclosed with the
payment orders and the particulars to be included shall be such
as to make it possible to carry out the checks provided for in
Articles 56, 59 and 61.

Before taking the decision validating the expenditure, the
2.
authorising officer
responsible shall personally check the
supporting documents or shall, on his own responsibility,
ascertain that this has been done.

3.
The decision validating the expenditure shall be expressed
by the signing of a ‘passed for payment’ voucher by the auth-
orising officer responsible.

Article 58

The Chief Authorising Officer shall lay down the criteria for
signing the ‘passed for payment’ voucher by analogy with the
relevant provisions of the detailed rules for the implementation
of the General Financial Regulation.

Article 59

In a non-computerised system, ‘passed for payment’ shall take
the form of a stamp incorporating the signature of the auth-
orising officer responsible. In a computerised system,
‘passed
for payment’ shall
take the form of validation using the
personal password of the authorising officer responsible.

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S e c t i o n 6

Authorisation of expenditure

Article 60

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

Article 61

When drawing up the payment order, the authorising officer
responsible shall ensure that:

(a) the payment order has been properly issued,
validation

corresponding
previously in the form of ‘passed for payment’;

decision

has

in that a
taken

been

The payment order shall be dated and signed by the auth-
orising officer responsible, then sent to the accounting officer.

Article 63

The supporting documents shall be kept by the authorising
officer responsible.

S e c t i o n 7

Payment of expenditure

Article 64

1.
Payment shall be made only on production of proof that
the relevant action has been carried out in accordance with the
provisions of the basic act or the contract and shall cover one
or more of the following operations:

(b) the

payment

to
order
commitment against which it is booked;

corresponds

the

financial

(a) payment of the entire amount due;

(c) the expenditure is charged to the correct

item in the

accounts;

(d) the appropriations are available;

(e) the particulars of the payee are correct.

(b) payment of the amounts due in any of the following ways:

(i) pre-financing, which may be divided into a number of

payments,

(ii) one or more interim payments,

Article 62

(iii) payment of the balance of the amounts due.

The payment order must state:

(a)

the financial year against which the expenditure is to be
booked;

2.
A distinction shall be made in the accounts between the
different types of payment referred to in paragraph 1 at the
time they are made.

(b) the instrument and allocation against which it is to be

booked in accordance with Article 3;

Pre-financing shall count in full or in part against the

3.
interim payments referred to in paragraph 1(b)(ii).

(c)

the references of the legal commitment giving rise to an
entitlement to payment;

4.
The total sum of pre-financing and interim payments
shall count against the payment of the balances referred to
in paragraph 1(b)(iii).

(d) the references of the financial commitment against which it

is to be booked;

Article 65

(e)

the references of any other payment orders booked
previously against the same financial commitment;

(f)

the sum to be paid in figures, indicating the currency in
which it is to be paid;

(g) the name and address of the payee;

(h) the bank account into which the payment is to be made;

(i)

the object of the expenditure;

(j)

the means of payment.

Payment of expenditure shall be made by the accounting
officer within the limits of the funds available.

Article 66

Payments shall be effected through the bank accounts referred
to in Article 29. The detailed rules for opening, administering
and using such accounts
shall be determined by the
Commission.

Those rules shall in particular require the joint signatures on
transfer orders of two duly authorised officials, one of whom
must be the accounting officer. They shall also specify the
expenditure in respect of which payment must necessarily be
made either by cheque or by transfer.

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Article 67

1.
In cases where the head of delegation performs the duties
of authorising officer by subdelegation in accordance with
Article 22(2), the corresponding payments may be effected
by an accounting officer by subdelegation, where appropriate
on the spot.

The accounting officer may 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.

2.
For payments made by the accounting officer by subdel-
egation, the authorising officer responsible shall ensure that
appropriate checks are carried out either before or after their
execution and on their entry in the accounts.

S e c t i o n 8

Time limits for expenditure operations

Article 68

The validation, authorisation and payment of expenditure must
be completed within a period of no more than 90 days from
the date on which payment is due. The National Authorising
Officer shall authorise the expenditure and notify the head of
delegation accordingly no later than 45 days before that time
limit expires.

Claims for delayed payments for which the Commission is
responsible in accordance with Article 37 of Annex IV to the
ACP-EC Agreement shall be borne by the Commission from
the account or accounts provided for in Article 6(2) of this
Regulation.

CHAPTER 7

COMPUTER SYSTEMS

Article 69

1. Where revenue and expenditure operations are managed
by means of computer systems, documents may be signed by a
computerised or electronic procedure.

2. Where computer systems and subsystems are used to
process financial implementation operations, a full description
of each system or subsystem shall be required.

Each description shall define the content of all data fields and
describe how the system treats each individual operation. It
shall show in detail how the system guarantees the existence
of a complete audit trail for each operation.

The data in computer systems and subsystems shall be

3.
saved periodically and kept in a safe place.

CHAPTER 8

INTERNAL AUDITOR

Article 70

relevant

international

The internal auditor of the EDF shall be the internal auditor of
the Commission. He shall perform his duties in accordance
with the
shall be
accountable to the Commission for verifying the proper
operation of systems and procedures for implementing EDF
resources managed by the Commission under Article 9. The
internal auditor may be neither authorising officer nor
accounting officer.

standards. He

Article 71

1.
The internal auditor shall advise the Commission on
dealing with risks, by issuing independent opinions on the
quality of management and control systems and by issuing
recommendations for improving the conditions of implemen-
tation
financial
management. He may be called on to advise the authorities
of ACP countries or OCTs on the same topics.

promoting

operations

sound

and

of

He shall be responsible in particular for:

(a) assessing the

suitability and effectiveness of

internal
management systems and the performance of departments
in implementing policies, programmes and actions by
reference to the risks associated with them;

(b) assessing the suitability and quality of the internal control
systems applicable to every operation for the implemen-
tation of EDF resources.

2.
The internal auditor shall enjoy full and unlimited access
to all the information he requires to perform his duties, where
necessary on the spot, including in the Member States and in
third countries.

3.
The internal auditor shall report to the Commission on
his findings and recommendations. The Commission shall
ensure that action is taken on recommendations resulting
from audits. The internal auditor shall also submit
to the
Commission an annual
indicating the
number and type of audits carried out, the recommendations
made and the action taken on those recommendations.

internal audit report

Each year

4.
the Commission shall send the authority
responsible for discharge a report summarising the number
and type of internal audits carried out, the recommendations
made and the action taken on those recommendations.

Article 72

The special rules applicable to the internal auditor shall be
those laid down in the detailed rules for implementing the
General Financial Regulation, particularly as regards his inde-
pendence in the performance of his duties and the circum-
stances under which he may be held liable.

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TITLE IV

PROCUREMENT

CHAPTER 1

SCOPE

Article 73

Public contracts are contracts

1.
for pecuniary interest
concluded in writing by a contracting authority within the
meaning of Article 74 in order to obtain, against payment of
a price paid in whole or in part from EDF resources, the supply
of movable or immovable assets, the execution of works or the
provision of services.

Such contracts comprise:

(a) supply contracts;

(b) works contracts;

(c) service contracts.

2.

This Title does not relate to grants.

Article 74

The following shall be contracting authorities for the

1.
purposes of this Title:

(a) the beneficiary ACP State or States or bodies duly

mandated by them, or their representatives;

(b) the Commission, in the case of contracts awarded on its

own account;

(c) the Commission, on behalf of and for the account of one

or more beneficiary ACP States;

(d) a national or international public sector body or natural or
legal persons who have signed a financing agreement or
grant agreement with one or more ACP countries or with
the Commission for the implementation of a programme
or project.

in
defined
Association Decision.

the measures

implementing

the Overseas

2. Where the Commission acts as contracting authority for
the implementation of humanitarian aid or emergency aid
within the framework of
the
Overseas Association Decision, it shall be required to comply
with the relevant Community rules on procurement.

the ACP-EC Agreement or

CHAPTER 3

PARTICIPATION IN CONTRACTS

Article 76

Participation in tendering procedures

1.
in respect of
contracts financed by the EDF shall be open on equal terms
in accordance with the conditions laid down in Article 20 of
Annex IV to the ACP-EC Agreement.

Nationals of countries other than ACP States and the
2.
Member States,
including the OCTs, may be authorised to
take part in the tendering procedures in accordance with the
conditions laid down in Article 22 of Annex IV to the ACP-EC
Agreement.

Article 77

Within the limits of the powers conferred on it by the ACP-EC
Agreement and in accordance with the conditions laid down in
Article 21 of Annex IV thereto, the Commission shall ensure
in
the broadest possible participation, on equal
tendering procedures for contracts financed by the EDF and
shall ensure compliance with the principles of transparency,
proportionality, equal treatment and non-discrimination

terms,

CHAPTER 4

PUBLICATION

Article 78

Within the limits of the powers conferred on it by the ACP-EC
Agreement and in accordance with the conditions laid down in
Articles 21 and 34 of Annex IV thereto, the Commission shall
tendering
take the necessary steps
procedures published in the Official
the European
Communities and on the Internet.

to have international

Journal of

The procurement procedures shall be laid down in the

2.
financing agreements referred to in Article 52(3).

Article 79

CHAPTER 2

PROCEDURES AND PRINCIPLES CONCERNING THE AWARD
OF CONTRACTS

Article 75

1.
The procedures for the award of contracts relating to
operations financed by the EDF to assist ACP States shall be
those defined in Article 28 of Annex IV to the ACP-EC
Agreement.

The procedures
relating to
operations financed by the EDF to assist OCTs shall be

the award of contracts

for

1. Within the limits of the powers conferred on it by the
ACP-EC Agreement, the Commission shall take all appropriate
measures to ensure the effective dissemination of information
for
concerned, notably through
periodic publication of the programmes and projects to be
financed from EDF resources.

economic operators

the

The Commission shall ensure in particular

2.
the
following information is published in the most appropriate
media, with an indication of the subject matter, content and
value of the proposed contracts:

that

(a)

fact sheets identifying projects;

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(b) a

summary of

financing proposals

adopted by the

Commission after consulting the EDF Committee.

3. Within the limits of the powers conferred on it by the
ACP-EC Agreement,
the
results of tendering procedures are published at the earliest
opportunity.

the Commission shall ensure that

TITLE V

DIRECT LABOUR OPERATIONS

Article 80

This Title shall govern the direct

labour operations
1.
provided for
in Article 24 of Annex IV to the ACP-EC
Agreement. It shall apply mutatis mutandis to financial coop-
eration with the OCT.

In the case of direct

2.
labour operations, projects and
programmes shall be implemented directly through public
departments of the ACP State or States concerned.

The Community shall contribute to the costs of the department
involved by providing the equipment and/or materials that it
lacks and/or the resources to acquire any additional staff
required,
from within the ACP States
concerned or other ACP States. The Community's participation
shall cover only costs incurred by supplementary measures and
temporary expenditure relating to execution that are strictly
confined to the requirements of the project in question.

such as

experts

the

and

grants.

specific

Each
award of
procurement
programme estimate shall be prepared by the imprest adminis-
trator and the accounting officer referred to in paragraph 2, in
the case of direct labour operations, or by the third party
organisation referred to in paragraph 3, in the case of exter-
nalised direct labour operations, and shall then be approved by
the National Authorising Officer and the head of delegation
before the activities it provides for commence.

5.
In the context of the implementation of the programme
estimates referred to in paragraph 4, the procurement and
grant award procedures shall comply with those laid down in
Titles IV and VI respectively. In particular, proposals for the
award of contracts must be approved by the head of delegation
in accordance with Article 36 of Annex IV to the ACP-EC
Agreement. The same shall apply to proposals to award grants.

The financing agreements referred to in Article 52(3)
6.
must make provision for the implementation of projects or
programmes by direct-labour operations.

Article 81

the
In the case of externalised direct
contracting authority referred to in Article 74(1)(a)
shall
conclude a service contract with a third party organisation.
The Commission shall ensure that the contract sets out:

labour operations,

for

(a) adequate provisions

scrutiny of

the use of EDF
resources by the Chief Authorising Officer, the head of
delegation, OLAF,
the
Court of Auditors and the national audit bodies of the
ACP State or States concerned;

the National Authorising Officer,

The financial management of a project implemented by direct
labour in accordance with the first and second subparagraphs
shall be carried out by imprest accounts administered by an
imprest administrator and an accounting officer, appointed by
the National Authorising Officer with the prior approval of the
head of delegation.

3.
In the case of externalised direct labour operations, the
contracting authorities within the meaning of Article 74(1)(a)
shall entrust tasks relating to the implementation of projects or
programmes to public, semi-public or private bodies that are
legally distinct from the ACP State or States concerned. In such
cases, the body concerned shall assume responsibility for the
management and implementation of the programme or project
in place of the National Authorising Officer. Tasks so delegated
may include the power to conclude contracts and manage
contracts and the supervision of works on behalf of or for
the account of the ACP State or States concerned.

4.
Direct labour operations shall be implemented on the
basis of a programme of measures to be carried out and an
estimate of their cost, hereinafter referred to as the ‘programme
estimate’. The programme estimate is a document laying down
the human and material resources required, the budget and the
detailed
implementing
arrangements for execution of a project over a specified
labour and, possibly, by means of public
period by direct

administrative

technical

and

(b) a clear definition and precise delimitation of the powers
delegated to the organisation concerned and the powers
retained by the National Authorising Officer;

(c)

the procedures to be followed in exercising the powers so
such as
delegated,
to be
financed,
the award of contracts or the supervision of
works;

the selection of operations

(d) the possibility of ex post review and financial penalties
where the granting of funds or award of contracts by the
third party organisation does not correspond to the
procedures laid down at point (c);

(e) effective segregation of the duties of authorising officer and

accounting officer;

(f)

the existence of an effective system for the internal control
of management operations;

(g) the existence of an accounting system for management
operations and separate procedures for the presentation
of accounts enabling the correct use of EDF resources to
be ascertained.

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TITLE VI

GRANTS

CHAPTER 1

GENERAL PROVISIONS

Article 82

1.
In the context of centralised management, grants are
direct financial contributions, awarded by the Commission by
way of donation from EDF resources in order to finance:

(a) either an action designed to help achieve an objective of
the ACP-EC Agreement or
the Overseas Association
Decision, or of a programme or project adopted in
accordance with that Agreement or Decision;

(b) or the functioning of a body which pursues such an

objective.

They shall be covered by a written agreement.

The following shall not constitute grants for the purposes

2.
of this Title:

(a)

financing agreements as referred to in Article 52(3)(a);

The grant may not have the purpose or effect of

2.
producing a profit for the beneficiary.

Article 84

1. Where,
in the context of centralised management, an
action provides for financing in the form of grants, the oper-
ational plan for that action shall contain a programme, except
in the case of crisis management aid or humanitarian aid
operations.

That programme shall be implemented through the publication
of calls for proposals save in duly substantiated cases of
urgency or where the nature of
the beneficiary leaves no
other choice for a given action.

2.
The grants awarded shall be published annually with due
observance of the requirements of confidentiality and security.

Article 85

One action may give rise to the award of only one grant

1.
from EDF resources to any one beneficiary.

A beneficiary may be awarded only one operating grant

2.
from EDF resources per budget year of the beneficiary.

Article 86

(b) public contracts as referred to in Title IV or direct labour

operations as referred to in Title V;

1.
A grant may be awarded for an action which has already
begun only if the applicant is able to demonstrate that it was
necessary to start the action before the agreement was signed.

(c)

loans, guarantees, contributions, contracts,
rate
subsidies or any other financial operation managed by
the EIB;

interest

(d) direct or indirect budgetary assistance, or aid to help relieve
debt or support export earnings in the event of short-term
fluctuations;

In such cases, expenditure eligible for financing may not have
been incurred prior to the date of submission of the grant
application, save in duly substantiated exceptional cases or in
the case of expenditure necessary for the proper implemen-
tation of
aid or humanitarian aid
operations, as provided for in the ACP-EC Agreement or the
Overseas Association Decision.

crisis management

(e) payments made to bodies to whom powers are delegated
by the Commission as provided for in Articles 15 and 16
or within the framework of joint management referred to
in Article 17.

No grant may be awarded retrospectively for actions already
completed.

CHAPTER 2

AWARD PRINCIPLES

Article 83

2.
The agreement on an operating grant may not be signed
the beneficiary's
more than four months after the start of
budget year. Expenditure eligible for financing may not have
been incurred before the date when the grant application was
submitted or the start of the beneficiary's budget year.

1.
The award of grants shall be subject to the principles of
transparency and equal treatment. Grants may not be cumu-
lative; they may not be awarded retrospectively; and they must
involve cofinancing.

Article 87

An action may be financed entirely from EDF resources only if
this proves essential for its completion.

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CHAPTER 3

AWARD PROCEDURE

Article 88

CHAPTER 4

PAYMENT

Article 91

1.
Grant applications shall be eligible where they fall under
the ACP-EC Agreement or the Overseas Association Decision
or a programme or project adopted in accordance with that
Agreement or Decision and are submitted in writing by legal
persons. By way of exception, depending on the nature of the
action or the objective pursued by the applicant, natural
persons may receive grants in accordance with the conditions
laid down in the Agreement or Decision.

Grants may not be

2.
situation, at the time of a grant award procedure,
that
Community rules applicable to public procurement.

awarded to applicants whose
is such
the

ineligible under

classed as

to be

they

fall

The pace of payments shall be determined by the financial risks
involved, the duration and progress of the action, or the costs
incurred by the beneficiary.

Article 92

The authorising officer responsible may require the beneficiary
to lodge a guarantee in advance in order to limit the financial
risks connected with the payment of pre-financing.

Applicants must certify that
situations referred to in the first subparagraph.

they are not

in one of

Article 93

the

1.
The amount of the grant shall not become final until after
the Commission has accepted the final reports and accounts,
without prejudice to subsequent checks by the Commission.

Effective, proportionate and dissuasive administrative and
3.
financial penalties may be imposed by the Chief Authorising
Officer on applicants who are excluded under paragraph 2.

Article 89

1.
The selection criteria shall be such as to make it possible
to assess the applicant's ability to complete the proposed action
or work programme.

2.
The award criteria shall be such as to make it possible to
assess the quality of the proposals submitted in the light of the
objectives and priorities set.

Article 90

shall

Proposals

1.
of
pre-announced selection and award criteria, by an evaluation
committee set up for that purpose, with a view to determining
which proposals may be financed.

evaluated,

basis

the

on

be

On the basis of the evaluation provided for in paragraph
2.
1, the authorising officer responsible shall draw up the list of
beneficiaries and the amounts approved.

The

officer

authorising

3.
inform
applicants in writing of the decision on their application. If
the grant requested is not awarded, he shall give the reasons
for the rejection of the application, with reference in particular
to the selection and award criteria previously announced.

responsible

shall

Should the beneficiary fail to comply with his legal or
2.
contractual obligations,
the grant shall be suspended and
reduced or terminated after the beneficiary has been given
the opportunity to make his observations.

CHAPTER 5

IMPLEMENTATION

Article 94

contracts by the beneficiary,

1. Where implementation of the action requires the award
of procurement
the grant
agreements referred to in Article 82(1) shall make provision
for procedures that comply with the Community rules on
procurement applicable to cooperation with non-member
countries.

Each grant agreement shall provide expressly for the
2.
Commission,
including OLAF, and the Court of Auditors to
exercise their powers of control, on documents and on the
spot, over all contractors and subcontractors who have
received financial assistance from EDF resources.

Article 95

the Commission shall

In the context of decentralised management, referred to in
Article 14,
to encourage
management by the beneficiary ACP States and OCTs that is
aimed at applying provisions equivalent to those laid down in
this Title.

strive

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TITLE VII

ACCOUNTS

CHAPTER 1

PRESENTATION OF THE ACCOUNTS

Article 96

(e) materiality;

(f) no netting;

(g) reality over appearance;

(h) accrual-based accounting.

1.
The Commission shall draw up, by 31 July each year at
the latest, the accounts of the EDF describing the financial
situation of the Fund as at 31 December of the preceding
year. The EDF Accounts shall comprise:

(a) the financial statements referred to in Article 100;

Article 99

In accordance with the principle of

1.
accrual-based
accounting, the financial statements referred to in Article 100
shall show the charges and income for the financial year,
regardless of the date of payment or collection.

(b) the reports on financial

implementation referred to in

Article 101;

2.
The value of assets and liabilities shall be determined in
accordance with the valuation rules provided for in Article
111.

(c) the financial statements and the information supplied by

the EIB in accordance with Article 125(2).

Article 100

2.
The EDF accounts shall be accompanied by a report on
financial management during the preceding year containing an
accurate account of:

(a) the achievement of the objectives for the financial year, in
financial

principle

sound

the

of

accordance with
management;

(b) the financial situation and the events that had a significant
influence on the activities carried out during the financial
year.

Article 97

The accounts must comply with the rules and be accurate and
comprehensive and present a true and fair view:

(a) as regards the financial statements, of

the assets and
liabilities, charges and income, entitlements and obligations
not shown as assets or liabilities, and cash flow;

(b) as regards the reports on financial implementation, of the
revenue and expenditure operations from EDF resources.

Article 98

The financial statements referred to in Article 100 shall be
drawn up in accordance with generally accepted accounting
principles, namely:

(a) going concern basis;

(b) prudence;

(c) consistent accounting methods;

(d) comparability of information;

The financial

1.
statements shall be drawn up by the
accounting officer and presented in millions of euros. They
shall comprise:

(a) the balance sheet, which represents the assets and liabilities
and financial situation and the economic outturn of the
EDF at 31 December of
it shall be
presented in accordance with the structure laid down by
the Council Directive on the annual accounts of certain
types of companies, but with account being taken of the
specific nature of the EDF's activities;

the previous year;

(b) the

cash-flow table

showing amounts

collected and
disbursed during the year, the final treasury position and
a statement of sources and uses of
funds covering the
preceding financial year;

(c) a table of items payable to the EDF showing:

(i) amounts still to be recovered at the beginning of the

financial year;

(ii) entitlements established in the course of the financial

year;

(iii) amounts recovered in the course of the financial year;

(iv) cancellation of established entitlements;

(v) amounts still to be recovered at the end of the financial

year.

2.
The annex to the financial statements shall supplement
and comment on the information presented in the statements
referred to in paragraph 1 and shall contain notes indicating
which accounting principles were applied in the preparation
and presentation of the accounts.

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Article 101

CHAPTER 2

1.
The reports on financial implementation shall be drawn
up by the accounting officer and presented in millions of euro.
They shall comprise the financial outturn account, which sets
out all financial operations for the year in terms of revenue and
expenditure. The annex to the financial outturn account shall
supplement and comment on the information presented in it.

2.
The reports on financial implementation shall comprise
the following tables, presented in millions of euros and drawn
up by the Chief Authorising Officer in conjunction with the
accounting officer:

(a) a table describing changes over the preceding financial year

in the appropriations indicated in the Annex;

(b) a table showing the total by allocation of commitments,
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.

Article 102

The Commission shall send the provisional accounts to the
Court of Auditors by 31 March of the following financial
year at the latest. By 30 April
it shall send the European
Parliament, the Council and the Court of Auditors the report,
referred to in Article 96, concerning financial management
during the year.

INFORMATION ON IMPLEMENTATION OF EDF RESOURCES

Article 104

1.
The Commission and the EIB shall monitor, each to the
extent to which it is concerned, the use of EDF assistance by
the ACP States, the OCTs or any other beneficiary, and the
implementation of projects
financed by the EDF, having
particular regard to the objectives referred to in Articles 55
and 56 of the ACP-EC Agreement and in the corresponding
provisions of the Overseas Association Decision.

The EIB shall periodically inform the Commission
2.
regarding the implementation of projects financed from the
EDF resources it administers,
following the procedures set
out in the operational guidelines of the Investment Facility.

The Commission and the EIB shall provide the EDF
3.
Committee with information on the operational
implemen-
tation of EDF resources through the national and regional
allocations set out in the Annex. Such information shall also
cover projects and programmes financed from the Investment
Facility. The Commission shall send that information to the
Court of Auditors in accordance with Article 32(4) of the
Internal Agreement.

CHAPTER 3

ACCOUNTING

Article 105

The accounting system is the system serving to organise
information in such a way that figures can be

1.
the financial
input, filed and registered.

The accounts

2.
shall consist of general accounts and
financial accounts. Those accounts shall be kept in euros on
the basis of the financial year.

Article 103

The Court of Auditors shall, by 15 June at the latest,
1.
make its observations on the provisional accounts as regards
the part of the EDF resources for which the Commission is
responsible for financial management under Article 9(1), so
that
the Commission can make the corrections deemed
necessary for drawing up the final accounts.

3.
The figures in the general accounts and the financial
accounts shall be adopted at the close of the financial year
so that the accounts referred to in Chapter 1 can be drawn up.

Notwithstanding paragraphs 2 and 3, the Chief Auth-

4.
orising Officer may keep analytical accounts.

2.
The Commission shall approve the final accounts and
send them to the European Parliament, the Council and the
Court of Auditors by 31 July of the following year at the latest.

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

Article 106

in the Official

The final accounts shall be published by 31 October of
3.
the following year
the European
Communities together with the statement of assurance given
by the Court of Auditors in respect of the part of the EDF
resources for which the Commission is responsible for financial
management under Article 9(1).

Journal of

Article 107

The general accounts shall record, in chronological order using
the double entry method, all events and operations affecting
the economic and financial
situation and the assets and
liabilities of the EDF, and which make up the EDF balance
sheet.

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Article 108

(b) provision for the revision of prices and contingencies as

1. Movements on the accounts and the balances shall be
entered in the accounting ledgers.

defined in EDF-funded contracts;

(c)

financial provision for exchange rate fluctuations.

All accounting entries,

2.
to the
accounts, shall be based on supporting documents, to which
they shall refer.

including adjustments

The accounting system shall be such as to leave a trail for

3.
all accounting entries.

Article 109

The accounting officer shall, after the close of the financial year
and up to the date of presentation of the accounts, make any
or
adjustments which, without
collection in respect of that year, are necessary for a true
and fair presentation of the accounts which complies with
the rules.

disbursement

involving

4.
The conversion rates to be used for final accounting of
payments made under the projects or programmes referred to
in Part 4 of the ACP-EC Agreement and Annex IV thereto or in
the Overseas Association Decision shall be the rates applicable
on the date on which the Commission accounts referred to in
Article 29 of this Regulation were debited.

All accounting records referring to the fulfilment of a
5.
commitment shall be kept for a period of five years from the
date of the decision giving discharge in respect of the financial
implementation of EDF resources, referred to in Article 119,
concerning the financial year during which the commitment
was closed for accounting purposes. However, records relating
to operations that have not been definitively closed shall be
kept beyond that period up to the end of the year following
the year in which those operations are closed.

Article 110

Article 111

The financial accounts shall allow detailed monitoring of

1.
the financial implementation of EDF resources.

They shall show all:

(a) allocations;

(b) commitments;

(c) assigned funds;

the

The

shall

adopt

accounting officer

1.
applicable
accounting rules and methods. He shall prepare and, after
consulting the Chief Authorising Officer, adopt the chart of
accounts to be applied to the EDF's operations. In so doing
he shall be guided by the internationally accepted accounting
standards for the public sector but may depart from them
where justified by the specific nature of the EDF's activities.

2.
Entries in the accounts shall be made on the basis of the
chart of accounts using a nomenclature which makes a clear
distinction between the general accounts and the financial
accounts. The chart of accounts shall be sent to the Court of
Auditors.

(d) payments, and established debts and collection operations
for the financial year, in full and without any adjustment
against each other.

TITLE VIII

EXTERNAL AUDIT AND DISCHARGE

2. When commitments, payments and debts are expressed
the accounting system shall make it
in national currencies,
possible, where necessary,
them to be recorded in
national currencies as well as in euros.

for

3.
The commitments defined in Article 52 shall be recorded
in euros for the value of the financing decisions taken by the
Commission.

The assigned funds defined in Article 55(3) shall be recorded in
euros at the equivalent of the value of the contracts, grants and
programme estimates concluded by the beneficiary ACP State
or OCT or by the Commission in the performance of the
project. That value shall include where appropriate:

(a) provision for the payment of reimbursable expenses on

presentation of supporting documents;

CHAPTER 1

GENERAL PROVISIONS

Article 112

The operations financed from EDF resources managed by the
EIB in accordance with Article 9(2) shall be subject to the audit
and discharge procedures laid down in the Statutes of the EIB
for all of its operations. Existing specific provisions concluded
by common agreement between the Court of Auditors, the EIB
and the Commission shall continue to apply and, where
necessary, shall be updated to take account of the specific
characteristics of
including interest
the Investment Facility,
rate subsidies.

regards

the operations

As
financed from EDF resources
managed by the Commission in accordance with Article 9(1),
the Court of Auditors shall exercise its powers in accordance
with this Title.

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CHAPTER 2

EXTERNAL AUDIT

Article 113

The Commission shall inform the Court of Auditors, as soon as
possible, of all decisions and rules adopted pursuant to this
Regulation.

Article 114

In the performance of its task, the Court of Auditors shall
notify the Commission and the authorities to which this Regu-
lation applies of the names of the members of its staff who are
empowered to audit them and the tasks entrusted to those
persons.

Article 115

1.
The Court of Auditors, when examining whether all
revenue has been received and all expenditure incurred in a
lawful and proper manner, shall have regard to the provisions
of the ACP-EC Agreement, the Overseas Association Decision,
this Regulation and all other acts adopted pursuant to those
instruments.

2.
In the performance of its task, the Court of Auditors shall
be entitled to consult, in the manner provided for in paragraph
6, all documents and information relating to the financial
management of departments or bodies with regard to
operations financed or cofinanced from EDF resources.
It
shall have the power
to make enquiries of any official
responsible for a revenue or expenditure operation and to
use any of
the auditing procedures appropriate to those
departments or bodies.

to obtain all

the necessary information for

the
In order
performance of
the Court of Auditors may be
present, at its request, during the audit operations carried out
within the framework of financial implementation by, or on
behalf of, the Commission.

task,

its

documents relating to revenue and expenditure, all inventories,
all organisation charts which the Court of Auditors considers
necessary for auditing the financial outturn report on the basis
of documents or on the spot and, for the same purposes, all
documents and data created or stored on a magnetic medium.

The officials whose operations are checked by the Court of
Auditors shall:

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

(b) present

the

correspondence or

any other document
required for the full implementation of the audit referred
to in paragraph 1.

information referred to under

The
second
subparagraph may be requested only by the Court of Auditors.

(b) of

the

The Court of Auditors shall be empowered to audit
the
documents relating to EDF revenue and expenditure which
are held by the Commission departments responsible.

The task of establishing that

6.
the revenue has been
received and the expenditure incurred in a lawful and proper
manner and that the financial management has been sound
the
extend to the utilisation by bodies outside
shall
Commission of EDF resources received in the form of grants
in accordance with Title VI. All financing from EDF resources
granted to beneficiaries outside the Commission shall be
subject to the agreement in writing by the beneficiaries or,
failing agreement on their part, by the contractors or subcon-
tractors, to an audit by the Court of Auditors of the use made
of the financing granted.

Use of integrated computer systems may not have the
to
impairing access by the Court of Auditors

7.
effect of
supporting documents.

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

Article 116

1.
After the closure of each financial year, the Court of
Auditors shall draw up an annual report in accordance with
paragraphs 2 to 6.

At the request of the Court of Auditors, the Commission
4.
shall authorise financial
institutions holding EDF deposits to
enable the Court of Auditors 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 latter deems
necessary for the performance of its task. It shall place at the
disposal of the Court of Auditors all documents concerning the
award and performance of contracts and all accounts of cash
or materials, all accounting records or supporting documents,
all
and also administrative documents

thereto,

relating

2.
The Court of Auditors shall transmit to the Commission,
by 15 June at the latest, any observations which, in its opinion,
are such that they should appear in the annual report. Those
observations must remain confidential. The Commission shall
address its replies to the Court of Auditors by 30 September at
the latest.

The annual report shall contain an assessment of the

3.
soundness of financial management.

The Court of Auditors may add any summary report or

4.
any general observations which it sees fit to make.

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The Court of Auditors shall take all necessary steps to
5.
ensure that the Commission's replies to its observations are
published immediately after the observations to which they
relate.

The Court of Auditors shall send its annual report,
6.
together with the Commission's replies,
to the authorities
responsible for giving discharge and to the Commission, by
31 October at
the latest, and shall ensure the publication
thereof in the Official Journal of the European Communities.

Article 117

The Court of Auditors shall notify the Commission of any
1.
observations which, in its opinion, are such that they should
appear in a special report. Those observations must remain
confidential.

The Commission 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.

The Court of Auditors shall adopt the definitive version of the
special report in question the following month.

2.
The special reports referred to in paragraph 1, together
with the Commission's replies, shall be transmitted without
delay to the European Parliament and the Council, each of
which shall decide, where appropriate in conjunction with
the Commission, what action is to be taken in response.

Should the Court of Auditors decide to have any such special
reports published in the Official
the European
Communities, they shall be accompanied by the Commission's
replies.

Journal of

The Court of Auditors may, at the request of one of the
issue opinions on matters relating to the

3.
other institutions,
EDF.

Article 118

the Court of Auditors

At the same time as the annual report referred to in Article
116,
shall provide the European
Parliament and the Council with a statement of assurance as
to the reliability of the accounts and the legality and regularity
of the underlying transactions.

CHAPTER 3

DISCHARGE

Article 119

1.
Before 30 April of year N+2, the European Parliament,
upon a recommendation from the Council acting by a qualified
majority, shall give a discharge to the Commission in respect of
the financial implementation for year N of the EDF resources,
which it manages in accordance with Article 9(1). If that date
cannot be met, the European Parliament or the Council shall
inform the Commission of the reasons for the postponement.
Should the European Parliament postpone the decision giving
the Commission shall make every effort to take
discharge,
measures, as soon as possible,
the
obstacles to that decision.

to facilitate removal of

The discharge decision shall cover the accounts referred
2.
to in Article 96, except the part thereof provided by the EIB in
accordance with Article 125(2). The discharge decision shall
include an assessment of the responsibility of the Commission
the financial management during the
in the execution of
preceding period.

3. With a view to granting the discharge,
the European
Parliament shall, after the Council has done so, examine the
EDF accounts referred to in Article 96. It shall also examine the
annual report made by the Court of Auditors together with the
Commission's replies, any special reports by the Court of
Auditors relevant to the financial year in question and the
Court of Auditors' statement of assurance as to the reliability
of
the
the accounts and the legality and regularity of
underlying transactions.

4.
The Commission shall take all appropriate steps to act on
the observations accompanying the European Parliament's
discharge decision and the comments accompanying the
discharge recommendation adopted by the Council.

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

The decision giving the discharge shall be published in

6.
the Official Journal of the European Communities.

Article 120

The Commission shall submit to the European Parliament, at
the latter's request, any information required for the control of
implementation of
the EDF resources managed by the
Commission in accordance with Article 9(1) for the year in
question. Access
the
confidential
arrangements for handling it shall comply with fundamental
human rights, the protection of business secrecy, the provisions
governing judicial
and the
interests of the Community.

and disciplinary proceedings

information

and

to

P A R T T W O

S P E C I F I C P R O V I S I O N S C O N C E R N I N G E D F
R E S O U R C E S M A N A G E D B Y T H E E I B

Article 121

the EIB shall

Each year, before 1 September,
send the
Commission its estimates of commitments and payments,
which are necessary for drawing up the communication
referred to in Article 8(1), in respect of the operations of the
Investment
in
including interest
accordance with the Internal Agreement.

subsidies,

Facility,

rate

The EIB shall update its estimates every three months. At the
beginning of each quarter and no later than 35 working days
before the due dates for contributions by the Member States
indicated in Article 39,
it shall send the Commission its
estimates of all amounts to be called on from the EDF that
are necessary to finance the operations under its responsibility.

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Article 122

1.
The contributions referred to in Article 39 and adopted
by the Council shall be paid by the Member States to the EIB
via a special account opened in the name of each Member
State.

2.
Save where the Council decides otherwise regarding the
remuneration of the EIB in accordance with Article 8 of the
Internal Agreement, proceeds received by the Bank via the
credit balance of
referred to in
special
paragraph 1 of this Article shall be recorded in an account
in the Commission's name, and used for the purposes set out
in Article 9 of the Agreement.

accounts

the

3.
Any rights resulting from operations carried out by the
EIB using EDF resources, and particularly rights as creditor or
owner, shall be vested in the Member States.

4.
The EIB shall undertake the treasury management of the
amounts referred to in paragraph 1 in accordance with the
laid down in the management agreement
detailed rules
provided for in Article 128.

The Investment Facility shall be managed in accordance
5.
with the conditions laid down in the ACP-EC Agreement, the
Overseas Association Decision and the Internal Agreement.

Article 123

The EIB shall be remunerated on a full indemnity basis for the
management of the Investment Facility operations. The Council
shall decide on the resources and mechanisms for remun-
eration of the Bank in accordance with Article 8(2) of the
Internal Agreement. The measures implementing that decision
shall be incorporated in the management agreement provided
for in Article 128.

Article 124

out

carried

regularly inform the Commission of
the

the
The EIB shall
operations
Facility,
under
including interest rate subsidies, of the use made of each call
for contributions paid to the EIB and, in particular, of the total
quarterly amounts of commitments, contracts and payments, in
accordance with the detailed rules
laid down in the
management agreement provided for in Article 128.

Investment

Article 125

The EIB shall keep the accounts of

the Investment
1.
Facility, including interest rate subsidies, financed by the EDF.
The EIB and the Commission shall draw up the relevant
accounting rules and methods by common agreement and
inform the Member States accordingly.

Each year

the EIB shall

2.
send the Council and the
Commission a report on the implementation of operations
financed
its management,
including the financial statements drawn up in accordance

from EDF

resources

under

with the rules and methods referred to in paragraph 1 and
the information referred to in Article 101(2).

Those documents shall be submitted in draft form no later than
28 February and in their final version no later than 30 June of
the following financial year, so that they can be used by the
Commission in preparing the accounts referred to in Article 96
of this Regulation in accordance with Article 32(1) of the
Internal Agreement. The report on the financial management
of the resources managed by the EIB shall be submitted by the
latter to the Commission no later than 31 March of
the
following financial year.

Article 126

The EIB's own rules shall apply to contracts financed by the
EDF resources which it manages.

Article 127

Where programmes or projects are cofinanced by the Member
States or their implementing bodies and correspond to the
priorities laid down in the Country Cooperation Strategies
provided for in Chapter III of the Internal Agreement and in
Article 20 of the Overseas Association Decision, the EIB may
entrust responsibility for managing Community aid to Member
States or their implementing bodies.

Article 128

The detailed rules for implementing this Part shall be the
subject of a management agreement between the Commission,
acting on behalf of the Community, and the EIB.

P A R T T H R E E

T R A N S I T I O N A L A N D F I N A L P R O V I S I O N S

TITLE I

TRANSITIONAL PROVISIONS

CHAPTER 1

TRANSFER OF BALANCES REMAINING FROM PREVIOUS EDFs

Article 129

The provisions of this Title shall govern the transfer to
1.
remaining from resources
the balances
the 9th EDF of
constituted under
the Internal Agreements relating to the
6th (1), 7th (2), and 8th (3) EDFs (hereinafter ‘previous EDFs’).

The balances remaining from previous EDFs shall be used
2.
to finance projects, programmes and other forms of action that
contribute to attaining the objectives of the ACP-EC Agreement
and the Overseas Association Decision, in accordance with the
provisions of that Agreement or that Decision, and with the
conditions laid down in this Title.

(1) OJ L 86, 31.3.1986, p. 221.
(2) OJ L 229, 17.8.1991, p. 288.
(3) OJ L 156, 29.5.1998, p. 108.

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To that end, any balances remaining from previous EDFs on
the date of the entry into force of the Financial Protocol set out
in Annex I to the ACP-EC Agreement, in the case of the ACP
States, or on the date of the entry into force of the Internal
together with any
Agreement,
amounts to be decommitted at a later date from ongoing
projects under those EDFs, shall be transferred to the 9th EDF.

in the case of

the OCTs,

Article 130

1.
Any resources transferred to the 9th EDF that were
previously allocated to the indicative programme of an ACP
State or an ACP region before the entry into force of the
to the ACP-EC
Financial Protocol
Agreement shall remain allocated to that State or region.

in Annex I

set out

2.
Resources that were allocated to OCTs before the entry
into force of the Overseas Association Decision shall remain
allocated to them. Any resources thus transferred to the 9th
EDF after having been allocated previously to the indicative
programme of an OCT or a region shall remain allocated to
that OCT or to regional cooperation in the context of the
implementation of the Overseas Association Decision.

3.
The balance of revenue accruing from interest on the
resources of previous EDFs shall be transferred to the 9th
EDF and allocated for the same purposes as the revenue
provided for in Article 1(3) of the Internal Agreement. The
same shall apply to miscellaneous revenue of previous EDFs
comprising, for example, default interest received in the event
of late payment of contributions to those EDFs by Member
States and the interest generated by the EDF resources
managed by the EIB, that is payable to the Community.

Article 131

1.
In respect of the ACP States, any balance that is not
allocated to a country or region, taking into account the tran-
sitional measures applicable up to the entry into force of the
shall be assigned to the unallocated
ACP-EC Agreement,
amount of
in accordance with the decision
referred to in Article 132 of this Regulation.

the 9th EDF,

The first subparagraph shall apply in particular to:

and 142 of Council Decision 91/482/EC (1), which concern,
respectively,
the Stabex and Sysmin instruments. However,
financing decisions concerning balances under Sysmin may
be adopted up to the entry into force of
the Internal
Agreement if a request for financing was introduced before
Decision 91/482/EC expired.

Article 132

the detailed arrangements for
The Commission shall adopt
implementing
this Title with regard to the definitive
treatment under the 9th EDF of the remaining balances and
amounts to be decommitted and transferred to the 9th EDF.

Those detailed arrangements shall be adopted after consultation
of the EIB in respect of the resources managed by it and in
accordance with the rules laid down in the ACP-EC Agreement,
the Overseas Association Decision, the Internal Agreement and
this Regulation.

CHAPTER 2

RULES APPLICABLE FOR THE IMPLEMENTATION OF
PREVIOUS EDFs AND BALANCES TRANSFERRED

Article 133

1.
Balances remaining from previous EDFs that are trans-
ferred to the 9th EDF shall be administered in accordance
with the conditions laid down in this Title and in the
relevant provisions of the ACP-EC Agreement, the Overseas
Association Decision or the Internal Agreement.

2.
As regards the ACP States, commitments relating to
previous EDFs entered into before the entry into force of the
ACP-EC Agreement
shall continue to be implemented in
accordance with the rules applicable to those EDFs, save as
regards the duties of the Financial Controller and the presen-
tation of accounts, for which the provisions of this Regulation
shall apply. With effect from the date on which the ACP-EC
Agreement enters into force, the balances transferred to the 9th
EDF shall be used in accordance with the conditions laid down
in the ACP-EC Agreement, the Internal Agreement and this
Regulation.

(a) any balance remaining from the resources of previous EDFs
that were not previously allocated to a specific ACP State
or region, including any balances of resources available for
emergency aid, aid for refugees or structural adjustment;

However, where transfers are made from previous EDFs for the
benefit of national or
indicative programmes, as
provided for in Article 130:

regional

(b) any balance remaining from resources under the Stabex

(a)

and Sysmin instruments.

if the amount exceeds EUR 10 million per country or
region, those resources shall be administered in accordance
with the rules of the EDF of origin as regards eligibility for
participation in tenders and the award of contracts;

2.
In respect of the OCTs, any balance that is not allocated
to an indicative programme on the date when the Internal
assigned to the
Agreement
non-allocated amount of the EDF.

into force

shall be

enters

(b) if

the resources transferred are equal

to or less than
EUR 10 million, the eligibility rules applicable to tenders
under the 9th EDF shall apply.

The first subparagraph shall apply in particular to any balance
remaining from the overall amounts referred to in Articles 118

(1) OJ L 263, 19.9.1991, p. 1.

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As

regards

relating to the
the OCTs, commitments
3.
previous EDFs entered into before the entry into force of the
Internal Agreement and this Regulation shall continue to be
implemented in accordance with the rules applicable to those
EDFs, save as regards the duties of the Financial Controller and
the presentation of accounts, for which the provisions of this
Regulation shall apply. Resources from previous EDFs shall
continue to be employed in accordance with the relevant
provisions of Decision 91/482/EC, which shall
remain
applicable for that purpose until the entry into force of the
Internal Agreement.

4.
Decisions relating to previous EDFs for which the EIB
undertakes the financial implementation shall continue to be
implemented in accordance with the rules applicable to those
EDFs.

Article 134

the Commission shall

To ensure that commitments entered into under previous EDFs
are completed in accordance with the principle of sound
financial management,
implement
procedures which provide, in particular, that, after this Regu-
lation enters into force, a financing agreement may be renewed
only once and may not in any event be renewed for a period of
more than three years from the deadline laid down at the time
of that entry into force for the completion of the programme
or project financed by the agreement in question.

CHAPTER 3

TRANSITIONAL PERIOD

Article 135

1.
The deadlines referred to in Articles 102, 103, 116 and
125 shall apply for the first time in respect of financial year
2005.

For earlier years those deadlines shall be:

(a) 30 April and 31 May for Article 102;

(b) 15 July for Article 103(1);

(c) 15 October for Article 103(2);

(d) 30 November for Article 103(3);

(e) 15 July and 31 October for Article 116(2);

(f) 30 November for Article 116(6);

(g) 31 March, 15 September and 30 April

for the second

subparagraph of Article 125(2).

The provisions of Title VII of Part One shall apply
2.
gradually depending on technical possibilities in order to be
fully effective for the financial year 2005.

TITLE II

FINAL PROVISIONS

Article 136

In accordance with Articles 2 and 34 of the Internal
1.
Agreement,
the Member States shall assess the degree to
which commitments and disbursements have been carried
out before the expiry of
the EDF. On that occasion they
shall also assess the Commission's needs in respect of the
resources reserved for costs linked to implementation under
Articles 4 and 9 of the Internal Agreement. The need for
financial cooperation and costs
new resources to support
linked to implementation under Article 9 of
the Internal
Agreement shall be established in the light of that assessment.
Due
the uncommitted and
taken of
shall be
non-disbursed resources under the EDF.

account

The Commission shall take full account of that performance
assessment when updating the allocation of resources under
Article 16 of the Internal Agreement and shall decide on any
reallocation of resources that is necessary in order to guarantee
optimum use of the available resources.

Before the expiry of the EDF, the Member States shall set
2.
a date beyond which the resources of the EDF may no longer
be committed.

Article 137

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

It shall be applicable for the same period as the Internal
Agreement.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

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ANNEX

FINANCIAL INFORMATION ON THE EDF

1.

In accordance with Article 1 of the Internal Agreement, the EDF shall consist of an amount of up to EUR 13 800
million contributed by the Member States as follows:

Member State

Contribution in EUR million

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

540,96

295,32

3 223,68

172,50

805,92

3 353,40

85,56

1 730,52

40,02

720,36

365,70

133,86

204,24

376,74

1 751,22

13 800,00

Within that total amount:

(i) EUR 13 500 million shall be allocated to the ACP States;

(ii) EUR 175 million shall be allocated to the OCTs;

(iii) EUR 125 million shall be allocated to the Commission for costs linked to implementation of the EDF.

2.1. Out of the total amount stated in Article 1(2)(a) of the Internal Agreement, an amount of up to EUR 13 500

million shall be reserved for the ACP States and allocated as follows:

(a) up to EUR 10 000 million in the form of non-repayable aid comprising up to:

(i) EUR 9 836 million reserved for support for long-term development to be programmed in accordance with
Articles 1 to 5 of Annex IV to the ACP-EC Agreement. Those resources may be used to finance humani-
tarian aid and short-term emergency aid in accordance with Article 72(3) of the ACP-EC Agreement. Out of
that total allocation, EUR 195 million shall be earmarked to finance the interest rate subsidies provided for
in Article 3(c) of Annex I to the ACP-EC Agreement and Articles 2 and 4 of Annex II thereto;

(ii) EUR 90 million reserved for the financing of the budget of the Centre for Development of Enterprise (CDE)

in accordance with the provisions of Annex III to the ACP-EC Agreement;

(iii) EUR 70 million reserved for the financing of the budget of the Technical Centre for Agriculture and Rural
Cooperation (CTA) in accordance with the provisions of Annex III to the ACP-EC Agreement; and

(iv) EUR 4 million for the expenditure relating to the ACP-EC Joint Assembly, constituted by Article 17 of the

ACP-EC Agreement;

(b) up to EUR 1 300 million reserved for the financing of support for regional cooperation and integration of the

ACP States in accordance with Articles 6 to 14 of Annex IV to the ACP-EC Agreement;

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(c) up to EUR 2 200 million shall be allocated to finance the Investment Facility in accordance with the terms and
conditions set out in Annex II (‘Terms and conditions of financing’) to the ACP-EC Agreement, without
prejudice to the financing of the interest rate subsidies provided for in Articles 2 and 4 of Annex II to the
Agreement funded from the resources mentioned in point (a)(i) of this Section.

2.2. Out of the EUR 13 500 million referred to in Section 2.1, an amount of EUR 1 000 million may be released only
following a performance review undertaken by the Council
from the
Commission. Those resources shall, if released, be distributed as appropriate between the envelopes referred to
in points (a), (b) and (c) of Section 2.1.

in 2004, on the basis of a proposal

3. The overall amount of financial assistance to the OCTs allocated by the Community out of the overall amount
stated in Article 1(2)(a) of the Internal Agreement shall be EUR 175 million, of which EUR 155 million in the
form of non-repayable aid, including EUR 1 million set aside to finance the interest rate subsidies provided for in
Article 3(3)(d) of Annex IIA to the Overseas Association Decision, and EUR 20 million under the Investment
Facility. The rules governing the implementation of that assistance shall be laid down in the Council Decision on
the association of the OCTs with the Community, adopted pursuant to Article 187 of the Treaty.

4. An amount of EUR 125 million shall be reserved for the financing of costs linked to implementation incurred by
the Commission in the framework of the ACP-EC Agreement. It shall be utilised in accordance with the principles
set out in Article 9 of the Internal Agreement together with the resources referred to in Article 1(3) of that
Agreement.

5.1. To the amount laid down in the second paragraph of Section 1 shall be added up to EUR 1 720 million in the
form of loans granted by the EIB from its own resources. Those resources shall be granted for the purposes set out
in Annex II to the ACP-EC Agreement and in the Overseas Association Decision, in accordance with the conditions
provided for by its statutes and the relevant provisions of the terms and conditions for investment financing as laid
down in that Annex and Decision.

5.2. Those loans shall be allocated as follows:

(a) up to EUR 1 700 million for financing operations to be carried out in the ACP States;

(b) up to EUR 20 million for financing operations to be carried out in the OCTs.