Amended proposal for a COUNCIL DECISION on the system of Own Resources of the European Union
Date: 2020-05-28
Institutions: European Commission, Secretariat-General
Subjects: CCT duties, EU Emissions Trading Scheme, EU budget, GNP contribution, VAT resource, corporation tax, financial control, packaging product, plastics, waste

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   EUROPEAN COMMISSION  Brussels, 28.5.2020  COM(2020) 445 final 2018/0135 (CNS)  Amended proposal for a COUNCIL DECISION on the system of Own Resources of the European Union  
 
1. 

INTRODUCTION  

EXPLANATORY MEMORANDUM 

The COVID-19 pandemic constitutes a widespread and severe public health crisis. It severely 
affects  citizens,  societies  and  economies  worldwide.  The  extent  of  the  health  crisis  and  the 
policy  responses  taken  to  control  it  are  unprecedented.  As  a  result,  the  depth  of  its  socio-
economic impact is extraordinarily uncertain. Already at this stage, it is certain that it presents 
unprecedented  and  acute  challenges  for  the  financial  and  economic  systems  of  Member 
States. According to the Commission’s spring economic forecasts1, the EU GDP is forecast to 
contract by about 7.5 % this year, far deeper than during the global  financial crisis in 2009, 
and to rebound by only 6% in 2021 while the EU unemployment rate is set to rise to 9% in 
2020, with a risk of rising poverty and inequality. 

In  response,  Member  States  have  adopted  exceptional  discretionary  economic  and  financial 
measures. Together with the effect of so-called “automatic stabilizers”, i.e. payments foreseen 
under  unemployment  insurance  and  social  security  systems  combined  with  loss  in  tax 
revenue, those measures have a considerable bearing on their public finances with aggregate 
general government deficit surging from 0.6% of GDP in 2019 to 8.5% of GDP in both the 
euro area and the Union this year.  

The shock to the EU economy is symmetric in that the pandemic has hit all Member States, 
however,  the  impact  of  the  pandemic  differs  considerably  between  Member  States,  as  does 
their ability to absorb the economic and fiscal shock and respond to it, depending also on the 
specific  economic  structures  and  initial  conditions  of  Member  States.  As  a  result,  there  is  a 
risk that the crisis will widen disparities within the Union threatening the collective economic 
and  social  resilience.  This  general  picture  is  also  confirmed  by  the  in-depth  needs 
assessment2. 

The Union has acted rapidly to deliver a coordinated and powerful collective response to the 
social and economic consequences of the crisis, within the limits of the current Multiannual 
Financial  Framework  expiring  in  2020.  That  response  complements  discretionary  economic 
and financial measures taken by Member States. 

The crisis could result in lasting damage to the Union’s economic tissue unless it is met with a 
commensurate short and medium term policy response at the level of the Union. There is an 
urgent  need  to  provide  for  immediately  available  additional  financial  capacity  to  support 
recovery and resilience across the Union in order to rise to this challenge.  

The response to the crisis must be comprehensive, bold and sustained. A comprehensive plan 
for European recovery will need massive public and private investment at European level to 
set the Union firmly on the path to a sustainable and resilient recovery, creating high-quality 
jobs  and  repairing  the  immediate  damage  brought  by  the  Covid  19  pandemic  whilst 
supporting the Union’s green and digital priorities. The long-term EU budget, reinforced by 
the new European Union Recovery Instrument, will be the main tool.  

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2 

European Economic Forecast, Institutional Paper 125. May 2020. 
SWD(2020)XXXX.. 

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The exceptional nature of the economic and social situation requires exceptional measures to 
support the recovery and resilience of the economies. In order to attain those objectives, the 
Union needs to provide itself with the necessary means and take the appropriate measures to 
address the challenges posed by the Covid-19 pandemic. For this reason, it is suitable to allow 
some of the necessary finance to be mobilised through borrowings on capital markets. These 
borrowings will be repaid when the Union is back on a positive growth trajectory.  

2. 

CONTENT OF THE AMENDED PROPOSAL 

The need for the EU to provide itself with the means to attain its objective 

Under the amended proposal, the Commission will be authorized to borrow funds on behalf of 
the  Union  up  to  the  amount  of  EUR  750  billion  in  2018  prices  on  the  capital  markets.  The 
proceeds  will  be  transferred  to  Union  programmes  in  accordance  with  the  European  Union 
Recovery Instrument. Given that the European Union Recovery Instrument is an exceptional 
response  to  those  temporary  but  extreme  circumstances,  the  powers  granted  to  the 
Commission  to  borrow in this Decision  are clearly limited in size, duration  and  scope. This 
removes  the  possibility  for  the  exceptional  powers  under  this  proposal  to  be  used  for  any 
purpose  other  than  tackling  the  direct  economic  and  social  consequences  of  the  COVID  19 
pandemic.  

The  EU  budget  will  start  making  the  required  repayments  of  the  funds  borrowed  on  capital 
markets from 2028 onwards. All liabilities of the Unions incurred by the proposed act will be 
fully  repaid  by  2058.  The  repayment  shall  be  organised  according  to  the  principle of  sound 
financial  management  with  a  view  to  achieving  a  steady  and  predictable  reduction  of 
liabilities during the overall period. 

Increase in the Own Resource ceilings 

The ceilings defined in the Own Resources Decision determine the maximum amount of own 
resources the Union can request the Member States to make available to the Union in a given 
year to finance its expenditure.  

On  2  May  2018,  the  Commission  proposed  a  ceiling  to  cover  annual  appropriations  for 
commitments and a ceiling to cover annual appropriation for payment of respectively 1.35% 
and  1.29%  of  the  EU  Gross  National  Income.  The  ceilings  defined  in  the  draft  Regulation 
establishing  the  Multiannual  Financial  Framework  (MFF),  expressed  in  euros,  set  the 
maximum  amount  that  can  be  either  committed  or  spent  during  the  2021-2027  period.  The 
margin  between  the  Own  Resources  Decision  ceilings  and  the  MFF  ceilings  must  be 
sufficiently  large  to  ensure  that  the  Union  is  in  a  position  to  cover  all  of  its  financial 
obligations and contingent liabilities in any given year and under any circumstances, even in 
case of negative economic developments.  

The Commission spring 2020 forecast projects that the euro area economy will contract by a 
record 7.75% in 2020 and the EU economy is forecast to contract by 7.5% in 2020. Growth 
projections for the EU and euro area have been revised down by around 9 percentage points 
compared to the autumn 2019 economic forecast. Although the Spring Forecast is clouded by 
a  higher  than  usual  degree  of  uncertainty,  it  is  beyond  doubts  that  the  Own  Resources 

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Decision ceilings, which are defined as a percentage of the EU Gross National Income, will 
decrease in absolute amount.  

In  order  to  preserve  a  sufficient  margin  under  the  Own  Resources  Decision  ceilings  for  the 
Union to cover all of its financial obligations and contingent liabilities falling due in a given 
year,  the  Own  Resources  Decision  ceilings  as  defined  in  percentage  of  the  Union’s  Gross 
National Income must be increased.    

To  that  end,  the  Commission  proposal  of  2  May  2018  must  be  amended  to  allow  for  an 
additional  increase  of  0,11  percentage  points  of  both  the  ceiling  for  appropriations  for 
commitments and the ceiling for appropriations for payments. This increase comes on top of 
the adjustments already proposed to cater for the automatic reduction of the absolute amount 
of the Own Resources Decision ceilings due to the withdrawal of the United Kingdom from 
the EU and the corresponding reduction of the Union’s Gross National Income. The ceiling to 
cover annual appropriation for payments shall thus be set at 1,40% of the EU Gross National 
Income and the ceiling to cover annual appropriations for commitments at 1,46% of the EU 
Gross National Income.  

Extraordinary and temporary increase of the own resources ceilings for addressing the 
COVID 19 crisis 

Furthermore, the amended proposal authorizes the Commission to borrow funds on behalf of 
the Union up to an amount of EUR 750 billion in 2018 prices. The proceeds will be assigned 
under the proposed European Union Recovery Instrument. In accordance with Article 310(4) 
TFEU, the Union shall not adopt any act which is likely to have appreciable implications for 
the  budget  without  providing  an  assurance  that  the  expenditure  arising  from  such  an  act  is 
capable of being financed within the limit of the Union's own resources. In accordance with 
Article  323  TFEU,  the  European  Parliament,  the  Council  and  the  Commission  shall  ensure 
that the financial means are made available to allow the Union to fulfil its legal obligations in 
respect of third parties.  

In  order  to  ensure  compliance  with  those  provisions  in  any  given  year  and  under  any 
circumstances, it is necessary that Member States allocate to the Union the resources needed 
to  cover  the  financial  obligations  and  contingent  liabilities  stemming  from  this  exceptional 
and temporary empowerment to borrow funds. Hence, the Own Resources Decision ceilings 
must  be  adjusted  upwards  on  a  temporary  basis  by  0,6  percentage  points.  This  additional 
allocation can only be used to honour financial obligations and contingent liabilities stemming 
from  the  exceptional  and  temporary  empowerment  to  borrow  funds.  In  this  framework,  the 
potential use of this additional allocation will decrease over time since the relevant financial 
obligations and contingent liabilities diminish as the borrowed funds are repaid and the loans 
mature. This increase expires when all those liabilities have ceased to exist, i.e. when all funds 
borrowed have been repaid – at the latest by 31 December 2058 – and all risks for contingent 
liabilities have ceased. 

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2018/0135 (CNS) 

Amended proposal for a 

COUNCIL DECISION 

on the system of Own Resources of the European Union 

Commission COM(2018) 325 is amended as follows:  

(1) 

(2) 

The last sentence of Recital (13) is deleted; 

The following recitals  (13a) to (13k) are inserted: 

(13a)  In  order  to  preserve  a  sufficient  margin  under  the  Own  Resources  Decision 
ceilings  for  the  Union  to  cover  all  of  its  financial  obligations  and  contingent 
liabilities falling due in any given year, the Own Resources Decision ceiling should 
be increased to a level of 1,40 % of the sum of the Member States’ Gross National 
Income  at  market  prices  for  appropriations  for  payments  and  of  1,46  %  for  the 
appropriations for commitments. 

(13b)  The  economic  impact  of  the  COVID-19  crisis  underlines  the  importance  of 
ensuring sufficient financial capacity for the Union in the event of economic shocks. 
The  Union  needs  to  provide  itself  with  the  means  to  attain  its  objective.  Financial 
resources on an exceptional scale are required in order to address the consequences 
of  the  COVID-19  crisis,  without  increasing  the  pressure  on  the  finances  of  the 
Member  States  at  a  moment  where  their  budgets  are  already  under  enormous 
pressure  to  finance  national  economic  and  social  measures  in  relation  to  the  crisis. 
An exceptional response should, therefore, be given at Union level. For this reason, it 
is  appropriate  to  authorise  the  Union  exceptionally  to  borrow  temporally  EUR  750 
billion in 2018 prices on capital markets, which would solely be used for expenditure 
in an amount of EUR 500 billion in 2018 prices and for loans in an amount of EUR 
250 billion in 2018 prices to address the consequences of the COVID-19  crisis.   

(13c) This exceptional response should address the consequences of the COVID-19 
pandemic  and  avoid its  re-emergence.  Therefore,  support  should  be  limited  in  time 
and the majority of the funding should be provided in the more immediate aftermath 
of the pandemic. 

(13d)  An  exceptional  and  temporary  increase  of  the  own  resources  ceiling  is 
necessary for the Union to bear the liability related to that borrowing of funds. The 
empowerment for the Commission to borrow funds in the capital markets, on behalf 
of  the  Union,  for  the  sole  and  exclusive  purposes  of  financing  the  measures 
addressing the consequences of the COVID-19, is closely related to the increase of 
the  own  resources  ceiling  operated  under  this  Decision  and,  ultimately,  to  the 
functioning  of  the  system  of  own  resources  of  the  Union.  Accordingly,  such  an 
empowerment should be included in this Decision. The unprecedented nature of this 
operation  and  the  exceptional  amount  of  those  funds  call  for  certainty  about  the 

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overall  volume  of  Union’s  liability  and  the  essential  features  of  its  repayment,  as 
well as for the pursuit of a single borrowing strategy.  

(13e) The borrowing of funds in the capital markets needs to be significant and must 
take  place  over  a  relatively  short  period.  The  Commission  should,  when 
implementing  the  operations  through  a  diversified  funding  strategy,  make  the  best 
use of the capacity of the markets to absorb borrowing of such significant amounts of 
funds  with  different  maturities  and  ensuring  the  most  advantagous  repayment 
conditions.  

(13f)  The  repayment  of  funds  borrowed  in  order  to  provide  non-repayable  support, 
repayable  support  through  financial  instruments  or  provisioning  for  budgetary 
guarantees, as well as the interest due, should be funded by the Union budget. The 
borrowed funds which are granted as loans to Member States should be repaid by the 
sums received from beneficiary Member States. The necessary resources need to be 
allocated and made available to the Union for it to be able to cover all of its financial 
obligations  and  contingent  liabilities  resulting  from  the  exceptional  and  temporary 
empowerment  to  borrow  in  any  given  year  and  under  any  circumstances  in 
compliance with Article 310(4) TFEU and Article 323 TFEU.  

(13g) Repayments to be made by the budget should start in 2028, while all liabilities 
incurred by this exceptional and temporary empowerment to borrow funds should be 
fully  repaid  by  31  December  2058.  In  order  to  ensure  an  efficient  budgetary 
management  of  the  appropriations  needed  to  cover  repayments  for  the  funds 
borrowed,  it  is  appropriate  to  provide  for  the  possibility  of  underlying  budgetary 
commitments  being  broken  down  in  annual  instalments.  The  schedule  of  the 
repayment should respect the principle of sound financial management, including a 
maximum  annual  exposure,  with  a  view  to  achieving  a  steady  and  predictable 
reduction of liabilities during the overall period.  

(13h) Given the features of the exceptional, temporary and limited empowerment to 
borrow funds for addressing the Covid-19 crisis, it should be clarified that, as a rule, 
the Union should not use funds borrowed on the capital markets for the financing of 
operational expenditure.  

(13i)  For  the  sole  purpose  of  covering  the  additional  financial  obligations  and 
contingent  liabilities  arising  from  the  exceptional  and  temporary  empowerment  to 
borrow  funds  and  to  ensure  financial  sustainability  even  in  times  of  economic 
downturn,  the  ceilings  for  appropriations  for  payments  and  the  ceiling  for 
appropriation of commitments should be increased by 0,6 percentage points each. 

(13j) The increase is necessary since the current ceilings are not sufficient to provide 
the  additional  resources  the  Union  needs  to  meet  the  liabilities  resulting  from  the 
exceptional  and  temporary  empowerment  to  borrow  funds.  The  need  to  have 
recourse  to  this  additional  allocation  will  only  be  temporary  since  the  relevant 
financial  obligations  and  contingent  liabilities  decrease  over  time  as  the  borrowed 
funds are repaid and the loans mature. Therefore, the increase should expire when all 
funds borrowed have been repaid and all contingent liabilities from loans granted on 
the basis of those funds have ceased, at the latest by 31 December 2058.   

(13k) In order to ensure that the Union is always able to fulfil its legal obligations in 
respect of third parties, the Commission should, in accordance with the conditions as 
laid down in regulations adopted under Article 322(2) TFEU, be authorised, during 
that  period  of  temporary  increase,  to  ask  Member  States  to  make  available  the 

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relevant cash resources where the authorised appropriations entered in the budget are 
not sufficient. 

(3) 

In Article 3, paragraphs 1 and 2 are replaced by the following: 

"1.  The  total  amount  of  own  resources  allocated  to  the  Union  to  cover  annual 
appropriations for payments shall not exceed 1,40% of the sum of the Gross National 
Incomes of all the Member States. 

2. The total annual amount of appropriations for commitments entered in the Union's 
budget shall not exceed 1,46% of the sum of the Gross National Incomes of all the 
Member States.”; 

(4) 

The following Articles 3a, 3b and 3c are inserted: 

"Article 3a 
Use of funds borrowed on the capital markets  

The Union shall not use funds borrowed on the capital markets for the financing of 
operational expenditure. 

Article 3b 
Extraordinary and temporary additional means to adress the COVID 19 crisis  

(1)  For the sole purpose of adressing the consequences of the COVID19 crisis: 

(a)  The  Commission  shall  be  empowered  to  borrow  funds  on  the  capital 
markets  on  behalf  of  the  Union  up  to  the  amount  of  EUR  750  000  000 
000 in 2018 prices. The borrowing operations shall be carried out in euro. 

(b)  The funds borrowed may be used for loans up to an amount of EUR 250 
000  000  000  in  2018  prices  and,  by  derogation  from  Article  3a,  for 
expenditure up to an amount of EUR 500 000 000 000 in 2018 prices.  

(2)  The repayment of the principal of the funds used for expenditure referred to in 
point  (b)  of  paragraph  1  and  the  related  interest  due  shall  be  borne  by  the 
general budget of the Union. The budgetary commitments may be broken down 
into annual instalments over several years in accordance with Article 112(2) of 
Regulation (EU, Euratom) 2018/1046.  

The  repayment  shall  be  scheduled,  in  accordance  with  the  principle  of  sound 
financial management, so as to ensure the steady and predictable reduction in 
liabilities, starting from 1 January 2028 until 31 December 2058. The amounts 
due by the Union in a given year for the repayment of the principal shall not 
exceed 7.5% of the maximum amount referred to in point (a) of paragraph 1. 

(3)  The  Commission  shall  establish 

the  necessary  arrangements  for 

the 

administration of the borrowing operations. 

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Article 3c 
Extraordinary and temporary increase of the own resources ceilings for the 
allocation of the resources necessary for addressing the COVID 19 crisis 

The  amounts  established  in  Article  3(1)  and  (2),  respectively,  shall  be  temporarily 
increased by 0,6 percentage points for the sole purpose of covering all liabilities of 
the  Union  resulting  from  its  borrowing  referred  to  in  Article  3b  until  all  these 
liabilities have ceased to exist, and at the latest until 31 December 2058.  

Those  increased  amounts  shall  not  be  used  for  paying  any  other  liabilities  of  the 
Union”. 

(5) 

In Article 6, the following paragraph 4 is added: 

“4. Where the authorised appropriations entered in the budget are not sufficient for 
the  Union  to  comply  with  its  obligations  resulting  from  borrowing  referred  to  in 
Article  3b,  the  Member  States  shall  make  the  resources  necessary  for  that  purpose 
available to the Commission.  

The  cash resources  shall  be  made  available in  accordance with  regulations  adopted 
under Article 322(2) TFEU, as applicable at that time, under the same conditions as 
those  applying  in  the  event  of  default  on  a  loan  contracted  pursuant  to  regulations 
and  decisions  adopted  by  the  Council,  or  by  the  European  Parliament  and  the 
Council.” 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL  

1.1. 

Title of the proposal 

Amended  proposal for an Council Decision  on the system of Own  Resource  of the 
European Union (COM(2018)325 final). 
Policy area(s) concerned in the ABM/ABB structure3  

1.2. 

EU budget revenue (Title 1, Own Resources) 

1.3. 

 Nature of the proposal/initiative  

 The proposal/initiative relates to a new action  

  The  proposal/initiative 
project/preparatory action4  

relates 

to  a  new  action 

following  a  pilot 

x The proposal/initiative relates to the extension of an existing action  

 The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objective(s) 

1.4.1.  The  Commission's  multiannual 

strategic  objective(s) 

targeted  by 

the 

proposal/initiative  

The COVID-19 pandemic is a widespread and severe public health crisis. It severely 
affects  citizens,  societies  and  economies  worldwide.  The  extent  of  the  health  crisis 
and the policy responses taken to control it are unprecedented. As a result, the depth 
of its socio-economic impact is extraordinarily uncertain. Already at this stage, it is 
certain  that  it  presents  unprecedented  and  acute  challenges  for  the  financial  and 
economic  systems  of  Member  States.  According  to  the  Commission’s  spring 
economic forecasts, the EU GDP is forecast to contract more than during the global 
financial crisis in 2009. 

In  response  to  the  emergency,  Member  States  have  adopted  exceptional  financial 
measures with a considerable bearing on their public finances. However, the impact 
across  Member  States  is  not  symmetric,  with  a  risk  that  the  crisis  will  widen 
disparities within the Union threatening the collective economic and social resilience. 
The EU has acted rapidly to deliver a coordinated and powerful collective response 
to the social and economic consequences of the crisis, within the limits of the current 
Multiannual Financial Framework expiring in 2020. 

The crisis could result in lasting damage to the Union’s economic tissue unless it is 
met with a commensurate short and medium term policy response at the level of the 
Union.  There  is  an  urgent  need  to  provide  for  immediately  available  additional 
financial capacity to support recovery and resilience across the Union in order to rise 
to this challenge.  

The  response  to  the  crisis  must  be  comprehensive,  bold  and  sustained.  A 
comprehensive  plan  for  European  recovery  will  need  massive  public  and  private 

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To  be  determined  in  the  2020  and  2021  budgetary  procedures.  ABM:  activity-based  management; 
ABB: activity-based budgeting. 
As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

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investment at European level to energise the economy, create high-quality jobs and 
invest  in  repairing  the immediate  damage  wrought  by  the Covid-19  pandemic.  The 
long-term EU budget, reinforced by the new European Union Recovery Instrument, 
will be the main tool.  

The  exceptional  nature  of  the  economic  and  social  situation  requires  exceptional 
measures to support the recovery and resilience of the economies. In order to attain 
those objectives, the Union needs to provide itself with the necessary means and take 
the appropriate measures to address the challenges posed by the Covid-19 pandemic. 
For this reason, it is suitable to allow some of the necessary finance to be mobilised 
through  borrowings  on  capital  markets.  These  borrowings  will  be  repaid  when  the 
Union is back on a positive growth trajectory. 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned 

1.4.3.  The own resource ceilings must be temporarily increased to allow the EU to fulfil its 
financial  obligations.  This  increase  is  necessary  in  order  to  cover  the  financial 
obligations and contingent liabilities stemming from this exceptional and temporary 
empowerment to borrow funds.  

The  issuance  will  create  financial  liabilities  of  the  Union,  which  will  be  fully  met 
through the necessary budgetary commitments and appropriations over the duration 
of  these  liabilities.  The  budgetary  commitments  may  be  broken  down  into  annual 
instalments over several years. 

1.4.4.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The amended Decision empowers the Commission to raise a maximum of EUR 750  
billion  in  2018  prices  through  recourse  to  financial  markets  and  to  transfer  the 
proceeds  to  the  EU  budget  in  support  of  the  EU  Recovery  Plan  under  the  next 
Multiannual Financial Framework.  

The  proceeds  of  the  borrowing  operations  will  go  to  the  EU  Recovery  Instrument. 
This  Instrument  will  provide  funding  for  the  different  policies  covered  by  the  EU 
Recovery Plan.  

1.4.5. 

Indicators of results and impact 

Specify the indicators for monitoring implementation of the proposal/initiative. 

Ratification and entry into force of the Own Resource Decision 

Aggregate volume of capital raised under the Recovery Instrument; 

Extent  to  which  capital  is  raised  early  in  the  life  of  the  Recovery  Instrument  and 
speed with which it is made available to the beneficiary financial instruments 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

The unprecedented nature of the borrowing operation and the exceptional amount of 
the  funds  to  be  borrowed  call  for  an  approval  by  all  Member  States  in  accordance 
with their national constitutional requirements.  

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The EU budget will start making the required repayments of the funds borrowed on 
capital  markets  from  2028  onwards.  All  liabilities  of  the  Unions  incurred  by  the 
proposed  act  will  be  fully  repaid  by  2058.  The  schedule  of  repayment  should  be 
organised according to the principle of sound financial management with a view to 
achieving a steady and predictable reduction of liabilities during the overall period. 
The  amounts  due  by  the  Union  in  a  given  year  for  the  repayment  of  the  principal 
shall  not  exceed  7.5%  of  the  maximum  amount  of  the  sums  borrowed  for 
expenditures.  

1.5.2.  Added value of EU involvement 

The COVID 19 crisis requires exceptional measures. The EU needs to provide itself 
with  the  means  to  attain  its  objective,  i.e.  restoring  the  long  term  growth  and 
resilience of EU economies.  

In order to relieve national public finance which are already impacted by the crisis, 
this Decision provides the EU with the authorisiaton to borrow on an exceptional and 
temporary basis. For this to happen, a temporary increase in the own resource ceiling 
is necessary in order to cover the financial obligations stemmnig for this exceptional 
authorisation to borrow.  

The EU Recovery Instrument will receive the proceeds of borrowing. On that basis, 
this  Instrument  will  offer  financial  support  in  a  spirit  of  European  solidarity  with 
affected  Member  States.  Considering  the  extent  of  the  crisis  and  the  scope  of  its 
financial and economic effects, concerted action at EU level is more appropriate to 
ensure that sufficient resources are mobilised to generate effective interventions and 
mitigate the direct societal and economic impact caused by COVID-19 crisis.  

1.5.3.  Lessons learned from similar experiences in the past 

The  Union  has  experience  in  borrowing  for  the  provision  of  financial  assistance,  
notably  under  the  a  European  Financial  Stabilisation  Mechanism  (EFSM)  and  the 
provision of Balance of Payments support.  

However,  this  experience  relates  mainly  to  the  part  of  the  borrowing  under  the 
proposed empowerment which is supposed to be used for the provisioning of loans.   

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

The Own Resource Decision empowers the Commission to borrow on behalf of the 
Union.  It  will  provide  the  means  for  the  European  Recovery  Instrument  to  provide 
the funding for the different policies covered by the EU Recovery Plan.  

The liabilities incurred under this instrument will have a long duration and therefore 
EU  budgetary  ceilings  need  to  accommodate  these  increased  liabilities  over  a 
prolonged period. The average maturity of the debt raised by the EU will be between 
[5-20] years, with the possibility for longer maturities (up to 30 years). The proposal 
also  foresees  the  possibility  for  the  EU  to  roll  over  debt  where  this  proves 
advantageous in terms of management of liabilities. 

EN 

10 

  EN 

1.6. 

Duration and financial impact  

X Proposal/initiative of limited duration  

–  X  Financial impact from entry into force of the Decision to completion of loans 
maturity,  overlapping  several  Multiannual  Financial  Frameworks;  no  maturities 
are envisaged before 2028.  

X Proposal/initiative of unlimited duration for the proposed increase in the OR 
ceiling on a permanent basis 

–  Implementation with a start-up period from the entry into force of the Decision, 

1.7.  Management mode(s) planned5  

X Direct management by the Commission 

–  X by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated; 

–   international organisations and their agencies (to be specified); 

–   the EIB and the European Investment Fund; 

–    bodies  referred  to  in  Articles  208  and  209  of  Regulation  (EU,  Euratom) 

1046/2018; 

–   public law bodies; 

–   bodies governed by private law with a public service mission to the extent that 

they provide adequate financial guarantees; 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  provide  adequate 
financial guarantees; 

–    persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP 

pursuant to Title V of the TEU, and identified in the relevant basic act. 

– 

If more than one management mode is indicated, please provide details in the ‘Comments’ section. 

5 

Details of management modes and references to Regulation (EU, Euratom) 1046/2018  may be found 
on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 

EN 

11 

  EN 

                                                 
2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

In accordance with the Financial Regulation, the Commission will report annually in 
the context of its  report  prepared on all  borrowing  operations carried out  under the 
Instrument. 

2.1.1.  Risk(s) identified  

Implementation  will  be  performed  inter  alia  through  issuance  of  large  volumes  of 
debt  on  international  capital  markets.  The  sudden  increase  in  debt  issuance  in  a 
period  when  there  is  likely  to  be  extensive  recourse  to  capital  markets  by  other 
sovereigns  and  institutions  gives  rise  to  the  risk  of  deterioration  in  the  terms  and 
conditions  available  to  the  Union.  This  risk  will  be  managed  through  the 
implementation of a new debt management strategy to help the Union to obtain the 
best available terms, while safeguarding its excellent credit rating.  

In  terms  of  loans  granted  to  Member  States  for  the  purposes  of  the  reform  and 
resilience facility, the risk of non-repayment is considered negligible as it is a remote 
possibility that an EU Member States has to suspend debt repayments. 

Management  of  these  risks  on  the  funding  and  lending  side  requires  a  significant 
investment  in  development  of  the  Commission’s  borrowing/lending  and  debt 
management  capacity.  This  investment  explains  the  administrative  expenditure 
linked  to  this  policy,  through  the  recruitment  of  specialised  staff  including  from 
national  debt  management  offices.  The  increased  staff  resources  is  also  needed  for 
support services such as accounting, back-office and dedicated IT support. 

The  increase  in  the  Own  Resource  ceilings  allows  the  Union  to  meet  its  financial 
obligations  and  contingent  liabilities.  It  will  expire  when  all  those  liabilities  have 
ceased  to  exist,  i.e.  when  all  funds  borrowed  have  been  repaid  and  all  risks  for 
contingent liabilities have ceased. 

2.1.2. 

Information concerning the internal control system set up 

The  European  Commission's  existing  internal  control  system  applies  to  ensure  that 
funds available under the EU Recovery instrument are used properly and in line with 
appropriate legislation.  

The current system is setup as follows:  

1. The internal control teams focuses on compliance with administrative procedures 
and legislation in force. The Internal Control Framework of the Commission is used 
for this purpose.  

2. Regular audit of grants and contracts by external auditors, which will be awarded 
under this instrument will be fully incorporated in annual audit plans.  

3. Evaluation of overall activities by external evaluators.  

Actions performed  may be audited by the European Anti-Fraud office (OLAF) and 
the Court of Auditors. 

EN 

12 

  EN 

2.1.3.  Estimate of the costs and benefits of the controls and assessment of the expected level 

of risk of error  

N.A. 

2.2.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

Maximum  transparency  and  proper  monitoring  of  the  use  of  the  EU  financial 
the  Member  States,  other 
resources  are  required.  Reporting  obligations  for 
beneficiaries and the Commission will apply. 

EN 

13 

  EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

  No existing budget lines  

  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the 
meaning of 
Article 21(2)(b) of 
Regulation (EU, 
Euratom) 
1046/2018   

2 

2 

06.200301  European  Union  Recovery 
Instrument  –  payment  of  periodic 
coupon and redemption at maturity 

Diff. 

NO 

NO 

NO 

NO 

06.012001 Support expenditure for the 
European Recovery Instrument (ERI) 

Non-Diff 

NO 

NO 

NO 

NO 

EN 

14 

  EN 

 
 
 
3.2. 

Estimated impact on expenditure  

The proposal has no impact on expenditure. A p.m. line will be created in the budgetary procedure.  

3.2.1. 

Summary of estimated impact on expenditure  

EUR million (to three decimal places) 

Heading of multiannual financial  
framework  

2  

DG: BUDG 

 Operational appropriations  

Year 
2021 

Year 
2022 

Year 
2023 

Year 
2024 

Year 
2025 

Year 2026 

Year 2027 

TOTAL 

 06.200301 European 
Union Recovery 
Instrument – payment 
of periodic coupon 
and redemption at 
maturity6 

06.200301 European 
Union Recovery 
Instrument – payment 
of periodic coupon 
and redemption at 
maturity 

Commitments  in  2018 
prices 

(1) 

202 757 

726 570 

1 402 108 

2 525 035 

3 070 263 

4 104 667 

5 359 447 

17 390 847 

Payments in 2018 prices 

(2) 

202 757 

726 570 

1 402 108 

2 525 035 

3 070 263 

4 104 667 

5 359 447 

17 390 847 

Commitments in current 
prices 

Payments 
prices 

in 

current 

215 168 

786 463 

1 548 040 

2 843 599 

3 526 767 

4 809 272 

6 405 035 

20 134 344 

215 168 

786 463 

1 548 040 

2 843 599 

3 526 767 

4 809 272 

6 405 035 

20 134 344 

6  

As loans will reach their maturity as from 2028, only coupon payments will take place in previous years. 

EN 

15 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Appropriations  of  an  administrative  nature  financed 
from the envelope of specific programmes7  

06.012001 

06.012001 

TOTAL 
appropriations  
(heading 2) 

Commitments = 
Payments in 2018 prices 

Commitments = 
Payments in current 
prices 

Commitments  in  2018 
prices 

(3) 

(3) 

4 712 

924 

906 

888 

871 

853 

5 000 

1 000 

1 000 

1 000 

1 000 

1 000 

9 153 

10 000 

=1+ 3 

207 469 

727 494 

1 403 013 

2 525 923 

3 071 133 

4 105 521 

5 359 447 

17 400 000 

Payments in 2018 prices 

=2+ 3 

207 469 

727 494 

1 403 013 

2 525 923 

3 071 133 

4 105 521 

5 359 447 

17 400 000 

Commitments in current 
prices 

Payments 
prices 

in 

current 

=1+ 3 

220 168 

787 463 

1 549 040 

2 844 599 

3 527 767 

4 810 272 

6 405 035 

20 144 344 

=2+ 3 

220 168 

787 463 

1 549 040 

2 844 599 

3 527 767 

4 810 272 

6 405 035 

20 144 344 

7 

Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, 
direct research. 

EN 

16 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Heading of multiannual financial  
framework  

7 

‘Administrative expenditure’ 

Year 
2021 

Year 
2022 

Year 
2023 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

EUR million (to three decimal places) 

DG BUDG 

 Human resources  

 Other administrative expenditure  

TOTAL DG BUDG 

Appropriations  

TOTAL appropriations 
under HEADING 5 (2020) and 
HEADING 7 (2021-2027) 
of the multiannual financial framework  

(Total 
commitments  = 
Total 
payments) 

TOTAL appropriations  
under the multiannual financial 
framework  

Commitments 

Payments 

Year 
2021 

Year 
2022 

Year 
2023 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

EUR million (to three decimal places) 

EN 

17 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–   

–  X 

The proposal/initiative does not require the use of operational appropriations  

The proposal/initiative requires the use of operational appropriations in budget years 2020-2027: payment of interests  as 

indicated in the table above 

EN 

18 

EN 

 
 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–   

The proposal/initiative does not require the use of appropriations of an 

administrative nature  

–  X 

The  proposal/initiative  requires  the  use  of  appropriations  of  an 

administrative nature, as explained below: 

EUR million (to three decimal places) 

Year 
2021 

Year 
2022 

Year 
2023 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2027 

TOTAL 

HEADING 5 (7 from 
2021) 
of the multiannual 
financial framework 

Human resources  

Other administrative 
expenditure  

Subtotal HEADING 5 (7) 
of the multiannual 
financial framework  

Outside HEADING 58 
of the multiannual 
financial framework  

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

2020:  

The  appropriations  required  for  human  resources  and  other  expenditure  of  an  administrative  nature  will  be  met  by 
appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the 
DG,  together  if  necessary  with  any  additional  allocation  which  may  be  granted  to  the  managing  DG  under  the  annual 
allocation procedure and in the light of budgetary constraints. 

8 

Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of 
EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research. 

EN 

19 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.  Estimated requirements of human resources 

–   

–  X 

The proposal/initiative does not require the use of human resources.  

The  proposal/initiative  requires  the  use  of  human  resources,  as 

explained below: 

Estimate to be expressed in full time equivalent units 

Year 
2023 

Year 
2024 

Year 
2025 

Year 
2026 

Year 
2021 

Year 
2022 

Year 
2027 

Enter as 
many 
years as 
necessary 
to show 
the 
duration 
of the 
impact 
(see 
point 
1.6) 

 Establishment plan posts (officials and temporary staff) 

XX 01 01 01 (Headquarters and Commission’s 
Representation Offices) 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

XX 01 02 01 (AC, END, INT from the ‘global envelope’) 

XX 01 02 02 (AC, AL, END, INT and JED in the 
delegations) 

XX 
01 
04 
yy 
9 

- at 
Headquarters 

- in 
Delegations  

XX 01 05 02 (AC, END, INT - Indirect research) 

10 01 05 02 (AC, END, INT - Direct research) 

Other budget lines (specify) 

TOTAL 

DG BUDG is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to management of the 
action  and/or  have  been  redeployed  within  the  DG,  together  if  necessary  with  any  additional  allocation  which 
may  be  granted  to  the  managing  DG  under  the  annual  allocation  procedure  and  in  the  light  of  budgetary 
constraints. 

Description of tasks to be carried out: 

Officials and temporary staff 

Debt issuance, loan administration and accounting, settlement.  

9 

Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 

EN 

20 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
External staff 

Debt issuance, loan administration and accounting, settlement. 

3.2.4.  Compatibility with the current multiannual financial framework  

–  X 

The  proposal/initiative  is  compatible  the  current  and  proposed  next 

multiannual financial framework. 

–   

The  proposal/initiative  will  entail  reprogramming  of  the  relevant 

heading in the multiannual financial framework. 

–   

The proposal/initiative requires application of the flexibility instrument 

or revision of the multiannual financial framework. 

3.2.5.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties.  

–  X The proposal/initiative provides for the co-financing estimated below: 

EN 

21 

  EN 

 
 
 
3.3. 

Estimated impact on revenue  

–   

–  X 

The proposal/initiative has no financial impact on revenue10. 

The proposal/initiative has the following financial impact: 

on assigned revenues (budget revenue line to be determined) 

Over  the  period  of  implementation,  EUR  X  billion  from  proceeds  of  borrowing  operations 
will constitute external assigned revenues devoted to grants to MSs and budgetary guarantees.  

EUR million (rounded) 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

total 

constant 
prices 2018 

current 
prices 

10 

EN 

22 

  EN