Communication from the Commission to the Council and the European Parliament - Financial Information on the European Development Funds
Date: 2006-06-19
Institutions: European Commission
Subjects: European Development Fund, European Investment Bank, commitment of expenditure, financial management, financial policy, financial regulation, financial year, payment

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 19.6.2006 
COM(2006) 317 final/2 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Financial Information on the European Development Funds 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

Financial Information on the European Development Funds 

FOREWORD 

This  document  is  to  be  annexed  to  the  draft  budget  for  2007,  in  accordance  with  the  1979 
agreements on budgetary procedure. 

Article 8(3)  of  the  Financial  Regulation  of  27  March  2003  applicable  to  the  9th  European 
Development Fund1 (EDF) requires the Commission to make this document available to the 
Council by 15 June, stipulating that this information serve as a basis for compiling an interim 
estimate of commitments and payments. 

As in previous years, this document shows: 

–  implementation of the EDFs (6th to 9th) at 31/12/2005; 

–  financial implementation forecasts for the current year; 

–  expenditure forecasts for 2007. 

The Member States contribute funds directly to the European Investment Bank (EIB) for the 
instruments  which  it  manages  under  the  9th  EDF(the  Investment  Facility  and  interest-rate 
subsidies). Contributions for other instruments, including contributions for the old instruments 
managed by the EIB (risk capital and interest-rate subsidies), go through the Commission. 

Unless otherwise indicated, all the commitments and payments listed in this Communication 
are  gross  amounts,  i.e.  no  decommitments  or  recoveries  have  been  deducted.  This  is  in 
keeping with the approach adopted for the European Union’s general budget.  

1 

OJ L 83, 1.4.2003, p. 1. 

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INTRODUCTION 

The  Commission  and  the  EIB  have  updated  their  commitment  and  payments 
forecasts for 2006 and 2007 for each of the ACP countries2 and OCTs.3 The payment 
forecasts in particular have been compiled with great care with the aim of helping the 
Member States to earmark amounts that are as accurate as possible in their national 
budgets while ensuring 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 EDF,4 
these forecasts will be adjusted in the October 2006 Communication.  

Annex 1 shows the status of EDF execution at 31 December 2005, and Annex 2 lists 
the  commitments  and  payments  made  in  2004  and  2005  for  the  main  instruments. 
The  table  in  Annex 3  shows  the  new  commitment  and  payment  forecasts  for  2006 
and  2007,  and  compares  them  with  the  figures  presented  in  the  October  2005 
communication.5 Annex 4 gives an overview of the financial situation and shows the 
total  contributions  payable  into  the  EDF  by  the  Member  States.  Finally,  Annex  5 
gives a breakdown by Member State of the contributions for 2006.  

The graph below shows the general trend in commitments and payments, including 
projections  for  2006/2007  (Commission  and  EIB):  the  upward  structural  trend  in 
payments since 2000 is clear. 

5.000

4.000

€
m

3.000

2.000

1.000

0

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

332
118

1.950
352

2.380
807

1.363
1.265

953
1.257

1.433
1.191

2.236
1.984

1.843
1.443

2.689
1.860

1.874
1.758

1.538
1.509

784
1.382

2.606
1.595

2.958
1.352

4.007
1.640

1.927
1.779

2.125
1.922

4.107
2.349

2.972
2.560

4.015
2.699

3.986
3.065

3.845
3.260

- - Commitments; __ Payments 

2 
3 
4 
5 

African, Caribbean and Pacific States. 
Overseas Countries and Territories. 
OJ L 83, 1.4.2003, p. 1. 
Communication  from  the  Commission  –  EDF:  estimate  of  commitments  and  payments  and  of 
contributions to be paid by the Member States (COM(2005) 542 final of 4.11.2005). 

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1. 

IMPLEMENTATION OF THE EUROPEAN DEVELOPMENT FUNDS AT 31 DECEMBER 2005 

1.1. 

Funds available at 31 December 2005 

the  end  of  2005.  Of 

Under  the  6th  to  9th  EDFs,  the  funds  available  to  the  Commission  and  EIB  totalled 
EUR 46 823 million  at 
this  amount,  approximately 
EUR 39 894 million  was  committed  and  EUR 28 657  million  disbursed.  Of  the 
amount not committed (EUR 6 929 million), EUR 5 851 million fall within the remit 
of  the  Commission  and  will  be  committed  by  the  end  of  2007.  These  figures  take 
account  of  the  full  mobilisation  of  the  conditional  EUR 1 billion.  More  detailed 
figures are available in Annex 1. 

Unlike  the  figures  in  the  rest  of  this  document,  the  figures  in  this  section  and  in 
Annex 1 are “net” figures, i.e. after decommitments and recoveries. This is necessary 
to determine the level of available funds, which is by definition a net figure. 

1.2. 

Implementation of the EDFs in 2005 

1.2.1.  Commitments 

With  commitments  totalling  EUR 3 511 million,  the  Commission  has  achieved  its 
goal  of  committing  EUR 3 500 million  (announced  in  October  2004  and  unchanged 
since  then).  The  EIB  committed  EUR 504 million  under  the  Investment  Facility 
(including interest-rate subsidies), falling short of the EUR 597 million forecast in the 
October  2005  communication.  Taking  both  institutions  together,  the  commitments 
made in 2005 totalled just over EUR 4 billion. More detailed figures are available in 
Annexes 2 and 3.  

In total, the Commission decommitted some EUR 476 million. This figure is relatively 
high compared with recent years (the 2000-2004 average was EUR 325 million) and is 
the  result of  the Commission’s efforts to pursue a proactive fund  reallocation  policy 
before the 10th EDF enters into force. 

1.2.2.  Payments 

In  2005,  payments  reached  a  record  high  (EUR 2699 million  in  total  by  the 
Commission and the EIB). This confirms the positive structural trend in the volume of 
payments.  

With EUR 2 544 million, the Commission has achieved 98% of the volume forecast in 
October  last  year  (EUR 2 596 million)  and  97%  of  the  volume  estimated  in  October 
2004.  This  slight  shortfall  is  due  to  the  overestimation  of  the  need  for  risk  capital 
under  the  old  EDFs  (EUR 61 million  actually  paid  compared  to  an  EIB  estimate  of 
EUR 117 million).  The  other  differences  cancel  each  other  out.  With  regard  to  the 
Investment  Facility  (and  interest-rate  subsidies),  the  EIB  made  payments  totalling 
EUR 155 million,  lower  than  its  October  2005  estimate  of  EUR 190 million.  More 
detailed figures are available in Annexes 2 and 3. 

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1.2.3.  Financial movements in 2005 

The table  in Annex 4  shows the start-of-year and end-of-year balances for 2005, the 
Member States’ contributions to the EDF, and payments. The table does not include 
payments made under Stabex (EUR 71 million) or payments for special measures for 
DR  Congo  (EUR 89 million)  because  these  were  made  from  separate  accounts  into 
which  Member  States  had  already  contributed.  Consequently,  these  accounts  do  not 
require any new contributions.  

The cash balance available to the Commission for operations at the end of 2005 was 
approximately  EUR 137 million.6  This  balance 
expected 
(EUR 66 million),  mainly  due  to  less  expenditure  on  risk  capital  and,  to  a  lesser 
extent, to larger amounts being recovered. Even though the balance is higher than in 
the  two  previous  years,  it  is  still  much  lower  than  in  the  years  preceding  that  (the 
1998-2002  average  was  EUR 340 million).  The  EIB’s  end-of-year  balance  was 
EUR 141 million. 

is  higher 

than 

2. 

FINANCIAL IMPLEMENTATION FORECASTS FOR 2006 AND 2007 

2.1. 

Commitments 

2.1.1. 

2006 financial year 

•  With  commitments  totalling  EUR 586 million  for  the  Investment  Facility  and 
interest-rate  subsidies,  the  EIB  is  still  on  target  for  achieving  the  figures 
communicated in October 2005. 

•  The  Commission’s  new  estimate  of  EUR 3 400 million  confirms  the  overall  total 
announced in October 2005 and remains well above the cautious forecast of June 
2005 (EUR 3 100 million).  

•  The 

total  volume  of  commitments  has  been  upwardly  adjusted 

to 

EUR 3 986 million. 

2.1.2. 

2007 financial year 

•  The  EIB  forecasts  that  it  will  commit  EUR 395 million  under  the  Investment 

Facility and for interest-rate subsidies.  

•  In its October 2005 communication, the Commission based its forecasts for 2007 
on the commitments cycle of previous EDFs. The new estimates, giving a total of 
EUR 3 450 million,7  are  based  on  actual  activities  and  confirm 
the 

that 

6 
7 

Does not include EUR 1.4 million in 2006 contributions. 
Based  on  the  assumption  that  some  EUR 1 billion  will  be  decommitted  and  re-committed  in  2006  and 
2007.  

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Commission will, by the end of 2007, be able to honour its pledge to make use of 
the entire financial allocation made available under the Cotonou Agreement.  

•  Taken together, the commitments of the Commission and the EIB are expected to 

total EUR 3 845 million. 

2.2. 

Payments 

2.2.1. 

2006 financial year 

•  The  EIB  has  upwardly  adjusted  its  estimates  from  EUR 240 million  in  October 
2005  to  EUR 315 million  now.  EUR 270 million  of  this  will  be  used  under  the 
Investment Facility and EUR 45 million for interest-rate subsidies. 

•  As in recent years, the Commission has made a particular effort with the updating 
of  the  payments  forecasts.  The  forecast  can  now  be  broken  down  by  project 
total  of 
(commitment)  and  by  contract.  The  new 
EUR 2 750 million 
the 
from 
October 2005 forecast (EUR 2 784 million). This slight decrease can be explained 
mainly by the EIB’s downward adjustment of payments under the old instruments 
(risk capital and interest-rate subsidies) from EUR 106 million to EUR 82 million. 
The other differences roughly cancel each other out. The upward trend in payments 
for Stabex bears witness to the Commission’s will to re-activate this system.  

forecast  shows  a 
the  Commission,  practically  unchanged 

for 

•  Updated,  the  EIB  and  Commission  payments  now  total  EUR 3 065 million, 

roughly the same as in the October 2005 forecast (EUR 3 024 million). 

2.2.2. 

2007 financial year 

Total payments in 2007 are estimated at EUR 3 260 million. This total comprises: 

•  EUR 410 million for the EIB under the 9th EDF, EUR 330 million of which goes 

to the Investment Facility; 

•  EUR 2 850 million for the instruments managed by the Commission. 

These figures should be treated with caution as they focus on a timeframe further in 
the future. 

3. 

FINANCIAL SITUATION FORECAST FOR 2006 AND 2007 

To be able to meet the increase in payments forecast for 2006, the EIB has requested 
an  extra  EUR 40 million  in  contributions  for  2006  (EUR 180 million  instead  of 
EUR 140 million). 

Member  State  contributions  to  the  Commission,  on  the  other  hand,  will  drop  from 
EUR 2 690 million  to  EUR 2 510 million.  This  is  due  to  several  factors,  which  are 
listed in the table in Annex 4. The first of these is a reduction in the forecast for risk 
capital  payments  (EUR 80 million  less  for  2005  and  2006  together).  There  has  also 

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been  a  slight  reduction  in  payments  under  other  instruments  (down  EUR 63 million 
for 2005 and 2006), except for the Stabex8 system (for which funds had already been 
contributed  in  the  past).  Finally,  the  upwards  adjustment  in  recoveries  means  that 
fewer contributions are needed (EUR 33 million less for 2005 and 2006).  

The Commission proposes a second tranche slightly lower than the one estimated in 
October  (EUR 910 million  against  EUR 1000 million).  On  the  basis  of  the  current 
estimate, it might also be possible to reduce the third tranche (from EUR 290 million 
to  EUR 200 million).  The  Commission  will  review  the  situation  in  its  October  2006 
communication.  The  EIB,  on  the  other  hand,  has  requested  EUR 100 million  –  as 
opposed  to  the  EUR 60 million  forecast  last  October  –  to  finance  the  new  higher 
disbursements forecast.  

A  preliminary  estimate  of  the  contributions  required  for  2007  is  EUR 3 100 million. 
There has been a large increase in the contributions made between 2003 and the 2007 
estimate 
2005: 
EUR 2 640 million). This shows that the EDF is becoming more efficient. 

EUR 2 200 million; 

EUR 2 340 million; 

(2003: 

2004: 

8 

See also section 1.2.3. 

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ANNEX 1 

Consolidated situation of the EDFs (6th to 9th) for the ACP countries and OCTs 
at 31 December 2005 (EUR million) 

Allocations 

Commitments  Payments 

COMMISSION 
National and OCT allocations 
CDE9, CTA10 and JPA11 
Long-term development reserve 
Regional cooperation 
Interest-rate subsidies 
Risk capital (6th to 8th EDFs) 
Structural adjustment facility 
Emergency aid 
Aid for refugees 
Stabex 
Mining products 
Use of interest 
Transfers from 1st to 5th EDFs 
Debt relief (EDFs 7 and 8) 
Studies and TA12 for OCTs 
Implementation expenses 
DR Congo special assistance 
Miscellaneous revenue 
Subtotal 
EIB (9th EDF) 
Interest-rate subsidies 
Investment Facility 
Subtotal 

Conditional billion 
TOTAL (6th to 9th EDFs) 

23 967 
107 
864 
6 431 
391 
2 541 
2 728 
723 
297 
3 862 
697 
38 
422 
1 100 
2 
125 
108 
53 

44 455 

188 
2 057 

2 245 
 123 

20 258 
105 
0 
5 338 
391 
2 541 
2 728 
723 
297 
3 862 
697 
38 
422 
1 100 
1 
125 
92 
9 

38 727  

38 
1 130 

1 167 

13 023 
61 
0 
3 344 
352 
2 198 
2 649 
722 
271 
3 477 
578 
32 
398 
1 100 
0 
109 
89 
0 

28 403 

38 
216 

254 

46 823 

39 894 

28 657 

Unlike the other figures presented in this document, the figures in this table are net 
figures, i.e. they take decommitals and recoveries into account. This is necessary to 
determine the level of available funds, which is by definition a net figure. 

9 
10 
11 
12 

Centre for the Development of Enterprise 
Technical Centre for Agricultural and Rural Cooperation 
Joint Parliamentary Assembly 
Technical assistance 

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ANNEX 2 

Breakdown of expenditure by instrument for the years 2004 and 2005 

EUR million 

2004 

2005 

Commitment
s 

Payments  Commitment

s 

Payments 

COMMISSION 

6th to 8th EDFs 
Indicative Programmes 
Excluding indicative programmes 
Interest-rate subsidies 
Emergency aid 
Aid for refugees 
Risk capital 
Mining products 
Stabex 
Structural adjustment facility 
Unexpended balances (4th + 5th 
EDFs) 
Implementation expenses 
Subtotal 

9th EDF + transitional measures 
Envelope A 
Envelope B 
Regional projects 
Intra-ACP Cotonou projects 
Implementation expenses 
DR Congo 
Other 
Subtotal 

-

-
-
-
-
-
9.6
-

-

-
9.6

1 739.5
230.2
134.1
413.6
1.8 
92.0
27.0
2 638.2

1 075.1

- 

887.7

9.8
2.5
26.9
143.3
27.4
7.3
89.7

11.2

16.4
334.5

654.7
144.4
12.3
158.9
 56.5
0.1
 27.7
1 054.6

- 
- 
- 
- 
- 
8.8 
- 

- 

- 
8.8 

2 806.3 
288.0 
217.2 
143.0 
7.3 
0.0 
40.5 
3 502.3 

0.4
1.9
9.4
60.8
15.0
70.8
15.9

5.6

1.9
181.6

950.5
192.8
23.8
131.5
54.0
89.2
33.2
1 475.0

Total managed by Commission 

2 647.8

2 464.3

3 511.1 

2 544.3

EIB (9th EDF) 

Investment Facility + interest-rate 
subsidies 
EDF TOTAL 

324.5

95.3

503.8 

154.5

2 972.3

2 559.6

4 014.9 

2 698.8

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Annex 3 – Commitments and Payments Made in 2005 and Forecast for 2006 and 2007 (EUR million) 

COMMITMENTS 

PAYMENTS 

Peace Facility 
Water Facility 
Other measures from the conditional billion 
Stabex (interest on secured accounts) 
Other 

Total for the Commission 
Investment Facility 
Interest-rate subsidies 

Total for EIB instruments (9th EDF) 
TOTAL 

Peace Facility 
Water Facility 
Other measures from the conditional billion 
Risk capital (*) 
Debt relief 
Other 
Subtotal 
Stabex 
DR Congo 

Total for the Commission 
Investment Facility 
Interest-rate subsidies 

Total for EIB instruments (9th EDF) 
TOTAL 

2005 

Actual 

COM Oct 
2005 (**) 

- 
80 
0 
10 
3 410 
3 500 
537 
60 
597 
4 097 

88 
5 
0 
117 
0 

2 245 
2 455 
52 
89 
2 596 
150 
40 
190 
2 786 

- 
80 
0 
9 
3 422 
3 511 
473 
31 
504 
4 015 

88 
5 
0 
61 
0 

2 230 
2 384 
71 
89 
2 544 
119 
35 
155 
2 699 

2006 

Adjusted 

2007 

Adjusted 

COM Oct 
2005 (**) 

0 
225 
330 
10 
2 835 
3 400 
511 
60 
571 
3 971 

45 
41 
44 
106 
60 

2 443 
2 739 
45 
0 
2 784 
200 
40 
240 
3 024 

COM Oct 
2005 (**) 

3 150 

3 350 

50 
185 
326 
10 
2 829 
3 400 
526 
60 
586 
3 986 

124 
44 
60 
82 
60 

2 297 
2 667 
83 
0 
2 750 
270 
45 
315 
3 065 

0 
190 
174 
10 
3 076 
3 450 
295 
100 
395 
3 845 

12 
89 
188 
71 
100 

2 300 
2 760 
90 
0 
2 850 
330 
80 
410 
3 260 

* Including interest-rate subsidies under the previous EDFs 

** As adjusted by the EIB (see Council doc. No 161/05 ACP) 

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Annex 4 – Financial Situation in 2005 and Forecast for 2006 and 2007 – Excluding Stabex and Special RD Congo Account(*) 
(EUR million) 

COM Oct 2005 (**) 

Commission 

EIB 
9th EDF 

TOTAL 

Commission 

Adjusted 
EIB 
9th EDF 

TOTAL 

Balance at 01/01/2005 

5
0
0
2

2004 contributions paid in 2005 
2005 contributions, of which: 
First tranche (***) 
Second tranche 
Third tranche 
Interest and other 
Recoveries 
Payments 
Balance at 31/12/2005 
  2005 contributions paid in 2006 
2006 contributions, of which: 

6
0
0
2

First tranche 
Second tranche 
Third tranche 
Interest and other revenue 
Recoveries 
Payments 
Balance at 31/12/2006 
2007 contributions 
Interest and other revenue 
Recoveries 
Payments 
Balance at 31/12/2007 
* Funds available for operations 
** as adjusted by the EIB (see Council doc. No 161/05 ACP) 

7
0
0
2

62 

42 
2 350 
1 360 
750 
240 
25 
42 
-2 455 
66 

2 690 
1 400 
1 000 
290 
10 
40 
-2 739 
67 

8 

290 
60 
250 
-20 

-190 
108 

140 
60 
60 
20 

-240 
8 

70 

42 
2 640 
1 420 
1 000 
220 
25 
42 
-2 645 
174 

2 830 
1 460 
1 060 
310 
10 
40 
-2 979 
75 

62 

42 
2 336 
1 360 
750 
226 
26 
55 
-2 384 
137**** 

14 
2 510 
1 400 
910 
200 
10 
60 
-2 667 
64 
2 690 
10 
60 
-2 760 
64 

6 

290 
60 
250 
-20 

-155 
141 

180 
60 
100 
20 

-315 
6 
410 

-410 
6 

68 

42 
2 626 
1 420 
1 000 
206 
26 
55 
-2 539 
278 

14 
2 690 
1 460 
1 010 
220 
10 
60 
-2 982 
70 
3 100 
10 
60 
-3 170 
70 

*** Of which EUR 180.4 million in 2005 contributions paid in at the end of December 2004 
**** Does not include EUR 1.4 million from 2006 contributions 

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Annex 5 

CONTRIBUTIONS TO THE EDF FOR 2006 (EUR) 

COUNTRY 

SCALE 

1st tranche 

2nd tranche 

3rd tranche 

TOTAL 

paid to 
the EIB 

paid to 

the Commission

payable to 
the EIB 

payable to 

the Commission

payable to 
the EIB 

payable to 

the Commission

% 

GERMANY 
BELGIUM 
DENMARK 
SPAIN 
FRANCE 
GREECE 
IRELAND 
ITALY 
LUXEMBOURG 
NETHERLANDS 
PORTUGAL 
UNITED KINGDOM 
AUSTRIA 
FINLAND 
SWEDEN 
TOTAL 

23.36 

14 016 000

327 040 000

23 360 000

212 576 000

4 672 000

46 720 000

628 384 000 

3.92 

2.14 

5.84 

2 352 000

1 284 000

3 504 000

54 880 000

3 920 000

29 960 000

2 140 000

35 672 000

19 474 000

784 000

428 000

7 840 000

105 448 000 

4 280 000

57 566 000 

81 760 000

5 840 000

53 144 000

1 168 000

11 680 000

157 096 000 

24.30 

14 580 000

340 200 000

24 300 000

221 130 000

4 860 000

48 600 000

653 670 000 

1.25 

0.62 

750 000

372 000

17 500 000

1 250 000

11 375 000

8 680 000

620 000

5 642 000

250 000

124 000

2 500 000

33 625 000 

1 240 000

16 678 000 

12.54 

7 524 000

175 560 000

12 540 000

114 114 000

2 508 000

25 080 000

337 326 000 

0.29 

5.22 

0.97 

174 000

4 060 000

290 000

2 639 000

58 000

580 000

7 801 000 

3 132 000

73 080 000

5 220 000

47 502 000

1 044 000

10 440 000

140 418 000 

582 000

13 580 000

970 000

8 827 000

194 000

1 940 000

26 093 000 

12.69 

7 614 000

177 660 000

12 690 000

115 479 000

2 538 000

25 380 000

341 361 000 

2.65 

1.48 

2.73 

1 590 000

37 100 000

2 650 000

888 000

20 720 000

1 480 000

1 638 000

38 220 000

2 730 000

24 115 000

13 468 000

24 843 000

530 000

296 000

546 000

5 300 000

71 285 000 

2 960 000

39 812 000 

5 460 000

73 437 000 

100.00  60 000 000

1 400 000 000 100 000 000

910 000 000 20 000 000

200 000 000 2 690 000 000 

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