Report from the Commission to the Council, the European Parliament and the European Court of Auditors - Annual Report on the Financial Management of the 6th-9th European Development Funds (EDFs) in 2006
Date: 2007-04-27
Institutions: European Commission
Subjects: European Development Fund, activity report, financial management, financial year

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.4.2007 
COM(2007) 240 final 

REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN 
PARLIAMENT AND THE EUROPEAN COURT OF AUDITORS 

Annual Report on the Financial Management of the 6th-9th European Development 
Funds (EDFs) in 2006 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

5. 

5.1. 

5.2. 

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

Highlights and Significant Events in 2006, Main Challenges for 2007....................... 3 

Financial Situation of the 6th-9th EDFs, Year-End 2006 ............................................ 4 

Delivering ACP Programmes in a Timely and Effective Way: Performance against 
Objectives in 2006 ....................................................................................................... 4 

Increase programmes' quality, impact and sustainability............................................. 4 

Deliver aid more quickly.............................................................................................. 7 

Co-ordinate and harmonise operations with other donors ......................................... 10 

Ensure an effective control environment and accountability..................................... 10 

Implement an active human resources policy and improve internal processes ......... 11 

Follow-up to comments by the European Court of Auditors..................................... 12 

Court of Auditors’ (CoA) Annual Report .................................................................. 12 

Court of Auditors’ Special Reports............................................................................ 12 

Annex 1: Evolution of unspent EDF commitments (“RAL”), 2001-06 (€m) .......................... 13 

Annex 2: EDF General Budget Support global commitments, 2002-06 (€m)......................... 14 

Annex 3: New EDF GBS and SPSPs global commitments, 2006 (€m) .................................. 15 

Annex 4: net commitments and payments, 2006 (€m)............................................................. 16 

Annex 5: EDF contributions to the UN and World Bank Group, 2005-06 (€m) ..................... 16 

Annex 7: Stabex – country-by-country situation, year-end 2006 (€)....................................... 18 

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1. 

INTRODUCTION 

This  report  fulfills  Articles  96  and  102  of  the  9th  European  Development  Fund 
(EDF)  Financial  Regulation.  These  require  the  Commission  to  report  each  year  on 
the EDF’s financial management. The Commission submitted an earlier draft of the 
report for review by the European Court of Auditors and the European Parliament’s 
Budgetary Control Committee. This final version takes their comments into account.  

2. 

HIGHLIGHTS AND SIGNIFICANT EVENTS IN 2006, MAIN CHALLENGES FOR 2007 

•  Financial objectives 2006 – the Commission met all its objectives, surpassing its 
target for contracts and payments, which were the highest ever. It also stabilised 
approved  but  unspent  funds,  with  significant  reductions  in  "old"  and  "dormant" 
commitments.  In  addition,  it  closed  the  6th  EDF  by  transferring  all  remaining 
funds to the 9th EDF.  

•  9th EDF end-of-term review - this was carried out in 2006, resulting in some final 
adjustments  to  the  allocation  of  funds  between  countries  and  regions,  which 
requires  completing  the  corresponding  commitments  of  the  remaining  9th  EDF 
funds in 2007, the 9th EDF’s last year. 

•  Internal  controls  and  processes  –  the  Commission  took  further  measures  to 
reinforce controls (see section 4.4 below), but EDF integration into the Common 
Relex  Information  System  (CRIS)  was  delayed  to  2008  so  as  to  prioritise  the 
Commission’s Accrual-Based Accounting (ABAC) system.  

•  Staffing  –  staff  turnover,  high  vacancy  rates  in  some  Delegations  and  declining 
staffing  levels  relative  to  amounts  managed  still  affect  some  priorities.  In  2006, 
the  Commission  continued  to  work  within  these  tight  constraints,  by  making 
sound financial management and quality its top priorities. 

•  10th  EDF  –  a  major  risk  for  EC  support  to ACP states is ratification of the 10th 
EDF by EU states in time to start committing 10th EDF funds from January 2008, 
when 9th EDF funds will no longer be available. 

•  Aid-for-trade – the Commission continued to provide substantial support; see box:  

Aid-for-trade: how the Commission is working to  
promote growth and jobs in ACP countries  

To lift themselves out of poverty permanently, ACP 
countries  must  be  able  to  grow  their  economies  and 
trade  more.  That’s  why  since  2001  the  Commission 
has provided:  

over  €850m  to  help  ACP  regions  integrate,  boost 
trade  and  play  a  bigger  part  in  world  markets;  this 
includes  negotiation  of  Economic  Partnership 
Agreements(EPAs) 

over  €35m  to  enable  ACP  states  to  negotiate  better 
with the EU and at the WTO;  

a further €60m to enable ACP states to draw up more 
effective trade policies.  

The  Commission  is  also  providing  over  €160m  in 
programmes  to  help  make  it  easier  to  set  up  and 
expand businesses in ACP countries. 

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3. 

FINANCIAL SITUATION OF THE 6TH-9TH EDFS, YEAR-END 20061 

The  table  below  shows  the  overall  financial  situation  for  the  6th-9th  EDFs  at  end 
2006.  An  amount  of  €3.16  billion  was  uncommitted.  This,  together  with 
decommitted funds, will all be committed before end 2007.  

 Table 1: Financial situation of the 6th-9th EDFs, year-end 2006 (€m) 

Funds allocated  
to ACP states (by EDF)2 
Total, 
9th  
6th-8th  
6th-9th 
c (a+b) 
b 
29 044  15 565 44 609 

A 

Funds 
committed

Funds 
spent 

Funds/commitments outstanding 

D 
41 446 

E 
31 165

Funds 
uncommitted 
f (c-d) 
3 163 

Commitments 
unspent (RAL) 
G (d-e) 
10 281 

Total remaining 
funds unspent 
h (f+g) 
13 444 

4. 

DELIVERING  ACP  PROGRAMMES 
PERFORMANCE AGAINST OBJECTIVES IN 2006 

IN  A  TIMELY  AND  EFFECTIVE  WAY: 

This  section  outlines  the  extent  to  which  the  Commission  met  each  of  its  2006 
objectives for the EDFs. It lists and reports on: 
•  objectives in the ACP section of EuropeAid’s Annual Management Plan, and 
•  relevant central performance indicators agreed by the EuropeAid Board.  

Figures  used  for  EuropeAid’s  performance  targets  and  OECD-DAC  reporting 
exclude decommitments and recovery orders, so are gross, not net. Similarly, figures 
in this section and in annex are gross, unless stated otherwise. 

4.1. 

Increase programmes' quality, impact and sustainability 

–  Reviewing all programmes at the identification and formulation stages  

EuropeAid’s  Quality  Support  Groups  (QSGs)  assess  operations  before  they  are 
implemented (ex-ante). QSG coverage rose sharply in 2006:  

Table 2: QSG review of EDF financing proposals, 2006 

Project  
cycle stage 
Identification 

Identification fiches reviewed 

Indicator 

2005 

2006  % change, year-

on-year 

Formulation 

Financing proposals reviewed 

Number  
Value (€m) 
Number  
Value (€m) 

84 
1270 
127 
3185 

156 
+86% 
2276  +79% 
+43% 
181 
-3% 
3094 

EuropeAid measures the QSG’s impact using a quality ratio. This is the proportion of 
positive and negative scores (A/B and C/D) given at the identification stage and then 
at the formulation stage. EuropeAid’s objective is to ensure the proportion of positive 
scores rises and the proportion of negative scores falls.  

1 In sections three and four, commitments and payments figures reflect a correction which the Commission mad 

in 2004 to figures for Stabex payments made between 2002 and 2004. 

2Throughout this report, figures:-include European Investment Bank (EIB) risk capital and related interest-rate 
subsidies  from  the  6-8th  EDFs,  because  the  Commission  holds  accounting  responsibility  for  these 
funds;  -exclude  the  EIB’s  Investment  Facility,  funded  from  the  9th  EDF,  because  the  EIB  holds 
accounting responsibility for the Facility. 

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The  table  below  shows  that  QSG  reviews  helped  to  improve  the  quality  of  project 
proposals, both in 2006 and year-on-year: 
•  in 2006, at the formulation stage, compared to the earlier identification stage; 
•  year-on-year, at both stages.  

Table 3: QSG impact on EDF project proposals’ quality, 2005-06  
- % of positive and negative scores awarded at each review stage 

Type of score 

2005 

2006 

Positive scores (A/B)  
Negative scores (C/D) 

Identification 
88 
12 

Formulation 
93 
7 

Identification 
90 
10 

Formulation 
95 
5 

After  the  formulation  stage,  the  Commission  improves  proposals  still  further,  by 
fulfilling the QSG’s recommendations before implementation starts. 

–  Continuing to invest in budget and sector support where appropriate  

The  2005  report  stated  that  general  budget  support  (GBS)  and  support  to  sector 
policies (SPSPs) peaked that year. Global commitments amounted to €1 120 million.  

In 2006, most 9th EDF budget support programmes were already underway. So new 
commitments were used mainly to address residual programmes or continue funding 
for  ongoing  programmes,  and  they  fell  as  a  result  year-on-year.  The  Commission 
approved GBS in 8 countries, amounting to €198 million, and SPSPs in 16 countries, 
totalling €421 million.  

Budget support remained significant, however: payments in 2006 amounted to €431 
million (see table below). In addition, the Commission continues to discuss policies 
to improve  budget support, both with beneficiary countries and in joint donor fora, 
such as the OECD-DAC Joint Venture on Public Financial Management. 

Table 4: New GBS and SPSPs, 2006 (€m) 

Type of programme 

General budget support 

Sector 
programmes 

policy 

support 

Total  

Commitments 

2006  % change 
198 

-72% 

2005 
500 

Payments 
2006  % change 
431 

-14% 

421 

1% 

162 

207 

28% 

2005 
705 

416 

1 120 

620 

-45% 

662 

638 

-4% 

In 2006, the Commission also:  
•  led  almost  half  the  assessments  of  Public  Expenditure  Financial  Accountability 

(PEFA) undertaken in 24 ACP countries; 

•  revised  the  Methodological  Guide  for  Budget  Support  -  this  provides  clearer 
criteria  for  identifying  whether  a  country  has  complied  with  eligibility  criteria 
before funds are disbursed;  

•  was  preparing  a  framework  to  provide  technical  support  to  Supreme  Audit 

Institutions in those countries benefiting from Budget Support. 

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–  Participating actively in End-of-Term Reviews and post-9th EDF programming 

The 9th EDF end-of-year review resulted in final adjustments to allocations between 
countries,  regions  and  sectors.  EuropeAid,  with  Delegations,  must  now  ensure  that 
all 9th EDF funds are committed by end 2007. At the same time, forward planning 
began for the launch of the 10th EDF. 

In addition, the Commission sought to ensure that it included concrete performance 
indicators  from  the  outset  of  the  10th  EDF  programming  process.  It  did  so  by 
referring specifically to such indicators in its:  

(1) 

programming guidelines – these also refer to: 

–  the need to strengthen partner countries' statistics-gathering capacity; and  
–  online support to help EC delegations identify indicators most relevant to them; 

(2) 

Implementing  Regulation  (currently  being  negotiated)  –  this  reiterates  the 
need to align with partner countries' PRSP indicators; 

(3) 

strategy documents – these include: 

–  sector-specific performance indicators  
–  ACP states’ commitments to improve governance. 

These indicators determine the size of incentive tranches and mid- and end-of-term 
reviews will assess progress.  

–  Monitoring  

Independent external monitors review every EDF-funded project amounting to over 
€1  million.  They  give  projects  scores  against  five  criteria:  relevance,  efficiency, 
effectiveness, impact and sustainability.  

By  year-end  2006  monitors  had  reviewed  over  1  000  such  projects.  In  2006,  they 
found  that  on  average,  ACP  programmes  reviewed  were  performing  on  track  or 
better (ie: scoring 2.5 or more). Draft findings suggest scores since 2003 have risen. 

In addition, the Commission asked the monitors to identify: 
•  trends in scores since 2003 by ACP sub-region and sector, such as infrastructure; 
•  reasons why scores for trade-related projects fell year-on-year in 2005-06. 

It will feed these findings back into its design of future programmes. 

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–  Evaluation 

In  2006  the  Commission  completed  13  evaluations  covering  EC  aid  to  ACP 
countries. It will feed recommendations back into the programming process and the 
design of future programmes. 

Table 5: Evaluations in 2006 of EC aid to ACP countries and regions  
Strategy 
type 

Countries 
/ region 

Sector 

Country 
/ region 
Regional   Central Africa 
Country  

Strategy 
type 
Sectoral 

ACP 
states  
ACP  & 
non-ACP 
states 

Microfinance 
Trade capacity-building 
Donor-partner country coordination 
Water and sanitation 
Good governance 

Comoros 
Mali 
Mauritius 
Rwanda 

. 

Seychelles 

General budget support 

Table 6: Key recommendations of 2006 evaluations  
Regional strategy  
– C. Africa:  

Country-specific:  

Sectoral 
– ACP 
only:  

Sectoral 
– ACP 
& non-
ACP 

Trade:  

Micro- 
finance:  
Budget 
support:  
Governance:  

Strengthen ties with neighbouring regional groupings (eg: CEDEAO) 
Improve quality of feasibility studies  
Hire more staff in delegations 
Use sector support for focal sectors identified in NIPs 
Factor in predictable delays in issuing instructions and starting works 
Invest more in developing a partnership-based strategy  
Coordinate aid more closely with EU MS 
Strengthen the Integrated Framework process 
Favour in countries where local government is weak 
Ensure programmes’ coherence with national/local priorities 
Use primarily to strengthen PFM and combat corruption 
Bring aid fully on budget as soon as possible 
Include administrative reform & PFM in PRSPs/CSPs/RSPs 
Use projects to support civil society, budget support for PFM 

4.2. 

Deliver aid more quickly 

In 2006, global commitments for new programmes achieved their target. Individual 
commitments,  i.e.  contracts  on  approved  programmes,  and  payments  both  ended 
ahead of target, setting new records for the EDF.  

Table 7: EDF key performance figures, 2002-06 (€m) 

Global commitments 
Individual commitments 
Payments 

2002 

2 125 
2 436 
1 922 

2003 

3 769 
3 062 
2 345 

2004 

2 648 
3 038 
2 464 

2005 

3 511 
3 057 
2 544 

2006  

Target 
3 400 
3 250 
2 750 

Actual 
3 408 
3 654 
2 826 

Since  1990,  both  global  commitments  and  payments  have  risen  steadily,  reflecting 
faster implementation: 

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EDF commitments and payments (1990-2006)
(gross amounts - nominal values)

€
0
0
0

5.000

4.000

3.000

2.000

1.000

0

DECISIONS 

1990

953

PAYMENTS 

1.257

1991

1.433

1.191

1992

2.236

1.984

1993

1.843

1.443

1994

2.689

1.860

1995

1.874

1.758

1996

1.538

1.509

1997

784

1.382

1998

2.606

1.595

1999

2.958

1.352

2000

4.006

1.640

2001

1.927

1.779

2002

2.125

1.922

2003

3.769

2.345

2004

2.648

2.464

2005

3.511

2.544

2006

3.408

2.826

–  Keeping RAL stable, focusing on contracts and old and dormant commitments 

4.2.1.1.  Keeping overall RAL stable  

Unspent commitments (or ‘RAL’, for reste à liquider) must be disbursed in line with 
the  rules  of  sound  financial  management.  The  Commission  monitors  overall  RAL 
attentively.  As  explained  in  the  2005  report,  RAL  rose  twice  in  2003  and  2005, 
because the Commission approved high levels of new commitments in both years.  

For 2006, the Commission’s objective was to stabilise overall RAL at the 2005 level: 
€10 300 million. Despite a high level of new commitments in 2005 and 2006, RAL 
was kept stable, thanks to the record level of payments entered in 2006. 

4.2.1.2.  Focusing on implementation and "old" and "dormant" commitments  

Timely  implementation  is  critical  to  achieving  programmes’  objectives.  In  ACP 
countries  this  can  be  difficult,  since  government  institutions  are  often  weak. 
However,  the  Commission’s  recent  efforts  to  improve  project  design  and  planning, 
streamline procedures and strengthen delegations are now yielding results.  

For example, the time taken to implement projects - measured by the ratio of RAL to 
annual payments – fell by over 30% between 2000 and 2006:  

Table 8: Average no. of years taken to implement projects (ratio of RAL to annual payments) 
2006 
3.6 

2001 
4.8 

2000 
5.5 

2002 
4.4 

2003 
4.1 

2004 
4.0 

2005 
4.1 

The Commission also continued to pay special attention to old and dormant RAL: 

Table 9: Evolution of old and dormant RAL, 2005-06 

Indicator 

Balance (€m) 

Comment 

Name 

Definition 

Old  
RAL  
Dormant 
RAL  

funds committed >5 years ago, 
still unspent 
funds committed but neither 
contracted nor spent in >2 years 

1.1.06 

1 618 

31.12.06 

Target 
867 

Actual  

822  Almost halved in 2006 

346 

350 

276 

Included disbursement to 
HIPC programme 

In  addition,  the  Commission  pursued  its  strategy  of  decommitting  all  outstanding 
commitments in time to recommit them by end 2007. The Commission is set to meet 
its decommitments target, set for end March 2007: 

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Table 10: EDF decommitments, 1.1.2006 to 1.3.2007 

Indicator 

Definition 

Amount (€m) 
2006  

2005  

Target  
(to 
31.3.07) 

Actual 
(to 1.3.07) 

Decommitments 

funds previously committed but unspent, 
now freed up for new programmes 

476 

923 

871 

Annex 1 presents a detailed breakdown of the evolution of unspent funds since 2002.  

Furthermore, the Commission: 
•  recovered €64 million in advance payments not subsequently used 
•  launched an action plan to monitor recovery orders and prefinancing.  
•  Annex 2 shows totals for:  
•  decommitments and recovery orders, and  
•  gross and net commitments and payments.  

4.2.1.3.  Spreading commitments evenly over the year (avoiding “backloading” at year-end)  

In  2005  and  2006  the  Commission  acted  to  spread  new  commitments  more  evenly 
over the year than in the past. As a result, in 2006 EDF backloading fell again, with 
58% of commitments completed by end September – just short of the 60% target. 

4.2.1.4.  Stabex3  

Part  of  the  RAL  comprises  Stabex  commitments  which  have  not  led  to  payments. 
The Commission has set strict deadlines for managing Stabex funds: 

Table 11: Stabex - Commission deadlines  

Action  

Complete approval of allocated but unspent funds 
Complete contracting  
Complete payments 

Deadline (year-end) 
2007 
2008 
2010 

Stabex funds are implemented through Frameworks of Mutual Obligations (FMOs). 
In  2006,  the  Commission  approved  17  FMOs,  amounting  to  €500  million  and 
transferred €190 million to double signature accounts (see below) 

In  its  2006  EDF  accounts  the  Commission  has  included  a  detailed  Stabex  table 
giving year-end balances for each beneficiary country.4  

However, in this report, Stabex figures given in Annex 7 are based on both: 
1. Stabex funds reported in the EDF accounts, and  
2. the 2006 year-end statements of beneficiary countries' so-called 'double signature' 
accounts  (from  property  of  the  beneficiary  ACP  state  concerned),  to  which  the 
Commission has already transferred some Stabex funds.  

3  Stabex  was  a  financial  instrument  created  by  the  Lomé  Convention  (Articles  186-212)  intended  to  offset 
instability  in  ACP  states’  export  earnings.  The  Cotonou  Agreement  replaced  Stabex  with  a  new 
instrument, Flex. 

4See document reference SEC/2007/448. 

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In 2007, the Commission will audit these accounts' statements and thereby certify the 
Stabex situation at year-end 2006.  

4.3. 

Co-ordinate and harmonise operations with other donors 

–  Sectoral concentration of EDF 

The  Commission  targets  EDF  spending  on  sectors  with  a  high  impact  on  poverty, 
and where the Commission can add most value: 

Table 12: EDF commitments and payments by OECD-DAC sector, 2006 (€m, gross)5 

Sector 

Education, health, water, basic sanitation 
Transport, communications, energy 
Agriculture, fisheries, trade, industry, tourism 
Environment, other cross-cutting issues 
Budget and balance of payments support6 
Debt relief  
Other, including reconstruction relief 
Administrative costs 
Total 

Commitments 

Payments 

€m  
1161 
933 
368 
324 
219 
0 
248 
154 
3 408 

% of total 
34% 
27% 
11% 
10% 
6% 
0% 
7% 
5% 
100% 

€m  
836 
663 
194 
91 
635 
80 
163 
193 
2826 

% of total 
29% 
23% 
7% 
3% 
22% 
3% 
6% 
7% 
100% 

–  Funding via International Organisations 

The  Commission  continued  to  work  closely  with  the  UN  family  and  World  Bank 
group  in  2006.  Amounts  contracted  in  2005-06  remained  relatively  stable  year-on-
year and accounted for about 11% of total contracting in the two years.  

In 2006 the Commission contracted: 
•  € 95 million with the WB, of which € 62 million went to the Global Fund to Fight 

Aids, Tuberculosis and Malaria; 
•  € 225 million with the UN family.  

Annex 3 shows commitments, contracts, payments and funds still to pay at year-end.  

The  Commission  also  continued  to  work  with  non-state  actors  and  civil  society,  as 
envisaged in Article 4 of the Cotonou Agreement.  

4.4. 

Ensure an effective control environment and accountability 

–  Closely monitoring transactions, using samples 

In 2006, EuropeAid responded to the Court’s recommendations by: 
•  reviewing its ex-post control methodology;  
•  reducing the share of payments controlled ex-post from three to one per cent;  
•  widening the scope of ex-post controls and documenting them more fully.  

5Annex 2 gives net EDF figures. 
6This OECD DAC sector definition includes some types of food security and Stabex operations. 

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Table 13: Ex-post control of transactions in 2006 – status, Jan. 2007 

No. of transactions  % of total transactions 

Total transactions  
Transactions for which controls planned 
- controls completed (transactions Jan-Jun 06) 
- controls due end Apr 07 (transactions Jul-Dec 06)  

21 654 
215 
95 

120 

100% 
1.0% 
0.4% 
0.6% 

In addition, the Commission: 
•  conducted  ex-post  controls  of  transactions  with  which  the  authorising  officer 

proceeded, despite reservations by the financial verifying officer; 

•  reviewed  transactions  and  internal  controls  in  situ  in  five  ACP  delegations 

identified through a risk analysis. 

–  Following up 100% of the IAS's key recommendations  

Recommendation 

Table 14: Follow-up of IAS recommendations 
Category  
Electronic  visas  as 
evidence of deputising 
of AOS functions  
Evidence  of  visas  in 
EDF financial circuits  

Adapt  electronic  OLAS  visas 
to comply with new circuits. 

Examine  OLAS  functionality 
to support electronic visas. 

Progress to year-end 2006 
Migration  from  OLAS  to  CRIS/ABAC  has  been 
delayed until end 2007. So no progress has been made 
since Mar. 06.  
A  new  OLAS  facturier,  launched  1.1.2007,  covers 
Initiating and Verifying Officers’ visa circuits.  

4.5. 

Implement an active human resources policy and improve internal processes 

–  Implement an active human resources policy  

Staff  turnover,  high  vacancy  rates  in  some  Delegations  and  low  levels  of  staffing 
relative to the amounts managed still affect some priorities. In 2006 the Commission 
continued  to  work  within  these  tight  constraints,  by  making  sound  financial 
management and quality its top priorities. 

Table 15: EuropeAid staff vacancy rates: HQ ACP directorate & ACP delegations, 2005-06 
Location 

Year-end vacancy rate 

Staff type 

ACP delegations 

Headquarters  
(ACP Directorate) 

Officials 
Other staff 
Officials 
Other staff 

2005 
5% 
9% 
2% 
1% 

2006 

7% 
9% 
0% 
1% 

–  Harmonise and simplify management practices and procedures 

The  Commission  presented  to  the  Council  a  revision  of  the  Financial  Regulation 
applicable  to  the  9th  EDF.  This  lightens  procedures  for  working  with  EU  Member 
and  mirrors  a  similar  revision  to  the  General  Financial  Regulation.  The  Council 
adopted  the  revised  EDF  financial  regulation  in  March  2007.  The  Commission 
intends to introduce further simplifications in its 10th EDF procedures.  

–  Further develop information systems and improve accounting systems 

The EDF has still to be integrated into CRIS. In addition, the introduction of ABAC-
FED has been delayed until 2008.  

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5. 

FOLLOW-UP TO COMMENTS BY THE EUROPEAN COURT OF AUDITORS 

5.1. 

Court of Auditors’ (CoA) Annual Report 

Table 16: Follow-up to CoA recommendations (Table 3, CoA Annual Report on the EDFs, 2006)  
Issue 
1. Advances,  
recoveries, 
doubtful debts 
2. Stabex 
funds 

Action taken to end 2006 
The Commission launched an action plan in 2006 to 
monitor centrally recovery orders and prefinancing. 

Action required  
Improve monitoring of uncleared 
advances.  

3. Risk 
management  

4. Ex-post 
controls  
5. Audit  

The Commission is preparing an updated inventory of all 
funds in Europe and ACP states.  

Obtain more reliable figures for 
funds in banks. 
Obtain reports on the use of funds.  The Commission received 38 of 39 reports due for 2006. 
EuropeAid’s ACP directorate compiled ACP-specific risk 
Identify risks specific to ACP 
registers for 2006 and 2007.  
states 
In  2006  AIDCO  prepared  a  risk-based  2007-09  rolling 
Improve risk analysis for IAC 
audit plan, and sent it to the IAS and to the Court. 
audits  
EuropeAid ACP Directorate’s Annual Audit Plan 2007 
Improve risk analysis for external 
covers all external audits in delegations and HQ. The 
audits (HQ, delegations) 
directorate’s financing and contracting unit (C5) issued 
risk analysis guidelines, and instructions drawn up by 
EuropeAid’s audit methodology unit (G2).  
EuropeAid’s audit methodology unit (G2) conducted risk 
analysis for the whole DG of the sample size and types of 
transactions to be checked.  
For the 2006 exercise, EuropeAid has prepared full 
documentation and ensured systematic follow-up. 
In its response to 2006 EAMRs, HQ reminded 
delegations of the Director-General’s instruction note 
stressing the importance of CRIS-Audit. 

Improve CRIS-Audit 
Use CRIS-Audit to supervise 
external audits better 

Improve risk analysis for ex-post 
controls  

Improve documentation  

5.2. 

Court of Auditors’ Special Reports 

Table 17: EDF budget support – public finance aspects (no. 2/2005, in 2004 EDF Discharge, para. 55) 
No.   Area 

Recommendation 
Update  and  complete, 
incl. monitoring reports 

55 

Methodological 
guide 

Eligibility 

Indicators 

Coordination 
ACP 
institutions 

states’ 

Give  clearer  evidence  of 
countries’ eligibility 

new 

PFM 

Use  enhanced-incentive 
PF 
performance 
indicators 
Use 
performance 
management tool 
Cooperate more locally 
Strengthen  relations  with 
parliaments  &  supreme 
audit institutions (SAIs) 

Action taken in 2006 
The Commission has updated its Methodological Guide: 
- clearer definitions  
- potential benefits and risks  
- clearer eligibility criteria 
- practical steps to prepare & implement programmes 
- guidance on using the PEFA assessment tool.  
Delegations must report each year on the status of public 
finance management. The Commission has also revised: 
- the format of Identification Fiches  
- checklists to assess Fiches and Financing Proposals. 
Evidence of compliance with eligibility criteria is: 
- assessed at the identification and formulation stages; 
- required before funds are disbursed.  
-  The  Commission  and  other  donors  completed  the 
Public  Expenditure  Financial  Accountability  (PEFA) 
framework in 2005.  
-  The  Commission  is  using  PEFA  to  replace  current 
tools, leading almost half of all 2006 PEFA assessments. 
-  The  EC  also  continues  to  use  the  OECD/DAC  Joint 
Venture on Public Financial Management. 
The Commission is: 
- drafting a note to promote technical support to SAIs; 
- discussing cooperation with international organisations 
such as INTOSAI. 

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Annex 1: Evolution of unspent EDF commitments (“RAL”), 2001-06 (€m)  

Type of unspent commitment 
(or ‘RAL’) 

Measure 

2002 

2003 

2004 

2005 

2006 

Year 

Status 

Known as 

≥5 years old  

‘old RAL’  

Committed 
before 
Committed in 

Total 
Change in total 
over year  

Inactive for ≥2 
yrs  
≥5 years old 
&/or  
inactive for ≥2 
yrs 
Total, all types  

‘dormant RAL’  

Total  

‘old &/or  
dormant RAL’  

Total 
Change in total 
over year  

‘total RAL’ 

All years 

1 
Jan 

31 
Dec 

1 
Jan 

31 
Dec 

1 
Jan 

31 
Dec 

1 
Jan 

31 
Dec 

1 
Jan 

31 
Dec 
Target Actual 

520
245
319
- 
- 

- 
1 084

389
1 473

‘95 
‘95 
‘96 
‘97 
‘98 
‘99 
2000 
€m 

€m 
% 

€m 
€m 
€m 

% 
€m 

429
183
210

429
183
210
194

323 
118 
145 
156 

323
118
145
156
427

253
72
91
128
286

253 
72 
91 
128 
286 
692 

141
49
54
112
181
488

822

1 016

743 

1 170

829

1 521  1 025

-262
-24%

449
1 271
-202

-14%
8 728

449
1 465

-273 
-27% 

261 
1 004 
-461 

-31% 
9 842 

255
1 425

-341
-29%

513
1 342
-83

-6%
9 779

-496
-33%

459 

487
1 980  1 512
-468

-24%
10 324

141 
49 
54 
112 
181 
488 
593 
1 618 

45
25
25
90
75
295
220
867

346 
1 964 

350
1 125

37
22
21
86
78
287
290
822

-796
-49%

276
1097
-867

-44%
10 281

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Annex 2: EDF General Budget Support global commitments, 2002-06 (€m) 

Country 

2002 

2003 

2004 

2005 

2006 

Benin 
Burkina Faso 
Burundi 
Cameroon 
Cape Verde 
Central African Republic 
Chad 
Côte d'Ivoire 
DR Congo 
Congo, Rep. 
Djibouti 
Dominican Republic 
Ethiopia 
Gabon 
The Gambia 
Ghana 
Guinea 
Guinea Bissau 
Guyana 
Haiti 
Jamaica 
Kenya 
Lesotho 
Madagascar 
Malawi 
Mali 
Mauritania 
Mozambique 
Niger 
Papua New Guinea 
Rwanda 
São Tomé & Príncipe 
Senegal 
Sierra Leone 
Tanzania 
Turks & Caicos 
Uganda 
Vanuatu 
Zambia 
Annual totals 
% of EDF annual global commitments 

55.0 

18.4 

151.5 
7.82 

43.6 

5.8 

12.5 

125.0 
22.6 

4.4 

40.0 
5.5 

50.0 

106.0 

30.45 

6.0 

55.0 
41.5 

95 
70.0 

36.0 

50.0 
57.0 

92.0 

44.1 

95.0 

5.0 

62.0 

30.0 

70.0 

168.0 
20.0 

132.9 

16.4 
90.0 

55.1 

114.0 

23.3 

25.0 
125.0 

35.0 

53.0 

1.7 

117.0 
741.4 
20% 

529.6 
25% 

469.4 
18% 

704.8 
20% 

4.0 

38.0 

10.2 

34.0 
21.1 

10.6 

62.0 
198.3 
6% 

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Annex 3: New EDF GBS and SPSPs global commitments, 2006 (€m) 

Recipient country 

Sector 

Amount 

Target 

Result 

Programme 
type 

Financing 
type 

General 
budget support  
(GBS) 

Budget  
Support 

Benin 

Central African Republic 

Dominican Republic 

Haiti 

Malawi 

Mali 

Mali 

Turks & Caicos 

Zambia 

Sub-total, macroeconomic budget support  

262 

Sector 
policy 
support 
programmes 
(SPSPs) 

Sectoral 
budget  
support  
(SBS) 

Anguilla 

Angola 

Burkina Faso 

Dominican Republic 

Standard 
project 
financing 

Ethiopia 

Falklands 

Grenada 

Guinea-Bissau 

Mauritius 

Montserrat 

Mozambique 

St Pierre & Miquelon 

St Helena 

Tanzania 

Trinidad & Tobago 

Zambia 

Zambia 

Sub-total, SBS 

Benin 

Djibouti 

Ethiopia 

Gabon 

Ghana 

Ghana 

Lesotho 

Liberia 

Malawi 

Madagascar 

Madagascar 

Niger 

Niger 

Niger 

Rwanda 

Water 

Education 

Infrastructure 

Trade 

Trade 

Water 

Education 

Education 

Infrastructure 

Health 

Infrastructure 

Infrastructure 

Infrastructure 

Infrastructure 

Health 

Education 

Infrastructure 

Infrastructure 

Infrastructure 

Justice 

Infrastructure 

18 

4 

38 

10 

34 

20 

1.1 

11 

62 

198 

8 

7 

2 

48 

155 

3 

7 

6 

10 

11 

35 

13 

16 

44 

27 

20 

10 

616 

421 

40 

11 

60 

14 

10 

5 

12 

12 

8 

13 

23 

6 

6 

12 

35 

Sub-total, standard projects  

335 

266 

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Sub-total, SPSPs 

Total 

951 

1213 

687 

885 

Annex 4: net commitments and payments, 2006 (€m) 

Global 
commitments 

Individual 
commitments 

Payments 

New global commitments (gross) 
De-commitments 
Net global commitments 
New contracts (gross) 
Contracts decommitted/cancelled 
Net individual commitments 
New payments (gross) 
Recoveries & corrections received7 
Net payments 

3 408 
-689 
2 719 
3 654 
-581 
3 073 
2 826 
-64 
2 762 

Annex 5: EDF contributions to the UN and World Bank Group, 2005-06 (€m) 

UN 
family 

Recipient 

FAO  
ILO 
UNCTAD 
UNDP  
UNDP Rep. Offices 
UNESCO  
UNFPA 
UNICEF 
UNIDO 
UNO Geneva 
UNO Vienna 
UNOPS 
WFP 
WHO 
Sub-total  

World Bank Group 
Total  

2005 
New 
commitments 
6.4 
5.5 

New 
commitments 
13.1 

87.8 

0.3 

42.4 
1.2 

24.7 
2.7 
34.7 
6.5 
212.2 
149.0 
361.2 

2.9 
110.6 

0.1 
19.6 
39.2 

0.1 
13.8 
24.8 
224.2 
94.5 
318.7 

2006 

Contracted 

Paid 

Still to pay  

2.1 

2.9 
108.8 
2.4 

19.6 
40.3 

0.2 

22.0 
24.8 
223.0 
94.0 
317.0 

0.8 

1.2 
80.5 
1.4 

10.1 
14.8 

0.1 

19.7 
3.4 
132.0 
75.9 
207.9 

1.3 

1.7 
28.3 
1.0 

9.5 
25.4 

0.0 

2.3 
21.5 
91.0 
18.1 
109.1 

7 

The EDF financial implementation report shows recoveries and corrections received. 

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Annex 6: EDF global commitments by programming & financing instrument, end 2006 (€m)  

EDF 

Non-programmable aid 

Total 

Non-
budget 
support 
(projects) 

Budget support 

General 

Sectoral 

6 

€m 

5,158.06 

% of total 

70% 

60.73 

1% 

7 

€m 

6,003.90 

1,626.21 

% of total 

56% 

15% 

- 

- 

Subtotal 
budget 
support 

60.73 

1% 

Sub-total 
programmable 
aid 

5,218.79 

71% 

1,626.21 

7,630.11 

15% 

72% 

Financial contributions 

Export support 

Stabex, 
Flex 

Sysmin 

Sub-total non 
programmable 
aid 

540.71 

7% 

839.01 

8% 

- 

1,451.12 

128.10 

2,119.93 

7,338.72 

40.00 

0% 

20% 

2% 

29% 

100% 

1,702.69 

443.11 

3,024.81 

10,654.92 

16% 

4% 

28% 

100% 

8 

9 

€m 

5,992.27 

1,778.55 

253.61 

2,032.16 

8,024.43 

1,134.27 

1,060.00 

717.35 

114.24 

3,025.86 

11,050.29 

% of total 

54% 

16% 

2% 

18% 

73% 

€m 

8,721.10 

1,974.56 

956.68 

2,931.24 

11,652.34 

% of total 

70% 

16% 

8% 

24% 

94% 

10% 

- 

10% 

630.00 

5% 

6% 

119.64 

1% 

1% 

- 

27% 

749.64 

6% 

100% 

12,401.98 

100% 

€m 

All, 
6-9  % of total 

25,875.33 

5,440.05 

1,210.29 

6,650.34 

32,525.67 

2,513.99 

1,730.00 

3,990.81 

685.45 

8,920.24 

41,445.91 

62% 

13% 

3% 

16% 

78% 

6% 

4% 

10% 

2% 

22% 

100% 

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Annex 7: Stabex – country-by-country situation, year-end 2006 (€)  

Beneficiary  
country 

Global 
Commitments 

Individual 
Commitments 

Benin 
Burkina Faso 
Burundi 
Cameroon 
Cape Verde 
Central African Rep. 
Chad 
Comoros 
Côte d'Ivoire 
Dominica 
Eq. Guinea  
Ethiopia 
Gambia 
Ghana 
Grenada 
Guinea-Bissau 
Haiti 
Jamaica 
Kenya 
Kiribati 
Lesotho9 
Madagascar 
Malawi 
Mauritania 
Mozambique 
Papua New Guinea 
Rwanda 
Samoa 
Senegal 
S. Leone 
Solomon Is.  
St. Lucia 
St. Vincent 
Sudan 
Tanzania 
Togo 
Uganda 
Vanuatu 
Zimbabwe 
Total 

(1) 
2,281,022 
9,126,422 
75,401,955 
308,716,655 
2,365,206 
18,774,155 
14,032,940 
8,057,525 
366,657,647 
41,818,410 
2,471,789 
239,688,822 
5,306,334 
59,796,247 
8,756,549 
1,775,942 
38,430,119 
10,150,868 
195,083,412 
908,379 
6,333,600 
91,191,845 
23,173,151 
38,936,337 
4,488,494 
85,402,166 
66,621,918 
13,654,244 
77,737,318 
15,267,927 
91,990,577 
79,815,963 
76,199,758 
201,054,264 
104,137,377 
34,027,821 
218,440,992 
5,032,066 
60,372,275 
2,703,478,491 

(2) 
2,274,819
9,101,820
36,929,953
308,574,512
1,937,563
16,137,220
12,948,972
7,957,741
364,907,313
42,084,082
1,435,472
238,825,667
3,720,104
59,796,247
7,436,088
762,844
38,430,119
9,489,254
198,235,985
908,379
6,333,600
90,744,189
22,552,308
11,513,882
0
95,158,547
22,996,883
6,555,971
51,245,000
15,267,927
126,856,928
60,788,987
72,123,084
201,054,264
102,929,859
44,165,571
218,440,991
3,959,176
31,720,308
2,546,301,629

…contracter 
(RAC)8 
(3)=(1) - (2) 
6,203
24,602
38,472,002
142,143
427,643
2,636,935
1,083,968
99,784
1,750,334
-265,672
1,036,317
863,155
1,586,230
0
1,320,461
1,013,098
0
661,614
-3,152,573
0
0
447,656
620,843
27,422,455
4,488,494
-9,756,381
43,625,035
7,098,273
26,492,318
0
-34,866,351
19,026,976
4,076,674
0
1,207,518
-10,137,750
1
1,072,890
28,651,967
157,176,862

Reste à…  

…payer  
(RAP) 
(4) = (5) - (3) 
210,867 
757,332 
-8,009,429 
19,396,040 
809,913 
1,136,767 
514,161 
1,753,994 
46,146,487 
268,921 
157,233 
67,087 
200,396 
4,615,374 
1,905,307 
-18,326 
0 
135,551 
63,860,715 
271,853 
312,928 
18,353,465 
3,835,856 
0 
0 
10,721,389 
-28,637,197 
-7,078,081 
26,791,515 
4,378,326 
53,733,059 
1,424,808 
10,026,867 
176,801,045 
16,269,276 
26,810,251 
41,530,336 
-995,990 
-7,768,681 
480,689,415 

…liquider 
(RAL) 
(5) 
217,070
781,934
30,462,573
19,538,183
1,237,556
3,773,702
1,598,129
1,853,778
47,896,821
3,249
1,193,550
930,242
1,786,626
4,615,374
3,225,768
994,772
0
797,165
60,708,142
271,853
312,928
18,801,121
4,456,699
27,422,455
4,488,494
965,008
14,987,838
20,192
53,283,833
4,378,326
18,866,708
20,451,784
14,103,541
176,801,045
17,476,794
16,672,501
41,530,337
76,900
20,883,286
637,866,277

8  For  Dominica,  the  figure  is  negative  because  new  FMOs  have  amended  past  FMOs,  resulting  in  an  over-

allocation of funds. For other countries, negative figures result from decommitments. 
9 An audit of funds at year-end 2006 is currently underway, so figures shown here are for year-end 2005. 

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EN 

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