Communication from the Commission - European development fund (EDF) -  Estimate of commitments and payments and of contributions to be paid by the Member States for 2005 and 2006, and forecast of commitments and payments for 2007 to 2010
Date: 2005-11-04
Institutions: European Commission
Subjects: European Development Fund, European Investment Bank, budget estimate, financial management, financial year, implementation of the budget, inclusion in the budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 4.11.2005 
COM(2005) 542 final 

COMMUNICATION FROM THE COMMISSION 

EUROPEAN DEVELOPMENT FUND (EDF) 

Estimate of commitments and payments and of contributions to be paid by the Member 
States for 2005 and 2006, and 

Forecast of commitments and payments for 2007 to 2010 

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FOREWORD 

The  Commission  draws  up  this  communication  to  the  Council  each  year  in 
accordance with Article 8 of the Financial Regulation applicable to the 9th European 
Development Fund (EDF). Its purpose is to provide an estimate of commitments and 
payments  for  the  current  financial  year  (2005)  and  the  following  financial  year 
(2006)  and  set  out  the  schedule  of  calls  for  contributions,  taking  into  account  the 
estimates  of  the  European  Investment  Bank  (EIB)  for  the  operations  which  it 
manages.  As  provided  for 
the 
communication  also  gives  estimates  of  commitments  and  payments  for  each  of  the 
following four years (2007 to 2010).  

the  Financial  Regulation, 

in  Article  8  of 

Since  the  entry  into  force  of  the  9th  EDF  in  2003  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)  still  go 
through  the  Commission.  This  communication  therefore  draws  a  clear  distinction 
between  EIB  payments  under  the  9th  EDF,  and  Commission  payments  (including 
those for the old instruments managed by the EIB).  

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INTRODUCTION 

The  Commission  and  the  EIB  have  updated  their  forecast  commitments  and 
payments  for  2005  and  2006  financial  years  for  each  of  the  ACP1  countries  and 
OCTs.2 Particular care has been taken with payment forecasts, for two reasons: (i) to 
help  Member  States  earmark  as  accurately  as  possible  amounts  in  their  national 
budgets; (ii) to ensure that sufficient financial resources are available for the EDF to 
avoid liquidity problems.  

In  accordance  with  Article  8  of  the  Financial  Regulation  applicable  to  the 
9th European  Development  Fund  (EDF),3
  the  forecasts  will  be  revised  in  the  June 
2006 communication.  

The  table  in  Annex  1  shows  the  new  forecasts  for  commitments  and  payments  for 
2005 and 2006, and compares them to the figures presented in the communication of 
June 2005.4 Annex 2 shows the financial situation for the two years in question, and 
in  particular  the  total  contributions  payable  by  Member  States  to  finance  the  EDF. 
Forecasts  for  commitments  and  payments  for  the  years  2007  to  2010  are  shown  in 
Annex 3. Annexes 4 and 5 show contributions broken down by Member State for the 
years 2005 and 2006.  

The  graph  below  shows  an  overview  of  the  trend  in  commitments  and  payments, 
made  in  the  past  and  expected  in  the  near  future.  It  clearly  indicates  the  upwards 
structural trend in payments since 2000. 

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- - Commitments 

___ Payments 

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2 
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African, Caribbean and Pacific States. 
Overseas Countries and Territories. 
OJ L 83, 1.4.2003, p. 1. 
Communication  from  the  Commission  to  the  Council:  financial  information  on  the  European 
Development Funds (COM(2005) 287 final of 29.06.2005). 

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1. 

COMMITMENTS IN 2005 AND 2006 

Close  examination  of  the  projects  in  the  pipeline  confirms  that  at  present  the 2005 
estimate, presented in the June communication (EUR 3 500 million) should be met, if 
not exceeded. There are, however, still a number of uncertainties that do not depend 
on  the  Commission  (such  as  non-compliance  by  some  ACP  States  with  certain 
conditionalities,  political  risks,  etc.).  The  EIB  is  broadly  standing  by  its  forecast, 
which  remains  at  around  EUR  600  million.  Total  combined  commitments  for  the 
Commission and the EIB are estimated at EUR 4 097 million.  

While  the  EIB  is  raising  its  2006  forecast  only  slightly  from  EUR  550  million  to 
EUR  571  million,  the  Commission  is  predicting  a  big  jump  from  the  EUR  3  100 
million presented in June to EUR 3 400 million. The total volume of commitments is 
estimated at EUR 3 971 million. 

Further details are included in the table in Annex 1. 

2. 

PAYMENTS IN 2005 AND 2006 

The  Commission’s  updated  estimate  of  2005  payments  comes 
to  some 
EUR 2 600 million and therefore confirms the estimate it presented in June. The EIB, 
by contrast, has been obliged to revise its estimate down from the EUR 445 million 
presented in June to EUR 292 million. Total EDF payments should amount to EUR 2 
888 million. 

For 2006 also, the EIB has lowered its estimate from the EUR 489 million presented 
in June to EUR 360 million. The Commission, for its part, estimates that it will make 
payments totalling EUR 2 784 million, approximately the volume announced in June 
(EUR  2  750  million).  With  a  combined  total  for  both  institutions  of  EUR  3  144 
million,  2006  should  be  the  first  year  when  the  level  of  payments  exceeds 
EUR 3 billion. 

Further details are included in the table in Annex 1. 

3. 

CALLS FOR CONTRIBUTIONS IN 2005 AND 2006 

Annex 2 shows various aspects of the financial situation expected for 2005 and 2006. 

It  should  be  recalled  that  two  types  of  measures  do  not  require  additional  financial 
resources  from  the  Member  States.  These  are  the  Stabex  instrument,  for  which 
Member States have already made the necessary payments in the past, and measures 
financed  from  a  special  account  to  accompany  the  elections  in  the  Democratic 
Republic  of  Congo.  Although  the  total  estimated  volume  of  payments  by  the 
Commission  for  2005  remains  more  or  less  unchanged,  the  upwards  revision  in 
payments  under  the  Stabex  instrument  and  the  exceptional  increase  in  interest  on 
Commission accounts allow a slight reduction in the last tranche of the contributions 
that the Commission asks from the Member States (EUR 240 million as opposed to 
EUR  275  million).  The  downwards  revision  in  disbursements  means  that  the  EIB 

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will  no  longer  need  additional  funds  in  2005.  Total  contributions  requested  by  the 
Commission and the EIB for the whole year are EUR 2 660 million, well within the 
amount  decreed  by  the  Council  in  December  2004  (EUR  2  782  million).  Annex  4 
gives a breakdown of contributions by Member State.  

For 2006, as the new Commission payment forecast remains more or less unchanged 
since June, Member States will pay almost the same amount as forecast at that time 
(EUR  2  690  million  for  the  year,  as  opposed  to  the  EUR  2  720  million  forecast  in 
June).  The  Commission  is  asking  the  Member  States  to  pay  an  initial  tranche  of 
EUR 1  400  million.  This  is  in  line  with  the  Commission  objective  to  spread 
payments  across  the  year  more  effectively  (and  therefore  decrease  the  payments 
made  towards  the  end  of  the  year).  In  line  with  its  forecast  downwards  revision  in 
payments,  the  EIB  estimates  a  need  for  contributions  totalling  EUR  350  million, 
including EUR 150 million for the first tranche. 

Current estimates from the Commission and the EIB for the second tranche of 2006 
contributions are for EUR 1 000 million and EUR 130 million respectively. The last 
tranche should therefore require EUR 290 million and EUR 70 million respectively. 
In accordance with the 9th EDF Financial Regulation, the second and third tranches 
may be adjusted up or down in line with real requirements at the time of the call for 
contributions. 

4. 

THE FUTURE 

The Commission and the EIB reiterate their pledge to do their utmost to commit the 
funds made available by the Cotonou Agreement (including the balances remaining 
from the 6th, 7th and 8th EDFs transferred to the 9th EDF) by the end of 2007. It is 
clear  that  achievement  of  this  objective  is  not  up  to  the  Commission  and  the  EIB 
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 capacities of the ACP countries 
(sufficiently stable political situation, minimum governance, etc.). The Commission 
will continue to support them, giving national authorising officers as much technical 
assistance  as  possible,  and  if  necessary  will  propose  corrective  measures,  at  latest 
during the reallocation of funds exercise programmed for the final review in 2006. 

The annual figures, based on the assumption of full use of the available funds, can be 
found in Annex 3. As the financial framework for the period after 2007 has not yet 
been agreed, this document does not include any amounts for commitments for the 
years  2008  to  2010.  This  also  affects  the  amounts  presented  as  payments,  and 
explains  the  significant  fall  in  amounts  starting  in  2009.  Payment  amounts  are 
calculated  on  the  basis  of  payment  rates  under  previous  EDFs,  taking  into  account 
the  beneficial  impact  of  the  reform  of  the  Commission’s  external  service,  and  in 
particular the devolution of management to ACP state level. 

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Overview of forecast commitments and payments for 2005 and 2006 

ANNEX 1 

COMMITMENTS 

Stabex 
Water Facility 
Balance (€750 million) from the 
 conditional million 

Other 

Total for the Commission 

Investment Facility 

Interest rate subsidies 

Total EIB instruments (9th EDF) 

TOTAL 

PAYMENTS 

Peace Facility 
Water Facility 
Risk capital5 
Balance (€750 million) from the 
 conditional million 
Stabex 
DR Congo 
Other 

Total for the Commission 

Investment Facility 
Interest rate subsidies 

Total EIB instruments (9th EDF) 
TOTAL 

2005 

2006 

June 2005 
Communic-
ation 

Updated 

June 2005 
Communic-
ation 

Updated 

10 
80 

120 

3 290 

3 500 

537 

73 

610 

10 
80 

0 

3 410 

3 500 

537 

60 

597 

10 
125 

330 

2 635 

3 100 

511 

39 

550 

10 
125 

430 

2 835 

3 400 

511 

60 

571 

4 110 

4 097 

3 650 

3 971 

80 
14 
92 

0 
17 
89 
2 296 
2 588 

372 
73 

445 
3 033 

88 
5 
117 

0 
52 
89 
2 245 
2 596 

247 
45 

292 
2 888 

95 
38 
72 

153 
20 

2 372 
2 750 

450 
39 

489 
3 239 

45 
23 
106 

62 
45 

2 503 
2 784 

300 
60 

360 
3 144 

5 

Including interest rate subsidies under the previous EDFs 

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Estimated cash position in 2004 and 2006 (€ million) 

ANNEX 2 

Communication: June 2005 

Update 

Commission

EIB 

9 FED 

TOTAL  Commission 

EIB 

9 FED 

TOTAL

62 

8 

42 

- 

70 

42 

62 

8 

42 

- 

70 

42 

2 385 

460 

2 845 

2 350 

310 

2 660 

1 360 

60 

1 420 

1 360 

60 

1 420 

750 

275 

5 

50 

300 

100 

- 

- 

1 050 

375 

5 

50 

750 

240 

25 

42 

250 

1 000 

0 

240 

- 

- 

25 

42 

-2 482 

-445 

-2 927 

-2 455 

-292 

-2 747 

62 

23 

85 

2 720 

500 

3 220 

5 

50 

- 

- 

5 

50 

66 

2 690 

1 400 

1 000 

290 

10 

40 

26 

350 

150 

130 

70 

92 

3 040 

1 550 

1 130 

360 

10 

40 

-2 780 

-489 

-3 269 

-2 739 

-360 

-3 099 

57 

34 

91 

67 

16 

83 

Balance at 01.01.2005 

2004 contributions paid in 2005 

2005 contributions, including: 

First tranche6 

Second tranche 

Third tranche 

Interest and other revenue 

Recoveries 

Payments7 

Balance 31.12.2005 

2006 contributions 

First tranche 

Second tranche 

Third tranche 

Interest and other revenue 

Recoveries 

Payments 

Balance 31.12.2006 

5
0
0
2

6
0
0
2

6 
7 

Including 2005 contributions of EUR 180.4 million paid at the end of December 2004. 
Excluding payments for Stabex and payments to the special account created for the DR Congo 

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ANNEX 3 

Forecast EDF commitments and payments 2007-2010 

Commitments 

Payments 

2007

3 150

3 350

2008

(p.m.)

3 300

2009 

( p.m.) 

2 600 

€ million 

2010

( p.m.)

1 650

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ANNEX 4 

2005 EDF Contributions by Member State (in euros) 

COUNTRY 

SCALE 

First tranche 

2nd tranche 

3rd tranche 

paid to 

paid to the 

paid to 

paid to the 

payable to 

GERMANY 

BELGIUM 

DENMARK 

SPAIN 

FRANCE 

GREECE 

IRELAND 

ITALY 

LUXEMBOURG 

NETHERLANDS 

PORTUGAL 

UNITED KINGDOM 

AUSTRIA 

FINLAND 

SWEDEN 

TOTAL 

% 

23.36 

3.92 

2.14 

5.84 

24.30 

1.25 

0.62 

12.54 

0.29 

5.22 

0.97 

12.69 

2.65 

1.48 

2.73 

the EIB 

Commission 

the EIB 

Commission 

the EIB 

14 016 000

317 696 000

58 400 000

175 200 000

2 352 000

53 312 000

9 800 000

29 400 000

1 284 000

29 104 000

5 350 000

16 050 000

3 504 000

79 424 000

14 600 000

43 800 000

14 580 000

330 480 000

60 750 000

182 250 000

750 000

17 000 000

3 125 000

9 375 000

372 000

8 432 000

1 550 000

4 650 000

7 524 000

170 544 000

31 350 000

94 050 000

174 000

3 944 000

725 000

2 175 000

3 132 000

70 992 000

13 050 000

39 150 000

582 000

13 192 000

2 425 000

7 275 000

7 614 000

172 584 000

31 725 000

95 175 000

1 590 000

36 040 000

6 625 000

19 875 000

888 000

20 128 000

3 700 000

11 100 000

1 638 000

37 128 000

6 825 000

20 475 000

100.00 

60 000 000

1 360 000 000

250 000 000

750 000 000

payable to 
the 
Commission 

TOTAL 

of the 

tranches 

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

56 064 000

621 376 000 

9 408 000

104 272 000 

5 136 000

56 924 000 

14 016 000

155 344 000 

58 320 000

646 380 000 

3 000 000

33 250 000 

1 488 000

16 492 000 

30 096 000

333 564 000 

696 000

7 714 000 

12 528 000

138 852 000 

2 328 000

25 802 000 

30 456 000

337 554 000 

6 360 000

70 490 000 

3 552 000

39 368 000 

6 552 000

72 618 000 

240 000 000

2 660 000 000 

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ANNEX 5 

2006 EDF Contributions by Member State (in euros) 

SCALE 

First tranche 

2nd tranche 

3rd tranche 

payable to the 
EIB 

payable to the 
Commission 

payable to the 
EIB 

payable to the 
Commission 

payable to EIB 

payable to the 
Commission 

TOTAL 

tranches 

35 040 000

327 040 000

30 368 000

233 600 000

16 352 000

67 744 000

710 144 000 

5 880 000

54 880 000

5 096 000

39 200 000

2 744 000

11 368 000

119 168 000 

3 210 000

29 960 000

2 782 000

21 400 000

1 498 000

6 206 000

65 056 000 

8 760 000

81 760 000

7 592 000

58 400 000

4 088 000

16 936 000

177 536 000 

36 450 000

340 200 000

31 590 000

243 000 000

17 010 000

70 470 000

738 720 000 

1 875 000

17 500 000

1 625 000

12 500 000

875 000

3 625 000

38 000 000 

930 000

8 680 000

806 000

6 200 000

434 000

1 798 000

18 848 000 

18 810 000

175 560 000

16 302 000

125 400 000

8 778 000

36 366 000

381 216 000 

435 000

4 060 000

377 000

2 900 000

203 000

841 000

8 816 000 

7 830 000

73 080 000

6 786 000

52 200 000

3 654 000

15 138 000

158 688 000 

1 455 000

13 580 000

1 261 000

9 700 000

679 000

2 813 000

29 488 000 

COUNTRY 

GERMANY 

BELGIUM 

DENMARK 

SPAIN 

FRANCE 

GREECE 

IRELAND 

ITALY 

LUXEMBOURG 

NETHERLANDS 

PORTUGAL 

% 
23.36 

3.92 

2.14 

5.84 

24.3 

1.25 

0.62 

12.54 

0.29 

5.22 

0.97 

UNITED KINGDOM 12.69 

19 035 000

177 660 000

16 497 000

126 900 000

8 883 000

36 801 000

385 776 000 

AUSTRIA 

FINLAND 

SWEDEN 

TOTAL 

2.65 

1.48 

2.73 

100 

3 975 000

37 100 000

3 445 000

26 500 000

1 855 000

7 685 000

80 560 000 

2 220 000

20 720 000

1 924 000

14 800 000

1 036 000

4 292 000

44 992 000 

4 095 000

38 220 000

3 549 000

27 300 000

1 911 000

7 917 000

82 992 000 

150 000 000

1 400 000 000

130 000 000

1 000 000 000

70 000 000

290 000 000

3 040 000 000 

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