Communication from the Commission - European Development Fund (EDF) - Estimate of decisions, payments and contributions to be paid by the Member States for 2003 and 2004 and forecast of decisions and payments for the period 2005 to 2008
Date: 2003-11-21
Institutions: European Commission
Subjects: European Development Fund, Member States' contribution, budget estimate, management accounting

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.11.2003
COM(2003) 720 final

COMMUNICATION FROM THE COMMISSION

EUROPEAN DEVELOPMENT FUND (EDF)
Estimate of decisions, payments and contributions to be paid by the Member States for
2003 and 2004 and 

Forecast of decisions and payments for the period 2005 to 2008

COMMUNICATION FROM THE COMMISSIONEUROPEAN DEVELOPMENT
FUND

Estimate of decisions, payments and contributions to be paid by the Member States for
2003 and 2004 and 
Forecast of decisions and payments for the period 2005 to 2008

TABLE OF CONTENTS

Introduction ................................................................................................................................ 3

Summary .................................................................................................................................... 3

1

2

3

Overall situation of the EDF at 31.08.2003 ................................................................. 6

EDF implementation in a historical perspective .......................................................... 8

Financial implementation forecasts for 2003 and 2004 ............................................... 9

3.1

Decisions ...................................................................................................................... 9

3.1.1

2003.............................................................................................................................. 9

3.1.2

2004............................................................................................................................ 10

3.2

Payments .................................................................................................................... 10

3.2.1

2003............................................................................................................................ 10

3.2.2

2004............................................................................................................................ 11

3.3

Calls for contributions to be paid by the Member States in 2003 and 2004 .............. 11

3.3.1

The last tranche for 2003............................................................................................ 11

3.3.2

Calls for contributions in 2004................................................................................... 12

4

5

6

7

EDF expenditure forecasts 2005 to 2008................................................................... 14

Contributions to the EDF for 2003 by Member State ................................................ 16

Contributions to the EDF for 2004 by Member State ................................................ 17

Acronyms and abbreviations...................................................................................... 18

2

INTRODUCTION

The  Commission  draws  up  this  communication  to  the  Council  each  year  in
accordance with Article 8 of the Financial Regulation applicable to the 9th EDF. Its
purpose is to provide an estimate of payments for the following financial year (2004)
and  set  out  the  schedule  of  calls  for  contributions,  taking  into  account  the  EIB's
estimates  for  the  operations  which  it  manages.  As  provided  for  in  Article  8  of  the
Financial  Regulation,  the  communication  also  gives  estimates  of  commitments  and
payments for each of the following four years (2005 to 2008). It starts with a revision
of the EDF expenditure estimate for the current year (2003).

Since  the  entry  into  force  of  the  9th  EDF,  the  Member  States  have  made  direct
contributions  to  the  EIB  for  the  9th  EDF  instruments  it  manages  (the  Investment
Facility  and  interest-rate  subsidies),  while  contributions  for  the  old  instruments
managed by the EIB (risk capital and interest-rate subsidies) will still go through the
Commission.  This  communication  therefore  draws  a  clear  distinction  between  EIB
payments  under  the  9th  EDF,  and  Commission  payments  (including  the  old
instruments managed by the EIB).

In accordance with Article 38(2) of the Financial Regulation, this communication is
accompanied  by  a  proposal  for  a  Council  Decision  on  the  first  tranche  of
contributions for 2004.

It covers the EDF resources of both the ACP countries and the OCTs.

SUMMARY

For  each  ACP  country  the  Commission  has  updated  its  forecast  of  decisions  and
payments  for  the  years  2003  and  2004.  For  decisions,  the  Commission  has  a
management tool to help it track projects under appraisal that are scheduled to start
up  before  the  end  of  2004.  Risk  analysis  was  used  to  gauge  the  probability  of
projects  being  completing  on  time.  The  payment  forecasts  have  been  updated  for
each country. The Commission has taken great care with the payments estimate so as
to  minimise  the  risk  of  Member  States'  earmarking  too  great  an  amount  in  their
national budgets. As was done this year, the estimates for 2004 will be reviewed in
greater detail at the beginning of the year.

The  EIB  has  also  updated  its  forecasts  for  instruments  of  both  the  9th  EDF  and
previous Funds. The full figures are set out in this communication.

Decisions in 2003 and 2004

For  2003  the  Commission  can  announce  that  the  estimate  made  in  June
(€2 500 million)  has  been 
reach
€3 200 million,  mainly  as  a  result  of  the  launching  of  a  new  HIPC  initiative  (debt
reduction:  €460 million)  and  this  summer's  decision  on  the  financing  of  the

revised  upwards  significantly  and  could 

3

devolution  of  responsibilities  from  headquarters  to  the  delegations  (€120 million).1
At this stage, the estimate for 2004 (€3275 million) still  holds  but this figure could
rise  if  new  initiatives  take  shape,  in  particular  the  peace  initiative  estimated  at
€250 million.

Payments in 2003 and 2004

Although  the  Commission  is  doing  everything  it  can,  as  it  pledged  in  the  last
communication, to improve on the prudent objective of €2500 million it set itself in
June  (€2100  million  in  regular  payments  and  €400  million  in  payments  under  the
Stabex and HIPC instruments), no increase looks likely. For the moment, therefore,
the €2500 million figure stands. In June the Commission forecast €2600 million for
2004.  Although  this  amount  certainly  remains  realistic,  the  Commission  prefers  to
reduce  it by  €100 million in order  to  minimise  the  risk  of  Member  States'  entering
too  big  an  appropriation  in  their  national  budgets.  This  minor  downwards  revision
stems from the fact that the 2003 contract forecasts were reduced for some countries,
which  is  likely  to  bring  down  the  payments  rate  in  2004.  There  will,  however,  be
payments in 2004 under the HIPC instrument of last July but the volume is difficult
to  judge  at  this  stage.  Depending  on  the  amounts  involved,  payments  might  reach
€2600 million or more. The Commission will reassess the situation at the beginning
of 2004.

Calls for contribution in 2003 and 2004

For the last tranche of contributions for 2003, it is proposed that Member States pay
the total amount specified in June, namely €450 million, of which €420 million to the
Commission  and  €30  million  to  the  EIB  (against  €400  million  and  €50  million
respectively in June).

For  2004,  following  a  careful  downwards  revision  of  payments  and  taking  into
account  recoveries  and  interest,  the  total  for  contributions  has  been  estimated  at
€2440  million  euros  (against  €2550  million  in  June).  Although  slightly  below  the
June estimate, this volume of the contributions is very high and confirms the strongly
upwards  trend  of  recent  years  (2001:  €1130  million);  2002:  €1705  million;  2003:
€2200 million.

1

Communication  from  the  Commission  to  the  Council:  financial  information  on  the  European
Development Funds (COM(2003) 353 final of 13.6.2003).

4

                                                
The future

The  Commission  and  the  EIB  believe  that  they  will  be  able  to  commit  the  funds
made available under the Cotonou Agreement (including the  remaining balances of
the  6th,  7th  and  8th  EDFs  transferred  to  the  9th  EDF)  within  five  years.  This
supposes however that the political situation in all the ACP countries is such that the
conditions  required  for  disbursing  the  funds  are  met.  The  cooperation  agreements
(Lomé  and  Cotonou)  are  rooted  in  the  principle  of  partnership  between  the  Union
and the ACP countries, which means that implementation of the EDF depends on the
absorption  capacity  (political  stability,  quality  of  governance,  etc.)  of  the  ACP
countries.  Payments  of  budgetary  aid  (structural  adjustment  programmes  and  the
HIPC  instrument),  which  accounts  for  a  growing  share  of  aid,  depend  on  the  ACP
country's satisfying certain macroeconomic conditions. Note finally that utilisation of
the funds made available by the Cotonou Agreement will also depend on the results
of  any  reallocation  of  following  the  mid-term  review  scheduled  for  2004.  A  real
reallocation of aid to the best-performing countries is a precondition for satisfactory
use of the whole Fund.

5

1.  OVERALL SITUATION OF THE EDF AT 31.08.2003

As a result of the entry into force of the 9th EDF the Commission has not been able
to  take  new  decisions  on  the  old  Funds  since  1  April  2003.  In  accordance  with
Article 133 of the 9th EDF Financial Regulation, on 24 June 2003 the Commission
transferred the non-committed amounts of the 6th, 7th and 8th EDFs to the 9th EDF.
The  total  transferred  stands  at  €2 315.33 million,  which  has  been  added  to  the
€12 800 million  of  the  9th  EDF.  This  transfer  has  not  concerned  risk  capital  and
interest-rate subsidies administered by the EIB, which has an additional three months
after the entry into force of the Agreement to make commitments under the previous
Funds. This last transfer will take place within a few months. In accordance with the
same article of the Financial Regulation,  the Commission will make other transfers
as decommitments are made and inform the Member States.

The  following table presents  the  financial  situation  of  the  EDF  at  31  August  2003,
including the transfer of 24 June 2003. Note that:

-  of  the  €32.8  billion  made  available  under  the  6th,  7th  and  8th  EDFs,  decisions
accounted  for  €30.1 billion,  92%,  contracts  for  €25.7  billion  (78%)  and  payments
€22.5 billion (68%);

- total funds made available to the 9th EDF, including the transfers of 24 June, stand
at  €15  115.3  million.  This  amount  does  not  include  the  €1000  million  that  the
Council may release after examining the results of the performance review scheduled
for 2004 (Article 2(2) of the Internal Agreement of the 9th EDF);2

-  The  total  sum  allocated  to  the  Funds  from  the  6th  to  the  9th  stands  at
€45 645 million euros.

2

OJ L 317, 15.12.2000, p. 355.

6

                                                
6th, 7th, 8th and 9th EDFs (ACP STATES AND OCTs)

6th, 7th and 8th EDFs

Allocations

Decisions

Assigned funds

Payments

Situation at
1 April 2003

Transfers

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

National/local indicative programmes

14 114 439 016

-1 179 794 076

12 934 644 940

12 906 341 125

10 328 853 579

8 910 267 912

Transitional national measures 9th EDF

1 200 000 000

-392 646 000

807 354 000

807 209 000

355 336 446

114 038 761

Regional cooperation

3 907 176 454

-375 604 115

3 531 572 339

3 515 298 136

2 772 822 232

2 355 391 982

9th EDF regional (transitional measures)

9th EDF intra-ACP (transitional measures)

Interest rate subsidies

Risk capital

25 000 000

60 000 000

486 578 492

2 790 000 000

-16 500 000

8 500 000

8 500 000

0

0

0

0

0

60 000 000

60 000 000

60 000 000

60 000 000

486 578 492

422 935 704

409 365 704

338 135 472

2 790 000 000

2 517 852 192

2 385 743 086

1 893 661 205

Structural adjustment facility

2 807 386 345

-43 517 226

2 763 869 118

2 763 869 118

2 529 221 300

2 464 932 176

Emergency assistance

Aid for refugees

Stabex

Sysmin

Use of interest

730 223 839

302 052 831

-3 246 857

726 976 982

726 976 982

725 228 226

717 051 230

-2 168 358

299 884 474

299 788 053

276 545 591

214 207 653

3 824 093 431

-5 620 519

3 818 472 912

3 818 472 912

3 806 307 060

3 615 325 526

734 693 853

-18 260 265

716 433 588

716 433 588

582 721 203

522 156 279

38 150 000

0

38 150 000

38 150 000

17 403 921

13 227 947

Transfers from the previous EDF

539 340 669

-92 398 352

446 942 317

441 641 273

402 074 914

374 599 959

Debt relief

General contingencies

1 225 000 000

-125 000 000

1 100 000 000

1 100 000 000

1 040 000 000

891 030 000

28 396 985

-28 396 985

0

0

0

0

Subtotal:

32 812 531 914

-2 283 152 752

30 529 379 162

30 143 468 082

25 691 623 263

22 484 026 102

Miscellaneous receipts

32 177 989

-32 177 989

0

Total

32 844 709 904

-2 315 330 741

30 529 379 162

30 143 468 082

25 691 623 263

22 484 026 102

9TH EDF

Allocations

Decisions

Assigned funds

Payments

National/individual OCT allocations
CDE, CTA & JPA
Long-term development reserve
Intra-ACP cooperation
Other regional cooperation
Reserve for regional cooperation
Studies and TA for the OCTs
Cost of implementation

Miscellaneous receipts

PM: Funds managed by the EIB
- Interest-rate subsidies
Investment facility

Situation at
1 April 2003

8 650 300 000
164 000 000
401 850 000
300 000 000
651 000 000
261 000 000
2 000 000
125 000 000

Transfers

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

1 631 361 700
-99 101 000
-84 705 508
846 687 900
249 909 659
-261 000 000
0
0

10 281 661 700
64 899 000
317 144 492
1 146 687 900
900 909 659
0
2 000 000
125 000 000

0

32 177 989

32 177 989

177 501 168
0
0
10 195 156
10 400 000
0
652 157
0

0

7 173 398
0
0
0
0
0
360 017
0

0

3 060 300
0
0
0
0
0
0
0

0

Total

10 555 150 000

2 315 330 741

12 870 480 741

198 748 481

7 533 415

3 060 300

187 850 000
2 057 000 000

187 850 000
2 057 000 000

Total 9th EDF

12 800 000 000

15 115 330 741

7

6th, 7th, 8th and 9th EDFs

Allocations

Decisions

Assigned funds

Payments

Situation at
1 April 2003

Transfers

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

Situation at
31 Aug 2003

National/individual OCT allocations
CDE, CTA & JPA
Long-term development reserve

23 964 739 016
164 000 000
401 850 000

58 921 625
-99 101 000
-84 705 508

24 023 660 640
64 899 000
317 144 492

13 891 051 292
0
0

10 691 363 423
0
0

9 027 366 974
0
0

Regional cooperation

5 204 176 454

443 493 445

5 647 669 898

3 604 393 292

2 832 822 232

2 415 391 982

Interest-rate subsidies (6th to 8th EDFs)
Risk capital (6th to 8th EDFs)
Structural adjustment facility
Emergency assistance
Aid for refugees
Stabex
Sysmin
Use of interest

Transfer from 1st to 5th EDFs

Debt reduction (7th and 8th EDFs)
Studies + TA for OCTs
General contingencies
Cost of implementation
Miscellaneous receipts

486 578 492
2 790 000 000
2 807 386 345
730 223 839
302 052 831
3 824 093 431
734 693 853
38 150 000

539 340 669

1 225 000 000
2 000 000
28 396 985
125 000 000
32 177 989

0
0
-43 517 226
-3 246 857
-2 168 358
-5 620 519
-18 260 265
0

-92 398 352

-125 000 000
0
-28 396 985
0
0

486 578 492
2 790 000 000
2 763 869 118
726 976 982
299 884 474
3 818 472 912
716 433 588
38 150 000

422 935 704
2 517 852 192
2 763 869 118
726 976 982
299 788 053
3 818 472 912
716 433 588
38 150 000

446 942 317

441 641 273

1 100 000 000
2 000 000
0
125 000 000
32 177 989

1 100 000 000
652 157
0
0
0

409 365 704
2 385 743 086
2 529 221 300
725 228 226
276 545 591
3 806 307 060
582 721 203
17 403 921

402 074 914

1 040 000 000
360 017
0
0
0

338 135 472
1 893 661 205
2 464 932 176
717 051 230
214 207 653
3 615 325 526
522 156 279
13 227 947

374 599 959

891 030 000
0
0
0
0

Total

43 399 859 904

0

43 399 859 904

30 342 216 563

25 699 156 678

22 487 086 402

PM: Funds managed by the EIB
Interest-rate subsidies
Investment facility

187 850 000
2 057 000 000

187 850 000
2 057 000 000

6th, 7th, 8th and 9th EDFs

45 644 709 904

45 644 709 904

2.  EDF IMPLEMENTATION IN A HISTORICAL PERSPECTIVE

The  following  graph  shows  trends  in  decisions  and  payments  since  1990.  The
commitment  cycle  is  clearly  in  evidence,  the  rate  rising  at  the  beginning  of  each
Convention and dropping towards the end of it. It also shows that there is an overall
upwards trend across the cycles.

Payments have a less pronounced cyclical nature and the cycles lag behind decisions.
While the average volume of payments fluctuated around €1500 million in the period
1990-99, there has been a clear upwards trend since 2000.

EDF decisions and payments
 (1990-2003)

€
0
0
0

4.500

3.500

2.500

1.500

500

-500

Decisions

Payments

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

953

1.433

2.236

1.843

2.689

1.874

1.538

784

2.606

2.958

4.007

1.921

2.115

3.200

1.257

1.191

1.984

1.443

1.860

1.758

1.509

1.382

1.595

1.352

1.640

2.124

1.902

2.500

The Commission wishes to stress that the significant increase in payments since 2000
is  not  attributable  to  greater  use  of  the  Stabex  and  HIPC  instruments,  both  high
disbursing instruments. As the following table shows, the increase (2000–2003) has

8

 
been  achieved  entirely  through  the  traditional  instruments,  mainly  the  national  and
regional programmes..

Payments

2000
executed

2001
executed

2002
executed

2003
forecast

€ million
Rise
2000-2003

(1)

(2)

(3)

(4)

(4) – (1)

Grand Total, of which

1 640

2 124

1 902

2 500

860

Stabex
HIPC
Subtotal

82
356
439

353
350
703

2
180
182

191
209
400

Total without
Stabex/HIPC

1 202

1 421

1 720

2 100

898

3.  FINANCIAL IMPLEMENTATION FORECASTS FOR 2003 AND 2004

3.1. Decisions

3.1.1.  2003

In the communication of June 2003 the Commission and the EIB estimated decisions
in 2003 at €2500 million in total, broken down as follows:

- €345 million for the instruments managed by the EIB under the 9th EDF, and

-  €2155  million  for  the  instruments  managed  by  the  Commission  (including
€125 million for the old EIB instruments).

Situation at 31 August 2003 and outlook for the end of the year:

-  At  the  end  of  August  the  EIB  had  committed  a  total  of  €141  million  under  the
Investment Facility (9th EDF), 41% of the target. It believes it will be able to achieve
its goal of €345 million by the end of the year.

-  In  the  case  of  instruments  managed  by  the  Commission  (including  the  old  EIB
instruments), €675 million had been committed at 31 August, 31% of the target. Note
that  the  procedure  for  adopting  decisions  is  such  that  in  the  first  half  of  the  year  a
large  number  of  pending  decisions  accumulate.  They  are  usually  projects  in  the
course  of  adoption  by  the  Commission.  At  the  end  of  August  this  amount  stood  at
€1397 million. The total therefore rises to €2072 million (final amounts and those in
the pipeline), 96% of the target. Of this €2072 million, some €1800 million was for
projects  that  had  been  before  the  EDF  Committee.  On  the  basis  of  the  information
available,  and  in  view  of  the  degree  of  uncertainty  still  surrounding  some  projects,
the  Commission  estimates  that  projects  to  a  value  of  some  €  920  million  will  be
committed  following  approval  by  the  EDF  Committee  in  September,  October  and
November.  Another  €135  million  approximately  will  be  added  by  the  instruments
managed by the EIB, bringing the total to some €2850 million.

9

- In all, the Commission believes that the estimated €2500 million will be exceeded
and could rise to €3200. This increase is largely attributable to the fact that the two
decisions  taken  in  the  summer  -  the  new  HIPC  initiative  (debt  reduction)  for  €460
million, and the decision on financing the costs of devolution  (120 million  euros) -
had not been part of the initial forecasts.

3.1.2.  2004

In the communication of June 2003 the Commission and the EIB forecast a joint total
of €3275 million, of which €400 million for the EIB (9th EDF) and €2875 million for
the Commission. This amount (€3275 million) was identical to that announced in the
communication  of  November  2002.3  As  a  result  of  the  entry  into  force  of  the  9th
EDF, there are no new commitments under the old EIB-managed instruments.

The Bank revised its forecast upwards to some €450 million (including €40 million
for interest-rate subsidies). In view of the projects in the pipeline, and taking account
of the risk that some projects do not end on time, the Commission finds it advisable
to keep to the June estimate, €3275 million. It might increase, even considerably, if
new initiatives such as the €250 million peace initiative are launched.

3.2. Payments

3.2.1.  2003

In the communication of June 2003 the Commission and the EIB estimated payments
in 2003 at €2500 million in total, broken down as follows:

- €2100 million for regular payments, including:

(cid:1)  €60 million for the instruments managed by the EIB under the 9th EDF, and

(cid:1)  €2040 million for other payments (NIP, RIP, structural adjustment, etc). Of
this  amount,  €224  million  was  earmarked  for  EIB  instruments  of  earlier
EDFs;

- €400 million for payments under the Stabex and HIPC instruments.

These figures were in line with the communication of November 2002.

Situation at 31 August 2003 and outlook for the end of the year:

- At the end August 2003 the EIB had made only a few payments under the 9th EDF,
something which can be explained by the very short time that had elapsed since the
official inauguration of the new facility. Given the volume of forecast decisions, the
EIB is asking for a provision of €70 million to cover requests for funds up to the end
of the year.

- For the other instruments, payments of about €973 million have been made, 48% of
the June  estimate (€2040  million). Taking account of a  total of  €111  million  under

3

COM(2002) 673 final of 28.11.2002.

10

                                                
appraisal in the payment circuit, the implementation rate was 53%. On the basis of a
new country-by-country analysis, and taking account of the figures communicated by
the EIB for the old EDF, the Commission believes that the forecast  year-end figure
can be reached.

-  Other  payments  concerned  a  Stabex  transfer  of  €191  million  in  July  to  a  secure
account opened for Sudan. It is planned  to transfer  €209 million for debt reduction
(HIPC) in September and October, thus meeting the objective of €400 million. Note
that  in  coming  months  the  Commission  will  have  to  pay  a  first  tranche  of  €100
million  under  the  new  HIPC  initiative  adopted  this  summer  (total  amount  €460
million). This is a transfer to the World Bank (Trust Fund) and may take place before
or after the end of the  year,  depending  on the  Bank's  requirements.  At present  the
Commission is assuming that the transfer will be made at the beginning of 2004.

-  To  sum  up,  the  Commission  believes  that,  overall,  the  June  forecast  of
€2500 million is achievable. Although it is doing all it can to speed up payments, the
volume is unlikely to increase.

3.2.2.  2004

In the communication of June payments were estimated at €2600 million, including
€225 million under the 9th EDF instruments managed by the EIB and €190 million
for the old EIB instruments.

The  EIB  has  revised  its  9th  EDF  requirements  upwards  (€260  million,  including
€10 million  for  interest-rate  subsidies,  against  €225  million)  and  those  for  the  old
instruments downwards (€170 million against €190 million in June), which does not
change the overall estimate for payments.

The  Commission  has  reviewed  its  forecasts  on  a  case-by-case  basis  and  concluded
that  it  is  unlikely  to  achieve  the  volume  predicted  in  June.  The  2003  contract
forecasts  were  reduced  for  some  countries,  which  will  be  reflected  in  a  smaller
volume  of  payments  next  year.  So,  in  order  to  avoid  Member  States'  setting  aside
financial  resources  unnecessarily,  the  Commission  prefers  to  lower  its  forecast  by
€100 million. In total, therefore, payments should reach about €2500 million (against
€2600 million  forecast  in  June),  including  €260  million  for  the  EIB  (9th  EDF).  Of
this  €2500  million,  some  will  be  disbursed  under  the  HIPC  instrument  (debt
reduction). This involves transfers to both the World Bank (the Union as donor) and
the EIB (the Union as a creditor). The payments will be made on the basis of the two
institutions' needs, which they will communicate in good time to the Commission.

3.3. Calls for contributions to be paid by the Member States in 2003 and 2004

3.3.1.  The last tranche for 2003

- The EIB has slightly increased its estimate of payments in 200, from €60 million to
€70  million.  But  it  believes  €10  million  should  be  sufficient  to  cover  the  period
between  1 January  2004  and  the  arrival  of  the  first  tranche  of  2004  contributions
towards  mid-January  (compared  with  €40  million  in  June).  In  conclusion,  a  last
contribution of €30 million for 2003 should suffice (against €50 million forecast in
June).

11

-  The  Commission  has  revised  down  the  amount  needed  for  other  instruments  to
bridge the gap between 1 January 2004 and the time when the funds of the first 2004
call will be available. It has instituted an analysis of the cash position and it estimates
that  some  €170 million  should  be  enough  (a  figure  of  €225  million  had  been
advanced in June). €170 million might seem a lot but do not forget that, if deadlines
are respected, the funds of the first 2004 call will not be paid by the Member States
until 21 January 2004 ; and that once paid, these funds will be transferred to various
commercial banks in the EU and from there to the banks in the ACP countries. These
transfers take time. With €170 million it will also be possible to transfer, if need be,
€100 million under  the  HIPC  instrument at the end of the  year  or  the  beginning  of
next, depending on the requirements of the World Bank. With the forecast for 2003
payments unchanged and a flat-rate amount of €50 million entered for recoveries (as
in June), the level of the contributions is put at €2120 million (against €2150 million
in  June).  Since  the  earlier  calls  came  to  €1700  million,  the  Commission  has
proposed4  that  the  Member  States  pay  €420  million  into  the  accounts  of  the
Commission for the last 2003 tranche.

- The overall level of the last tranche remains the same as predicted in June, namely
€450  million,  although  the  breakdown  of  the  payments  to  the  EIB  and  the
Commission is slightly different.

The table on following page summarises the forecast cash situation.

The table in point 5 gives the contributions called for by Member State in 2003.

3.3.2.  Calls for contributions in 2004

-  Since  payments  have  been  revised  down  slightly  (from  €2600  million  to  €2500
million)  and  a  flat-rate  amount  of  €50  million  has  been  entered  for  recoveries,
contributions are put at €2440 million, of which €260 million (including €10 million
for interest-rate subsidies) for the EIB and €2180 million for the Commission.

- Going by the historical rate of disbursements by the Commission and the forecasts
communicated by the EIB, and also taking into account the Member States' wish to
keep  funding  down,  the  Commission  and  the  EIB  propose  the  three  following
tranches for 2004 :

To be paid to the EIB

To be paid to the
Commission

of which for interest-
rate subsidies

First tranche
Second tranche
Third tranche

Total

125
95
40

260

5
4
1

10

725
810
645

2180

€ million

Total

850
905
685

2 440

The table in point 6 sets out the contributions called for, by Member State, in 2004.

4

COM(2003) 608 final of 14.10.2003.

12

                                                
As usual, these tranches may be adjusted up or down in line with real requirements at
the  time  of  the  quarterly  call.  Similarly,  if  forecasts  are  implemented  at  a  more
sustained rate the Commission will have recourse to the Internal Agreement to obtain
enough funding to meet requirements.

13

Estimated cash flow at 31/12/2003 and 31/12/2004 € million

Current operations

Stabex

Commission
(incl. EIB 6th to
8th EDFs)

EIB+ 9th
EDF

Total

Balance at 01/01/2003
(without 2003 contributions
paid before 01.01.03)

2003 contributions
(previous tranches)

2003 contributions - last
tranche

Total of 2003 contributions to
be paid by the Member
States

Interest

Transfer from Stabex to the
Commission's current
expenditure account

Recoveries

Disbursements

Balance at 31/12/2003

2004 contributions Member
States
Interest

Recoveries

Disbursements

230

1 700

420

2 120

10

13

50

-2 250

173

2 180

10

50

230

211

50

30

80

-70

10

260

1 750

450

2 200

10

13

50

-2 320

183

2 440

10

50

5

-13

-191
125

-2 240

-260

-2 500

Balance at 31/12/2004

173

10

183

12

4.  EDF EXPENDITURE FORECASTS 2005 TO 2008

Forecasts for 2005 to  2008  are  only an  approximate estimate of expenditure, based
on  the  rates  in  previous  years.  For  example,  figures  may  vary  considerably  if,  say,
there are new debt relief commitments.

On the question of decisions, the Commission reiterates its pledge to do everything
in  its  power  to  mobilise  the  funds  made  available  under  the  9th  EDF  (including
transfers  from  old  Funds)  by  the  end  of  2007.  It  is  clear  that  achievement  of  this
objective  is  not  up  to  the  Commission  alone.  Indeed,  the  very  nature  of  the
cooperation agreements (Lomé and Cotonou), namely the fact that they are based on
partnership, means that the rate at which the EDF is implemented will depend on the
absorption  capacity  of  the  ACP  countries  (sufficiently  stable  political  situation,
minimum governance, etc).  Although  the  Commission  endeavours  to  give  National

5

The Commission has to keep this amount in the Stabex account in case a suspended payment to Togo
has to be made.

14

                                                
Authorising Officers as much technical assistance as possible, it cannot actually take
the place of the ACP country. Another determining factor is the reallocation of funds
scheduled  to  take  place  when  the  mid-term  review  is  carried  out.  If  allocations  are
not redirected to the best-performing countries, the goal will not be achieved.
The  amounts  forecast  for  the  period  2005-2007  are  in  line  with  the  Commission's
aim to commit all 9th EDF funds (including the remaining balances of the previous
EDFs).  The  Commission  does  not  plan  to  make  new  decisions  on  the  EDF  in  its
current form from 2008.

While  it  is  difficult  to  make  reliable  long-term  estimates  for  decisions,  it  is  even
harder for payments, because the payments rate is dictated by factors over which the
Commission has no control. In the case of projects it certainly takes the lead in the
design  and  decision  phase  but  it  has  only  an  ancillary  role  during  implementation,
since  the  principle  of  partnership  cited  above  means  that  at  this  point  it  intervenes
only  through  technical  assistance.  The  pace  of  payments  of  budgetary  aid,  which
accounts  for  an  increasing  proportion  of  all  aid,  is  also  dependent  on  factors  not
easily  controllable,  such  as  the  economic  situation  and  the  political  stability  of  the
States concerned.

Going  by  the  historical  rates  of  payments  under  previous  Funds,  and  taking  into
account  the  expected  beneficial  effects  of  the  reform  of  the  Commission's  external
service, in particular the devolution  towards  the  ACP  States  that  is  planned  for  the
second half of 2003, the Commission believes that the pace of payments will pick up
significantly from 2005.

Forecast EDF decisions and payments 2005-2008

Decisions

Payments

2005

4 350

2 875

2006

2 650

3 200

2007

2 450

3 050

€ million

2008

p.m.

2 475

15

5.  CONTRIBUTIONS TO THE EDF FOR 2003 BY MEMBER STATE

COUNTRY

SCALE

8th EDF

%

23.36

3.92

2.14

5.84

24.3

1.25

0.62

GERMANY

BELGIUM

DENMARK

SPAIN

FRANCE

GREECE

IRELAND

ITALY

1st call

2nd call

3rd call

4th call

(1)

(1)

paid to
the EIB
(2)

paid to the
Commission
(2)

to be paid to
the EIB
(2)

to be paid to the
Commission
(2)

Euro

TOTAL

calls

105 120 000

116 800 000

11 680 000

175 200 000

7 008 000

98 112 000

513 920 000

17 640 000

19 600 000

1 960 000

29 400 000

1 176 000

16 464 000

86 240 000

9 630 000

10 700 000

1 070 000

16 050 000

642 000

8 988 000

47 080 000

26 280 000

29 200 000

2 920 000

43 800 000

1 752 000

24 528 000

128 480 000

109 350 000

121 500 000

12 150 000

182 250 000

7 290 000

102 060 000

534 600 000

5 625 000

6 250 000

2 790 000

3 100 000

625 000

310 000

9 375 000

4 650 000

375 000

186 000

5 250 000

27 500 000

2 604 000

13 640 000

12.54

56 430 000

62 700 000

6 270 000

94 050 000

3 762 000

52 668 000

275 880 000

LUXEMBOURG

NETHERLANDS

PORTUGAL

0.29

5.22

0.97

1 305 000

1 450 000

145 000

2 175 000

87 000

1 218 000

6 380 000

23 490 000

26 100 000

2 610 000

39 150 000

1 566 000

21 924 000

114 840 000

4 365 000

4 850 000

485 000

7 275 000

291 000

4 074 000

21 340 000

UNITED KINGDOM 12.69

57 105 000

63 450 000

6 345 000

95 175 000

3 807 000

53 298 000

279 180 000

AUSTRIA

FINLAND

SWEDEN

TOTAL

2.65

1.48

2.73

11 925 000

13 250 000

1 325 000

19 875 000

6 660 000

7 400 000

740 000

11 100 000

12 285 000

13 650 000

1 365 000

20 475 000

795 000

444 000

819 000

11 130 000

58 300 000

6 216 000

32 560 000

11 466 000

60 060 000

100

450 000 000

500 000 000

50 000 000

750 000 000

30 000 000

420 000 000

2 200 000 000

(1) According to the 8th EDF Financial Regulation.
(2) According to the 9th EDF Financial Regulation.

16

6.  CONTRIBUTIONS TO THE EDF FOR 2004 BY MEMBER STATE

SCALE

1st tranche

2nd tranche

3rd tranche

COUNTRY

8th EDF
%

To be paid to
the EIB

To be paid to
the
Commission

To be paid to
the EIB

To be paid to
the
Commission

to be paid tothe
EIB

To be paid to
the
Commission

Euro

TOTAL

tranches

GERMANY

BELGIUM

DENMARK

SPAIN

FRANCE

GREECE

IRELAND

ITALY

LUXEMBOURG

NETHERLANDS

PORTUGAL

23.36

29 200 000

169 360 000

22 192 000

189 216 000

9 344 000

150 672 000

569 984 000

3.92

2.14

5.84

24.30

1.25

0.62

12.54

0.29

5.22

0.97

4 900 000

28 420 000

3 724 000

31 752 000

1 568 000

25 284 000

95 648 000

2 675 000

15 515 000

2 033 000

17 334 000

856 000

13 803 000

52 216 000

7 300 000

42 340 000

5 548 000

47 304 000

2 336 000

37 668 000

142 496 000

30 375 000

176 175 000

23 085 000

196 830 000

9 720 000

156 735 000

592 920 000

1 562 500

9 062 500

1 187 500

10 125 000

775 000

4 495 000

589 000

5 022 000

500 000

248 000

8 062 500

30 500 000

3 999 000

15 128 000

15 675 000

90 915 000

11 913 000

101 574 000

5 016 000

80 883 000

305 976 000

362 500

2 102 500

275 500

2 349 000

116 000

1 870 500

7 076 000

6 525 000

37 845 000

4 959 000

42 282 000

2 088 000

33 669 000

127 368 000

1 212 500

7 032 500

921 500

7 857 000

388 000

6 256 500

23 668 000

UNITED KINGDOM

12.69

15 862 500

92 002 500

12 055 500

102 789 000

5 076 000

81 850 500

309 636 000

AUSTRIA

FINLAND

SWEDEN

TOTAL

2.65

1.48

2.73

3 312 500

19 212 500

2 517 500

21 465 000

1 060 000

17 092 500

64 660 000

1 850 000

10 730 000

1 406 000

11 988 000

592 000

9 546 000

36 112 000

3 412 500

19 792 500

2 593 500

22 113 000

1 092 000

17 608 500

66 612 000

100    

125 000 0006

725 000 000

95 000 0007

810 000 000

40 000 0008

645 000 000

2 440 000 000

6

7

8

Of which €5 million in interest-rate subsidies.
Of which €4 million in interest-rate subsidies.
Of which €1 million in interest-rate subsidies.

17

                                                
7.  ACRONYMS AND ABBREVIATIONS

APC ............... African, Caribbean and Pacific States

JPA ................ Joint Parliamentary Assembly

TA ................. technical assistance

EIB ................ European Investment Bank

CDE............... Centre for the Development of Enterprise

CTA............... Centre for the Development of Agriculture

EDF ............... European Development Fund

NIP ................ national indicative programme

RIP................. regional indicative programme

HIPC.............. Highly indebted poor countries

OCT............... Overseas Countries and Territories

18