COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament and the Council Mid-term review/revision of the multiannual financial framework 2014-2020 An EU budget focused on results
Date: 2016-09-14
Institutions: European Commission, Secretariat-General
Subjects: budgetary discipline (EU), budgetary procedure, commitment of expenditure, financial management, general budget (EU)

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 14.9.2016  SWD(2016) 299 final   COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament and the Council Mid-term review/revision of the multiannual financial framework 2014-2020  An EU budget focused on results {COM(2016) 603 final}  
 
 
Table of Contents 

1. 

INTRODUCTION ....................................................................................................... 4 

2.  WHERE  WE  SPEND:  FOCUSING  THE  BUDGET  FURTHER  ON  JOBS 
AND  SUSTAINABLE  GROWTH  AND  RESPONSE  TO  NEW 
CHALLENGES ........................................................................................................... 6 

2.1.  Tackling the economic crisis and investment gap ............................................. 7 

2.1.1.  Kick-starting spending for jobs and growth ........................................ 7 

2.1.2.  Mobilising cohesion investment for jobs and growth ......................... 9 

2.1.3.  Sustainable Growth: Natural Resources ............................................ 11 

2.2.  Addressing the refugee crisis ........................................................................... 12 

2.2.1.  Protecting the EU external borders .................................................... 13 

2.2.2.  Challenges inside the EU ................................................................... 13 

2.2.3.  External challenges ............................................................................ 14 

2.3.  Addressing  security  and  development  concerns  inside  the  EU  and  in 

its neighbourhood ............................................................................................ 18 

2.3.1.  Macro-Financial  Assistance  to  avoid  economic  instability  in 

the EU neighbourhood ....................................................................... 18 

2.3.2.  EIB External Lending Mandate ......................................................... 18 

2.3.3.  Security and Defence ......................................................................... 19 

2.4.  Addressing climate change .............................................................................. 20 

3.  HOW WE SPEND: IMPROVING THE FLEXIBILITY OF THE BUDGET 

AND MAXIMISING ITS IMPACT ......................................................................... 21 

3.1. 

Improving  the  flexibility  of  the  EU  budget  to  respond  to  unforeseen 
events ............................................................................................................... 22 

3.2.  Leveraging the EU budget ............................................................................... 23 

3.2.1.  Financial instruments and EFSI ......................................................... 23 

3.2.2.  Trust Funds ........................................................................................ 25 

3.3. 

Improving the conditions for an effective use of EU funds ............................ 26 

3.3.1.  Linking effectiveness of European Structural and Investment 

Funds to sound economic governance ............................................... 26 

3.3.2.  Simplifying the delivery of the EU Budget ....................................... 28 

3.3.3. 

Improving the interoperability of funds, financial instruments 
and EFSI ............................................................................................ 30 

4.  HOW  WE  ARE  ASSESSED:  PERFORMANCE,  ACCOUNTABILITY 

AND MULTIANNUAL ERROR RATES ................................................................ 30 

4.1.  Towards a reinforced EU Performance Budgeting System ............................. 30 

4.2.  Accountability and reporting ........................................................................... 31 

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4.3.  Multiannual error rates .................................................................................... 32 

5.  BUDGETARY AVAILABILITIES IN THE 2014-2020 MFF ................................ 33 

5.1.  Financing needs for the initiatives proposed by the Mid-Term Review ......... 33 

5.2.  Budgetary availabilities in the remainder of the 2014-2020 MFF .................. 34 

5.3.  Sufficiency of payment ceilings ...................................................................... 34 

6.  TOWARDS THE NEXT MULTIANNUAL FINANCIAL FRAMEWORK ........... 35 

6.1.  Context of the next MFF ................................................................................. 35 

6.2.  Duration of the next MFF ................................................................................ 36 

6.3.  EDF budgetisation ........................................................................................... 36 

6.4.  Potential new spending areas: defence and security ........................................ 37 

6.5.  Own resources ................................................................................................. 37 

6.6.  Completing Europe's Economic and Monetary Union .................................... 38 

ANNEXES ........................................................................................................................ 39 

ANNEX 1: MFF 2014-2020 .............................................................................................. 39 

ANNEX 2: CLIMATE TRACKING OF 20 % TARGET ................................................ 41 

ANNEX 3: EUROPEAN UNION TRUST FUNDS ......................................................... 43 

ANNEX 

4: 

SCHEMATIC  VIEW  OF  ESI 

FUNDS  MACRO-

CONDITIONALITY ................................................................................................. 47 

ANNEX 5: SIMPLIFICATION SCOREBOARD ............................................................ 48 

ANNEX 6: MEDIUM-TERM PAYMENTS FORECAST ............................................... 51 

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1. 

INTRODUCTION 

the  Commission's 
The  present  Staff  Working  Document  accompanies 
Communication  on  the  mid-term  review/revision  of  the  multiannual  financial 
framework 2014-2020 – An EU budget focused on results1.  

The multiannual financial framework (MFF) for 2014-2020 provides for EUR 1087 
billion  in  commitment  appropriations  and  for  EUR  1025  billion  in  payment 
appropriations (in current prices)2. In commitments, this represents about 2.1 % of 
EU Member States’ total government expenditure and 1.04 % of EU gross national 
income. 

The MFF provides a stable funding framework for programmes which contribute to 
the achievement of the Europe 2020 strategic long term objectives3 in the areas of 
competitiveness  for  jobs  and  growth,  economic,  social  and  territorial  cohesion, 
sustainable  growth  and  natural  resources,  security  and  citizenship  and  external 
action  (Global  Europe).  The  focus  on  political  priorities  is  further  reflected  in  the 
Commission's  Agenda  for  Jobs,  Growth,  Fairness  and  Democratic  Change,  which 
highlights  the  ten  policy  areas  where  action  will  be  pursued  during  the  current 
mandate in order to prepare Europe for the global challenges ahead4. 

The 2014-2020 MFF has brought about some significant improvements in terms of 
how EU money is spent, notably: 

–  Competitiveness, EU value-added and strengthened conditionality: the share 
of the budget spent in programmes considered to bring the highest added value in 
terms of  jobs  and  growth and  enhancing  competitiveness has  been  significantly 
increased.  This  has  been  notably  the  case  for  Horizon  2020  programme  for 
research  and  innovation  and  the  new  Connecting  Europe  Facility  that 
supports the development of trans-European networks in the fields of transport, 
energy  and  digital  services.  It  is  also  the  case  of  Erasmus+,  with  a  strong  EU 
value-added  in  its  transnational  mobility  activities,  contributing  to  skills 
development,  employability  of  students  and  less  likelihood  of  unemployment. 
Moreover,  new  provisions  have  been  introduced  for  the  implementation  of  the 
European Structural and Investment Funds to improve their effectiveness and 
European  added  value, notably  by concentrating  resources  on  key  Europe  2020 
objectives,  establishing  a  performance  framework  based  on  measurable 
indicators and targets linked to the release of a performance reserve, introducing 
ex-ante conditionalities as well as creating closer linkages with the EU economic 
governance and the European Semester process.  

1   COM(2016)603 of 14.9.2016. 
2   Annex 1 shows the commitment appropriations per main categories of spending (headings) in % of the 
total and in current prices, based on the most recent Technical Adjustment of the MFF; COM(2016) 
311 final of 30.6.2016. 

3   The Europe 2020 Strategy fixes five targets for the EU in 2020: (1) Employment: 75% of the 20-64 
year-olds to be employed, (2) R&D / innovation: 3% of the EU's GDP (public and private combined) 
to be invested in R&D/innovation; (3) Climate change/energy: greenhouse gas emissions 20% (or even 
30%, if the conditions are right) lower than 1990, 20% of energy from  renewables,  20% increase in 
energy efficiency; (4) Education: Reducing school drop-out rates below 10%, at least 40% of 30-34–
year-olds  completing  third  level  education;  (5)  Poverty/social  exclusion:  at  least  20  million  fewer 
people in or at risk of poverty and social exclusion. 

4   http://ec.europa.eu/priorities/sites/beta-political/files/juncker-political-guidelines_en.pdf.  

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–  Common  Agricultural  Policy  (CAP):  the  support  to  farmers  through  the  CAP 
includes  more  public  policy  objectives  than  in  the  past,  notably  on  promoting 
sustainable management of natural resources and climate action. 

–  Climate  mainstreaming:  overall,  at  least  20%  of  the  EU  budget  should 
contribute to the fight against the causes and consequences of climate change.  

–  Performance  budgeting:  a  performance  budgeting  system,  aligned  on  the 
Europe 2020 strategy, has been established. Performance benchmarks have been 
embedded  in  the  legal  bases  of  multiannual  programmes,  including  a  set  of 
clearly defined objectives, indicators, milestones and long-term targets, which are 
reported on, both ex-ante and ex-post, at the time of the draft budget.  

–  Simplification: progress has been made in reducing the number of programmes 
and  instruments  and  grouping  some  of  them  under  a  common  framework  with 
uniform rules, simplifying procedures for application and declaration of costs by 
financial 
final  beneficiaries, 
instruments, and improving the cost-efficiency of controls.  

the  deployment  of 

facilitating 

innovative 

–  Flexibility:  the  introduction  of  new  instruments  allows  for  shifting  available 
margins  between  headings  and  years,  which  represents  a  major  step  forward  in 
terms  of  flexibility  within  the  total  MFF  ceilings  to  accommodate  evolving 
needs.  

–  Leveraging: the MFF 2014-2020 and the related spending programmes have also 
laid down the foundations for a more systematic use of financial instruments as a 
means  to  leverage  the  EU  budget's  impact,  and  authorised  the  setting-up  of 
European Union Trust Funds in the external policy area.  

Building  on  this,  the  Commission  has,  in  2015,  launched  the  Budget  focused  on 
results initiative which aims at further improving the impact and performance of the 
EU budget5 and which is framed around four key questions: 

–  "Where  we  spend":  the  EU  budget  should  invest  in  programmes  delivering 
European  added  value  and  contributing  to  implementing  the  Union's  overall 
strategy and priorities. Moreover, it should be able to respond to new challenges 
and  to  address  multiple  objectives  (e.g.  climate  mainstreaming,  conditionality 
and alignment with country-specific recommendations). 

–  "How we spend": the EU budget must ensure swift and efficient delivery on the 
ground  by  building  on  the  simplification  of  delivery  mechanisms  already 
achieved,  in  particular  in  the  research  area,  ensuring  more  efficiency  in  the 
budget  implementation  at  Commission,  Member  State  and  project  level, 
achieving  a higher financial leverage from the EU budget  and providing  better 
incentives to achieve results through performance reserve and conditionality. 

–  "How  is  performance  assessed":  beyond  guarantees  on  sound  financial 
management  in  line  with  the  legal  and  regulatory  requirements,  public 
accountability  requires  transparency  and  adequate  reporting  on  how  the  EU 
the 
budget  contributes 

the  Union's  political  priorities.  Furthermore, 

to 

5   See: http://ec.europa.eu/budget/budget4results/index_en.cfm. 

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Commission, together with the Member States, will aim to bring down the error 
rate, taking into consideration multi-annual corrections, to below 2%.  

–  "How  we  communicate":  improving  information  and  communication  on  the 
results  achieved  by  EU  spending  is  crucial  for  strengthening  the  citizens' 
confidence  in  the  ability  of  the  EU  to  provide  added  value  and  contribute  to 
economic and social welfare and tackling global challenges.     

The work undertaken under this initiative has helped framing the assessment made 
of  the  functioning  and  implementation  of  the  MFF  at  mid-term6  with  a  view  to 
taking  stock  of  progress  made  in  modernising  the  budget  and  to  seeking  further 
improvements,  along  three  main  lines:  further  improving  the  budget's  focus  on 
policy priorities and new challenges (Chapter 2) and its efficiency and flexibility in 
mobilising  and  delivering  funding  to  respond  to  evolving  needs  (Chapter  3),  and 
demonstrating results (Chapter 4).  

Chapter 5 summarises the financing needs for further aligning the EU budget's to 
the  political  priorities  and  assesses  the  sufficiency  of  the  MFF  ceilings.  Chapter  6 
addresses  issues  of  particular  relevance  for  the  preparation  of  the  next  MFF,  for 
which the Commission will have to present proposals before 1 January 2018.  

2.  WHERE  WE  SPEND:  FOCUSING  THE  BUDGET  FURTHER  ON  JOBS  AND  SUSTAINABLE 

GROWTH AND RESPONSE TO NEW CHALLENGES  

In  the  first  years  of  implementation,  the  MFF  has  contributed  to  address  the 
challenges  the  EU  is  facing,  notably  the  economic  crisis  and  the  resulting 
investment  gap,  the  refugee  crisis,  the  internal  and  external  security  concerns,  as 
well as climate change.  

In  this  context,  to  take  account  of  the  difficult  situation  of  Member  States  who 
suffered  most  from  the  crisis,  the  Member  States'  cohesion  allocations  were 
reviewed in June 2016 and, where appropriate, adjusted for the years 2017-2020 on 
the basis of the most recent statistics available.  

As  announced  in  the  technical  adjustment  of  the  MFF  for  20177,  the  Commission 
has engaged in discussions with Member States who benefit most of the adjustment 
of  cohesion  policy  envelopes  with  a  view  to  focusing  the  additional  amounts  on 
measures  to  help  tackling  the  migration  crisis  and  youth  unemployment  and  on 
investments  through  financial  instruments  and  a  combination  with  the  European 
Fund for Strategic Investments, taking into account the needs and relevance of those 
priorities for each Member State. 

6   The MFF review/revision is not to be seen as a renegotiation of the MFF package agreed in 2013. As 
foreseen in Article 2 of the MFF Regulation, pre-allocated national envelopes shall not be reduced in 
the  context  of  the  Mid-Term  Review/Revision.  And  this  exercise  is  distinct  from  the  mid-term 
evaluation of multiannual programmes, most of which being scheduled for end-2017.  

7   Technical  Adjustment  of  the  financial  framework  for  2017  in  line  with  movements  in  GNI  and 
adjustment of cohesion policy envelopes, adopted pursuant to Articles 6 and 7 of Council Regulation 
No 1311/2013 laying down the multiannual financial framework for the years 2014-2020, COM(2016) 
311, 30.6.2016. 

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2.1.  Tackling the economic crisis and investment gap 

2.1.1.  Kick-starting spending for jobs and growth 

The ceiling for sub-heading 1A "Competitiveness for Growth and Jobs" is 
set at EUR 142 billion in current prices under the MFF 2014-2020.  

Compared  with  the  previous  period,  the  MFF  2014-2020  has  operated  a 
significant recalibration of spending towards activities conducive to jobs and 
growth. This has been amplified by the setting-up of the European Fund for 
Strategic Investment (EFSI).  

A number of programmes  have  shown high  demand resulting in  fast  project 
selection and commitment of funds: for example, the programme for research 
and  innovation  (Horizon  2020)  could  finance  less  than  one  third  of  the 
proposals  evaluated  positively;  in 2015,  around  560  000  young  people,  staff 
members  of  educational  institutions  and  youth  organisations  from  EU  and 
non-EU countries were given the chance to participate in actions supported by 
Erasmus+ such as to study abroad and youth-exchanges as well as  trainings 
and  volunteering  experiences;  the  strong  demand  for  COSME  financial 
instruments – the Union's programme dedicated to support SMEs – resulted in 
the whole 2014-2015 budget being used up by mid-20158; similarly, demand 
for  microcredit  and  microloans  under  the  EU  Programme  for  Employment 
and  Social  Innovation  (EaSI)9  exceeded  expectations  by  far;  finally,  the 
2014 and 2015 calls for proposals launched under the transport strand of the 
Connecting  Europe  Facility  (CEF)10  were  very  successful.  As  a 
consequence, no significant appropriations will be available for CEF transport 
for any new calls until the end of 2019.  

In  terms  of  large-scale projects,  the  infrastructure  for  Galileo  (the  European 
Satellite  navigation  programmes)  and  Copernicus  (the  European  Earth 
Observation  Programme)  is  being  successfully  deployed,  with  first  services 
becoming operational in 2016-2017. On the other hand, the completion of the 
International  Thermonuclear  Experimental  Reactor  project  (ITER)  is 
being delayed, mostly because of its highly complex nature11.  

Complementing  the  existing  MFF  programmes,  the  European  Fund  for 
Strategic Investments (EFSI), adopted in June 2015, aims at contributing to 
bridge the investment gap of the EU since the start of the crisis. To establish 

8   Still,  agreements  could  continue  to  be  signed  in  the  second  half  of  2015  thanks  to  the  guarantee 

provided by the European Fund for Strategic Investment (EFSI). 

9   The  EaSI  programme  is  a  financing  instrument  at  EU  level  to  promote  a  high  level  of  quality  and 
sustainable  employment,  guaranteeing  adequate  and  decent  social  protection,  combating  social 
exclusion and poverty and improving working conditions. 

10   The  CEF  supports  trans-European  networks  and  infrastructures  in  the  sectors  of  transport, 
telecommunications and energy. Its transport strand benefits from an additional transfer of funds from 
the Cohesion Fund in order to focus spending on projects of particular European interest.  

11   After  the  appointment  of  a  new  management  team,  the  ITER  Council  of  June  2016  endorsed  an 
updated schedule for the ITER project, which identifies the date of First Plasma as December 2025. A 
communication by the Commission to the Council and the Parliament to agree the new schedule and 
mandate  from  all  parties  will  be  presented  in  2017.  The  EUR  6.6  billion  budget  ceiling  set  for  the 
current MFF will be respected. However, additional EUR 3 billion will be needed for the construction 
phase in 2021-2025. 

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EFSI, a guarantee of EUR 16 billion has been created, which is backed by a 
guarantee  fund  of  EUR  8  billion  from  the  EU  budget,  aiming  at  mobilising 
EUR 315 billion in investments in the real economy over three years (2015-
2017)12.   

The  EFSI  is  delivering  tangible  results.  Around  300  projects  have  been 
approved  in  26  EU  Member  States  by  July  2016,  which  are  expected  to 
support  some  200,000  SMEs  and  to  mobilise  EUR  115.7  billion  in  total 
investment,  representing  more  than  one  third  of  the  overall  objective.  It  has 
been successful in crowding in significant additional finance (85% of the total 
investment mobilised) from private and public investors13.  

Complementarity  between  the  EFSI  and  other EU  funds  is  a  key  part of  the 
Commission’s overall commitment to ensure a better use of EU funds across 
all policy areas. The Commission has published guidance on this matter14 and 
will propose to simplify their combination (see also under 2.1.2).  

Given its success, the EFSI SME-window was scaled up quickly in July 2016, 
under the current framework, for the benefit of SMEs and mid-cap companies 
in all Member States: EUR 500 million of the EU guarantee was transferred 
from the Infrastructure and Innovation window to the SME window. The EU 
guarantee  will  be  used  to  top-up  InnovFin  and  COSME  loan  guarantee 
instruments as well as the EaSI programme and for the development of new 
products.  This  will  lead  to  an  increase  in  the  overall  size  of  budgetary 
allocations  for  these  instruments  and  allow  financing  a  significant  extra 
volume of operations. 

Furthermore,  given  the  results  delivered,  a  reinforced  EFSI  should  continue 
beyond the initial three-year period. To this end, the Commission presents a 
legislative proposal to extend the duration of the EFSI until 2020 in parallel 
with  its  Communication  on  the  mid-term  review/revision  of  the  MFF.  This 
proposal  includes  a  transfer  from  CEF  financial  instruments  to  the  EFSI  of 
EUR  500  million,  a  transfer  of  EUR  1  146  million  from  CEF  financial 
instruments  to  CEF  grants  to  be  blended  with  EFSI  financing  or  to  other 
instruments  dedicated  to  energy  efficiency,  as  well  as  the  use  of  EUR  150 
million from the unallocated margin. 

Given the high demand and effective absorption, it is proposed to supplement 
the original allocations of Horizon 2020 by EUR 0.4 billion, CEF-transport by 
EUR  0.4  billion,  Erasmus+  by  EUR  0.2  billion  and  COSME  by  EUR  0.2 
billion  over  2017  –  2020  to  further  enhance  the  EU  support  to  jobs  and 
growth. 

12   This amount has been made available through redeployment from existing EU programmes (EUR 2.2 
billion from Horizon 2020 and EUR 2.8 billion from the Connecting Europe Facility) and by using the 
available margins, notably from the Global Margin for commitments (for a total amount of EUR 2 448 
million). 

13   COM(2016) 359 final: Europe investing again – Tacking stock of the Investment Plan for Europe and 

next step. 

14   http://ec.europa.eu/regional_policy/sources/thefinds/fin_inst/pdf/efsi_esif_compl_en.pdf 

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Following  the  Communication  setting  out  a  European  vision  of  Internet 
connectivity  for  the  Digital  Single  Market  and  in  order  to  promote  digital 
inclusion,  the  Union  should  support  the  provision  of  free  local  wireless 
connectivity  in  the  centres  of  local  public  life  through  targeted  support.  For 
this  reason  the  Commission  has  adopted  the  Wifi4EU  proposal,  with  a  total 
budget proposed of EUR 120 million, including a reinforcement by EUR  50 
million. 

EU  financing  has  a  strong  leverage  effect  on  Member  States  and  private 
investments.  This  is  also  relevant  in  the  digital  area  -  one  of  the  top  10 
priorities  of  this  Commission  –  where  investment  needs  linked  to  high-
performance  computing,  cybersecurity,  digital  skills  and  connectivity  have 
been  identified.  The  Commission  will  look  into  ways  to  address  these 
investment needs by pooling EU, national and private funding. 

2.1.2.  Mobilising cohesion investment for jobs and growth 

Planned spending for Economic, social and territorial cohesion under sub-
heading  1b  of  the  MFF  2014-2020  amounts  to  EUR  371  billion  in  current 
prices.  This  amount  includes  the  European  Structural  and  Investment  Funds 
(ESI  Funds),  the  Youth  Employment  Initiative  specific  allocation  (EUR  3.2 
billion), the Fund for European Aid for the most Deprived (FEAD) allocation 
(EUR  3.8  billion)  and  the  Cohesion  Fund  contribution  to  the  Connecting 
Europe Facility (EUR 11.3 billion).  

So  far  the  implementation  of  the  new  operational  programmes  has  been 
limited. As part of the reform for the 2014-2020 programming period a series 
of innovative  elements to deliver high quality investments  (see section 3.3.1 
for  more  detail)  have  been  introduced.  Putting  this  ambitious  new  approach 
into practice in Member States and regions requires time and resources in the 
start-up  phase  to  ensure  that  the  necessary  conditions  for  effective  spending 
are in place.  

The setting-up of these innovative elements required time and resources in the 
start-up  phase  to  ensure  that  the  necessary  conditions  for  effective  spending 
are in place. This and the late adoption of the legal acts and the introduction 
of  a  general  n+3  decommitment  rule,  which  considerably  relaxed  the 
regulatory discipline on speed of implementation contributed to  delaying the 
preparation  of  the  operational  programmes.  Moreover,  Member  States 
focused  their  efforts  on  maximising  the  implementation  of  the  2007-2013 
programmes in order to avoid potential loss of allocations. Finally, the process 
of  designating  the  programme's  managing,  paying  and  certifying  authorities 
by the Member States, which is a prerequisite for the submission of payment 
claims, was particularly lengthy15.  

Hence,  so  far  the  implementation  of  the  new  programmes  has  mainly  been 
limited to the payment of the initial and annual pre-financing. The low take-
up so far of the 2014-2020 cohesion programmes is a source of concern and 
requires  determined  action  by  the  Member  States.  The  Commission  will 

15   At the end of July 2016, 191 out of 419 programmes financed from the Structural Funds, the Cohesion 

Fund and the Fund for European Aid to the Most Deprived had their authorities designated. 

9 

 
                                                 
present  a  first  report  summarising  ESI  Funds  implementation  in  December 
2016. 

The  Commission  has  urged  Member  States  to  notify  designations  of  their 
managing  and  certifying  authorities,  to  submit  major  project  applications  to 
accelerate  project  implementation,  as  well  as  to  implement  the  required 
actions to fulfil ex ante conditionalities which are paramount to effective and 
efficient  investments.    It  will  continue  to  offer  technical  support  to  Member 
States  with  implementation  issues  following  the  Task  Force  for  Better 
Implementation approach.  

An  important  objective  is  to  reinforce  the  take-up  of  European  Fund  for 
Strategic  Investments  in  less  developed  Member  States.  In  this  respect,  an 
easier  combination  of  EFSI  and  European  Structural  and  Investment  Funds 
support is a key element. This should be done in view of mobilising additional 
private  sector  investment  and  ensuring  further  additionality.  Guidance  has 
been  issued  on  the  combination  of  European  Structural  and  Investment 
Funds, financial instruments and the EFSI. The combination of ESI Funds 
and EFSI support is to be further simplified and legislative and other obstacles 
to such combinations removed through the proposal to simplify financial rules 
accompanying  the Mid-Term Review16, which also contains other  measures, 
building on the findings of the High-level Group on Simplification17.  

A specific allocation of EUR 3.2 billion (with the same amount being added 
from the European Social Fund)  has  been  made available to the new  Youth 
Employment  Initiative  (YEI)  and  frontloaded  to  2014  and  2015.  The  YEI 
provided for the first time ever direct targeted support to young unemployed 
living in regions with youth unemployment rates higher than 25%. Whilst the 
YEI  also  experienced  delays  in  setting  up  the  programmes,  designating 
authorities and submitting payment applications18, all systems and structures 
necessary  for  the  smooth  implementation  are  now  in  place  and  showing 
encouraging results:  

To date, over 1.4 million young people have been covered by YEI-supported 
actions,  a  number  which  exceeds  initial  estimates.  First  evaluations  point  at 
significantly improved opportunities for young people who completed a YEI 
intervention  in  finding  employment  or  continuing  their  studies  afterwards19. 
In  many  Member  States,  the  mobilisation  of  EU  funds  (YEI  and  ESF)  to 
support the national Youth Guarantee schemes and related structural reforms 
has been crucial for the successful implementation of the Youth Guarantee20. 
Jointly, the YEI and the ESF invest directly more than EUR 12.7 billion for 

16   See chapter 3.3.2. 
17   See section 3.3.     
18   In order to speed-up the initiative, the YEI was fully frontloaded in terms of commitments in 2014 and 
2015.  It  was  also  decided  to  scale-up  the  additional  initial  pre-financing  to  30%  in  order  to  provide 
liquidity to Member States and speed-up implementation on the ground.  

19   The  Commission's  Report  on  the  implementation  of  the  Youth  Guarantee  and  the  operation  of  the 

Youth Employment Initiative is being finalised (and foreseen to be adopted in October 2016).  

20   The  Youth  Guarantee  was  endorsed  in  April  2013  through  a  Council  Recommendation.  It  aims  at 
ensuring that all young people under the age of 25 years receive a good-quality offer of employment, 
continued  education,  an  apprenticeship  or  a  traineeship  within  a  period  of  four  months  of  becoming 
unemployed or leaving formal education. 

10 

 
                                                 
the  integration  of  young  people  in  the  labour  market  over  2014-2020.  In  a 
number of Member States, the Youth Guarantee has provided a new impetus 
and has accelerated policy developments, especially in those facing important 
challenges and receiving significant EU financial support. 

Given  the  persistently  high  levels  of  youth  unemployment  in  many  regions 
and  the  encouraging  first  results  shown,  it  is  proposed  to  supplement  the 
original allocation of the YEI by EUR 1 billion over 2017 – 2020, to reach a 
total amount of EUR 8 billion (with EUR 1 billion of matching funding to be 
provided from the European Social Fund). 

2.1.3.  Sustainable Growth: Natural Resources 

Heading  2  "Sustainable  Growth:  Natural  Resources",  with  an  overall 
ceiling of EUR 420 billion for the years 2014-2020, covers direct payments, 
market-related  expenditure  and  rural  development  under  the  Common 
Agricultural  Policy,  the  European  Maritime  and  Fisheries  Fund  and 
environment and climate action (Life programme).  

Since  2014,  the  Commission  has  proposed  a  number  of  exceptional  market 
support  measures  for  fruit  and  vegetable  producers  and  the  dairy  and  other 
livestock  sectors  in  response  to  the  Russian  ban  and  market  imbalances, 
which  could  be  financed  through  the  European  Agriculture  Guarantee 
Fund (EAGF) from redeployments and assigned revenue21. The total amount 
of these measures adds up to EUR 1 664 million. This financial support is to 
be considered exceptional. 

2016  is  the  first  year  fully  reflecting  the  implementation  of  the  2014-2020 
CAP reform in the EU budget. Due to technical difficulties experienced in the 
implementation of the new direct payments scheme, EAGF execution reached 
57% by mid-2016 compared to 90% a year earlier. The implementation gap is 
expected  to  substantially  decrease  until  15  October,  which  is  the  end  of  the 
2016  agricultural  financial  year.  To  help  Member  States  facing  these 
difficulties, the Commission will waive reductions for expenditure made after 
30 June but before 15 October.   

the  European  Agricultural  Fund 

Implementation  of 
for  Rural 
Development  (EAFRD)  and  of  the  European  Maritime  and  Fisheries 
Fund  (EMFF)  was  delayed  due  to  the  late  adoption  of  the  regulatory 
framework  and  programmes22.  However,  whilst  the  EMFF  was  confronted 
with  the  same  process  of  designation  of  the  programmes'  managing  and 
certifying  authorities  as  for  cohesion  policy23,  the  continuation  of  existing 

21   If,  through  its  system  of  audits,  the  Commission  finds  that  a  member  state  has  not  managed  funds 
correctly – in terms of administration and controls –the Commission has the right to claw back funds 
from  member  states.  The  funds  remain  available  under  the  Common  Agricultural  Policy  and  are 
known as assigned revenue. Assigned revenue has been significantly higher than expected in the first 
years of the MFF: collected revenue assigned to EAGF amounted to EUR 1 014 million in 2014 and 
EUR  1  632  million  in  2015.  The  2016  budget  assumes  a  level  of  assigned  revenue  to  be  collected 
throughout the year of EUR 2 090 million. 

22   All EAFRD and EMFF programmes were adopted by end 2015. 
23   By  end  July  2016,  7  out of  27  national  programmes  supported  from  the  EMFF  had  their  authorities 

designated. 

11 

 
                                                 
accredited paying agencies allowed for Rural Development interim payments 
to take place as soon as the related programme was adopted.     

2.2.  Addressing the refugee crisis 

Heading 3 "Security and citizenship" is the smallest of all MFF headings, 
standing  at  EUR  17.7  billion  in  current  prices  (less  than  2%  of  the  MFF). 
Heading 4 "Global Europe" stands at EUR 66.2 billion (6% of the MFF).  

Europe has been experiencing unprecedented migratory flows in 2015, driven 
by  geopolitical  and  economic  factors  expected  to  persist  over  the  coming 
years.  The European  Agenda  on  Migration24 has  set out  measures  needed to 
prevent human tragedies and to strengthen emergency responses, as well as to 
address  this  issue  comprehensively with  a  focus  on  four  key  areas:  securing 
Europe's  external  borders;  a  strong  Common  Asylum  System;  a  new 
European  policy  on  legal  migration  and  fighting  irregular  migration  and 
human trafficking more robustly.  

On 18 March 2016, EU Heads of State or Government and Turkey agreed on 
a mechanism seeking to end irregular migration from Turkey to the EU and to 
facilitate  legal  channels  of  resettlement  of  refugees  to  the  European  Union. 
Under  the  EU-Turkey  Agreement,  for  every  Syrian  national  returned  from 
the Greek islands to Turkey another will be resettled to the EU directly from 
Turkey.  Resettlement  of  refugees  is  financed  from  the  EU  budget  under  the 
EU relocation and resettlement schemes. 

More than EUR 10 billion have been mobilised from the EU budget and the 
European  Development  Fund  in  2015  and  2016  on  the  internal  and  external 
dimension of the refugee crisis, doubling the amount initially foreseen under 
the  MFF  for  the  Asylum,  Migration  and  Integration  Fund  (AMIF),  the 
Internal  Security  Fund  (ISF),  including  emergency  assistance25.  The 
Commission  has  proposed  for  2017  to  maintain  this  level  of  expenditure  by 
resorting to further redeployments and activation of special instruments. 

Moreover,  in  response  to  the  growing  pressure,  the  EU  has  expanded  the 
funding base through the creation of external Trust Funds and the Refugee 
Facility for  Turkey (see  section  3.2.2),  pooling  and  coordinating  additional 
contributions from Member States with funds from the EU budget.  

All these actions should allow for a total funding available for migration of 
EUR  15.7  billion  in  2015-2017,  demonstrating  the  budget’s  ability  to  react 
but also the challenges and the limits of the current financial availabilities in 
addressing the refugee crisis. 

24   COM(2015) 240 final, 13.5.2015. 
25   The AMIF and the ISF were set up for the period 2014-20 with respective amounts of EUR 3.1 billion 
and EUR 3.8 billion. The aim of the AMIF is to promote the efficient management of migration flows 
and the implementation, strengthening and development of a common Union approach to asylum and 
immigration. The ISF promotes the implementation of the Internal Security Strategy, law enforcement 
cooperation  and  the  management  of  the  Union's  external  borders.  The  ISF  is  composed  of  two 
instruments, ISF Borders and Visa and ISF Police. Within AMIF and ISF, emergency assistance can 
finance, for example, reception centres, mobile hospitals, tents, and containers. 

12 

 
                                                 
2.2.1.  Protecting the EU external borders 

The Schengen area without internal borders is only sustainable if the external 
borders are effectively secured and protected. The Commission's proposal of 
15  December  2015  for  a  European  Border  and  Coast  Guard,  to  be  built 
from the existing Frontex agency and the national authorities and coastguards 
responsible  for  border  management  will  be  able  to  draw  on  at  least  1,500 
experts  that  can  be  deployed  in  under  3  days.  For  the  first  time  the  Agency 
will  be  able  to  acquire  equipment  itself  and  to  draw  on  a  pool  of  technical 
equipment  provided  by  the  Member  States.  The  new  Agency's  human 
resources  will more than double  those of Frontex, to reach 1,000 permanent 
staff  by  2020.  The  Agency’s  budgets  for  2015  and  201626  have  been 
reinforced in order to enable it to address the migratory crisis, in particular by 
tripling  the  financial  resources  for  the  joint  operations  Poseidon  and  Triton, 
extending  the  Agency’s  support  to  the  Member  States  in  the  area  of  returns 
and giving necessary resources to set-up reception centres.  

For  the  Agency  to  adequately  fulfil  its  new  tasks,  an  additional  amount  of 
EUR 840 million will be needed until 2020 compared to the initial financial 
programming. The total number of staff will increase gradually to reach 1000 
persons  in  2020,  of  which  550  temporary  agents.  The  Commission  is 
committed to provide financial assistance for urgent needs to Member States 
facing extreme pressure at the external borders of the Union. 

2.2.2.  Challenges inside the EU 

Two implementation packages have been adopted under the European Agenda 
on Migration to provide for the relocation within the EU of 160,000 refugees 
from  Italy  and  Greece  and  the  resettlement  programme  to  provide  for legal 
and safe pathways for refugees outside the Union27.  

In order to ensure an adequate and comprehensive response to the challenges 
Member States may face with the migrant crisis, the  Commission has called 
on Member States to examine the use of their Structural Funds programmes 
in  terms  of  supporting migration-related  measures,  including  integration  and 
support to local host communities, with a view to a possible reprogramming 
of 
to  simplify  financial  rules 
the  proposal 
accompanying  the  Mid-Term  Review  introduces  a  dedicated  investment 
priority  to  support  the  reception  and  integration  of  migrants  and  refugees. 
This will make programming simpler and provide legal certainty concerning 
action in this area.  

the  funds.  Accordingly, 

Given  the  sudden  and  massive  influx  of  third-country  nationals  into  the 
territory of a number of Member States in 2015 and 2016, a new instrument 
has  been  established  for  providing  emergency  assistance  in  EU  Member 
States. This support can include the provision of food, shelter, medicine and 
other  basic  necessities.  The  estimated  needs  for  2016  are  EUR  300  million 
with a further EUR 200 million each for 2017 and 2018 respectively. 

26   The final EU subsidy for 2016 as adopted by the Budgetary Authority is EUR 238.7 million. 
27   The scheme aims at resettling over 22,000 people in need of international protection from outside of 

the EU to EU Member States. This two year scheme is also supported by AMIF. 

13 

 
                                                 
The Commission has tabled a number of proposals in the areas of migration, 
refugees,  security  and  external  border  control,  which  require  an  additional 
EUR  2.55  billion  for  the  years  2018-2020  beyond  the  initial  financial 
programming.  This  includes  the  budgetary  implications  of  the  European 
Border and Coast Guard and the reinforcement of EUROPOL as well as the 
Commission  proposals  related  to  the  EU  Agency  for  Asylum,  the  review  of 
the Dublin common asylum system, the Emergency support within the Union 
and  the  new  Entry/Exit  system  which  aims  at  registering  entry,  exit  and 
refusal of entry data of third country nationals crossing the external borders of 
the Member States of the EU. 

Should  these  measures  prove  not  sufficient  to  address  the  migration 
challenges, additional resources would be needed. This could be financed by 
the proposed new European Union Crisis Reserve funded by the re-use of de-
committed appropriations. 

2.2.3.  External challenges 

Addressing  root  causes  of  migration  and  providing  assistance  to  refugees 
hosted  by  third  countries  is  of  crucial  importance  for  reducing  migratory 
pressure. The EU and Member States are the world's largest development and 
humanitarian aid donor. But the scale of migratory movements puts the onus 
on  being  more  targeted,  more  tailored  and  effective  in  terms  of  investments 
having  a  real  impact  boosting  local  growth  and  job  creation  and  hence 
reducing  the  causes  of  irregular  migration  both  in  countries  of  origin  and 
transit. The EU must use all means available and set itself clear priorities and 
measurable  objectives.  Development,  pre-accession  and  neighbourhood 
policy  tools  should  reinforce  local  capacity-building,  including  for  border 
control, asylum, counter-smuggling and reintegration efforts. 

for  Pre-Accession  Assistance 

Like  heading  3,  heading  4  has  been  under  particular  pressure  due  to  the 
multiplication  of  crises  in  the  European  neighbourhood  and  beyond.  The 
Instrument 
the  European 
Neighbourhood  Instrument 
the  Development  Cooperation 
Instrument  (DCI),  Humanitarian  Aid,  and  the  Instrument  contributing 
to  Stability  and  Peace  (IcSP)  were  mobilised  for  responding  to  the  new 
challenges and emergencies. Some important reinforcements had to be made 
through  redeployments  and  the  use  of  margins  and  flexibility  instruments, 
whilst funding had also to be redirected and leveraged by means of new tools 
such as Trust Funds and facilities.  

(ENI), 

(IPA), 

In view of the need to react to unforeseen needs, each geographical external 
instrument  (the  Instrument  for  Pre-Accession,  the  European  Neighbourhood 
Instrument  and  the  Development  Cooperation  Instrument)  should  be  able  to 
keep  a  reserve  (a  "flexibility  cushion")  of  up  to  10  %  of  the  annual 
commitment  appropriations  available  unallocated,  with  the  possibility  to 
carry-over to the following year remaining funds of that reserve not used in a 
given financial year.  

Since  the  beginning  of  the  crisis,  the  EU  has  provided  a  significant 
contribution in terms of humanitarian aid to Syrian refugees both in Syria and 
neighbouring  countries.  The  EU  Regional  Trust  Fund  in  Response  to  the 

14 

 
Syrian Crisis ("Madad") addresses non-humanitarian resilience needs of the 
almost  5  million  Syrian  refugees,  internally  displaced  persons  and  hosting 
communities  in  Syria's  neighbouring  countries  and  the  Western  Balkans  in 
terms of education, livelihoods and health. The Trust Fund also has a mandate 
to finance reconstruction in a future post-conflict Syria, and would be the best 
suited  EU  instrument  for  that  purpose.  It  has  already  reached  a  volume  of 
more than EUR 700 million, and is expected to meet its initial target of EUR 
1  billion  by  the  end  of  2016.  By  mid-August  2016,  EUR  629  million  had 
already been allocated for projects in Lebanon, Jordan, Turkey, Iraq, and the 
Western Balkans28. 

Since the beginning of the crisis, EU humanitarian aid to Syrian refugees has 
exceeded  EUR  1  billion.  The  EU  and  its  Member  States  total  contribution 
pledged  at  the  London  Conference  "Supporting  Syria  and  the  region"  in 
February represented over 70% of all pledges29. The political imperative now 
is to deliver on this commitment. At the London conference, the EU pledged 
to continue its support over the coming years to help cover the annual cost of 
EUR  1.25  billion  for  ensuring  education  for  all  children  in  the  region.  The 
Facility  for  Refugees  in  Turkey  combines  both  immediate  and  structural 
support to a total EUR 3 billion in 2016-201730. By mid-August 2016, EUR 2 
239  million  had  been  allocated  for  humanitarian  and  non-humanitarian 
assistance31.  

Should the initial allocation to the Facility for Refugees in Turkey be used to 
the  full  and  all  commitments  respected,  a  further  EUR  3  billion  could  be 
provided up to the end of 2018 to continue support. This could be financed by 
the proposed new European Union Crisis Reserve funded by the re-use of de-
committed appropriations (see section 3.1).  

Beyond  Syria,  the  EU  Emergency  Trust  Fund  for  Africa  ("Africa  Trust 
Fund") has been launched at the Valetta summit on migration in November 
2015. It will assist countries that are most affected by migration in the Sahel 
and Lake  Chad region, the Horn of Africa  and North  Africa. With its initial 
allocation of EUR 1.88 billion, decisions have been  taken on projects worth 
over  EUR  750  million  in  areas  such  as  job  creation  and  resilience,  with  a 
focus on the most vulnerable.  

Supplementing  action  under  the  existing  programmes,  the  Commission  has 
proposed  a  Partnership  Framework  with  third  countries32  under  the 
European Agenda on Migration in order to ensure a coherent approach vis a 
vis partner countries and a more efficient and coordinated deployment of the 
different  programmes  and  funding  sources  at  the  Union's  disposal,  i.e.  MFF 
programmes, the European Development Fund (EDF), European Union Trust 
Funds  and  the  Facility  for  Refugees  in  Turkey.  The  partnership  framework 

28   See: http://ec.europa.eu/enlargement/neighbourhood/countries/syria/madad/index_en.htm 
29   Over EUR 7 billion. 
30   The  Facility  for  Refugees  in  Turkey  is  financed  from  the  EU  budget  (EUR  1  billion)  and  from 

additional EU Member State contributions (EUR 2 billion) in 2016-2017. 

31   For 

the 

list  of  projects  and 

the  state  of  play  of  contracting  and  disbursements  see: 

http://ec.europa.eu/enlargement/news_corner/migration/20160818-turkey-facility-table.pdf. 

32   COM(2016) 385 final. 

15 

 
                                                 
aims at a coherent and tailored engagement where the Union and its Member 
States  act  in  a  coordinated  manner  putting  together  instruments,  tools  and 
leverage,  to  reach  comprehensive  Partnership  frameworks  (compacts)  with 
third  countries  to  better  manage  migration  in  full  respect  of  the  Union's 
humanitarian and human rights obligations. 

The  following  main  financial  sources  from  the  EU  and  its  Member  States 
should be available to vitalise the partnerships: 

–  Money for financing the immediate actions of the compacts: EUR 1 billion 
to  be  added  to  the  EU  Emergency  Trust  Fund  for  Africa,  consisting  of 
EUR  0.5  billion  from  the  EDF  reserve  and  EUR  0.5  billion  from  the 
Member States.  

–  Money  from  the  existing  trust  funds:  EUR  3.6  billion  from  the  EU 
Emergency Trust Fund for Africa and EUR 1 billion from the EU Regional 
Trust Fund in Response to the Syrian Crisis.   

–  Nearly EUR 2.4 billion in total pledged contributions from the EU and its 
Member States as additional funds for Lebanon, Jordan (and Syria) at the 
London conference.  

–  Macro-financial  assistance  to  avoid  economic  instability  of  up  to  EUR  1 
billion in  loans  to  Tunisia  (EUR  0.3  billion  being  implemented  and  EUR 
0.5  billion  proposed  by  the  Commission  in  February  2016)  and  Jordan 
(EUR 0.2 billion million under consideration). 

–  Total  aid  flows  from  the  EU  and  its  Member  States  to  the  key  priority 

countries which recently averaged EUR 4.4 billion per year. 

This  would  mean,  provided  that  all  Member  States  participate,  that  nearly 
EUR  8  billion  are  made  available  over  2016-2020  for  the  delivery  of  the 
compacts to be complemented by the annual Official Development Aid flows 
from the EU and Member States. 

In the long term, the EU should continue to increase its efforts to address the 
root  causes  of  irregular  migration  and  forced  displacement  and  to  provide 
capacity building to the host communities and relevant institutions. This will 
require  fundamentally  reconsidering  the  scale  and  nature  of  traditional 
development  co-operation  models.  A  much  greater  role  must  be  given  to 
private  investors  looking  for  new  investment  opportunities  in  emerging 
markets. This is the purpose of the proposed External Investment Plan that 
aims  at  supporting  investments  in  regions  outside  the  EU  as  a  means  to 
contribute  to  the  achievement  of  sustainable  development  goals,  thus 
addressing  the  root  causes  of  migration  and  support  partners  to  manage  its 
consequences33. 

In  parallel  with  the  Mid-Term  Review,  the  Commission  is  submitting  a 
proposal for a new  European Fund for Sustainable Development (EFSD) 

33   Communication from the Commission to the European Parliament, the European Council, the Council 
and the European Investment Bank on establishing a new Partnership Framework with third countries 
under the European Agenda on Migration, COM(2016) 385 final, 7.6.2016.  

16 

 
                                                 
which  should  constitute  the  investment  pillar  of  the  External  Investment 
Plan34. The EFSD will combine existing blending facilities (EUR 2.6 billion) 
and  a  new  innovative  scheme  whereby  EUR  1.5  billion  of  guarantee  (the 
EFSD  Guarantee  for  Sustainable  Development)  borne  by  the  EU  budget 
would  be  backed  by  a  guarantee  fund  endowed  with  EUR  750  million35..  It 
will  operate  as  a  "one-stop  shop"  to  receive  financing  proposals  from 
Financial Institutions and public or private investors and provide an integrated 
financial  package  to  finance  investments  in  regions  outside  the  EU,  thereby 
creating  growth  and  employment  opportunities,  maximising  additionality, 
delivering innovative products and crowding-in private sector funds. 

The  EFSD  Guarantee  aims  to  constitute  guarantee  capacity  for  credit 
enhancement that will ultimately benefit the final investments and allow risk 
sharing with other investors, notably private actors. It will leverage additional 
financing, in particular from the private sector, by addressing the key factors 
that  enable  crowding-in  private  investment.  The  EFSD  Guarantee  Fund  will 
provide the liquidity in case the EFSD Guarantee is called upon to cover for 
losses occurred under the guarantee agreements. 

Overall EUR 3.35 billion of EU resources will go to the EFSD.  The impact of 
the  new  EFSD  guarantee  would  be  greatly  enhanced  if  Member  States  also 
contributed either through the blending facilities and/or the guarantee.   

The Commission estimates that if Member States were to match the EUR 1.5 
billion EU guarantee, the total investment mobilised by the EFSD could reach 
up to EUR 62 billion.  

It  is  proposed  to  mobilise  EUR  750  million  for  the  Partnership  framework 
process and 250 million for the European Fund for Sustainable Development. 

2.3.  Addressing  security  and  development  concerns  inside  the  EU  and  in  its 

neighbourhood  

2.3.1.  Macro-Financial Assistance to avoid economic instability in the EU 

neighbourhood 

The  macroeconomic  and  financial  instability  in  the  Union's  neighbourhood, 
fuelled by recent regional crises and conflicts, has led to increasing demands 
for  EU  macro-financial  assistance  (MFA)  over  recent  years36.  MFA 
commitments have increased from EUR 1.5 billion in the period 2000-2008 to 

34   COM(2016)586 of 14.9.2016. 
35   Of which EUR 400 million from the EDF and EUR 350 million from the EU budget (including EUR 

250 from the unallocated margin). 

36   The  Union's  instrument  for  Macro-Financial  Assistance  is  designed  to  address  exceptional  external 
financing needs of countries that are geographically, economically and politically close to the EU. Its 
objective  is  to  restore  macroeconomic  and  financial  stability  in  candidate  and  potential  candidate 
countries and in countries in the European Neighbourhood, while encouraging the implementation of 
macroeconomic  adjustment  and  structural  reforms.  It  takes  the  form  of  either  loans  for  which  the 
Commission  borrows  the  necessary  funds  in  capital  markets  and  on-lends  them  to  the  beneficiary 
country, or, under certain circumstances, grants financed by the EU budget.  

17 

 
                                                 
EUR 4.6 billion since 2009; MFA amounts made available in the context of 
the recent crisis in Ukraine account alone for EUR 3.4 billion.  

As the geopolitical and economic instability of the region persists, the needs 
for  EU  macro-financial  support  are  likely  to  remain  at  a  exceptionally  high 
levels  for  the  years  to  come.  This  is  evidenced  by  the  two  follow-up 
operations  currently  under  preparation  for  Tunisia  and  Jordan,  and  the 
possibility  of  an  additional  large-scale  operation  in  Ukraine.  However, 
currently,  the  size  of  potential  MFA  operations  in  2014-2020  is  limited  to 
about  EUR  500  million  per  year  due  to  the  provisioning  mechanism  of  the 
Guarantee Fund for External Actions under the current MFF. 

The  Commission  proposes  to  increase  the  lending  capacity  of  the  MFA 
from currently EUR 500 million to EUR 2 billion per year, by increasing the 
provisioning of the Guarantee Fund for External Actions by EUR 270 million 
over the financial years 2019 and 202037. 

2.3.2.  EIB External Lending Mandate 

The  European  Investment  Bank  (EIB)  is  the  Union’s  financing  institution 
which  contributes  to  European  integration,  development  and  cohesion  by 
financing projects in support of EU policies. Although the majority of projects 
financed  by  the  EIB  are  located  within  the  EU,  the  EIB  also  carries  out 
operations outside the Union, guaranteed by the Guarantee Fund for External 
Actions (the ‘external lending mandate’ (ELM)). The latter currently amounts 
to EUR 27 billion over the period 2014–2020.  

An  external  mid-term  review  of  the  ELM  has  been  carried  out  which 
estimates  the  financial  needs  of  the  ELM  at  EUR  30  billion  to  support  the 
ELM objectives. 

In  parallel,  the  EIB  has  proposed  a  new  "Resilience"  initiative  aimed  at 
rapidly mobilising additional financing in support of sustainable growth, vital 
infrastructure  and  social  cohesion  in  Southern  neighbourhood  and  Western 
Balkans countries in response to the March 2016 European Council.  

Based on the above, the Commission proposes, in parallel with the MFF Mid-
Term Review, to increase the ELM of the EIB by EUR 5.3 billion to reach a 
total of EUR 32.3 billion. The increase of the mandate would consist of EUR 
3  billion  to  increase  the  EIB's  overall  lending  capacity  to  eligible  third 
countries,  of  which  EUR  1.4  billion  to  fund  migration-related  actions  in  the 
public sector, and EUR 2.3 billion to support migration-related actions by the 
private  sector  under  a  new  private  sector  lending  mandate.  This  will  enable 
the EIB to contribute to the External Investment Plan.  

This requires increasing the Guarantee Fund by EUR 115 million over 2018-
2020.  In  order  to  cover  the  additional  risks  stemming  from  the  new  private 

37   To reach a lending capacity of EUR 2 billion per year, an additional 1.5 billion per year is needed on 
top of the currently estimated annual EUR 500 million. As the rules of the Guarantee Fund provide for 
a  9%  provisioning  of  the  annual  volume  (with  a  two-year  lag  for  the  provisioning  of  the  Guarantee 
Fund), an additional EUR 135 million will be required annually in both 2019 and 2020. 

18 

 
                                                 
sector  lending,  the  guarantee  fees  charged  on  the  latter  will  be  used  to 
reinforce the Guarantee Fund. 

2.3.3.  Security and Defence 

The  Commission  has  responded  to  the  evolution  of  the  security  situation  in 
Europe,  especially  in  the  aftermath  of  the  terrorist  attacks  in  Paris  in 
November 2015 and in Brussels in March 2016, by proposing legislation and 
increasing  the  financial  resources  dedicated  to  address  the  security  needs.. 
The  security  situation  remains  unstable  and  unpredictable.  In  order  to 
guarantee the security of our citizens additional measures might be needed to 
address  future  crises  including  stepping  up  if  necessary  additional  financial 
resources. 

The  key  instrument  of  the  budget  inside  the  EU  is  the  Internal  Security 
Fund  (ISF),  which  promotes  the  implementation  of  the  Internal  Security 
Strategy,  law  enforcement  cooperation  and  the  management  of  the  Union's 
external  borders.  The  ISF  is  composed  of  two  instruments,  ISF  Borders  and 
Visa and ISF Police with a total allocation of EUR 3.8 billion for 2014-2020. 
Additional reinforcements were factored in for ISF in the course of the 2016 
for  a  total  amount  of  EUR  119.4  million.  The  current  level  of  emergency 
assistance for ISF has reached EUR 140.5 million. 

In April 2015 the Commission has set out a European Agenda on Security 
for  the  period  2015-2020  to  support  Member  States'  cooperation  in  tackling 
security threats and step up the efforts in the fight against terrorism, organised 
crime  and  cybercrime38.  This  has  been  followed  by  several  proposals  and 
actions to pave the way towards a genuine and effective Security Union. 

On  the  external  front,  the  Global  Strategy  for  the  European  Union's 
Foreign and Security Policy presented to the European Council in June 2016 
stresses  the  need  for  the  Union  to  mobilise  all  its  networks,  its  economic 
weight and all the tools at its disposal in a coherent way in order to address 
the hybrid security threats it is facing. Actions strengthening internal security 
through  preventing  and  fighting  terrorism  have  to  be  complemented  by  a 
multifaceted  approach  to  resilience  in  the  regions  surrounding  the  EU.  This 
requires joining up the Union's security and development policies. 

In  that  context,  the  revised  European  Neighbourhood  policy  calls  to  step  up 
cooperation with the partner countries on law enforcement issues and on the 
prevention and response to crises and conflicts. 

The Union already finances a number of actions in third countries in the field 
of  capacity  building  in  support  of  security  and  development.  The 
Commission has proposed to extend the assistance provided under the Union's 
instrument  contributing  to  stability  and  peace  (IcSP)  under  exceptional 
circumstances  to  be  used  to  build  the  capacity  of  military  actors  in  partner 

38   COM(2015) 185 final, 28.4.2015. 

19 

 
                                                 
countries  in  order  to  contribute  to  sustainable  development  and  in  particular 
the achievement of peaceful and inclusive societies39.  

The reinforcement of the IcSP for capacity building in support of security 
and development requires additional EUR 100 million over the period 2017-
2020 to be financed through redeployment within Heading 4 of the MFF. 

Should these measures prove not sufficient to address the security challenges, 
additional resources would be needed. This could be financed by the proposed 
new  European  Union  Crisis  Reserve  funded  by  the  re-use  of  de-committed 
appropriations. 

Finally, the Commission has proposed within the Draft Budget 2017 to launch 
a new Preparatory action on Defence research in order to contribute to the 
technological  autonomy  of  the  EU  in  this  field.  The  main  objective  of  this 
flagship  action  of  the  EU  defence  industrial  policy  launched  by  the 
Commission's  2013  Defence  Communication40  is  to  prepare  and  test  a 
mechanism to organise and deliver a variety of defence research, technology 
and development activities to improve competitiveness and innovation in the 
European defence industry, in view of the financing of EU defence research 
within the next MFF41. 

2.4.  Addressing climate change 

In  December  2015,  the  UNFCCC  Conference  of  the  Parties  (COP21) 
concluded  the  historic  Paris  Agreement  to  keep  global  temperature  increase 
well below 2 °C. The EU has been a leading actor in achieving an agreement 
that  is  global,  ambitious,  and  binding,  showing  the  way  with  its  ambitious 
climate policies and the innovative approach of mainstreaming climate action 
throughout  the  EU  budget  with  the  set  objective  that  it  should  represent  at 
least 20% of EU spending in the period 2014-202042.  

The political  commitment  of  devoting at least  20%  of EU budget  to  climate 
action  has  helped  to  bring  the  climate  dimension  into  the  discussions  with 
stakeholders  on  programme  design  and  implementation  and  has  as  such 
delivered  on  its  prime  objective.  It  has  also  delivered  a  benchmark  for 
analysing progress within and across instruments on the basis of a transparent 
methodology  in  the  framework  of  the  budgetary  procedure.  In  addition,  the 
EU  financial  instruments  are  leveraging  significant  investments  towards  the 
transition to a low carbon and climate resilient economy. 

With  all  operational  programmes  now  in  place,  the  current  estimates  show 
that the EU budget annual allocation to climate action has exceeded the 20% 

39   Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 
No 230/2014  of  the  European  Parliament  and  of  the  Council  of  11  March  2014  establishing  an 
instrument contributing to stability and peace, COM(2016) 447, 5.7.2016. 

40   COM(2013) 542 final.  
41   The execution of the Preparatory action will be delegated to the European Defence Agency.  
42   Point 10 of the European Council conclusions of 8 February 2013 (EUCO 37/13). 

20 

 
                                                 
target in 2016 and will remain close to it over 2017-2020. It is set to deliver 
slightly above EUR 200 billion43.  

The  mid-term  reviews  of  the  MFF  programmes  will  assess  progress  made 
towards  the  achievements  of  20%  of  EU  spending  objective.  Also  the 
reinforcement of Heading 1A programmes should for example, help Horizon 
2020 to reach its expected target of 35% climate relevance. Furthermore, the 
proposal for the extension of EFSI 2 sets a minimum target for climate-related   
projects.   

3.  HOW  WE  SPEND:  IMPROVING  THE  FLEXIBILITY  OF  THE  BUDGET  AND  MAXIMISING 

ITS IMPACT 

The  MFF  Regulation  2014-2020  introduced  three  new  instruments  that  allow 
shifting  available  margins  between  Headings  ('vertical'  flexibility)  and  years 
('horizontal'  flexibility)  to  a  much  larger  extent  than  in  the  past.  This  represents  a 
major step forward in terms of the financial framework's overall flexibility44, within 
a framework where almost 80% of the EU budget is pre-allocated to Member States 
mainly under the Union's Common Agricultural Policy and cohesion policies:  

 

 

the  Global  margin  for  commitments  for  growth  and  employment,  in 
particular  youth  employment  and  the  Global  margin  for  payments  allow 
safeguarding margins left unused in previous financial years; 

the  Contingency  Margin  which  allows  exceeding  annual  ceilings  for 
commitments and payments  by  an  amount equal to  0.03 % of the EU  GNI 
(about EUR 4.5 billion per year), though respecting the overall ceilings; this 
means that any amount mobilised in a given year must be offset in the same 
or later financial years.  

3.1.  Improving  the  flexibility  of  the  EU  budget  to  respond  to  unforeseen 

events  

The  new  instruments  and  other  special  instruments  have  been  extensively 
used since the beginning of the MFF.  

–  The Contingency Margin was mobilised in 2014 for an amount of about 
EUR  3  billion  in  payment  appropriations  to  reduce  the  backlog  on 

43   See annex 2 for a detailed state of play by programme. 
44   Beyond these novelties, the MFF agreement has included further improvements to flexibility, such as 
increased  amounts  and  carry-over  provisions  for  the  Flexibility  Instrument  and  the  Emergency  Aid 
Reserve,  as  well  as  the  doubling  of  the  percentage  (from  5  to  10%)  by  which  the  annual  budgetary 
procedure can deviate from amounts included in the legislative acts for multiannual programmes. 

21 

 
 
                                                 
payments from the previous MFF period45. The Commission has proposed 
in  the  Draft  budget  2017  to  mobilise  the  Contingency  Margin  for  an 
amount  of  EUR  1  164  million  to  be  offset  by  using  margins  available 
under Heading 2 (EUR 650 million) and Heading 5 (EUR 514 million) in 
the  same  year  to  top-up  availabilities  under  heading  3  for  migration-
refugees-security related measures. 

–  EUR  2  448  million  from  the  Global  margin  for  commitments  were 
anticipated in order to finance the part of the Guarantee Fund for the EFSI 
not financed through redeployment46.  

–  The flexibility instrument and the Emergency Aid Reserve (EAR) have 
been  intensively  used  to  finance  the  successive  migration  packages  since 
2015.  

–  The  European  Union  Solidarity  Fund  (EUSF)  and  the  European 
Globalisation Adjustment Fund (EGF), whose size was scaled down for 
the current period, have been used to a more limited extent, with room for 
simplification in terms of the procedures for mobilising them47.  

–  No use has been made of the agricultural crisis reserve.  

The below table shows the use of the four special instruments so far48:  

The use made of the flexibility tools, in particular for the refugee crisis, shows 
the importance of these instruments for reacting to unforeseen circumstances. 
In  order  to  ensure  a  sufficient  degree  of  flexibility  without  changing  the 
overall  ceilings  of  the  MFF  to  respond  to  growing  challenges  and 
uncertainties  for  the  remainder  of  this  MFF,  the  Commission  proposes  to 
increase flexibilities in the following way: 

A  number  of  provisions  of  the  MFF  Regulation  and/or  of  the  Financial 
Regulation are proposed to be amended in order to increase the flexibility of 
the EU budget by: 

–  increasing  the  annual  availabilities  under  the  flexibility  instrument  to 

EUR 1 billion (at 2011 prices);  

–  increasing the annual availabilities under the Emergency Aid Reserve to 

EUR 0.5 billion (at 2011 prices)  ; 

45   The  decision  mobilising  the  contingency  margin  foresaw  an  equivalent  reduction  of  the  payment 

ceilings in 2018-2020.  

46   EUR 543 million in 2016, EUR 1265 million in 2017, and EUR 640 million in 2018. 
47   See section 3.3. on proposals for simplification. 
48   For 2017 figures are those of the Draft Budget.  

22 

YearFlexEAREGFEUSFTotal20148998811273952015149283438355820161,53030526501,9112017530000530In million Euro, commitment appropriations 
 
                                                 
–  setting-up  a  new  European  Union  Crisis  Reserve  financed  from  de-
committed appropriations to allow the Union to react rapidly to crises, such 
as  the  current  migration  crisis,  and  events  with  serious  humanitarian  or 
security implications; 

–  removing  the  limitation  in  scope  and  time  of  the  Global  margin  for 

commitments; 

–  removing  the  annual  caps  set  for  the  Global  margin  for  payments  over 
2018-2020 (Article 5.2) to allow for the full mobilisation, in the later years 
of  the  MFF,  of  the  large  margins  in  payments  left  unused  in  2016  and 
2017,  should  it  prove  necessary,  and  therefore  ensure  specific  and 
maximum flexibility. 

3.2.  Leveraging the EU budget  

3.2.1.  Financial instruments and EFSI 

One  of  the  major  innovations  of  the  MFF  2014-2020  was  to  lay  down  the 
foundations  for  a  more  systematic  use  of  financial  instruments  by  the  EU 
budget as a means to leverage its impact.  

The review of the current state of implementation of EU financial instruments 
leads to the following conclusions: 

–  Demand  for  instruments  supporting  SMEs  (including  microfinance  and 
social enterprise finance), in particular the guarantees to loan portfolios, is 
well  above  their  initial  budgetary  allocation.  This  demand  has  been 
satisfied  largely  thanks  to  supplementary  resources  provided  by  EFSI: 
EUR 1.25 billion for the COSME Loan Guarantee Facility and the Horizon 
2020  InnovFin  SME  Guarantee.  Demand  for  the  Private  Finance  for 
Energy Efficiency (PF4EE) instrument, supported by the LIFE programme, 
is also significantly higher than initially expected49.  

–  In  the  infrastructure  area  supported  by  the  Connecting  Europe  Facility 
(CEF),  the  launch  of  financial  instruments  in  the  broadband  domain  is 
under  way in  line  with  the  initial  financial  programming.  In  the  transport 
sector  (CEF-T), 
is  being  fully 
the  2014-2016  work  programme 
implemented. In addition, to increase the possibilities for combining Union 
Funds  with  EFSI  support,  the  Commission  proposes  to  shift  EUR  1146 
million  from  the  CEF  financial  instruments  to  CEF  grants  to  be  blended 
with EFSI financing or to other instruments dedicated to energy efficiency. 
This should ensure a maximum impact of EU funds, eliminate overlaps and 
maximise the synergies between different grants and financial instruments 
as well as with private investors. 

–  A  number  of  newly  established  financial  instruments  are  lagging  behind: 
this  concerns  the  Students  Loans  Guarantee  Facility  supported  under 
Erasmus+  and  the  Creative  and  Cultural  Sectors  Loan  Guarantee  Facility 
(CCS  LGF)  supported  under  the  Creative  Europe  Programme.  While  the 

49   EUR 80 million for 2014-2017. 

23 

 
                                                 
slow implementation path of the Students Loans Guarantee Facility is the 
result of an  initial low response  by the market, the  pipeline of  projects is 
progressively growing. The CCS LGF (EUR 121 million) is a novelty not 
yet tested with the market in a sector with a poor record in bank lending; 
its implementation just started and will be closely monitored. 

–  New  financial  instruments  are  being  launched  to  keep  pace  with  the 
priority on jobs and growth, such as a pan-European venture capital fund of 
funds.  The  fund  will  benefit  from  at  least  EUR  300  million  support 
provided within Horizon 2020 (InnovFin), COSME and EFSI. 

–  As  regards  financial  instruments  in  shared  management,  the  European 
Structural  and  Investment  Funds  are  due  to  provide  an  important 
contribution  to  the  success  of  the  Investment  Plan  for  Europe,  with  the 
objective  of  at  least  doubling  the  use  of  financial  instruments.  Currently, 
EUR  11.5  billion  ERDF  and  ESF  are  delivering  support  to  SMEs,  urban 
development and energy efficiency projects under the programmes due to 
be closed in early 2017. Planned allocations for financial instruments under 
ESI  Funds  during  2014-2020  will  amount  to  EUR  21  billion.  The  SME 
Initiative50,  deployed  in  Bulgaria,  Spain  and  Malta,  totals  some  EUR  1.1 
billion  in  ERDF  commitments.  Three  more  Member  States  are  about  to 
join this initiative (Italy, Romania and Finland). 

–  Financial instruments have by nature a longer lead-in and set up time, but 
more  needs to  be  done  to  further  increase  the  uptake.  In  order  to  support 
and promote further use of financial instruments in combination with ESI 
Funds,  the  Commission  established  an  advisory  tool  (fi-compass51)  to 
provide  relevant  information  and  guidance  to  stakeholders  and  developed 
five  off-the-shelf  instruments52  for  the  use  of  Member  States.  The 
Commission  also  released  guidance  to  managing  authorities  and  other 
stakeholders on how to maximise ESI Funds/EFSI complementarities53. In 
addition,  the  proposal  to  simplify  financial  rules,  which  accompanies  the 
review,  amends  the  Common  Provisions  Regulation  in  order  to  facilitate 
the combination of ESI Funds and EFSI54.  

It  is  crucial  now  to  warrant  the  full  implementation  of  current  plans  by 
Member  States  and  to  further  develop  the  potential  of  financial instruments, 
where appropriate in conjunction with ESI Funds and EFSI55, in order to fill 
the investment gap inherited from the financial and economic crisis.  

50   In  the  SME  initiative  (also  financially  supported  by  Horizon  2020  and  COSME),  the  European 
Structural  and  Investment  Funds  contribute  to  an  EU  level  financial  instrument  implemented  by  the 
European Investment Fund and supporting uncapped guarantees or securitisation in favour of SMEs. 

51   https://www.fi-compass.eu/ 
52   The so-called off-the-shelf instruments provide standard terms and conditions, which are compatible 
with ESI Funds regulation and State Aid rules and seek to combine public and private resources. There 
are  now  five  such  off-the-shelf  instruments  (for  risk-sharing  loans,  capped  guarantees  for  SMEs, 
housing renovation (energy efficiency), equity co-investment in SMEs and urban development). 

53    http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/efsi_esif_compl_en.pdf 
54   See below section 3.3.2. 
55   See section 3.3.3. 

24 

 
                                                 
Building  on  the  progress  made  under  the  current  MFF,  the  Commission 
proposes together with the review to simplify financial rules so as to optimise 
the use of financial instruments in 2017-2020 by: 

–  amending the Common Provisions Regulation for the European Structural 
and  Investment  Funds  in  order  to  clarify  and  expand  the  selection 
procedures for fund  managers, to  facilitate  the combination  of ESI Funds 
and EFSI and to extend the SME initiative beyond the originally foreseen 
period (2014-2016); 

–  amending  the  Financial  Regulation  for  establishing  a  comprehensive 
framework  for  financial  operations,  in  particular  facilitating  the  use  of 
financial  instruments  by  optimising  the  use  of  reflows,  ensuring  a  level 
playing field among key EU implementing partners, reducing burdensome 
requirements related to publication of individual data of final recipients. 

3.2.2.  Trust Funds 

In order to achieve the political leverage needed to address comprehensively 
major crises, the EU and Member States identified the need to set up EU Trust 
Funds.  As  mentioned  in  section  2.2.3,  the  Commission  has  created  three 
funds56 since 2014: the European Trust Fund for the Central African Republic 
(‘Békou’); the European Union regional Trust Fund in response to the Syrian 
crisis (‘Madad’), and the European Union Emergency Trust Fund for Stability 
and Addressing Root Causes of Irregular Migration and Displaced Persons in 
Africa (Africa Trust Fund)57.  

tool  has  allowed  more  flexible,  coordinated  and  quicker 
This  new 
identification  and  awarding  of  targeted  projects.  In  this  way,  immediate 
measures  have  been  financed,  supporting  refugees  and  host  communities,  as 
well  as  migration  management  and  return  and  readmission 
through 
reintegration and capacity building.  

The Commission proposal to simplify financial rules, which accompanies the 
review, amends  the Financial  Regulation  in  order to  enhance the  efficiency 
and transparency of the EU Trust Funds:  

–  Consultation and involvement of EU institutions: The European Parliament 
and the Council should be informed before the Commission decides on the 
establishment of a EUTF.  

–  Implementing  partners:  Cooperation  with  European  and  international 
partners  will  be  enhanced  through  significant  simplification  and  cross 
reliance, and enabling of Thematic Trust Funds. 

–  Showing  results:  The  Commission  is  developing  specific  tools  and 

templates to improve monitoring and evaluation of EUTFs.   

56   Based on Article 187 of the Financial Regulation. 
57   See further information on EU Trust Funds and the pledged contributions in Annex 3. 

25 

 
                                                 
–  Trust Funds: The Commission proposal foresees the establishment of EU 
Trust Funds also for emergency, post-emergency or thematic actions within 
the EU (and not only for third countries) so as to establish a tool allowing 
for  attracting  additional  contributions  from  (all  or  a  group  of)  Member 
States  and  other  donors  in  a  flexible  and  swift  way,  for  example  in  the 
digital  area.  As  the  boundaries  between  external  and  internal  policies  are 
increasingly  blurred,  this  would  also  provide  a  tool  for  addressing 
challenges across borders. 

3.3.  Improving the conditions for an effective use of EU funds 

3.3.1.  Linking effectiveness of European  Structural and Investment  Funds 

to sound economic governance 

The  legislative  framework  for  implementing  the  European  Structural  and 
Investment Funds agreed for the 2014-2020 period has introduced  a number 
of provisions aimed at improving the effectiveness and European added value 
of the funds. This is notably done by concentrating resources on the national 
objectives,  which  following  the  country-specific  recommendations  translate 
the key Europe 2020 objectives, establishing a performance framework based 
on  measurable  indicators  and  targets  linked  to  the  release  of  a  performance 
reserve,  and  introducing  ex-ante  conditionalities  as  well  as  creating  closer 
linkages with the EU economic governance58. As a result, the ESI Funds will 
be supporting structural reforms in line with the priorities set at EU level. 

Thematic concentration requirements ensure that ESI Funds investments are 
focused  on  priorities  contributing  to  jobs  and  growth.  For  cohesion  policy, 
planned  investments  are  thus  focused  on  research  and  innovation,  SME 
support; ICT and the low carbon economy as well as on employment, social 
inclusion, education and administrative capacity building. These requirements 
have  been  complied  with  in  the  programming  exercise  and  in  many  cases 
exceeded. 

Ex-ante conditionalities require that regulatory and policy frameworks are in 
place  and  that  there  is  sufficient  administrative  capacity  before  investments 
supported  by  the  ESI  Funds  are  made.59  About  75  %  of  these  ex-ante 
conditionalities  were  found  to  be  fulfilled  at  the  time  of  the  programmes' 
adoption60.  Where  this  was  not  the  case,  action  plans  for  their  fulfilment  by 
the  end  of  2016  at  the  latest  were  agreed.  A  failure  to  fulfil  such  an  action 
plan  by  the  end  of  2016  could  trigger  the  suspension  of  payments  by  the 
Commission to the programme(s) and priorities concerned.  

58   On 8 August 2016, the Council agreed with the Commission proposal not to impose fines on Portugal 
and Spain for their failure to take effective action to correct their excessive deficits based on reasoned 
requests  from  Portugal  and  Spain.  The  Commission  also  decided  to  present  its  proposal  for  a 
suspension of all or part of the EU's structural and investment fund commitments or payments for 2017 
following a structured dialogue with the European Parliament.    

59   They  cover  most  investment  areas,  including  improvements  to  regional  research  and  innovation 
strategies  for  smart  specialisation,  as  well  as  strategic  plans  linked  to  water  and  transport  sectors, 
active inclusion, health services, vocational education and training. 

60   Investing  in  jobs  and  growth  –  maximising  the  contribution  of  European  Structural  and  Investment 

Funds, COM(2015) 639 final, 14.12.2015. 

26 

 
                                                 
As to the link to the European semester and macro-economic conditionality, 
more than two thirds of the Country Specific Recommendations in 2014 were 
relevant  for  ESI  Funds  investment  (in  particular  the  European  Regional 
Development  Fund  and  the  European  Social  Fund)  and  have  thus  been 
integrated  into  the  Member  States'  programme  priorities61.  They  cover 
reforms  in  six  areas:  research  and  innovation,  energy  and  transport,  health 
care, labour market participation, education, social inclusion and reform of the 
public administration.  

In 2017, the Commission will produce the first Strategic Report on ESI Funds 
implementation. If the in-depth assessment of the link between effectiveness 
of the ESI Funds and sound economic governance leads to the conclusion that 
there  is  insufficient  progress  in  implementing  an  existing  Country  Specific 
Recommendation with ESI Funds relevance, it can require a Member State to 
adjust its ESI Funds programmes so that funds can contribute to responding to 
the challenge addressed in the Recommendation62.   

The  new  conditionality  tool  box  is  starting  to  show  results  for  significantly 
improved economic governance at EU level.   

The  Commission  presents  its  annual  analysis  of  the  economic  and  social 
challenges in the Member States in the so-called Country Reports published in 
February each year63.  

Based  on  this  analysis,  the  Commission  will  continue  carefully  monitoring 
Member States' progress in implementing structural reforms highlighted in the 
relevant  Country  Specific  Recommendations.  It  will  use  the  findings  to 
engage in a dialogue with the Member States.  

The Country Reports may also identify new reform challenges that have not 
been or are insufficiently addressed by the Member State, which can turn into 
a new Country Specific Recommendation later in the European Semester, thus 
triggering a reprogramming request64. 

3.3.2.  Simplifying the delivery of the EU Budget  

Simplification  has  been  at  the  core  of  the  Commission's  proposals  for  the 
programmes  covered  by  the  MFF  2014-202065.  Considerable  progress  has 
been  made  (the  state  of  play  of  the  take-up  of  simplification  measures  is 
shown in the simplification scoreboard in annex 5)66. 

However,  there  is  room  for  further  simplification.  This  is  confirmed  by  the 
experience  gained  since  2014  and  by  the  work  of  the  High  Level  Group  of 

61   Whilst  the  overall  number  of  CSRs  relevant  for  ESIF  decreased  in  2015,  reflecting  the  new 
streamlined approach of the European Semester, the Commission stressed that the previous CSRs were 
still valid and that it would continue to monitor the implementation of those reforms. 

62   Reprogramming powers granted under Article 23 of the ESIF's Common Provisions Regulation. 
63   The  Country  Reports  2016  emphasise  for  the  first  time  the  investment  challenges  for  each  Member 

State and recognise the contribution of the EU budget to support structural change. 

64   See schematic view in Annex 4. 
65   See further examples on: http://ec.europa.eu/budget/mff/simplification/index_en.cfm.  
66   See Annex 5. 

27 

 
                                                 
Independent  Experts  on  Monitoring  Simplification  for  Beneficiaries  of  the 
European  Structural  and  Investment  Funds67  and  the  public  consultation  on 
the revision of the Financial Regulation68.  

Efforts must therefore continue. Simpler and more flexible financial rules will 
contribute  to  optimising  spending  and  impact  of  the  MFF  2014-2020  and 
constitute as such one of the key elements of the Commission's initiative for a 
Budget  Focused  on  Results.  In  addition,  this  will  reduce  the  costs  related  to 
implementation of EU rules as well as the number of errors. Simpler and more 
flexible  EU  financial  rules  are  key  in  enhancing  the  EU  budget’s  ability  to 
adapt to changing circumstances and to respond to unexpected developments. 

The Commission therefore proposes in a single act an ambitious revision of 
the general financial rules accompanied by corresponding changes to the 
sectorial financial rules set out in 15 legislative acts concerning multiannual 
programmes69.  The  inclusion  of sectorial  changes  in  the  same  legislative 
proposal  aims  at  ensuring  a  coherent  negotiation  process  as  well  as  at 
facilitating  a  speedy  adoption  by  the  legislator.  The  focus  is  put  on  the 
following key areas:  

–  Simplification  for  recipients  of  EU  funds: many  measures  aim  at 
simplifying life for recipients of EU funds. They relate to grants (removal 
of  the  non-cumulative  award  check  for  low-value  grants  and  of  the  non-
profit  principle;  simpler  rules  for  "contribution  in  kind"  valuation; 
recognition  of  volunteer  work;  grant  awards  without  calls  for  proposal 
under  specific  conditions)  and  simplified  forms  of  grants  like  simplified 
cost options. The latter is also reinforced with respect to ESI Funds.  

–  From multiple layers of controls to cross reliance on audit, assessment 
or  authorisation,  and  harmonisation  of  reporting  requirements: the 
aim  of  these  measures  is  to  encourage  reliance  as  far  as  possible  on  one 
single  audit,  assessment  or  authorisation  (conformity  to  State  aids  for 
instance),  when the  audit, assessment  or  authorisation meets the  necessary 
conditions to be taken into account in the EU system. More generally, rules 
for  implementing  partners  (international  organisations,  EIB/EIF,  national 
promotional banks, national agencies, NGOs) will be simplified by relying 
increasingly  on 
assessed 
positively. Financial  framework  partnership  agreements  concluded  with 
long  term  partners  will  allow  progressing  in  the  harmonisation  of  audit, 
reporting and other administrative requirements among donors. 

and  policies  once 

their  procedures 

–  Allowing the application of only one set of rules to hybrid actions or in 
the case of combination of measures or instruments: the proposal aims 
at achieving further simplification for the partners of the EU by a number 
of  measures to  avoid  the  parallel  application  of  different  rules  and 

67   Group of experts chaired by former Commission Vice-President Siim Kallas set up by the Commission 
on 10 July 2015 in order to advise it with regard to simplification and the reduction of administrative 
burden 
.  
the  European  Structural 
http://ec.europa.eu/regional_policy/en/policy/how/improving-investment/high-level-group-
simplification  

Investment  Funds: 

beneficiaries 

and 

for 

of 

68   See synthesis on http://ec.europa.eu/budget/consultations/index_en.cfm. 
69   COM(2016)605 of 14.09.2016. 

28 

 
                                                 
procedures, notably  through  facilitating  the  combination  of  European 
Structural  and  Investment  Funds  funding  with  financial  instruments  and 
the European Fund for Strategic Investments. 

–  More  effective  use  of  financial  instruments: optimise  use  of  reflows, 
ensuring  a  level  playing  field  among  key  EU  implementing  partners, 
reducing burdensome requirements related to publication of individual data 
of final recipients or to the exclusion criteria. 

among  which the 

crisis  management 

–  More flexible budget management: the proposal sets out several ways for 
more  budgetary  flexibility,  in  order  to  allow  the  Union  to  respond  to 
unforeseen  challenges  and  new  tasks  more  effectively  and  to  achieve 
creation of 
- 
swifter 
a "flexibility cushion" for  unforeseen  needs  and  new  crises in  the external 
actions geographic  instruments  budget,  a  more  efficient  activation  of  the 
European  Union  Solidarity  and  Globalisation  Adjustment  funds, the 
extension  of  Trust-Funds  to  internal  policies,  the  creation  of  a  new 
European  Union  Crisis  Reserve  with 
the  reuse  of  decommited 
appropriations, and for the next  Multiannual  Financial  Framework, create 
the  possibility  for  generating  a  contingent  liability  for  the  Union  outside 
the  area  of  financial  instruments  and  the  creation  of  a  common 
provisioning  fund  holding 
the  resources  provisioned  for  financial 
operations. 

–  Focus  on  results  and streamlining  of reporting: a  stronger  focus  on 
results  through  lump  sums,  prizes,  payment  based  on  output  and  results 
rather  than  on  reimbursement  of  costs,  payment  against  conditions  to  be 
fulfilled.  This  should  contribute  to  further  reducing  the  costs  of 
implementing EU funds as well as the number of errors. On the reporting 
side,  reports  are  regrouped  around  the  draft  budget  and  the  integrated 
financial  reporting  package, 
increase  efficiency  and 
in  order 
transparency both towards the general public and the budgetary authority. 

to 

–  Simpler  and  leaner  EU  administration: facilitating  arrangements  or 
the 
delegations  between  Institutions  or  bodies 
implementation  of  administrative  appropriations  in  European  Offices  or 
within  Executive  Agencies;  merging  consultative  panels  competent  of 
financial  irregularities  and  moving  from  annual  to  multiannual  financing 
decisions. 

in  order 

to  pool 

–  Citizen engagement: the proposal provides for a possibility for citizens to 
be  consulted  on  the  implementation  of  the  Union  budget  by  the 
Commission, Member States and any other entity implementing the Union 
budget. 

In  simplifying  and  making  EU  financial  rules  more  flexible,  the  above 
proposals pave the way for the preparation of the next generation of spending 
programmes in the next MFF.  

29 

 
3.3.3. 

Improving  the  interoperability  of  funds,  financial  instruments  and 
EFSI 

The principle of complementarity of the European Structural and Investment 
Funds with the centrally managed financial instruments was enshrined in their 
respective  legal  acts.    Provisions  exist  in  the  legislative  framework  for  ESI 
Funds  concerning  the  possibilities  for  combination  of  financial  instruments 
with grants and with other financial instruments. Nevertheless the facilitation 
of their combination with EU level instruments as regards state aid is key.  

The Commission proposal to simplify financial rules, which accompanies the 
review, aims at improving the interoperability of funds, financial instruments 
and the EFSI by amending the Financial Regulation and relevant basic acts in 
order to:  

–  facilitate  the  use  of  European  Structural  and  Investment  Funds  to  top-up 
successful  financial  instruments  at  central  level  with  limited  EU  budget 
resources,  such  as  EaSI,  by  avoiding  additional  state-aid  checks  where 
European  Structural  and  Investment  Funds  go  into  EU-level  financial 
instruments; 

–  allow  for  the  application  of  only  one  set  of  rules  in  the  case  of 
combination  of  measures  or  instruments:  the  proposal  aims  at  achieving 
further  simplification,  e.g.  by  applying  financial  instruments  rules  also  to 
complementary grants where both are combined,; 

4.  HOW  WE  ARE  ASSESSED:  PERFORMANCE,  ACCOUNTABILITY  AND  MULTIANNUAL 

ERROR RATES 

4.1.  Towards a reinforced EU Performance Budgeting System 

A  performance  budgeting  system,  aligned  on  the  Europe  2020  strategy,  has 
been established for the EU budget with the adoption of the MFF 2014-2020. 
The  EU  programmes'  performance  framework  is  designed  to  provide  the 
Budgetary  Authority  with  ex-ante  and  ex-post  performance  information 
relevant for decision-making during the budgetary procedure. Legal bases and 
implementing acts of multiannual programmes include a set of clearly defined 
objectives,  indicators,  milestones  and  long-term  targets,  which  are  collected 
and reported on a regular basis through programme statements70.  

In  the  framework  of  the  Budget  Focused  on  Results  initiative  launched  in 
2015,  the  Commission  works  closely  with  international  organisations  with 
particular  expertise  in  budget  performance,  especially  the  OECD,  to  ensure 
that the performance framework is aligned with international best practices as 
well as to identify possible areas for improvements.  

Expert  meetings  on  performance  budgeting  are  organised  with  a  view  to 
pooling the expertise of the Commission, the European Parliament, Member 

70    http://ec.europa.eu/budget/library/biblio/documents/2017/DB2017_WD01_en.pdf  

For further information on performance reporting, see Chapter 5.  

30 

 
                                                 
States, the Court of Auditors and international organisations and  to agree on 
the  best  use  of  performance  information  integrated  in  the  annual  and 
multiannual EU budget framework to inform political decisions.  

One  of  the  risks  associated  with  performance-based  budgeting  is  the 
multiplication  of  quantitative  indicators  as  definite  tools  for  evaluating  a 
public  policy.  This  imposes  high  implementation  costs  and  may  not  be 
proportionate  to  the  results  in  terms  of  relevant  and  timely  evidence  for 
decision-making.  Consequently,  the  Commission  engaged  in  a  process  to 
streamline  indicators  and  selecting  the  most  meaningful  and  reliable  ones, 
while diminishing measurement costs. 

The Commission proposal to simplify financial rules, which accompanies the 
review, seeks to amend the Financial Regulation in order to ensure a common 
understanding  of  performance  and  to  provide  a  stronger  focus  on  results 
through lumps sums, prizes, and payment against conditions to be fulfilled or 
based  on  outputs  and  results  rather  than  on  reimbursement  of  costs.  This 
should contribute to further reducing the costs of implementing EU funds as 
well as the number of errors.  

4.2.  Accountability and reporting 

As from 2015 the Commission has reinforced budget planning and reporting. 
One  illustration  of  this  process  is  the  publication  of  an  Integrated  Financial 
Reporting  Package  in  July  2016,  including  the  annual  accounts,  the 
Communication  on  the  performance  of  the  EU  budget,  the  Financial  Report 
and  the  Annual  Management  and  Performance  Report71  for  the  EU  Budget. 
This  annual  reporting  package  fulfils  existing  requirements  for  EU-budget 
programmes  evaluation  established  in  the  EU  Treaty  and  the  accountability 
requirements for the budget management by the Commission as established in 
the Financial Regulation on the EU budget.  

is  a  need 

reporting  obligations, 

Beyond 
to  enhance  public 
there 
communication and accountability of all bodies implementing the EU budget: 
the Commission, Member states, International organizations and agencies. In 
September 2015, at the first annual conference on Budget focused on results, 
the  EU  Results  database  was  launched  in  order  to  improve  the  visibility  of 
EU  funding,  with  EU-financed  projects  in  Europe  and  across  the  world 
presented in a single web application72. 

The  Commission  seeks  to  further  streamline  ex  ante  and  ex  post 
reporting,  in  particular  on  the  performance  of  programmes,  around  the 
Draft  annual  Budget  and  the  Integrated  financial  reporting  package,  in 
order to increase efficiency and transparency both towards the general public 
and the budgetary authority. 

71   http://ec.europa.eu/budget/biblio/media/2016package_en.cfm 
72   http://ec.europa.eu/budget/euprojects/ 

31 

 
                                                 
4.3.  Multiannual error rates  

The  Commission  implements  multiannual  control  strategies  to  ensure  the 
legality  and  regularity  of  the  financial  operations.  Controls  are  both 
implemented  before  payment  (preventive,  ex-ante)  and  after  payment 
(corrective, ex-post).  

In  order  to  provide  an  overall  view,  the  Commission  reports  on  the  best 
estimates  of  the  amount  at  risk  (i.e.  expenditure  in  breach  of  applicable 
regulatory  and  contractual  provisions)  for  the  budget  and  of  corrections 
expected  in  the  future.  The  comparison  of  these  two  figures  provides  an 
estimation  of  the  amount  at  risk  at  closure,  i.e.  the  level  of  error  after  all 
corrective measures have been implemented at the closure of the programmes.  

The amount at risk at closure represents the Commission management's view 
on  the  performance  of  the  multiannual  control  strategies.  It  appropriately 
reflects  the  fact  that  the  control  cycle  is  multiannual  and  that  further 
corrective measures can be implemented until closure.  

The amount at risk at closure was produced for the first time for the various 
policy areas in the 2015 Annual Management and Performance Report for the 
EU  Budget.  The  amount  at  risk  estimated  at  the  end  of  2015  represented 
between 2.3% and 3.1% of the relevant 2015 expenditure. This is expected to 
be  brought  down  to  between  0.8%  and  1.6%  at  closure,  once  all  corrective 
measures  have  been 
the  multiannual  corrective 
mechanisms adequately protect the EU budget from expenditure in breach of 
law. 

implemented.  Thus, 

In  order  to  further  enhance  the  efficiency  of  controls  and  reduce  potentially 
redundant  bureaucracy  in  the  implementation  of  EU  funds,  the  proposed 
amendment  of  the  Financial  Regulation  includes  provisions  encouraging 
reliance  on  single  audits  instead  of  multiple  layers  of  controls.  More 
generally,  rules  for  implementing  partners  whose  audit  meets  the  necessary 
conditions  to  be  taken  into  account  in  the  EU  system    (certain  international 
organisations,  EIB/EIF,  national  promotional  banks,  national  agencies, 
NGOs)  will  be  simplified  by  relying  increasingly  on  their  procedures  and 
policies  once  assessed  positively.  Framework  partnership  agreements 
concluded with long term partners will allow progressing in the harmonisation 
of audit, reporting and other administrative requirements among donors. 

5.  BUDGETARY AVAILABILITIES IN THE 2014-2020 MFF  

5.1.  Financing needs for the initiatives proposed by the Mid-Term Review 

The previous sections proposed a series of initiatives to reinforce the priority 
given to (i) jobs and growth and (ii) responding to the new challenges linked 
to  migration,  refugees  and  security.  These  initiatives  would  require  about 
EUR  6.3  billion  in  commitments  over  the  remaining  years  of  the  MFF  to 
reinforce the budget availabilities in four areas: 

1.  Heading 1A: EUR 1.4 billion to reinforce Horizon 2020, CEF-Transport 

and Telecom, Erasmus+, COSME, and the EFSI;  

32 

 
2.  Heading  1B:  EUR  1  billion  for  the  prolongation  of  the  Youth 

Employment Initiative; 

3.  Heading  3:  EUR  2.55  billion  for  the  years  2018-2020  to  finance  the 
European Border and Coast Guard and the reinforcement of EUROPOL as 
well as the Commission proposals related to the EU Agency for Asylum, 
the review of the Dublin common asylum system, the Emergency support 
within  the  Union  and  the  Entry/Exit  system  which  aims  at  registering 
entry, exit and refusal of entry data of third country nationals crossing the 
external borders of the Member States of the EU.  

4.  Heading 4: 

a.  EUR  385  million  for  reinforcing  the  Macro-Financial  Assistance 
instrument  and  the  'Extended  External  lending  Mandate'  of  the 
EIB; 

b.  EUR  1  billion  for  the  Partnership    framework  process  and  the 

European Fund for Sustainable Development; 

Moreover, it is proposed to earmark the EUR 4.6 billion stemming from the 
adjustment  of  the  national  envelopes  for  cohesion  policy  for  sustaining  the 
effort  to  fight  against  youth  unemployment,  integration  of  refugees  and 
supporting investment through financial instruments and in combination 
with the EFSI. 

In  conjunction  with  the  use  of  margins  and  special  instruments  of  EUR  1.8 
billion  mainly  for  migration  proposed  in  the  Draft  Budget  2017,  these  three 
components  would  amount  to  an  overall  reinforcement  of  about  EUR  13 
billion  which  would  allow  addressing  the  persistently  urgent  needs  and 
common  political  priorities 
financial 
programming period. 

the  remainder  of 

the 

for 

5.2.  Budgetary availabilities in the remainder of the 2014-2020 MFF 

Taking  into account the  above  proposals, the overall budgetary margins still 
remaining  in  2017-2020  would  amount  to  EUR  1.9  billion.  Margins  could 
materialise  in  Heading  2  over  2018-20  due  to  higher  assigned  revenue  than 
foreseen  when  the  MFF  ceilings  were  established,  although  not  to  the  same 
extent than experienced in the first years of the MFF given that some sources 
of  assigned  revenue  do  not  exist  any  longer  (e.g.  the  milk  superlevy)  and  a 
backlog of conformity procedures has been cleared.  

In order to maintain a sufficient capacity for the budget to react to unforeseen 
events until the end of the MFF period, the Commission therefore proposes to 
reinforce  special  instruments73  and  to  create  a  new  European  Union  Crisis 
Reserve, funded through the re-budgeting of de-committed appropriations, by 
means of an amendment of the MFF Regulation and the Financial Regulation. 
With  the  proposed  doubling  of  the  annual  availabilities  of  the  Flexibility 
instrument  and  the  Emergency  Aid  Reserve,  a  total  of  EUR  4.1  billion  and 

73   See above section 3.1. 

33 

 
                                                 
EUR  2.5  billion  respectively  would  be  available  in  2017-2020  under  these 
instruments.  Based  on  the  latest  estimates  (see  annex  6),  the  additional 
availabilities  that  could  stem  from  the  proposed  re-use  of  de-committed 
appropriations  could  range  between  EUR  3  and  EUR  4  billion  per  year  on 
average.   

5.3.  Sufficiency of payment ceilings 

The  constraints  on  the  payment  appropriations  authorised  in  past  budgets 
combined  with  the  implementation  cycle  of  the  cohesion  programmes  from 
the  previous  MFF  led  to  the  progressive  building  up  of  very  significant 
backlog  of  outstanding  payment  claims  at  year-end, 
reaching  an 
unprecedented  level  of  EUR  24.7  billion  at  the  end  of  2014.  Difficult 
decisions  made  with  regards  to  the  2014  and  2015  budgets,  in  line  with  the 
payment  plan  agreed  by  the  European  Parliament,  the  Council  and  the 
Commission74, have progressively reduced the abnormal backlog, which will 
be fully resorbed by end 2016.  

By contrast, lower needs than originally foreseen in 2016 and a large "dip" in 
the payment profile in 2017 would be mainly due to the delayed start of the 
implementation  of  cohesion  before  bouncing  back  above  the  annual  ceilings 
in the later years of the MFF once the programmes would reach their cruising 
speed.  However,  the  risk  of  accumulating  a  significant  amount  of  abnormal 
backlog again in the later years of the MFF should be mitigated by the Global 
Margin 
transferring  unused  payment 
appropriations to later years.  

for  Payments,  which  allows 

Based on the current payment forecast, it is proposed to use the margins in 
payments to advance in 2017 the offsetting of the 2014 mobilisation of the 
contingency  margin  in  order  to  be  able  to  deal  with  the  likely  increase  of 
payments  in  2018-2020.  It  is  therefore  proposed  to  amend  Decision  EU 
2015/435  on  the  mobilisation  of  the  Contingency  Margin  in  payment  of  17 
December 2014. 

Bringing together the medium-term current payments forecast, which shows a 
margin  until  2020  of  EUR  5.3  billion,  and  the  additional  needs  stemming 
from  the  Mid-Term  Review,  estimated  at  about  EUR  3  billion75,  the  overall 
payment ceiling would be just sufficient under two necessary conditions: 

•  The  payments  for  Special  instruments  are  counted  over  and  above  the 
ceilings in the same way as commitments; 

•  The  Global  Margin  for  Payments  is  used  to  the  full  extent  necessary  to 
provide specific and maximum flexibility. 

It  should  be  noted  that  there  are  upside  and  downside  risks  to  this  medium-
term  payment  forecasts  given 
the  pace  of 
implementation  of  cohesion  policy.  A  (+/-)  1%  change  in  the  pace  of 
implementation  leads  to  a  (+/-)  EUR  4  billion  change  in  payment  needs. 

large  sensitivity 

its 

to 

74   Joint statement on a payment plan 2015-2016, 26 May 2015. 
75   See Annex 6. 

34 

 
                                                 
While  downside  risks  would  translate  into  lower  annual  appropriations  for 
payments,  the  materialisation  of  upside  risks  would  require  increasing  the 
payment appropriations and to  adjust  the  ceilings accordingly76 as  otherwise 
an abnormal backlog would build up again. 

6.  TOWARDS THE NEXT MULTIANNUAL FINANCIAL FRAMEWORK  

6.1.  Context of the next MFF 

In  line  with  the  Budget  focused  on  results  initiative,  European  Value 
Added/subsidiarity principles as well as focus on impact and performance of 
the EU budget should be at the core of the next MFF proposals. Therefore, the 
next MFF should build on the upcoming mid-term evaluations of the current 
programmes.  

Identifying  the  challenges  for  the  next  MFF  will  also  require  a  thorough 
analysis  of  the  medium-term  challenges  over  a  10-year  horizon,  a  major 
difficulty given the rapid changing circumstances of our globalised world. A 
financial  framework  which  has  to  bridge  the  gap  between  stable  investment 
horizon and catering for acute emergencies will require inbuilt resilience and 
flexibility from the very outset. 

The EU budget has an important role to play as a leverage instrument in the 
policy, political and financial sense: even a small amount of money can have 
a  significant  impact  by  being  attached  to  conditions  that  lead  to  changes  in 
national  policymaking  (conditionality):  the  link  of  EU  funds  with  economic 
governance  will  deserve  particular  attention  in  the  next  MFF  context.  Also, 
fostering  cooperation  between  Member  States  in  areas  where  economies  of 
scale and/or externalities are significant is essential: this will be paramount to 
address  new  challenges  such  as  in  the  areas  of  migration,  security  and 
defence.  

The  proposal  to  create  for  the  next  MFF  contingent  liabilities  beyond  the 
assets  provisioned  and  to  set-up  a  common  provisioning  fund  which  would 
centralise guarantees provided by the Union budget, which is included in the 
Commission's proposal to simplify financial rules , underpins this toolbox and 
allows increasing the leverage of the EU budget.  

6.2.  Duration of the next MFF 

As  part  of  their  agreement  on  the  2014-2020  MFF,  the  three  institutions 
concluded that, in the context of the Mid-Term Review/Revision, they would 
examine  "the  most  suitable  duration  for  the  subsequent  MFF  before  the 
Commission  presents  its  proposals  with  a  view  to  striking  the  right  balance 
between the  duration  of  the  respective  terms  of  office  of  the  members  of  the 

76   Art.18 of the MFF regulation 1311/2013 provides that the Commission shall present any proposals to 
revise  the  total  appropriations  for  payments  which  it  considers  necessary,  in  the  light  of 
implementation, to ensure a sound management of the yearly payments ceilings and, in particular, their 
orderly progression in relation of the appropriations in commitments.  

35 

 
                                                 
European  Parliament  and  the  European  Commission  -  and  the  need  for 
stability for programming cycles and investment predictability”77. 

Three main options for the duration of the MFF were discussed in the past: (a) 
alignment  to  the  political  mandates  (five  years),  (b)  sticking  to  the  seven 
years, or (c) considering a period of ten years with a substantial/compulsory 
review after five years ("5+5")78. 

In its Resolution on the preparation of the post-electoral revision of the MFF 
2014-2020, adopted on 06 July 201679, the European Parliament pointed out 
that,  "given  the  rapidly  changing  political  environment  and  with  a  view  to 
ensuring  greater flexibility, some elements of the  MFF should be  agreed for 
five years while others, notably those related to programmes requiring longer-
term  programming  and/or  policies  foreseeing  complex  procedures  for  the 
establishment  of  implementation  systems,  should  be  agreed  for  a  period  of 
5+5 years with compulsory mid-term revision."  

6.3.  EDF budgetisation 

As regards the budgetisation of the European Development Fund (EDF), and 
recalling  the  2013  Interinstitutional  Agreement  where  the  "European 
Parliament and the Council note that the Commission […] intends to propose 
the  budgetisation  of  the  EDF  as  of  2021",  the  Commission  will  carefully 
analyse  the  way  forward,  taking  into  account  all  relevant  circumstances  and 
considerations, including:  

–  The  overall  design  and  structure  of  the  post-2020  external  action 

instruments; 

–  The nature of the partnership between the European Union and the African, 
Caribbean and Pacific countries after the expiry of the Cotonou agreement 
in 2020;  

–  Lessons 

learned  from  evaluations  of  previous  action,  stakeholder 

consultations and impact assessments of various arrangements.  

6.4.  Potential new spending areas: defence and security  

There is a growing expectation that the EU should take greater responsibility 
for  the  EU  security  and  defence.  Alongside  external  crisis  management  and 
capacity-building, the EU should be able to  assist in  protecting its Members 
upon their request, and its institutions. This means delivering on commitments 
to  mutual  assistance  and  solidarity  and  includes  addressing  challenges  with 
both internal and external dimension, such as terrorism, hybrid threats, cyber 

77   Third recital of Council Regulation No 1311/2013. 
78  

In its October 2010 Communication on the Budget Review, this latter option of ten years period with 
a “substantial mid-term review” (“5+5”) was presented as the “most attractive one”: COM(2010) 700 
final, 19.10.2010, p. 22. Ahead of the Commission proposals for the MFF, the European Parliament 
opted  for  a  seven  years  period  as  the  “preferred  transitional  solution”,  whilst  this  “should  not  pre-
empt the possibility of opting for a 5 or 5+5 year period as of 2021”: European Parliament Resolution 
of  8  June  2011:  Investing  in  the  future:  a  new  Multiannual  Financial  Framework  (MFF)  for  a 
competitive, sustainable and inclusive Europe (2010/2211(INI)), P7_TA(2011)0266. 

79   2015/2353(INI). 

36 

 
                                                 
and  energy  security,  organised  crime  and  external  border  management.  For 
instance,  the  Common  Security  and  Defence  Policy  (CSDP)  missions  and 
operations can work alongside the European Border and Coast Guard and EU 
specialised  agencies  to  enhance  border  protection  and  maritime  security  in 
order  to  save  more  lives,  fight  cross-border  crime  and  disrupt  smuggling 
networks.  

In  this  context,  should  the  results  of  the  Preparatory  Action  on  Defence 
Research  (see  section  2.3)  be  positive,  considerations  could  be  given  to 
include  an  EU  Defence  Research  in  next  MFF.  Future  EU  defence  research 
financing  should  be  designed  to  support  a  strong  European  industrial  base 
able to deliver the strategic capability needs of Europe and identify where the 
EU  could  provide  an  added-value.  It  shall  aim  to  ensure  development  and 
maintenance  of  defence  capabilities  requiring  both 
investments  and 
optimising  the  use  of  national  resources  through  deeper  cooperation.  The 
Commission  upcoming  European  Defence  Action  Plan  will  support  the 
the 
European 
mobilisation of EU instruments, including EU financing tools, as appropriate. 

industrial  base  and  facilitate  defence  cooperation  via 

6.5.  Own resources 

Whilst  the  2011  Commission  proposals  on  reforming  the  Own  Resources 
system  of  the  Union  did  not  meet  the  required  unanimous  agreement  in 
Council, the European Council of February 2013 invited Council to continue 
examining the Commission proposal of an own resource based on value added 
tax  to  make  it  as  simple  and  transparent  as  possible  and  to  ensure  equal 
treatment  of  taxpayers  in  all  Member  States.  It  also  invited  Member  States 
participating  in  the  enhanced  cooperation  on  the  financial  transaction  tax  to 
examine if it could become the base for a new own resource. 

In order to provide a framework for a structured dialogue between institutions 
on  the  future  of  the  Own  Resources  system,  a  high  level  Group  (HLGOR), 
composed  of  members  appointed  by  the  three  institutions  and  chaired  by 
former  Prime  Minister  of  Italy  and  Commissioner  Mario  Monti,  was 
established  in  that  spirit.  The  Group  issued  a  joint  diagnosis  on  the  current 
Own Resources system80. 

The Commission will carefully assess the recommendations that the HLGOR 
is expected to submit at the end of 2016 in the preparatory phase of its  next 
MFF package, and make legislative proposals as appropriate81.  

6.6.  Completing Europe's Economic and Monetary Union  

In June 2015, the President of the European Commission, in close cooperation 
with  the  President  of  the  Euro  Summit,  the  President  of  the  Eurogroup,  the 
President  of  the  European  Central  Bank  and  the  President  of  the  European 
Parliament  presented  a  report  on  an  ambitious  yet  pragmatic  roadmap  for 

80  More information available on: http://ec.europa.eu/budget/mff/hlgor/index_en.cfm. 
81   The  present  Own  Resources  system  is  managed  under  the  provisions  of  the  2007  Own  Resources 
Decision (ORD), Council Decision EC, Euratom 2007/436/EC, Official Journal L 163 of 23/06/2007. 
The ORD 2014 will come into effect once the ratification process which is underway is completed (ref. 
Council Decision 5602/14 of 12 February 2014).  

37 

 
                                                 
completing  the  EMU82.  This  Five  Presidents'  Report  makes  the  point  that 
progress  is  necessary  on  four  fronts  in  parallel:  firstly,  towards  a  genuine 
Economic  Union  that  ensures  each  economy  has  the  structural  features  to 
prosper within the Monetary Union; secondly, towards a Financial Union that 
guarantees  the  integrity  of  the  currency  across  the  Monetary  Union  by 
limiting risk to financial stability and increasing risk-sharing with the private 
sector; thirdly, towards a Fiscal Union that delivers both fiscal sustainability 
and fiscal stabilisation; and finally, towards a Political Union that provides the 
foundation  for  all  of  the  above  through  genuine  democratic  accountability, 
legitimacy and institutional strengthening. 

The Five Presidents also agreed on a roadmap for implementation that should 
consolidate  the  euro  area  by  early  2017.  In  October  2015,  a  Commission 
"Communication  on  steps  towards  Completing  Economic  and  Monetary 
Union"83  set  out  specific  actions  for  the  first  stage84.  In  Stage  2,  more  far-
reaching  measures  should  be  agreed  upon  to  complete  the  EMU's  economic 
and institutional architecture.  

To prepare the transition from Stage 1 to Stage 2 of completing the EMU, the 
Commission  will  present  a  White  Paper  in  spring  2017,  building  on  the 
progress made in Stage 1 and outlining the next steps needed to complete the 
EMU in Stage 2. The White Paper  will be prepared in consultation with the 
Presidents of the other EU institutions.  

82   Completing  Europe's  Economic  and  Monetary  Union,  Report  by  Jean-Claude  Juncker,  in  close 
cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz, 22 June 2015. 

83   http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52015DC0600&from=EN  
84   http://europa.eu/rapid/press-release_IP-15-5294_en.htm.  

38 

 
 
                                                 
ANNEXES 

ANNEX 1: MFF 2014-2020 

39 

Competitive-ness  13%Cohesion 34%Natural Ressources 39%Security and Citizenship  2%Global Europe 6%Administration6%MFF 2014-2020Ceilings for commitment appropriations per heading (in % of total) 
 
 
 
40 

(EUR million - current prices)COMMITMENT APPROPRIATIONS2014201520162017201820192020Total2014-20201. Smart and Inclusive Growth52 75677 98669 30473 51276 42079 92483 661513 5631a: Competitiveness for growth and jobs16 56017 66618 46719 92521 23923 08225 191142 1301b: Economic, social and territorial cohesion36 19660 32050 83753 58755 18156 84258 470371 4332. Sustainable Growth: Natural Resources49 85764 69264 26260 19160 26760 34460 421420 034of which: Market related expenditure and direct payments43 77944 19043 95144 14644 16344 24144 264308 7343. Security and citizenship1 7372 4562 5462 5782 6562 8012 95117 7254. Global Europe8 3358 7499 1439 4329 82510 26810 51066 2625. Administration 8 7219 0769 4839 91810 34610 78611 25469 584of which: Administrative expenditure of the institutions7 0567 3517 6798 0078 3608 7009 07156 2246. Compensations 2900000029TOTAL COMMITMENT APPROPRIATIONS121 435162 959154 738155 631159 514164 123168 7971 087 197as a percentage of GNI0.90%1.17%1.05%1.04%1.04%1.04%1.03%1.04%TOTAL PAYMENT APPROPRIATIONS135 762140 719144 685142 906149 713154 286157 3581 025 429as a percentage of GNI1.01%1.02%0.98%0.95%0.97%0.97%0.96%0.98%Margin available0.22%0.21%0.25%0.28%0.26%0.26%0.27%0.25%Own Resources Ceiling as a percentage of GNI1.23%1.23%1.23%1.23%1.23%1.23%1.23%1.23%MULTIANNUAL FINANCIAL FRAMEWORK (EU-28)Technical adjustment for 2017 
ANNEX 2: CLIMATE TRACKING OF 20 % TARGET 

The Commission's method  for  tracking  climate related expenditure across  the EU budget is based on 
using  the  so-called  climate  markers  which  distinguish  ‘primary’  and  ‘significant’  expenditure  with 
respective assigned values of 100%  and 40% that are counted as climate related spending. Given the 
range of implementing procedures (centrally managed, shared management, programmable/bottom-up), 
the  approach  to  implementation  varies  across  programmes  and  the  general  methodology  is  refined  to 
reflect the specific circumstances.  

The  main  purpose  of  setting  a  climate  relevant  spending  target  in  the  budget  is  to  incentivise  the 
integration  of  climate  considerations  at  the  programming  stage,  with  the  tracking  providing  a  proxy 
indicator.  

The  methodology  is  more  detailed  for  the  European  Structural  and  Investment  Funds,  Horizon  2020 
and the European Agricultural Guarantee Fund, which make up more than 80% of the EU budget, and 
more  than  90%  of  climate-related  spending.  With  all  operational  programmes  now  in  place  and  the 
method  for  tracking  climate  spending  set  for  all  programmes,  the  Commission  can  use  the  data  as  a 
baseline to track further evolution.  

For  2014-2017,  data  is  updated  mostly  on  the  basis  of  actual  commitment  allocations  (for  centrally 
managed funds) or on the basis of proportional distribution of the allocation of thematic objectives in 
final operational programmes over the whole 2014-2020 period (shared management funds, primarily 
ESI Funds).  

Regarding the forecasts for 2018-2020, the indicative data depend on the programming process. For 
ESI  Funds,  these  reflect  the  proportion  of  the  relevant  activities  across  the  whole  MFF  period.  For 
centrally  managed  funds  where  Mid-Term  Reviews  might  reallocate  funds  between  objectives  and 
priorities, the forecasts can be a mathematical average. 

As  a  denominator  for  calculating  the  share  of  climate  related  spending  in  the  EU  budget,  the 
Commission  uses  the  same  baseline  as  in  the  annual  monitoring  as  included  in  the  annual  budgetary 
documents, based on the latest available financial programming. In as far as the financial programming 
is a dynamic system, the exact percentage share may vary slightly from one year to the next.   

41 

 
 
 
42 

(EUR million, commitment appropriations)Programme2014201520162017201820192020Total 2014-2020For Reference: Total EU Budget (Section III-Commission, Financial programming)118 054.4158 606.8151 241.6153 757.8156 782.8159 966.3164 145.41 062 554.9Total Climate Change finance in the EU budget16 097.727 475.731 634.429 726.830 777.731 833.632 307.7200 986.9Share of climate relevant spending in EU budget13.6%17.3%20.9%19.3%19.6%19.9%19.7%18.9%HEADING 1a — COMPETITIVENESS FOR GROWTH AND JOBS3 347.53 422.04 036.33 968.14 320.74 985.75 098.229 178.5European Earth Observation Programme (Copernicus)120.4190.3200.7209.7220.8299.1213.51 454.4Horizon 2020 – The Framework Programme for Research and Innovation2 090.92 251.12 053.52 103.52 458.12 691.92 918.816 567.8Connecting Europe Facility (CEF) (including contributions tyo H2020) 1 115.0959.01 761.01 631.01 618.01 970.01 939.010 993.0Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME)21.221.621.123.923.824.726.9163.2HEADING 1b — COHESION POLICY5 339.18 933.17 363.77 780.38 291.48 562.98 813.256 217.0European Regional Development Fund (ERDF) 3 144.66 121.24 959.25 281.35 669.75 840.96 004.537 021.4Cohesion Fund (CF)2 194.42 811.92 404.52 499.02 621.72 722.02 808.718 062.2Europpean Social Fund (ESF), estimate over the period161.9161.9161.9161.9161.9161.9161.91 133.3HEADING 2 — SUSTAINABLE GROWTH: NATURAL RESOURCES6 679.314 071.419 040.916 646.316 808.816 815.216 838.5106 900.3European Agricultural Guarantee Fund (EAGF)3 316.03 273.07 938.08 014.08 147.08 164.08 172.047 024.0European Agricultural Fund for Rural Development (EAFRD)3 033.010 455.010 744.08 260.08 265.08 236.08 238.057 231.0European Maritime and Fisheries Fund (EMFF)139.4141.2142.5144.8148.2149.2151.91 017.2Programme for the Environment and Climate Action (LIFE)190.9202.2216.4227.5248.6266.0276.61 628.1HEADING 3 — SECURITY AND CITIZENSHIP6.94.05.45.86.17.07.542.7Union Civil Protection Mechanism6.94.05.45.86.17.07.542.7HEADING 4 — GLOBAL EUROPE724.91 045.21 188.11 326.31 350.81 462.81 550.48 648.4Union Civil Protection Mechanism1.62.12.12.12.52.62.715.7Instrument for Pre-accession Assistance (IPA II)90.1210.3222.3305.4250.8270.1288.41 637.3EU Aid Volunteers initative (EUAV)0.00.01.72.52.22.32.411.1Instrument of financial support for the Turkish Cypriot community 10.18.75.08.50.00.00.032.3European Neighbourhood Instrument (ENI)185.0268.0245.0259.2272.8309.2343.91 883.2Development Cooperation Instrument (DCI)379.9497.9639.8682.5748.5803.7837.24 589.6Partnership instrument for cooperation with third countries (PI)20.920.529.923.030.030.030.0184.3Humanitarian Aid37.337.842.343.144.044.845.7295.0Climate Mainstreaming 2014-2020 - totals by programme2014-20172018-2020 estimates 
 
ANNEX 3: EUROPEAN UNION TRUST FUNDS  

The  EU  regional  Trust  Fund  for  the  Central  African  Republic  (Bêkou)  was 
established in July 2014, the EU regional Trust Fund in response to the Syrian crisis 
(Madad)  in  December  2014,  and  the  European  Union  Emergency  Trust  Fund  for 
Stability and Addressing Root Causes of Irregular Migration and Displaced Persons 
in  Africa  in  November  2015.  The  fourth  planned  EUTF  will  aim  to  support  the 
peace  process  in  Colombia.  It  received  the  unanimous  approval  of  Member  States 
within the DCI Committee and is expected to be established as soon as possible.  

The  EUTFs  are  set  up  as  pool  funds  (i.e.  bank  accounts)  established  between  the 
Commission and other donors for a specific purpose (for instance, providing support 
to  a  country  or  region  in  crisis,  such  as  Syria  or  Northern  Africa,  or  addressing  a 
specific thematic issue, such as energy). Both the EU and other donors (usually EU 
Member  States)  contribute  to  EUTFs.  Although  these  funds  are  managed  by  the 
Commission,  they  are  separate  from  the  EU  Budget  or  the  EDF.  The  use  and 
implementation  of  funds  therefore  follow  its  own  specific  rules  pursuant  to  its 
constitutive agreement, signed between the Commission and the other donors.  

These agreements establish inter alia the governing structures of a EUTF (namely a 
Board and an Operational Committee where the Commission and other donors are 
represented), the role of the Commission as manager, and how the decisions on the 
global strategy and on the use of their funds for specific actions should be adopted 
by  these  governing  bodies.  Before  the  signature  of  a  constitutive  agreement 
establishing  a  EUTF,  the  College  adopts  the  relevant  establishment  decision 
authorising  its  signature  (the  draft  agreement  is  attached).  Moreover,  all  the 
contributions  of  the  EU  budget  (or  EDF)  to  a  EUTF  are  made  on  the  basis  of  a 
financing  decision.  Once  the  EUTF  is  established,  activities  are  proposed  by  the 
Manager  to  the  governing  bodies  and  agreed  in  principle  by  consensus. 
Implementation follows, as a rule, the normal procedures of the Commission. 

Contributions  from  Member  States  and  other  donors  vary  depending  on  the  trust 
fund. As they are open for further contributions during their existence, it is difficult 
to predict the total financing available. Furthermore, the different objectives of the 
trust  funds  have  translated  into  a  very  diverse  range  of  donors  and  contributions, 
depending  mainly  on  donors’  own  internal  priorities  and  areas  of  interest.  The 
contributions  also  depend  on  attraction  capacity  of  the  objective  of  the  EUTF, 
needs,  policy  priorities  and  the  international  context.  Disbursements  may  also  be 
done  in  different  years,  and  therefore  pledges  should  be  taken  into  account.  See 
below tables reflecting pledges for each of the EUTFs in place.  

The following pages show the State of Play of the three established EUTFs.  

43 

 
 
 
 
 
Bêkou Trust Fund 

44 

The EU Trust Fund for the Central African RepublicBêkou Trust Fund (T003)AmountContributions:Amount (EUR)Contributions through EU instruments:EDF and EDF Reserve68 000 000DCI30 100 000ECHO3 000 000Total  EU Budget and EDF101 100 000Total external contributions of which34 950 000   Total Acknowledged MS contributions34 000 000Total Acknowledged other contributions950 000Grand Total 136 050 000Financial performance:Total commitment appropriations96 695 680Total committed: 75 250 139Total commitments available: 21 445 541Total paid: 24 672 376Recovery orders cashed from MS + others28 925 326recovery order cashed from other external contributorsRecovery orders cashed EU Budget12 000 000Recovery order cashed EDF 39 000 000Recovery total cashed79 925 362Objective:To support all aspects of the Central African Republic's (CAR) exit from crisisto reconstruction and to promote stabilisation.Basis for creation:The Constitutive Agreement establishing the EUTF was signed on 14 July 2014External Contributors:France, Germany, Netherlands, Italy and Switzerland 
 
 
 
Madad Trust Fund 

45 

EU Regional Trust Fund inn response to the Syrian crisisMadad Trust Fund (T004)Contributions:Amount (EUR)Contributions through EU instrumentsENI 522 032 000IPA242 278 000DCI31 000 000Total  EU Budget 795 310 000Total external contributions of which93 950 000Total Acknowledged MS contributions69 300 000Total Acknowledged other contributions *24 650 000Grand Total 889 260 000Financial performance:Total commitment appropriations:705 206 707Total committed: 629 333 271Total commitments available: 75 873 436Total paid: 125 599 671Recovery orders cashed from MS53 228 238Recovery orders cashed from Turkey24 650 228Recovery orders cashed EU Budget158 919 261Recovery total cashed236 797 727* Turkish co-financing to IPA packageObjective: To provide a coherent and reinforced aid response to the Syrian crisis on a regional scaleScope/sectors covered: Scope: The Syrian and Iraqi crises, to address the needs of refugees, IDPs and returneesSectors: Education, Health, Water&Sanitation, Other social infrastructure & servces                    Government&Civil society, Conflict prevention and resolution,                    Reconstruction, relief and rehabilitationBasis for creation:The Agreement establishing the EUTF was signed on 15 December 2014Underlying Commission decisions: C(2014)9615 of 10,12,2014 and C(2015)9691 of 21.12.2015External Contributors: in total 21 Member States 
 
 
Africa Trust Fund 

46 

The EU Emergency Trust Fund for AfricaAfrica  Trust Fund (T005)AmountContributions:Amount (EUR)Contributions through EC instruments:EDF and EDF Reserve1 476 000 000EU BudgetENI200 000 000IcSP10 000 000DCI125 000 000ECHO50 000 000HOME *20 000 000Other18 600 000Total  EU Budget and EDF1 899 600 000Total external contributions of which81 814 389   Total Acknowlded MS contributions34 845 000Total Acknowledged other contributionsGrand Total 1 981 414 389Financial performance:Total commitment appropriations:1 300 294 213Total committed: 384 614 280Total commitments available: 915 679 933Total paid: 50 032 011Recovery orders cashed from MS45 291 921Recovery orders cashed from other contributorsRecovery orders cashed from EU budgetRecovery orders cashed EDF68 513 800Recovery total cashed113 805 721* amount to be confirmedObjective: ToaddressthecrisesintheregionsoftheSahelandtheLakeChad,the Horn of Africa and the North of Africa.The Trust Fund aims to help foster stability in the regions.Scope/sectors covered: Scope:TheTrustFundwillbenefitawiderangeofcountriesacrossAfricathatencompassesthemajorAfricanmigrationroutestoEurope.Sectors: Economy/Employment opportunities, Food and nutrition security, Migration managem.   and Conflict preventionBasis for creation:The Agreement establishing the EUTF was signed on 9-10 November 2014 in VallettaExternal Contributors: in total 25 Member States and Norway and Switzerland 
 
 
ANNEX 4: SCHEMATIC VIEW OF ESI FUNDS MACRO-CONDITIONALITY  

Existing CSR 

New CSR 

CSR  
(year n) 

Country report  (year n+1) 
- Commission analysis of socio economic progress by Member State 
- Looks at national implementation of previous CSRs 
- Analyses challenges (old and new)  faced by MS  

Satisfactory 
progress 
towards CSR 

Insufficient 
progress towards 
CSR 

CSR re-issued 

Dialogue with MS 

No re-
programming  

If necessary 
reprogramming 
request 

Identification of 
new challenges 

If necessary, new 
CSR 

Dialogue with 
MS 

If necessary, 
reprogramming 
request 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 5: SIMPLIFICATION SCOREBOARD 

The European Commission continues its efforts in simplifying the allocation of EU 
funds.   

A  Simplification  Scoreboard  accompanied  the  negotiation  of  the  legislative  acts 
under  the  MFF  2014-2020,  with  three  updates.  The  Scoreboard  was  welcomed  by 
the other Institutions. In particular, the Budgetary Committee of the Council invited 
the Commission to pursue its efforts in the implementation phase. In response to this 
invitation  and  as  a  component  of  the  “Budget  Focussed  On  Results”  strategy,  the 
European Commission re-launches the Administrative Simplification Scoreboard in 
the form of the present document and will update it. 

This  Scoreboard  documents  initiatives  towards  simplifying  EU  funding  program 
implementation by the European Commission and Member States.   

Key simplification initiatives by the European Commission and Member States: 

The Commission has  set  up a  High Level Group on simplification of European 
Structural and Investment funds. The Group is composed of independent experts 
and chaired by former Commission Vice-President Siim Kallas. The Group will in 
particular:  

–  Assess  the  uptake  of  simplification  opportunities  by  Member  States,  including 
their commitments to reduce the administrative burden for beneficiaries as set out 
in the partnership agreements; 

–  Analyse the implementation of simplification opportunities in Member States and 

regions, taking account of the study on simplification;  

–  Identify good practices to reduce the administrative burden on beneficiaries;  

–  Make  recommendations  to  improve  the  uptake  of  simplification  measures  for 
2014-2020, in particular for the MFF Mid-Term Review; and on the way forward 
for the post-2020 period85. 

In  their  partnership  agreements  with  the  Commission  in  the  framework  of  the 
European  Structural  and  Investment  funds  constituting  the  bulk  of  the  EU  budget 
implemented  through  shared  management,  Member  States  have  set  objectives  for 
the  reduction  of  the  administrative  burden  for  beneficiaries.  Simplification  is 
established as a quantitative objective, to be pursued and verified by every Member 
State throughout the period 2014-2020. 

The Commission has contracted several studies in 2015 within the framework of the 
implementation  of  the  European  Structural  and  Investment  funds.  One  study 
focuses on simplification and is being carried out with the contribution of Member 
States; the first results are expected in  the coming months.  This study  shall  assess 
the  uptake  of  simplification  possibilities  by  Member  States,  regional  and  local 
authorities and identify the reasons for success as well as the causes preventing the 
taking up of other simplification options. 

85 http://ec.europa.eu/regional_policy/fr/policy/how/improving-investment/high-level-group-simplification/ 

48 

 
                                                 
Legislation requires a full shift to e-governance for cohesion policy by 31 December 
2015.  From  this  date,  all  documentation  has  to  be  stored  and  exchanged  between 
administrations (both at EU and national level) and with beneficiaries in electronic 
format only. Member States have made a significant effort to make this switch in a 
timely manner; the Commission is monitoring the results and providing support. 

In 2015, the Commission launched a screening of the entire EU level agricultural 
legislation  ("acquis")  to  identify  the  potential  for  simplification.  Many  proposals 
for further simplification have been submitted by Member States. In May 2015 the 
Council  adopted  conclusions  on  simplification  highlighting  some  short-  and 
medium-term priorities. The EESC and the Committee of the Regions also adopted 
opinions  on  CAP  simplification.  Many  proposals  were  submitted  by  stakeholders. 
The  Commission  has  followed  up  this  exercise  by  launching  four  waves  of 
simplification measures so far, covering Commission level legislation and guidance 
documents86.  

As  part  of 
Commission 
administrations to share best practices. 

the  EU-Level  Platform  on  Transnational  Cooperation, 
co-ordinates  10 

the 
thematic  networks  with  Member  State 

Data on the use of certain simplification measures: 

Use of simplified cost options (SCO)  

The use of SCO has the advantage that beneficiaries do not have to spend time and 
resources  to  carry  out  detailed  accounting  and  calculations  of  project  costs  when 
submitting  reimbursement  requests.  They  are  used  in  various  fields:  agriculture, 
employment, education, research, development cooperation, support to industry and 
entrepreneurship,  justice,  taxation,  and  culture.  2015  data  for  programmes  directly 
managed  by  the  Commission  and  executive  agencies  show  that  for  several 
programmes  SCO  make  for  a  substantive  share  in  the  annual  budget  allocated 
through grants (up  to 89%  in the case of education, training, youth and sport).  In 
some cases, however, SCO are not available or their use remains marginal.  

e-Management of the funding process 

in  development  cooperation, 

As regards direct management in 2015, grants were entirely managed via electronic 
justice,  research  & 
procedures 
innovation and culture. While there are several programmes for which e-tendering is 
applied  for  all  calls,  e-submission  still  remains  of  limited  use.  Contracts  are 
managed  in  electronic  format  only  in  the  sectors  of  internal  market,  industry, 
entrepreneurship  and  support  to  SMEs;  fraud  prevention;  health  and  consumer 
protection; and taxation. In the same sectors, invoices are created and exchanged in 
electronic format only. 

infrastructure, 

86   These  include  action  in  Direct  Payments  (e.g.  various  Ecological  Focus  Area  criteria,  Voluntary 
coupled  support,  young  farmers),  controls  (e.g.  improvement  of  sample  selection,  simplified  system 
for administrative penalties for direct payments, introduction of yellow card mechanism for first time 
offenders), markets (reduction of number of Commission level acts from more than 200 to 40), rural 
development (e.g. publicity obligations for farmers, programming of financial instruments). Also at the 
end of 2015, the Commission launched the review of greening after one year of implementation. 

49 

 
                                                 
Single web portal for beneficiaries 

In  2015,  for  almost  all  the  programmes  managed  directly  a  single  web  portal  for 
beneficiaries  has  been  available.  Beneficiaries  can  find  all  funding  opportunities, 
submit  their  application,  follow  the  treatment  of  such  application  by  the 
Commission,  and  store  supporting  documents.  Such  web  portals  are  currently 
available  for  research  &  innovation,  industry  and  entrepreneurship,  taxation, 
development cooperation and culture. 

Average time limits for payments and grants 

The  payment  time  indicator  is  comparable  to  2014  or  improved  in  2015  for  the 
majority  of  programmes  under  direct  management.  There  is  a  similar  trend  as 
regards the time for grants. 

Detailed  data  can  be  found  in  the  tables  uploaded  on  the  following  website: 
http://ec.europa.eu/budget/mff/simplification/index_en.cfm. 

50 

 
 
ANNEX 6: MEDIUM-TERM PAYMENTS FORECAST 

This annex presents a forecast for the overall payment requirements of the EU until the 
end of the current MFF in 2020. The overall forecast is based on a careful review of the 
implementation of the MFF since 2013 and on individual forecast for the main spending 
programmes.  It  is  based  on  the  latest  information  available  at  the  beginning  of 
September 2016. Such forecast is rather uncertain, in particular as regards the ESI funds 
where there is currently very limited information on actual implementation and for which 
the forecasting is very sensitive (see details in section 3). The forecast presented in this 
annex represents a central scenario of what is in reality a considerable range of plausible 
outcomes.  

1. 

INTRODUCTION 

One of the key issues in the first years of the current MFF has been the gap between the 
authorised  payment  appropriations  and  the  past  commitments  taken  by  the  European 
Institutions.  The  significant  drop  in  payments  authorized  and  the  important  volume  of 
payments  due  from  the  implementation  of  cohesion  policy  from  the  past  programming 
period  led  to  a  growing  backlog  of  outstanding  payment  claims,  which  reached  an 
unprecedented  peak  at  the  end  of  2014.  To  address  this  issue,  the  three  European 
institutions agreed on a payments plan in March 2015 which will lead to the phasing out 
of  this  backlog  by  the  end  of  2016.  However,  the  slower  than  expected  start  of  the 
implementation  of  the  new  programmes  supported  from  the  European  Structural  and 
Investment  Funds  (ESI  Funds)  raises  again  the  issue  of  whether  payment  ceilings  are 
sufficient  and  their  annual  distribution  appropriate  to  avoid  the  building  up  of  a  new 
backlog  of  payment  claims  at  the  end  of  the  current  Multiannual  Financial  Framework 
(MFF).  Monitoring  closely  the  evolution  of  payments  and  assessing  continuously  the 
sustainability  of  the  payment  ceilings  of  the  MFF  remains,  therefore,  of  crucial 
importance. 

In  this  context,  the  Commission  has  produced  this  medium-term  payments  forecast.  It 
provides  an  analysis  of  the  implementation  of  the  MFF  since  its  adoption  in  2013, 
estimates the evolution of RAL over and at the end of the MFF period and assesses the 
sustainability of the payment ceilings taking into account the new flexibility provisions 
and the new proposals included in the Mid-Term Review communication87. 

The forecast covers the period until 2020. The updated forecast of the RAL by end 2020 
and  post  2020  will  be  presented  in  2017  as  foreseen  in  Point  9  of  the  Interinstitutional 
Agreement88.  

87  
88  

COM(2016) 603 of 14.9.2016. 
Interinstitutional  agreement  of  2  December  2013  between the  European Parliament,  the  Council 
and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound 
financial management. 

51 

 
 
                                                 
 
2. 

IMPLEMENTATION OF THE MULTIANNUAL FINANCIAL FRAMEWORK SINCE 2013 

The  agreement  reached  in  the  February  2013  European  Council  on  the  current  MFF 
2014-2020  led  for  the  first  time  to  a  reduction  of  overall  commitments  as  well  as  an 
important tightening of the payment ceiling as shown in the chart below.  

The MFF therefore introduced again a very significant difference (of EUR 51.5 billion in 
2011 prices) between the overall ceilings for commitment and payment appropriations89. 
The  Commission  declared  at  the  time  that  this  difference  was  just  compatible  with  the 
principles of sound financial management and legal requirements. 

In order to allow the Union to fulfil its obligations in compliance with Article 323 of the 
Treaty on the Functioning of the European Union (TFEU) in the new tighter budgetary 
environment,  it  was  agreed  that  "specific  and  maximum  flexibility"  would  be 
implemented  

Specific and maximum flexibility was integrated in the MFF Regulation in the form of 
enhanced  Special  instruments90  and  of  new  tools  allowing  the  shift  of  appropriations 
across different years and headings throughout the MFF and the full use of margins over 
the  period.  Ceilings  establish  maximum  expenditure  levels  but  the  annual  budget 
procedures  determine  the  actual  level  of  commitment  and  payments  executed,  usually 
below  the  ceiling,  leaving  a  margin  that  the  budgetary  authorities  can  activate  in  the 
course of the year or transferred to the future. In the current MFF, the Global Margin for 

89  
90  

The difference in the 2007-13 period was EUR 50 billion in 2011 prices. 
The  Flexibility  instrument  (Flex),  the  Solidarity  Fund  (EUSF),  the  European  Globalisation 
Adjustment fund (EGF) and the Emergency Aid Reserve (EAR). 

52 

 
 
                                                 
 
Commitments  (GMC)  allows  using  unallocated  margins  in  commitments  from  years 
2014-17  ex-post,  the  Contingency  margin  allows  the  increase  of  ceilings  for  both 
commitments  and  payments  to  be  offset  against  margins  in  the  current  or  future  years, 
and the Global Margin of Payments (GMP) allows using the full amount available under 
the overall payment ceiling, with annual limits set for 2018-2020.These new flexibilities 
have been used extensively up till now91.  

The MFF has evolved significantly since its adoption in 2013. Some of it was anticipated 
in the MFF Regulation:  

  Re-programming of the shared managed programmes (Article 19 of the MFF 
Regulation):  due  to  late  adoption  of  programmes  under  shared  management  in 
Headings 1b, 2 and 3, commitment appropriations for more than EUR 21 billion 
were transferred from 2014 to, mainly, 2015 but also to 2016 and 2017. This re-
programming  has  not  changed  the  overall  commitment  ceiling  expressed  in 
current  prices92,  but  it  reflects  the  delay  in  the  implementation  of  those 
programmes93. 

  Transfers between the two pillars of the Common Agricultural Policy (CAP) 
(Article  2  of  the  MFF  Regulation):  the  three  rounds  of  transfers  between  rural 
development  and  direct  payments  announced  to  date  result  in  a  net  transfer  of 
EUR  4  005  million  from  direct  payments  to  rural  development,  leaving 
unchanged the overall ceiling for Heading 2. This translates into a shift from non-
differentiated  to  differentiated  appropriations  resulting  in  a  lower  level  of 
payments  during  this  MFF  and  a  larger  time  lag  between  commitments  and 
payments. 

  Adjustment of cohesion policy envelopes (Article 7 of the MFF Regulation): In 
order  to  take  account  of  the  particularly  difficult  situation  of  Member  States 
suffering  from  the  crisis,  the  Member  States'  individual  envelopes  were 
recalculated on the basis of the most recent statistics available in spring 2016 and 
those envelopes with changes of above +/- 5% compared to the original envelope 
were  adjusted  accordingly.  As  a  result, 
the  ceilings  for  commitment 
appropriations of Heading 1b were increased by a total of EUR 4 642 million in 
current  prices  for 
the  ceilings  for  payment 
appropriations  by  EUR  1 367  million  over  the  same  years  to  allow  an  orderly 
progression between commitments and payments94. 

the  years  2017-2020  and 

91  
92  
93  

94  

See section 3 of this Commission Staff Working Document. 
The overall commitment ceiling in 2011 prices was slightly decreased. 
Payments  corresponding  to  2015-2016  commitments  will  have  to  be  made  before  2020,  or  de-
committed  based  on  the  n+3/n+2  de-commitment  rule  (n+3  de-commitment  rule  applies  to  all 
ESIF, n+2 applies to Heading 3 shared managed funds (AMIF, ISF)). 
See Technical adjustment of the MFF for 2017 in line with movements in GNI and adjustment of 
cohesion policy envelopes. COM(2016) 311 final, 30.6.2016. 

53 

 
                                                 
 
Other changes were not foreseen when the MFF was agreed and introduced in response 
to reinforced priorities and new challenges:  the European Fund for Strategic Investments 
was  set-up95  to  boost  jobs  and  growth  within  the  EU  and  additional  financing  was 
mobilised  in  order  to  deal  with  the  internal  and  external  dimension  of  the  refugee 
influx96. 

The  financing  of  these  new  activities  was  possible  thanks  to  the  increased  flexibility 
provided for in the MFF Regulation. 

In  the  context  of  the  assessment  of  the  sustainability  of  the  payment  ceilings,  it  is 
important  to  recall  that  the  MFF  established  them  on  the  basis  of  programmed 
commitments.  Payments were  not  foreseen  for unplanned expenditure derived from the 
more  flexible  use  of  margins  or  Special  instruments.  In  line  with  this,  the  present 
medium-term  payments  forecast  considers  payments  for  Special  instruments  above  the 
ceilings  (see  chapter  6  below),  whereas  the  mobilised  margins  are  financed  within  the 
ceilings. 

The  table  below  shows  the  actual  and  forecast  evolution  of  margins  during  the  MFF. 
Originally,  when  the  MFF  was  adopted,  an  overall  amount  of  EUR  7  billion  was  left 
unallocated under the different commitment ceilings to allow for flexibility in the annual 
budgetary  procedure.  The  current  forecast  of  the  remaining  margins  corresponds  to  the 
financial programming accompanying the Draft Budget 2017. 

95  

96 

The  Global  Margin  for  Commitments  was  mobilised  to  contribute  to  the  financing  of  the  EU 
budget guarantee for the European Fund for Strategic Investment (EFSI): EUR 543 million was 
entered in the 2016 budget from remaining margins from 2014, EUR 1 265 million in 2017 budget 
from  remaining  margins  of  2015  and  EUR  640  million  is  programmed  for  2018  using  the  still 
unused part of 2015 GMC and part of the 2016 GMC. 
The EAR and Flexibility instrument availabilities until 2017 were fully used and the Contingency 
margin  is proposed  to  be  mobilised  in  2017  to  allow financing  of  additional needs of migration 
above the ceilings of Heading 3 (with offsetting in the same year). 

54 

 
                                                 
Evolution of margins between 2013 and financial programming DB 2017 

* Current 2017 margins are shown before the proposed offsetting of the EUR 1 164 million of Contingency 
Margin for H3 from H2 (EUR 650 million) and H5 (EUR 514 million) 
** The total amount of the remaining margins (EUR 5.7 billion) is calculated taking into account the EUR 
445  million  of  the  2016  margin  foreseen  for  the  financing  of  EFSI  in  2018  (via  GMC)  and  the  negative 
margins (EUR 2 billion) in Heading 3 in 2018-20 as included in the financial programming accompanying 
DB 2017 and excluding the 2014 and 2015 margins used for financing EFSI.  

In  line  with  the  focus  on  the  top  political  priorities  (kick-starting  jobs  and  growth,  and 
dealing with the internal and external implications of the refugee flows), the table shows 
that the margins in the Headings 1a, 3 and 4 have been progressively  used up and even 
exceeded, whilst larger than expected margins emerged from Heading 2, notably due to 
higher  than  expected  assigned  revenue97,  and  in  Heading  5,  due  to  the  lower  2011  and 
2012 salary adjustments98. This  has  allowed  compensating the increased  expenditure to 
deal  with  the  new  needs.  As  expenditure  in  the  latter  Headings  is  mostly  non-
differentiated, corresponding additional margins are created also in payments. Similarly, 
margins could materialise in Heading 2 over 2018-20 thanks to higher assigned revenue 
than foreseen when the MFF ceilings were established, although not to the same extent as 
experienced in the first years of the MFF given that some sources of assigned revenue do 
not exist any longer (e.g. the milk superlevy) and a backlog of conformity procedures has 
been cleared.  

97  

98  

EAGF measures are every year financed partly by assigned revenue. EUR 672 million per year of 
assigned revenue was assumed when the sub-ceiling for Heading 2 was established. The amounts 
turned out to be significantly higher so far. It means a decrease of the payments counted against 
the MFF payment ceilings (and an increase of the margins). 
The European Court of Justice issued a ruling that allowed Member States to fix the increase in 
salary for employees of the EU institutions at a lower level than expected because of "exceptional 
circumstances" caused by the financial and economic crisis. This ruling led to additional margins 
created in Heading 5. 

55 

2014201520162017*2018201920202014-20original margin106.0183.3264.8292.4321.7433.4476.42 078.0current margin76.0114.30.081.085.0435.4504.81 296.5change-30.0-69.0-264.8-211.4-236.82.028.4-781.5original margin1.11.0-0.30.10.90.70.33.8current margin0.00.35.913.20.00.00.019.3change-1.1-0.76.213.1-0.9-0.7-0.315.6original margin46.754.461.266.874.380.988.7473.0current margin112.1814.91 777.81 289.367.877.184.14 223.0change65.4760.41 716.61 222.5-6.5-3.8-4.63 750.1H3original margin65.469.487.9114.6131.9153.9160.3783.5current margin7.00.00.0-1 164.0-849.6-662.7-496.0-3 165.3change-58.4-69.4-87.9-1 278.6-981.5-816.6-656.3-3 948.8H4original margin143.1228.0233.0322.4386.1451.7521.32 285.6current margin10.038.10.00.0373.5402.5421.31 245.5change-133.1-189.9-233.0-322.4-12.6-49.1-99.9-1 040.0H5original margin63.797.4154.6202.7264.2292.9341.81 417.3current margin316.5415.5532.0595.9751.9821.3973.74 406.9change252.8318.1377.4393.2487.7528.4631.92 989.6original margin425.9633.6801.1999.01 179.21 413.51 588.87 041.0current margin521.51 383.12 315.6815.4428.61 073.61 488.08 026.0change95.7749.51 514.5-183.5-750.6-339.9-100.8984.9of which still available**1 871.0815.4428.61 073.61 488.05 676.7totalmil EUR, current pricesH1aH1bH2 
 
                                                 
3. 

PAYMENTS FORECAST 

The  evolution  of  actual  payments  since  the  beginning  of  the  current  MFF  deviates 
significantly  from  the  original  forecast  used  when  the  payment  ceilings  were  agreed, 
especially as regards the evolution of payments for ESI funds.  

The evolution of payments in Heading 1b is crucial for assessing the sustainability of the 
payment ceilings as a (+/-) 1% change in the pace of implementation leads to a (+/-) EUR 
4 billion change in payment needs. Its accurate forecasting has proved to be challenging.  

When  preparing  the  MFF  2014-2020,  the  payments  forecasts  for  the  2014-2020 
programmes were based on historical evidence from the previous two MFF periods (i.e. 
2000-2006  and  the  first  years  of  2007-2013).  The  assumption  was  that  the  delays 
experienced in 2007 and 2008 would not be repeated and that implementation would start 
earlier. This assumption has proved to be wrong. The start of the implementation of the 
new programmes  was even slower than in  the previous period due to  a combination of 
different factors:  

  significant delays in the implementation of the 2007-2013 programmes leading to 
a  peak  of  payments  between  2013-2015  and  a  focus  from  Member  States  on 
closing the previous programmes;  

 

 

 

late adoption of the legal bases for the 2014-20 programmes followed by a very 
significant re-programming of the 2014 commitments to 2015 and beyond;  

long delays in setting up and notifying responsible national authorities,  

introduction  of  n+3  rule  for  all  Member  States  for  the  whole  period  pushing  by 
one  year  the  risk  of  de-commitment  and  thus  reducing  the  incentives  for  fast 
implementation ; and  

  change of rules aimed at increasing the quality of programmes and projects, but 

which require additional start-up time.  

As regards the evolution in other headings, the significant backlog of end 2013 and 2014 
as  well  as  late  adoption  of  the  legal  acts  caused  some  delay  in  the  launch  of  new 
programmes in Heading 1a and 4 and a one year delay in the start of the implementation 
of rural development in Heading 2. 

The payments  forecast until  2020 has been  carefully reassessed  taking  into  account the 
implementation  in  2014  and  2015  and  the  amounts  budgeted  for  2016  and  2017.  The 
forecast for payments is made for each Heading and programme/fund separately for the 
pre-2014 and 2014-2020 commitments, as follows:  

  Payment  estimates  are  based  on  prudent  estimates,  i.e.  no  de-commitments  are 
assumed to be made for new (2014-2020) commitments in Headings 1b and 2 and 
very limited de-commitments are assumed for new commitments in Headings 1a, 
3 and 4 until 2020 – see the forecast of de-commitments in chapter 4.  

56 

 
  The  payments  on  the  pre-2014  commitments  correspond  fully  to  the  payment 
schedules  accompanying  the  draft  budget  2017  (for  all  Headings,  with  some 
adjustments  for  Heading  1b  related  to  the  current  pace  of  implementation  and 
taking  into  account  the  latest  forecasts  received  from  Member  States  in  July 
2016).  

  100%  payment 

the  commitment  for  non-differentiated 
appropriations (i.e. for the 1st pillar of the CAP and administration in Heading 5); 

the  year  of 

in 

 

 

In  the  case  of  ESI  Funds  (the  European  Regional  Development  Fund,  the 
European  Social  Fund,  the  Cohesion  Fund,  the  European  Agricultural  Fund  for 
Rural  Development  and  the  European  Maritime  and  Fisheries  Fund),  estimated 
payments are based on specific assumptions on payment schedules per fund; 

In  all  other  cases  the  Commission  used  differentiated  schedules  by  programme 
based on the implementation of the 2014-2017 commitments as presented in the 
financial programming accompanying the draft budget 2017. 

This  forecast  only  concentrates  on  the  evolution  of  the  payment  appropriations.  It 
does  not  analyse  the  impact  for  the  Member  States  contributions.  It  is  however 
important to  recall that changes in  the payment appropriations  do not  automatically 
lead  to  increased  contributions  by  Member  States.  Besides  own  resources, 
expenditure can also be financed by other sources such as fines or assigned revenue, 
with a neutral impact on national budgets, as has been the as was the case in recent 
years. 

3.1 Forecast assumptions by Heading and programme/fund 

3.1.1. European Structural and Investment Funds 

The forecast for the payments for ESI Funds is based on past experience adjusted 
to take into account the new financial provisions (initial and annual pre-financing, 
clearance procedure, different accounting and financial year, n+3 de-commitment 
rule for all Member States and all years, and the 6% performance reserve).  

The forecasting is based on a profile of interim payment claims as a percentage of 
the  overall  envelope.  A  specific  payment  profile  is  used  for  each  of  the  funds 
(ERDF, ESF and Cohesion fund and EMFF). The historical profile of the claims 
for  the  2007-13  programmes  was  taken  as  a  basis  for  the  current  forecast  and 
adjusted to the actual delayed implementation in 2014-2016 and the impact of the 
change  of  the  de-commitment  rules  (n+3  for  the  whole  period  for  all  Member 
States; no coincidence of two de-commitment targets as in 2013).  

The  table  below  shows  the  assumed  profile  of  interim  payment  claims  for  each 
fund as % of the overall envelope for the fund (without performance reserve): 

57 

 
 
Forecast  profile  of  interim  payment  claims  for  cohesion  funds  (%  of  total 
allocation) 

For the years 2018 and 2019 the amounts are at the level of the 2011 and 2012 
claims.  The  amount  for  2020  is  lower  than  it  was  for  2013  as  in  2013  two  de-
commitment  targets  applied  for  the  new  Member  States  (as  the  de-commitment 
rule changed from n+3 to n+2 between 2010 and 2011). In full coherence with the 
new  n+3  rule,  the  forecast  leads  to  a  smoother  implementation  where  payments 
will be pushed to a higher degree into the first years of the next MFF.  

3.1.2.  Rural development 

The  European  Fund  for  Rural  Development  (EAFRD)  is  implemented  through 
different financial  rules than other ESI Funds. The  only common provisions are 
those  for  the  initial  pre-financing,  the  n+3  rule  for  decommitments  and  the  6% 
performance reserve. All other rules basically correspond to the rules applied in 
the previous period. Slightly less than half of the national envelopes are spent on 
so called annual measures, and only the remaining  part on investment measures 
similar  to  those  financed  by  ESI  Funds  under  Heading  1b.  Moreover,  the 
establishment  of  responsible  authorities  is  not  a  pre-condition  for  interim 
payments.  As  a  result,  the  delay  in  the  start  of  the  implementation  was  much 
shorter  for  the  EAFRD  and  mostly  linked  to  the  re-programming  of  the  2014 
tranche.   

3.1.3.  Direct payments and market measures - revenue assigned to EAGF 

The main change as regards the European Agricultural Guarantee Fund (EAGF) 
relates  to  the  forecast  of  assigned  revenue.  When  the  sub-ceiling  for  Heading  2 
was  established  an  annual  amount  of  EUR  672  million  was  assumed  to  be 
financed  from  assigned  revenue.  The  2014-2017  amounts  turned  out  to  be 
significantly  higher99.  This  implied  a  decrease  of  the  payments  counted  against 
the MFF payment ceilings (and an increase of the margins – both in commitments 
and payments). Even though the amounts are difficult to forecast since they often 

99  

The collected EAGF assigned revenue amounted to EUR around 1 bn in 2014 and EUR 1.6 billion 
in 2015. Around EUR 2.1 billion are budgeted in 2016 and EUR 1.4 billion are so far included in 
DB 2017 which will be updated via an Amending Letter in October 2016. (These figures relate to 
assigned  revenue  freshly  collected  during  the  running  budget  year  and  do  not  include  assigned 
revenue carried-over from the previous year.) 

58 

2014201520162017201820192020total 2014-20ESF0.0%0.3%4.1%10.8%12.9%15.1%16.0%59.2%ERDF0.0%0.3%3.8%10.5%13.5%15.3%16.5%59.8%CF0.0%0.0%4.0%9.7%11.0%13.0%15.0%52.7% 
 
 
 
                                                 
include  elements  with  a  one-off  character  (such  as  instalment  and  deferral 
decisions  for  clearance  of  accounts,  over-shooting  of  milk  quotas,  etc.)  the 
implementation up-to-date shows that the initial assumption should be reassessed.  

For  the  current  payments  forecast,  the  amounts  for  assigned  revenues  for  2014-
2017  are  based  on  actual  and  known  data  as  well  as  DB  2017100.  The  amount 
currently assumed for 2018-20 is EUR 1 billion per year (i.e. an increase by EUR 
328  million),  taking  into  account  already  known  amounts  of  future  assigned 
revenue  linked  to  clearance  of  accounts  decisions  adopted  in  2015  or  earlier101. 
However, the actual level of EAGF assigned revenue in those  years will depend 
on  future  clearance  of  accounts'  decisions,  with  possible  requests  of  Member 
States  for  instalments,  whereas  milk  super  levies  are  no  longer  collected  as  the 
milk quota system has ended in 2015. 

As  regards  the  appropriations  for  the  EAGF,  they  are  mostly  non-differentiated 
and  the  bulk  related  to  direct  payments  to  farmers  is  usually  reimbursed  to 
Member  States  during  the  first  months  of  the  budget  year.  In  2016,  however, 
significant  delays  were  observed  due  to  implementation  difficulties  in  the  first 
year of application of the new scheme of direct payments under the MFF 2014-
2020. While there has been meanwhile a gradual catch-up in the implementation, 
significant amounts are still expected to be paid by mid-October 2016. 

3.1.4.  Headings 1a, 3, 4 and 5 

For Headings 1a, 3 and 4, the forecasts are based on the execution of payments in 
2014 and 2015, the revised financial programming and the schedules of payments 
accompanying the draft budget 2017. It is the latest available information which 
comprises  payments  on  2014  to  2017  commitments  is  used  to  model  the 
payments of 2018-2020 commitments.  

As  administrative  expenditure  (Heading  5)  is  based  on  non-differentiated 
appropriations,  the  amounts  for  commitments  as  presented  in  the  financial 
programming accompanying the DB 2017 are those which apply to the respective 
payments forecast. 

100  

101  

The Amending Letter updating the amounts of EAGF assigned revenue for 2017 was not available 
at the time of the finalization of this payment forecast.  
The Member States may benefit from deferrals under specific circumstances or may be authorised 
by the Commission to pay in instalments spread over several years after request, which is often 
done in case when they have to pay back significant amounts.  

59 

 
 
 
 
 
                                                 
3.2. Results of the current payments forecast 

The payments forecast confirms that the delay in the payments at the beginning of the 
MFF will result in higher than foreseen payments needs in the years 2018-2020.  

The table below shows the results of the payment forecast: 

The remaining high margin in 2016102 is largely a result of the delayed start of the 
new programmes financed from ESI funds. While in years 2014 and 2015 the delay in 
implementation of those programmes allowed for a faster reduction of the backlog and 
of  payments  of  the  pre-2014  RAL  as  well  as  the  budgeting  of  the  additional 
appropriations  needed  in  headings  3  and  4  to  deal  with  the  new  needs.  Most 
programmes  from  the  previous  period  have  now  reached  the  maximum  95%  level 
which can be paid before closure and will thus not require payments in 2016.  

For  2017,  a  "dip"  in  the  payment  profile  was  already  expected  when  the  MFF  was 
agreed based on the assumed lag between phasing out the pre-2014 programmes and 
reaching the cruising speed of the 2014-2020 programmes. The lag has turned out to 
be longer than expected and therefore the dip in 2017 is deeper than forecast in 2013. 
Several factors contribute to the deepening of the dip. The main factor is the delayed 
start of the implementation of ESI funds and the new rules on clearance of annual pre-
financing.  Given  the  low  level  of  claim  submission  for  ESI  funds  so  far,  the  annual 
clearing in 2017 will result in a large part of the 2% annual pre-financing paid in 2016 
being recovered from Member States103. This amount will generate assigned revenue 
in  2017  which  will  be  used  to  make  interim  payments  and  therefore  reduces 
accordingly  the  needs  for  fresh  appropriations  to  be  budgeted.  In  order  to  align  the 
annual  payment  ceilings  to  the  forecasted  needs,  the  Mid  Term  Review  of  the  MFF 
includes a proposal to use the margins in payment in 2017 to advance the offsetting of 

102  

103  

The  amount  for  2016  is  provisional  and  compared  to  the  adopted  budget  only  includes 
reassessment  of  the  implementation  of  cohesion  based  on  MS  forecast.  More  precise  figures, 
which  were  not  available  at  the  time  of  the  finalization  of  this  forecast,  will  be  included  in  the 
forthcoming DAB 4/2016. 
The annual pre-financing paid in 2016 (EUR 6.6 billion), i.e. 2% of the overall envelope, shall be 
cleared against interim payment claims in the accounting period of 1/7/2015 to 30/6/2016. While 
this  amount  will  be  only  known  in  May  2017,  given  the  low  level  of  payment  claims  in  the 
relevant period, the recoveries are expected to be substantial. 

60 

PAYMENT APPROPRIATIONS (mil EUR)2014201520162017201820192020Total2014-2020Latest payment ceiling (incl. CM 2014, GMP 2014,2015 + Art. 7 payments)138 580140 719144 685142 906148 773153 347156 4191 025 429Difference to original MFF2 714-1 1820135-301-151241 475of which:Contingency Margin 2014 + offsetting2 8180-940-939-9390Global Margin for Payments 2014-1041062Global Margin for Payments 2015-1 288455465474106Art. 7 - adjustment of cohesion envelopes1351844595891 367Midterm payment forecast138 580140 741135 665133 297149 055159 225163 5841 020 147difference to latest payment ceiling022-9 020-9 6092825 8787 165-5 282 
 
                                                 
the 2014 mobilisation of the contingency margin in order to preserve the full original 
ceilings  for  2018-2020,  when  payment  needs  will  increase  and  exceed  the  annual 
ceilings104. 

For the final years of this MFF, it is expected that all programmes will reach cruising 
speed  and,  thus,  the  level  of  spending  experienced  in  2011-2013  should  be  repeated 
both  for  shared  and  directly  managed  programmes.  For  Heading  1b,  the  pre-2014 
programmes should be closed in 2018 and 2019 and the new programmes should be 
fully on track. Consequently, the payments forecast shows payment levels above the 
annual ceilings in 2018-20105. However, the risk of accumulating a significant amount 
of abnormal backlog again can be mitigated by the functioning of the Global Margin 
for  Payments,  the  new  instrument  recycling  unused  payment  appropriations  (see 
below).  Therefore,  annual  accumulation  of  unused  payment  appropriation  in  early 
years of the MFF can be transferred to allow an increase of ceilings in the final years 
of the MFF by means of the GMP to cater for the actual shift in payment needs. If the 
total amount of payments needs over the 2014-2020 period is lower than the overall 
payment ceiling, there should not be any abnormal backlog at the end of the MFF.  

3.3. Global Margin for Payments (GMP) 

The  Global  margin  for  payments  was  introduced  in  order  to  allow  maximum 
flexibility and full availability of the overall amount of payment ceilings for the whole 
period.  The  Commission  will  adjust  the  payment  ceilings  for  the  years  2015-2020 
upwards  by  an  amount  equivalent  to  the  difference  between  the  executed  payments 
and the MFF payment ceiling of the year n-1. Any upward adjustment shall be fully 
offset by a corresponding reduction of the payment ceiling for year n-1. This provides 
the  flexibility  to  allow  the  full  use  of  payment  ceiling  but  with  some  limitations: 
Article 5 of the MFF Regulation sets also maximum annual thresholds for the GMP 
for years 2018-20: 

  For 2018: EUR 7 billion in 2011 prices, i.e. EUR 8 billion in current prices; 

  For  2019:  EUR  9  billion  in  2011  prices,  i.e.  EUR  10.5  billion  in  current 

prices; 

  For  2020:  EUR  10  billion  in  2011  prices,  i.e.  EUR  12  billion  in  current 

prices. 

The GMP was calculated twice so far – for 2014 and 2015.  

In 2014, due to the mobilisation of the Contingency margin for payments there was no 
margin  left  in  the  budget,  so  the  GMP  was  only  constituted  by  under-execution  and 

104    
105  

COM(2016) 607 of 14.9.2016.  
A  peak  of  payments  is  expected  in  2020  but  not  as  significant  as  in  2013  when  two  de-
commitment targets coincided for the new Member States. 

61 

 
 
                                                 
amounted to EUR 104 million. The ceiling of 2014 was adjusted downwards and the 
2015 ceiling upward by that amount106. 

In  2015,  the  remaining  margin  under  the  payment  ceiling  amounted  to  EUR  1  288 
million. The 2015 ceiling was adjusted downwards by that amount and the ceilings of 
2018-20  were  increased  by  one  third  of  the  GMP  (adjusted  for  2%  inflation).  The 
decision  to  transfer  the  GMP  to  years  2018-20  was  made  based  on  the  absence  of 
additional payment needs in 2016 and 2017, as significant margins already existed in 
those  years  as  explained  above,  and  on  the  expected  payments  needs  for  the  years 
2018-20  exceeding  the  annual  payment  ceilings.  This  approach  will  in  principle  be 
replicated in the next years based on the assessment of payment needs.107  

In the same vein, given the significant margins remaining under the payment ceiling in 
2017,  the  Commission  proposes  to  advance  the  offsetting  of  the  2014  Contingency 
margins from years 2018-20 to 2017108 in order to preserve the full original ceilings 
for 2018-20, when payment needs will significantly increase. 

In  this  context,  the  chart  below  shows  how  the  GMP  will  provide  specific  and 
maximum flexibility in line with recital 4 of the MFF Regulation  as agreed in 2013, 
respecting  all  provisions  of  the  MFF,  in  particular,  in  full  respect  of  the  overall 
payment ceiling for the period 2014-2020 in 2011 prices and of the annual limits for 
the years 2018-2020 set by Art 5.2 of the MFF Regulation.  

106 

107  

108  

See the Technical adjustment of the financial framework for 2016 in line with movements in GNI, 
COM(2015) 320 of 22.5.2015. 
This  approach  also  allows  mobilisation  of  the  payment  appropriations  in  draft  budget,  avoiding 
amending budget and therefore also allowing more predictability for national budgets. 
COM(2016)  607  of  14.9.2016,  proposal  for  a  Decision  of  the  EP  and  the  Council  amending 
Decision EU 2015/435 of the EP and of the Council of 17 December 2014 on the mobilisation of 
the Contingency margin. 

62 

 
                                                 
*  incl.  Contingency  Margin  2014  (offsetting  in  2017),  GMP  2014+2015,  Art.  7 
adjustment as included in the technical adjustment of the MFF for 2017 

The chart shows that the annual GMP ceilings as set in article 5.2 of the MFF Regulation 
would  be  respected  based  on  the  current  payment  forecast.  However,  given  the  high 
sensitivity of the forecast of the cohesion policy payments, the Commission proposes to 
remove the annual GMP thresholds for 2018-20 in order to provide maximum flexibility 
within the unchanged overall payment ceiling109. 

109  

COM(2016)  604  of  14.9.2016,  proposal  for  a  Council  Regulation  amending  Regulation  No 
1311/2013 laying down the MFF for the years 2014-20 as amended. 

63 

 
 
 
 
 
                                                 
4. ESTIMATED EVOLUTION OF UNPAID COMMITMENTS (RAL) AND DE-COMMITMENTS 

A significant amount of the RAL from the previous period (EUR 221.9 billion) remained 
to be paid or de-committed at the beginning of 2014. This amount should be almost fully 
implemented or de-committed by the end of 2020 as shown in the chart below. 

At  the  same  time  new  RAL,  i.e.  outstanding  2014-20  commitments  is  building  up  as 
shown in the chart below: 

Based on the current payments forecast, the total RAL is expected to amount to EUR 254 
billion at the end of 2020. This figure corresponds to the balance between the sum of the 
RAL  at  the  beginning  of  2014  plus  the  2014-2020  commitments  (without  unallocated 
margins) and the corresponding payments and de-commitments made or expected to be 
made in 2014-2020. The payments are split into two components, payments on the pre-

64 

 
 
 
2014 commitments and payments on the 2014-2020 commitments. The commitments are 
based on the latest available financial programming figures110 (for the draft budget 2017). 

The  RAL  currently  forecast  for  end  2020  is  EUR  8.7  billion  lower  than  the  estimate 
made  in  2013  (EUR  262.9  billion)  mainly  thanks  to  the  lower  starting  point  (due  to 
higher than initially expected payments made in 2013, by EUR 3 billion) and higher de-
commitments  than  foreseen  (by  EUR  10.6  billion).  On  the  other  hand,  the  increase  in 
commitments  linked  to  the  adjustment  of  the  cohesion  policy  envelopes  and  the  re-
allocation  of  the  unused  margins  via  the  Global  Margin  for  Commitments  and  the 
Contingency margin are increasing the RAL.  

The  overall  amount  of  de-commitments  forecast  is  EUR  24.3  billion  of  which  EUR  4 
billion  is  foreseen  from  the  2014-20  commitments  in  Headings  1a,  3  and  4.  No  de-
commitments  on  the  new  programmes  under  Headings  1b  and  2  are  assumed  before 
2021.  The  table  below  shows  the  actual  de-commitments  in  2014  and  2015  and  the 
forecast for 2016-20 by Heading.  

The forecast of de-commitments for 2016-2020 is based on the past experience, i.e. about 
2%  of  the  2007-13  allocation  (EUR  7  billion  in  Heading  1b,  EUR  2  billion  in  rural 
development)  is  forecast  to  be  de-committed  at  closure.  For  those  two  headings  the 
forecast de-commitments only relate to pre-2014 commitments. For Headings 1a, 3 and 4 
the de-commitments on the pre-2014 commitments correspond to the payment schedules 
and about EUR 4 bn is foreseen to be de-committed in those three headings from 2014-
20 commitments. 

110 

The  higher  level  of  estimated  revenue  assigned  to  EAGF  in  2018-2020  decreases  the  estimated 
needs for CA compared to the financial programming in Heading 2. 

65 

EUR billion, current pricesRAL end 2013Commitments 2014-20*Decommitments 2014-20 *Payments 2014-20 (pre 2014 CA)Payments 2014-20 (2014-20 CA)RAL end 2020TOTAL APPROPRIATIONS221.91 080.628.1196.9823.2254.2* includes amounts paid by assigned revenue20142015201620172018201920202014-2020Heading 1a-0.7-1.2-0.6-0.5-0.5-0.5-0.5-4.5Heading 1b-1.2-1.1-1.5-2.5-3.0-1.20.0-10.5Heading 2-0.3-0.5-1.0-1.0-0.80.00.0-3.6Heading 3-0.3-0.3-0.2-0.3-0.3-0.3-0.3-2.0Heading 4-0.7-0.7-0.4-0.4-0.4-0.4-0.5-3.6Heading 50.00.00.00.00.00.00.00.0Total-3.3-3.8-3.7-4.8-4.9-2.4-1.4-24.3actualforecastEUR billion 
  
 
 
 
                                                 
5. 

IMPACT OF THE MTR PROPOSALS 

The MTR proposes to finance additional measures in Headings 1a and 1b, 3 and 4 at the 
level of EUR 6.15 billion from available margins111.  

The impact of payments for these proposals will depend on the exact allocations by year. 
The table below shows a possible impact: 

Financing proposed by the MTR 

Period 

Additional 
commitments 

Additional 
payments 

Assumptions 

Heading 1a 

EUR 1.4 bn 

EUR 0.9 bn 

Horizon 2020 

2017-2020 

EUR 0.4 bn 

EUR 0.2 bn 

CEF transport  

2017-2020 

EUR 0.4 bn 

EUR 0.2 bn 

ERASMUS+ 

2017-2020 

EUR 0.2 bn 

EUR 0.2 bn 

Wifi4EU 

2017-2020 

EUR 0.05 bn 

EUR 0.03 bn 

COSME 

2017-2020 

EUR 0.2 bn 

EUR 0.2 bn 

EFSI 2 

2018-2020 

EUR 0.15 bn 

EUR 0.1 bn  

Heading 1b 

YEI 

2017-2020 

EUR 1 bn 

EUR  0.3  -  1 
bn 

CA  split 
proportions 
2017-20; 

in  equal 
over 

The  same  payment 
schedules applied for 
each  programme  as 
original 
for 
the 
(2017-
allocations 
2020 commitments) 

COSME  –  financial 
instruments  –  non-
differentiated; 

Provisioning  of  the 
fund  as 
guarantee 
foreseen 
the 
in 
legislative proposal. 

the 
Depending  on 
of 
profile 
commitments  – 
if 
full amount allocated 
full 
in  2017, 
would 
allocation 
have 
to  be  paid 
before end 2020;  

the 

with 
split 
CA 
equally  over  2017-
20,  only  about  1/3 
to  be 
would  need 

111   See section 5.1 of this Commission Staff Working document. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
before 

end 

paid 
2020` 

corresponding 
already 
in 
the 
forecast 
the 
on 
schedules 
the 

The 
payments 
included 
payment 
based 
payment 
accompanying 
DB 2017. 

Non-differentiated 
appropriations 
= PA) 

(CA 

Precise  split  to  be 
the 
confirmed  but 
to  be 
full  amount 
end 
before 
paid 
2020. 

2018 - 2020 

EUR 2.55 bn 

n.a. 

Heading 3 

Migration  & 
Security 
(see 
financial annex 
to  COM(2016) 
603 

Heading 4 

EUR 1.4 bn 

EUR 1.4 

MFA/ELM 

2017-2020 

EUR 0.385 bn 

0.385 

EUR 
bn 

EUR 1 bn 

2016-2020 

EUR 1 bn 

Partnership 
framework 
process 
EFSD 

+ 

TOTAL 

2016-2020 

EUR  6.3  bn 
(EUR  3.8  bn 
above 
the 
financial 
programming 
DB 2017) 

EUR  2.6  – 
3.3 bn 

The current forecast of the financing of new MTR proposals (except those in Heading 3 
which  are  already  included  in  the  payment  forecast  as  described  above)  would  require 
EUR  2.6  to  3.3  billion  until  2020  (depending  on  the  profile  of  the  additional 
commitments). 

6. 

SPECIAL INSTRUMENTS 

When reaching an agreement on the MFF the European Council declared that in order to 
provide flexibility and given their specificities, the Flexibility instrument, the European 
Union Solidarity Fund ("EUSF"), the European Globalisation Adjustment fund ("EGF") 
and the Emergency Aid Reserve ("EAR") shall be placed outside the MFF112. 

112    

See paragraph 101 of the European Council conclusions on the MFF of 8 February 2013. 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
However,  when  mobilising  the  Contingency  margin  in  2014113,  the  treatment  of 
payments  related  to  these  Special  instruments  was  left  open  and  the  Commission  was 
invited to propose a solution in a timely manner114. 

The present medium-term payments forecast shows that the MFF payment ceilings shall 
only be sufficient to cater for commitments if the payment appropriations for the Special 
instruments  are  accounted  for  over  and  above  the  payment  ceilings.  A  total  amount  of 
EUR  3.4  billion  was  already  mobilised  and  EUR  7.4  billion  still  remains  available  (of 
which EUR 3.2 billion for the Flexibility instrument and the EAR) as shown in the table 
below:  

Overview of Special instruments mobilised and still available  

The current overall remaining availabilities under the payment ceilings amount to EUR 
5.3 billion and additional EUR 2.6 to 3.3 billion is to be foreseen for financing the new 
initiatives proposed under the Mid-Term Review. Furthermore, additional proposals, e.g. 
to address the refugee crisis, may come in the future. The amount already mobilised  in 
Special  instruments  (EUR  3.4  billion)  could  not  be  accommodated  in  full  within  the 
ceilings and would not leave any flexibility to mobilise either the still available amounts 
or the proposed increases115 of Special instruments for the future years. 

The  Commission  therefore  proposes  to  confirm  that  payments  related  to  Special 
instruments  are  placed  over  and  above  the  ceilings  by  amending  the  Decision  of  17 

113  

114 

115  

Decision (EU) 2015/435 of the EP and of the Council of 17 December 2014 on the mobilisation of 
the Contingency margin, OJ L 72/4, 17.3.2015. 
When  mobilising  the  Contingency  margin  in  2014,  the  institutions  could  not  agree  whether  the 
amount  of  EUR  350  million  for  Special  instruments  should  be  counted  above  the  ceilings:  the 
decision  on  the  mobilisation  of  the  Contingency  margin  allowed  the  EU  budget  to  exceed  the 
ceilings  by  an  amount  of  EUR  3  168  million  but  only  provided  the  offsetting  for  EUR  2  818 
million. The Commission was called upon to provide a solution in due time.  
See section 3.1 of the Staff Working document.  

68 

YearFlexEAREGFEUSFTotal201489.398.181.0126.7395.12015149.4282.543.482.8558.220161 530.0305.026.050.01 911.02017530.00.00.00.0530.0Total2 298.7685.6150.4259.53 394.3YearFlexEAREGFEUSFTotal20160.0223.4139.61 043.01 406.020170.0315.0168.9563.01 046.92018541.0322.0172.3574.01 609.32019552.0328.0175.7586.01 641.72020563.0335.0179.3598.01 675.3Total1 656.01 523.4835.83 364.07 379.2In million Euro, commitment appropriationsStill availableIn million Euro, commitment appropriationsMobilised 
 
                                                 
December  2014  on  the  mobilisation  of  the  Contingency  margin  accordingly116.  This  is 
crucial,  as  otherwise  the  MFF  payments  ceilings  would  need  to  be  revised  upwards  in 
order to allow the EU to fulfil its obligations in accordance with Article 323 TFEU. 

7. 

CONCLUSIONS – ASSESSMENT OF SUSTAINABILITY OF THE PAYMENT CEILINGS 

Bringing  together  the  current  payments  forecast,  which  shows  a  cumulated  margin  of 
EUR 5.3 billion over the period up to 2020, and the additional needs stemming from the 
Mid-Term Review, estimated at about EUR 2.6 - 3.3 billion, the overall payment ceilings 
of  the  2014-20  MFF  should  be  just  sufficient,  avoiding  any  new  abnormal  backlog  of 
unpaid  claims  at  the  end  of  the  period.  Therefore  no  revision  of  the  payment  ceilings 
appears to be required. However, this outcome requires that: 

  The payments for Special instruments are counted over and above the ceilings in 

the same way as commitments; 

  The  Global  Margin  for  Payments  is  fully  used  to  provide  the  specific  and 

maximum flexibility. 

In  line  with  this  analysis,  in  order  to  align  better  the  annual  profile  of  the  MFF  to  the 
forecasted  payment  needs,  the  Commission  proposes  in  the  context  of  the  Mid  Term 
Review  of  the  MFF  to  advance  the  offsetting  of  the  2014  contingency  margin  to  2017 
and  -  as  a  precaution  -  to  remove  the  annual  GMP  thresholds  for  2018-20  in  order  to 
provide maximum flexibility within the unchanged overall payment ceiling.  

116    

COM(2016) 607, 14.9.2016. 

69