Communication from the Commission to the European Parliament, the Council and the Court of Auditors – Annual accounts of the European Development Fund 2019
Date: 2020-11-13
Institutions: European Commission
Subjects: European Development Fund, balance sheet, closing of accounts, consolidated account, general budget (EU), implementation of the budget








C_2020387EN.01000101.xml










13.11.2020   


EN


Official Journal of the European Union


C 387/1






COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS
Annual accounts of the European Development Fund 2019
(2020/C 387/01)

CONTENTS






CERTIFICATION OF THE ACCOUNTS
2








IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES
3








FUNDS MANAGED BY THE EUROPEAN COMMISSION
6








FINANCIAL STATEMENTS OF THE EDF
8








FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF
44








CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS
58








EDF REPORT ON FINANCIAL IMPLEMENTATION
63








ANNUAL REPORT ON IMPLEMENTATION — FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK
95




CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2019 have been prepared in accordance with Title X of the Financial Regulation of the 11th European Development Fund and with the accounting principles, rules and methods set out in the notes to the financial statements.
I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Development Fund in accordance with Article 18 of the Financial Regulation of the 11th European Development Fund.
I have obtained from the authorising officer and from the EIB, who guarantee its reliability, all the information necessary for the production of the accounts that show the European Development Fund’s assets and liabilities and the budgetary implementation.
I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present a true and fair view of the financial position of the European Development Fund in all material aspects.


Rosa ALDEA BUSQUETS

Accounting Officer


16 June 2020




IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

1.   BACKGROUND

The European Union (hereinafter referred to as the ‘EU’) has cooperative relations with a large number of developing countries. The main objective is to promote economic, social and environmental development, with the primary aim of reducing and eradicating poverty in the long term by providing beneficiary countries with development aid and technical assistance. To achieve this, the EU draws up, jointly with the partner countries, cooperation strategies and mobilises the financial resources to implement them. These EU resources allocated to development cooperation come from three sources:






—


The EU budget,










—


The European Development Fund,










—


The European Investment Bank.




The European Development Fund (hereinafter referred to as the ‘EDF’) is the main instrument for providing EU aid for development cooperation to the African, Caribbean and Pacific (hereinafter referred to as the ‘ACP’) States and Overseas Countries and Territories (hereinafter referred to as the ‘OCTs’).
The EDF is not funded by the EU budget. It is established by an Internal Agreement of the Representatives of the Member States, sitting within the Council, and managed by a specific committee. The European Commission (hereinafter referred to as the ‘Commission’) is responsible for the financial implementation of the operations carried out with EDF resources. The European Investment Bank (hereinafter referred to as the ‘EIB’) manages the Investment Facility.
During the period 2014-2020, the geographic aid granted to ACP States and OCTs will continue to be mainly funded by the EDF. Each EDF is usually concluded for a period of around five years and is governed by its own Financial Regulation, which requires the preparation of financial statements for each individual EDF. Accordingly, financial statements are prepared separately for each EDF in respect of the part that is managed by the Commission. These financial statements are also presented in an aggregated way so as to provide a global view of the financial situation of the resources for which the Commission is responsible.
The Internal Agreement establishing the 11th EDF was signed by the participating Member States, meeting within the Council, in June 2013 (1). It came into force on 1 March 2015.
In 2018, the Council adopted the Financial Regulation applicable to the 11th EDF (2). This repealed the previous regulation in force and is applicable to operations financed from previous EDFs without prejudice to existing legal commitments. This Regulation does not apply to the Investment Facility under previous EDFs.
Within the framework of the ACP-EU Partnership Agreement, the Investment Facility was established, managed by the EIB, and used to support private sector development in the ACP States by financing essentially — but not exclusively — private investments. The Facility is designed as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a self-renewing and financially independent facility. As the Investment Facility is not managed by the Commission, it is not consolidated in the first part of the annual accounts — the financial statements of the EDF and the related report on financial implementation. The financial statements of the Investment Facility are included as a separate part of the annual accounts (Part II) to provide a full picture of the development aid of the EDF.
2.   HOW IS THE EDF FUNDED?

The European Council of 2 December 2013 adopted the multiannual financial framework for 2014-2020. In this context, it was decided that geographical cooperation with the ACP States would not be integrated into the EU budget (budgetised), but would continue to be funded through the existing intergovernmental EDF.
The EU budget is annual and according to the budgetary principle of annuality, expenditure and revenue are planned and authorised for one year. Unlike the EU Budget, the EDF is a fund operating based on multiannuality. Each EDF establishes an overall fund to implement development cooperation during a period of usually five years. As resources are allocated on a multiannual basis, the allocated funds may be used over the period of the EDF. The lack of budget annuality is highlighted in the budgetary reporting, where the budgetary implementation of the EDFs is measured against the total funds.
The EDF resources are ‘ad hoc’ contributions from the EU Member States. Approximately every five years, Member State representatives meet at intergovernmental level to decide on an overall amount that will be allocated to the fund and to oversee its implementation. The Commission then manages the fund in accordance with the Union policy on development cooperation. Since Member States have their own development and aid policies in parallel to the Union policy, the Member States must coordinate their policies with the EU to ensure they are complementary.
In addition to the abovementioned contributions, it is also possible for Member States to enter into co-financing arrangements or to make voluntary financial contributions to the EDF.
3.   YEAR-END REPORTING

3.1.   ANNUAL ACCOUNTS

In accordance with Article 18(3) of the EDF Financial Regulation, the EDF financial statements are prepared based on accrual-based accounting rules that themselves are based on International Public Sector Accounting Standards (IPSAS). The accounting rules adopted by the Accounting Officer of the Commission are applied by all the institutions and bodies of the EU in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements. These EU accounting rules are also applied to the EDF while taking into account the specific nature of its activities.
The preparation of the EDF annual accounts is entrusted to the Commission’s Accounting Officer who is the Accounting Officer of the EDF. She ensures that the annual accounts of the EDF present a true and fair view of the financial position of the EDF.
The annual accounts are presented as follows:
Part I: Funds managed by the Commission






 








(i)


Financial statements and explanatory notes of the EDF










(ii)


Financial statements of the EU trust funds consolidated in the EDF










(iii)


Consolidated financial statements of EDF and the EU trust funds










(iv)


Report on financial implementation of the EDF








Part II: Annual report on implementation — Funds managed by the EIB






 








(i)


Financial statements of the Investment Facility








The part ‘Financial statements of the European trust funds consolidated in the EDF’ includes financial statements of the two trust funds created under the EDF: The Bêkou EU Trust Fund (see section ‘Financial statements of the Bêkou EU Trust Fund’) and the EU Trust Fund for Africa (see section ‘Financial statements of EU Trust Fund for Africa’). The trust funds individual financial statements are prepared under the responsibility of the Commission’s Accounting Officer and are subject to external audit carried out by a private auditor. The trust funds’ figures included in these annual accounts are provisional.
The EDF annual accounts must be adopted by the Commission no later than 31 July of the year following the balance sheet date and presented to the European Parliament and to the Council for discharge.
4.   AUDIT AND DISCHARGE

4.1.   AUDIT

The EDF annual accounts are audited by its external auditor, the European Court of Auditors (hereinafter referred to as the ‘ECA’), which draws up an annual report for the European Parliament and the Council.
4.2.   DISCHARGE

The final control of the financial implementation of the EDF resources for a given financial year is the discharge. Following the audit and finalisation of the annual accounts, it falls to the Council to recommend, and then to the European Parliament to decide, whether to grant discharge to the Commission for the financial implementation of the EDF resources for a given financial year. This decision is based on a review of the accounts and the annual report of the ECA (which includes an official statement of assurance) and replies of the Commission to questions and further information requests of the discharge authority.

FUNDS MANAGED BY THE EUROPEAN COMMISSION


CONTENTS






FINANCIAL STATEMENTS OF THE EDF
8








EDF BALANCE SHEET
9








EDF STATEMENT OF FINANCIAL PERFORMANCE
10








EDF CASHFLOW STATEMENT
11








EDF STATEMENT OF CHANGES IN NET ASSETS
12








BALANCE SHEET BY EDF
13








STATEMENT OF FINANCIAL PERFORMANCE BY EDF
15








STATEMENT OF CHANGES IN NET ASSETS BY EDF
16








NOTES TO THE FINANCIAL STATEMENTS OF THE EDF
19








FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF
44








FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2019
45








FINANCIAL STATEMENTS OF THE EUTF AFRICA 2019
51








CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS
58








CONSOLIDATED BALANCE SHEET
59








CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
60








CONSOLIDATED CASH FLOW STATEMENT
61








CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
62








EDF REPORT ON FINANCIAL IMPLEMENTATION
63




FINANCIAL STATEMENTS OF THE EDF (3)


EDF BALANCE SHEET









EUR million




 


Note


31.12.2019


31.12.2018





NON-CURRENT ASSETS



 


 


 





Financial assets




2.1




36




—






Pre-financing




2.2




910




887






Trust Fund contributions




2.3




266




201





 


 



1 213 




1 088 






CURRENT ASSETS



 


 


 





Pre-financing




2.2




1 288 




1 448 






Exchange receivables and non-exchange recoverables




2.4




123




138






Cash and cash equivalents




2.5




1 179 




387





 


 



2 590 




1 973 






TOTAL ASSETS



 



3 803 




3 061 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities




2.6




(19)




(18)





 


 



(19)




(18)






CURRENT LIABILITIES



 


 


 





Payables




2.7




(516)




(241)






Accrued charges and deferred income




2.8




(1 319 )




(1 281 )





 


 



(1 835 )




(1 523 )






TOTAL LIABILITIES



 



(1 854 )




(1 540 )






NET ASSETS



 



1 948 




1 521 






FUNDS & RESERVES



 


 


 





Fair value reserve




2.9




(2)




—






Called fund capital — active EDFs




2.10




54 809 




50 423 






Called fund capital from closed EDFs carried forward




2.10




2 252 




2 252 






Economic result carried forward from previous years



 



(51 155 )




(47 037 )






Economic result of the year



 



(3 956 )




(4 118 )






NET ASSETS



 



1 948 




1 521 









EDF STATEMENT OF FINANCIAL PERFORMANCE









EUR million




 


Note


2019


2018





REVENUE



 


 


 





Revenue from non-exchange transactions




3.1



 


 





Recovery activities



 



28




4





 


 



28




4






Revenue from exchange transactions




3.2



 


 





Financial revenue



 



7




10






Other revenue



 



39




46





 


 



46




57






Total Revenue



 



74




60






EXPENSES



 


 


 





Aid instruments




3.3




(3 755 )




(4 054 )






Co-financing expenses




3.4




(14)




17






Finance costs




3.5




(1)




7






Other expenses




3.6




(260)




(148)






Total Expenses



 



(4 030 )




(4 178 )






ECONOMIC RESULT OF THE YEAR



 



(3 956 )




(4 118 )









EDF CASHFLOW STATEMENT









EUR million




 


Note


2019


2018





Economic result of the year



 



(3 956 )




(4 118 )






Operating activities



 


 


 





Capital increase — contributions (net)



 



4 385 




4 250 






(Increase)/decrease in trust funds contributions



 



(65)




(38)






(Increase)/decrease in pre-financing



 



136




(235)






(Increase)/decrease in exchange receivables and non-exchange recoverables



 



15




(46)






Increase/(decrease) in provisions



 



—




(4)






Increase/(decrease) in financial liabilities



 



2




3






Increase/(decrease) in payables



 



275




(322)






Increase/(decrease) in accrued charges and deferred income



 



37




548






Other non-cash movements



 



(2)




—






Investing activities



 


 


 





(Increase)/decrease in available for sale financial assets



 



(36)




—






NET CASHFLOW



 



792




40






Net increase/(decrease) in cash and cash equivalents



 



792




40






Cash and cash equivalents at the beginning of the year




2.5




387




347






Cash and cash equivalents at year-end




2.5




1 179 




387









EDF STATEMENT OF CHANGES IN NET ASSETS













EUR million




 


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Fair value reserve
(F)


Total Net Assets
(C)+(D)+(E)+(F)






BALANCE AS AT 31.12.2017





73 264 




27 090 




46 173 




(47 037 )




2 252 




—




1 389 






Capital increase — contributions




—




(4 250 )




4 250 




—




—



 



4 250 






Economic result of the year




—




—




—




(4 118 )




—



 



(4 118 )







BALANCE AS AT 31.12.2018





73 264 




22 840 




50 423 




(51 155 )




2 252 




—




1 521 






Fair value movements



 


 


 


 


 



(2)




(2)






Capital increase — contributions




—




(4 385 )




4 385 




—




—



 



4 385 






Economic result of the year




—




—




—




(3 956 )




—



 



(3 956 )







BALANCE AS AT 31.12.2019





73 264 




18 455 




54 809 




(55 111 )




2 252 




(2)




1 948 









BALANCE SHEET BY EDF

















EUR million




 


 


31.12.2019


31.12.2018




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





NON-CURRENT ASSETS



 


 


 


 


 


 


 


 


 


 


 





Financial assets




2.1




—




—




—




36




36




—




—




—




—




—






Pre-financing




2.2




—




6




325




580




910




—




23




520




344




887






Trust Fund contributions




2.3




—




—




—




266




266




—




—




—




201




201





 


 



—




6




325




882




1 213 




—




23




520




546




1 088 






CURRENT ASSETS



 


 


 


 


 


 


 


 


 


 


 





Pre-financing




2.2




0




26




441




821




1 288 




0




19




445




984




1 448 






Exchange receivables and non-exchange recoverables




2.4




183




121




2 201 




(2 382 )




123




183




176




2 457 




(2 679 )




138






Inter-EDF accounts



 



182




53




2 160 




(2 395 )




(0)




183




111




2 421 




(2 715 )




(0)






Cash and cash equivalents




2.5




—




—




—




1 179 




1 179 




—




—




—




387




387





 


 



365




201




4 801 




(2 777 )




2 590 




367




306




5 323 




(4 023 )




1 973 






TOTAL ASSETS



 



365




207




5 127 




(1 896 )




3 803 




367




329




5 843 




(3 477 )




3 061 






NON-CURRENT LIABILITIES



 


 


 


 


 


 


 


 


 


 


 





Financial liabilities




2.6




—




—




(1)




(18)




(19)




—




—




(1)




(16)




(18)





 


 



—




—




(1)




(18)




(19)




—




—




(1)




(16)




(18)






CURRENT LIABILITIES



 


 


 


 


 


 


 


 


 


 


 





Payables




2.7




—




(5)




(108)




(404)




(516)




(0)




(6)




(125)




(111)




(241)






Accrued charges and deferred income




2.8




—




(96)




(240)




(983)




(1 319 )




(0)




(83)




(358)




(840)




(1 281 )





 


 



—




(101)




(348)




(1 386 )




(1 835 )




(0)




(89)




(482)




(951)




(1 522 )






TOTAL LIABILITIES



 



—




(101)




(349)




(1 405 )




(1 854 )




(0)




(89)




(484)




(967)




(1 540 )






NET ASSETS



 



365




106




4 778 




(3 300 )




1 948 




366




240




5 359 




(4 444 )




1 521 






Fair value reserves




2.9




—




—




—




(2)




(2)




—




—




—




—




—






Called fund capital — active EDFs




2.10




12 164 




10 758 




20 960 




10 927 




54 809 




12 164 




10 773 




20 960 




6 527 




50 423 






Called fund capital from closed EDFs carried forward




2.10




627




1 625 




—




—




2 252 




627




1 625 




—




—




2 252 






Called fund capital transfers between active EDFs




2.10




(2 510 )




2 109 




265




136




—




(2 509 )




2 137 




55




317




—






Economic result carried forward from previous years



 



(10 098 )




(14 406 )




(18 077 )




(8 573 )




(51 155 )




(10 098 )




(14 352 )




(17 078 )




(5 508 )




(47 037 )






Economic result of the year



 



(0)




(34)




(529)




(3 393 )




(3 956 )




0




(53)




(1 000 )




(3 065 )




(4 118 )






NET ASSETS



 



183




53




2 618 




(905)




1 948 




184




129




2 938 




(1 729 )




1 521 









STATEMENT OF FINANCIAL PERFORMANCE BY EDF

















EUR million




 


 


2019


2018




Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





REVENUE



 


 


 


 


 


 


 


 


 


 


 





Revenue from non-exchange transactions




3.1



 


 


 


 


 


 


 


 


 


 





Recovery activities



 



0




—




18




10




28




0




3




(3)




4




4





 


 



0




0




18




10




28




0




3




(3)




4




4






Revenue from exchange transactions




3.2



 


 


 


 


 


 


 


 


 


 





Financial revenue



 



(0)




—




3




4




7




0




2




8




1




10






Other revenue



 



1




6




21




12




39




1




6




27




12




46





 


 



1




6




24




16




46




1




8




35




13




57






Total revenue



 



1




6




42




26




74




1




11




32




17




60






EXPENSES



 


 


 


 


 


 


 


 


 


 


 





Aid instruments




3.3




(0)




(35)




(579)




(3 141 )




(3 755 )




0




(59)




(984)




(3 012 )




(4 054 )






Co-financing expenses




3.4




—




—




(9)




(5)




(14)




—




—




18




(1)




17






Finance costs




3.5




(0)




2




(2)




(1)




(1)




0




1




5




1




7






Other expenses




3.6




(1)




(8)




20




(272)




(260)




(1)




(7)




(71)




(70)




(148)






Total expenses



 



(1)




(40)




(571)




(3 418 )




(4 030 )




(0)




(64)




(1 031 )




(3 082 )




(4 178 )






ECONOMIC RESULT OF THE YEAR



 



(0)




(34)




(529)




(3 393 )




(3 956 )




0




(53)




(1 000 )




(3 065 )




(4 118 )






STATEMENT OF CHANGES IN NET ASSETS BY EDF













EUR million




Eighth EDF


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Called fund capital transfers between active EDFs
(F)


Total Net Assets
(C)+(D)+(E)+(F)





BALANCE AS AT 31.12.2017




12 164 




—




12 164 




(10 098 )




627




(2 503 )




190






Transfers to/from the 10th EDF



 


 



—



 


 



(7)




(7)






BALANCE AS AT 31.12.2018




12 164 




—




12 164 




(10 098 )




627




(2 509 )




183






Transfers to/from the 10th EDF



 


 



—



 


 



(1)




(1)






BALANCE AS AT 31.12.2019




12 164 




—




12 164 




(10 098 )




627




(2 510 )




183




















EUR million




Ninth EDF


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Called fund capital transfers between active EDFs
(F)


Total Net Assets
(C)+(D)+(E)+(F)





BALANCE AS AT 31.12.2017




10 773 




—




10 773 




(14 352 )




1 625 




2 177 




222






Transfers to/from the 10th EDF



 


 



—



 


 



(40)




(40)






Economic result of the year



 


 



—




(53)



 


 



(53)






BALANCE AS AT 31.12.2018




10 773 




—




10 773 




(14 406 )




1 625 




2 137 




129






Capital increase — contributions



 



15




(15)



 


 


 



(15)






Transfers to/from the 10th EDF



 


 



—



 


 



(27)




(27)






Economic result of the year



 


 



—




(34)



 



—




(34)






BALANCE AS AT 31.12.2019




10 773 




15




10 758 




(14 440 )




1 625 




2 109 




53




















EUR million




10th EDF


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Called fund capital transfers between active EDFs
(F)


Total Net Assets
(C)+(D)+(E)+(F)





BALANCE AS AT 31.12.2017




20 960 




0




20 960 




(17 078 )




—




120




4 003 






Transfers to/from the Eighth and Ninth EDF



 


 



—



 


 



47




47






Transfers to/from the 11th EDF



 


 



—



 


 



(112)




(112)






Economic result of the year



 


 



—




(1 000 )



 


 



(1 000 )






BALANCE AS AT 31.12.2018




20 960 




0




20 960 




(18 077 )




—




55




2 938 






Transfers to/from the Eighth and Ninth EDF



 


 



—



 


 



28




28






Transfers to/from the 11th EDF



 


 



—



 


 



181




181






Economic result of the year



 


 



—




(529)



 



—




(529)






BALANCE AS AT 31.12.2019




20 960 




—




20 960 




(18 606 )




—




265




2 618 





















EUR million




11th EDF


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Called fund capital transfers between active EDFs
(F)


Fair value reserve
(G)


Total Net Assets
(C)+(D)+(E)+(F)+(G)





BALANCE AS AT 31.12.2017




29 367 




27 090 




2 277 




(5 508 )




—




206




—




(3 025 )






Capital increase — contributions



 



(4 250 )




4 250 



 


 



—



 



4 250 






Transfers to/from the Eighth, Ninth and 10th EDF



 


 



—



 



—




112



 



112






Economic result of the year



 


 



—




(3 065 )



 



—



 



(3 065 )






BALANCE AS AT 31.12.2018




29 367 




22 840 




6 527 




(8 573 )




—




317




—




(1 729 )






Fair value movements



 


 


 


 


 


 



(2)




(2)






Capital increase –contributions



 



(4 400 )




4 400 



 


 



(181)



 



4 219 






Economic result of the year



 


 



—




(3 393 )



 



—



 



(3 393 )






BALANCE AS AT 31.12.2019




29 367 




18 440 




10 927 




(11 966 )




—




136




(2)




(905)






NOTES TO THE FINANCIAL STATEMENTS OF THE EDF (4)

1.   SIGNIFICANT ACCOUNTING POLICIES

1.1.   ACCOUNTING PRINCIPLES

The objective of financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of users.
The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU Accounting Rule 1 ‘Financial Statements’ and are the same as those described in IPSAS 1: fair presentation, accrual basis, going concern, consistency of presentation, materiality, aggregation, offsetting and comparative information. The qualitative characteristics of financial reporting are relevance, faithful representation (reliability), understandability, timeliness, comparability and verifiability.
1.2.   BASIS OF PREPARATION

1.2.1.   Reporting period

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 December.
1.2.2.   Currency and basis for conversion

The annual accounts are presented in thousands of euros, the euro being the EU’s functional currency. Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the date when they were purchased.
Year-end balances of monetary assets and liabilities denominated in foreign currencies are translated into euros on the basis of the European Central Bank (ECB) exchange rates applying on 31 December.

Euro exchange rates











Currency


31.12.2019


31.12.2018


Currency


31.12.2019


31.12.2018





BGN




1,9558 




1,9558 




PLN




4,2568 




4,3014 






CZK




25,4080 




25,7240 




RON




4,783 




4,6635 






DKK




7,4715 




7,4673 




SEK




10,4468 




10,2548 






GBP




0,8508 




0,8945 




CHF




1,0854 




1,1269 






HRK




7,4395 




7,4125 




JPY




121,9400 




125,8500 






HUF




330,5300 




320,9800 




USD




1,1234 




1,145 





1.2.3.   Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to: amounts for employee benefit liabilities, accrued and deferred revenue and charges, provisions, financial risk on accounts receivable, contingent assets and liabilities, and degree of impairment of assets. Actual results could differ from those estimates.
Reasonable estimates are an essential part of the preparation of financial statements and do not undermine their reliability. An estimate may need revision if changes occur in the circumstances on which the estimate was based or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior periods and is not the correction of an error. The effect of a change in accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes known.
1.3.   BALANCE SHEET

1.3.1.   Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance. An asset is identifiable if it is either separable (i.e. it is capable of being separated or divided from the entity, e.g. by being sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so), or arises from binding arrangements (including rights from contracts or other legal rights), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations).
Acquired intangible assets are stated at historical cost less accumulated amortisation and impairment losses. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met and the expenses relate solely to the development phase of the asset. The capitalisable costs include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.
Intangible assets are amortised on a straight-line basis over their estimated useful lives (3 to 11 years). The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime determined by an agreement.
1.3.2.   Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition, construction or transfer of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the entity and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred. Land is not depreciated, as it is deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:






Type of asset


Straight line depreciation rate





Buildings




4 % to 10 %






Plant and equipment




10 % to 25 %






Furniture and vehicles




10 % to 25 %






Computer hardware




25 % to 33 %






Other




10 % to 33 %





Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the statement of financial performance.

Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Leases are classified as either finance leases or operating leases.
Finance leases are leases where substantially all the risks and rewards incidental to ownership are transferred to the lessee. When entering a finance lease as a lessee, the assets acquired under the finance lease are recognised as assets and the associated lease obligations as liabilities as from the commencement of the lease term. The assets and liabilities are recognised at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Over the period of the lease term, the assets held under finance leases are depreciated over the shorter of the asset’s useful life and the lease term. The minimum lease payments are apportioned between the finance charge (the interest element) and the reduction of the outstanding liability (the capital element). The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability, which is presented as current/non-current, as applicable. Contingent rents shall be charged as expenses in the period in which they are incurred.
An operating lease is a lease other than a finance lease, i.e. a lease where the lessor retains substantially all the risks and rewards incidental to ownership of an asset. When entering an operating lease as a lessee, the operating lease payments are recognised as an expense in the statement of financial performance on a straight-line basis over the lease term with neither a leased asset nor a leasing liability presented in the statement of financial position.
1.3.3.   Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation/depreciation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are tested for impairment whenever there is an indication at the reporting date that an asset may be impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable (service) amount. The recoverable (service) amount is the higher of an asset’s fair value less costs to sell and its value in use.
Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly.
1.3.4.   Financial assets

Financial assets are classified in the following categories: ‘financial assets at fair value through surplus or deficit’, ‘loans and receivables’, ‘held-to-maturity investments’ and ‘available for sale financial assets’. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.
(i)   Financial assets at fair value through surplus or deficit

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the entity. Derivatives are also presented in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date. During this financial year, the entity did not hold any investments in this category.
(ii)   Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the entity provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet date. Loans and receivables include term deposits with the original maturity above three months.
(iii)   Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the entity has the positive intention and ability to hold to maturity. During this financial year, the entity did not hold any investments in this category.
(iv)   Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the period of time the entity expects to hold them, which is usually the maturity date. During this financial year, the entity did not hold any investments in this category.

Initial recognition and measurement

Purchases and sales of financial assets at fair value through surplus or deficit, held-to-maturity and available for sale are recognised on their trade date, i.e. the date on which the entity commits to purchase or sell the asset. Cash equivalents and loans are recognised when cash is deposited in a financial institution or advanced to borrowers. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through surplus or deficit, transaction costs are added to the fair value at initial recognition.
Financial instruments are derecognised when the rights to receive cashflows from the investments have expired or the entity has transferred substantially all risks and rewards of ownership to another party.

Subsequent measurement

Financial assets at fair value through surplus or deficit are subsequently carried at fair value, with gains and losses arising from changes in the fair value being included in the statement of financial performance in the period in which they arise.
Loans and receivables and held-to maturity investments are carried at amortised cost using the effective interest method.
Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value are recognised in the fair value reserve. Interest on available for sale financial assets, calculated using the effective interest method, is recognised in the statement of financial performance.
The entity assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired and whether an impairment loss should be recorded in the statement of financial performance.
1.3.5.   Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, he has the obligation to return the pre-financing advance to the entity. Thus, as the entity retains control over the pre-financing and is entitled to a refund for the ineligible part, the amount is presented as an asset.
Pre-financing is initially recognised on the balance sheet when cash is transferred to the recipient. It is measured at the amount of the consideration given. In subsequent periods pre-financing is measured at the amount initially recognised on the balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the period.
1.3.6.   Receivables and recoverables

The EU accounting rules require a separate presentation of exchange and non-exchange transactions. To distinguish between the two categories, the term ‘receivable’ is reserved for exchange transactions, whereas for non-exchange transactions, i.e. when the EU receives value from another entity without directly giving approximately equal value in exchange, the term ‘recoverables’ is used (e.g. recoverables from Member States related to own resources).
Receivables from exchange transactions meet the definition of financial instruments and are thus classified as loans and receivables and measured accordingly (see 1.3.4 above).
Recoverables from non-exchange transactions are carried at original amount (adjusted for interests and penalties) less write-down for impairment. A write-down for impairment is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of the recoverables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.
1.3.7.   Cash and cash equivalents

Cash and cash equivalents are financial instruments and include cash at hand, deposits held at call or at short notice with banks, and other short-term highly liquid investments with original maturities of three months or less.
1.3.8.   Provisions

Provisions are recognised when the entity has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (‘expected value’ method).
Provisions for onerous contracts are measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
1.3.9.   Payables

Included under accounts payable are both amounts related to exchange transactions such as the purchase of goods and services and to non-exchange transactions, e.g. to cost claims from beneficiaries, grants or other EU funding, or pre-financing received (see note 1.4.1).
Where grants or other funding are provided to the beneficiaries, the cost claims are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.
Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the entity.
1.3.10.   Accrued and deferred revenue and charges

Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the entity or a contractual agreement exists (e.g. by reference to a contract), an accrued revenue will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.
Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Accounting Officer which aim at ensuring that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. By analogy, if a payment has been made in advance for services or goods that have not yet been received, the expense will be deferred and recognised in the subsequent accounting period.
1.4.   STATEMENT OF FINANCIAL PERFORMANCE

1.4.1.   Revenue

Revenue comprises gross inflows of economic benefits or service potential received and receivable by the entity, which represents an increase in net assets, other than increases relating to contributions from owners.
Depending on the nature of the underlying transactions in the statement of financial performance it is distinguished between:
(i)   Revenue from non-exchange transactions

Revenue from non-exchange transactions are taxes and transfers because the transferor provides resources to the recipient entity without the recipient entity providing approximately equal value directly in exchange.
Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. The entity shall recognise an asset in respect of transfers when the entity controls the resources as a result of a past event (the transfer) and expects to receive future economic benefits or service potential from those resources, and when the fair value can be reliably measured. An inflow of resources from a non-exchange transaction recognised as an asset (i.e. cash) is also recognised as revenue, except to the extent that the entity has a present obligation in respect of that transfer (condition), which needs to be satisfied before the revenue can be recognised. Until the condition is met the revenue is deferred and recognised as a liability (pre-financing received).
(ii)   Revenue from exchange transactions

Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.
1.4.2.   Expenses

Expenses are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or incurrence of liabilities that result in decreases in net assets/equity. They include both the expenses from exchange transactions and expenses from non-exchange transactions.
Expenses from exchange transactions arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the entity. They are valued at the original invoice amount. Furthermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are recognised in the statement of financial performance.
Expenses from non-exchange transactions relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations. Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation or an agreement has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.
When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expense.
1.5.   CONTINGENT ASSETS AND LIABILITIES

1.5.1.   Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.
1.5.2.   Contingent liabilities

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or, in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.
1.6.   CO-FINANCING

Co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and they are presented as payables to Member States, non-Member States and others. The EDF is required to use the contributions to deliver services to third parties or is otherwise required to return the assets (the contributions received). The outstanding payables relating to co-financing agreements represent the co-financing contributions received less the expenses incurred related to the project. The effect on net assets is nil.
Expenses relating to co-financing projects are recognised as they are incurred. The corresponding amount of contributions is recognised as operating revenue and the effect on economic result of the year is nil.
2.   NOTES TO THE BALANCE SHEET


ASSETS

2.1.   FINANCIAL ASSETS

The financial assets of the EDF amounted to EUR 36 million at 31 December 2019 (2018: nil). They comprise available for sale financial assets that are almost entirely investments in equity instruments.
2.2.   PRE-FINANCING

Many contracts provide for payments of advances before the commencement of works, delivery of supplies or the provision of services. Sometimes the payment schedules of contracts foresee payments based on progress reports. Pre-financing is normally paid in the currency of the country or territory where the project is executed.
The timing of use of pre-financing governs whether it is disclosed as a current or a non-current pre-financing. The use is defined by the project’s underlying agreement. Any use due within twelve months after the reporting date are disclosed as current pre-financing. As many of the EDF projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus some pre-financing amounts are shown as non-current assets.












EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Non-current pre-financing



2.2.1


—



6




325




580




910




887






Current pre-financing



2.2.2



0




26




441




821




1 288 




1 448 






Total



 



0




32




766




1 401 




2 199 




2 335 





The decrease of the total pre-financing at 31 December 2019 is mainly explained by a decrease of pre-financing of the 10th EDF (2018: EUR 964 million). In line with the lifecycle of the EDF, many contracts related to the 10th EDF were completed and closed. The number of open contracts under this EDF dropped from approximately 2 600 in 2018 to circa 2 300 in 2019. Consequently, the level of pre-financing payments made to beneficiaries decreased while the clearing of pre-financing increased.
This decrease was partially compensated by an increase of pre-financing related to 11th EDF (2018: EUR 1 328 million). The 11th EDF started in 2015 and in 2019 was at cruising speed concerning the implementation of adopted actions. The number of open contracts increased from around 2 300 in 2018 to 3 400 in 2019, which translated into an increase of total open pre-financing of EUR 73 million.
2.2.1.   Non-current pre-financing








EUR million




 


31.12.2019


31.12.2018





Direct Management



 


 





Implemented by:



 


 










 



Commission








190




140











 








 



EU executive agencies












6



—










 








 



EU delegations












49




48





 



244




188






Indirect Management



 


 










 



Implemented by:







 


 










 








 



EIB and EIF












313




367











 








 



International organisations












291




280











 








 



Private law bodies with a public service mission












22




6











 








 



Public law bodies












22




24











 








 



Third countries












17




21











 








 



EU bodies and Public Private Partnership












1



—




 



665




698






Total




910




887





2.2.2.   Current pre-financing












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Pre-financing (gross)




0




115




1 627 




3 288 




5 030 




5 153 






Cleared via cut-off



—



(89)




(1 186 )




(2 467 )




(3 742 )




(3 705 )






Total




0




26




441




821




1 288 




1 448 





2.2.3.   Guarantees received in respect of pre-financing

Guarantees are held to secure pre-financing and are released when the final claim under a project is paid. At 31 December 2019, the guarantees received by the EDF in respect of pre-financing decreased to EUR 46 million (2018: EUR 79 million).
The majority of pre-financing is paid under the indirect management mode. In this case, the beneficiary of the guarantee is not the EDF but the contracting authority. Even though the EDF is not the beneficiary, those guarantees secure its assets.
2.3.   TRUST FUND CONTRIBUTIONS

This heading represents the amount paid as contributions to the EU Trust Fund for Africa and the Bêkou EU Trust Fund. The contributions are net of the costs incurred by the trust funds and attributable to the EDF.
The trust fund contributions are implemented by the EDF under the direct management mode.









EUR million




 


Net contribution at 31.12.2018


Contributions paid in 2019


Allocation of TF’s net expenses 2019


Net contribution at 31.12.2019





Africa




193




600




(530)




263






Bêkou




9



—



(5)




4






Total




201




600




(535)




266





2.4.   EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES









EUR million




 


Note


31.12.2019


31.12.2018





Recoverables from non-exchange transactions



2.4.1



32




37






Receivables from exchange transactions



2.4.2



91




101






Total



 



123




138





2.4.1.   Recoverables from non-exchange transactions












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Member States



—



0



—



1




1




5






Customers




1




4




17




4




27




26






Public bodies



—



9




11




1




21




25






Third states




0




2




4




0




7




5






Write-down




(2)




(13)




(12)




(1)




(27)




(27)






Inter-company accounts with EU institutions



—


—


—



4




4




3






Total




0




3




20




9




32




37





2.4.2.   Receivables from exchange transactions












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Accrued income




1




65




21




0




88




81






Receivable from EU



—


—


—



4




4




20






Inter-EDF accounts




182




53




2 160 




(2 395 )




(0)




(0)






Total




183




119




2 181 




(2 391 )




91




101





Included under accrued income are amounts of accrued interest on pre-financing related to projects (EUR 65 million) and on pre-financing related to the EU-Africa Trust Fund (EUR 21 million).
The receivable from the EU is the amount that was transferred to the trust account owned by the European Commission.
For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF; this leads to operations between the various EDFs, which are balanced out in the inter-EDF accounts between the various EDF balance sheets.
Inter-EDF accounts are presented only in the individual EDFs. The total of inter-EDF accounts is zero.
2.5.   CASH AND CASH EQUIVALENTS (5)












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Special accounts



 


 


 


 


 


 





Central banks



—


—


—



729




729




276





 


—


—


—



729




729




276






Current accounts



 


 


 


 


 


 





Commercial banks



—


—


—



421




421




87






Cash belonging to financial instruments



—


—


—



30




30




24





 


—


—


—



450




450




111






Total



—


—


—



1 179 




1 179 




387





The increase of amounts under this heading of EUR 792 million can be explained mainly by payment execution being lower than forecast. EDF payments totalled EUR 3 910 million on 31 December 2019, compared to the annual target of EUR 4 400 million. Two key reasons for this differential are the suspension of the signature of the contract on Global Partnership for Education with the World Bank and the postponement of Budget Support payments for Chad, Haiti, and Benin.
In addition, the increase under Commercial banks relates to EUR 264 million of the 2020 capital contribution received from the UK on the Natwest bank account at the end of December (see note 2.7.2.1) .
Similar previous years and in order to limit counterparty risk more cash is kept in accounts with central banks than in the commercial banks (see note 5.1).

LIABILITIES

2.6.   FINANCIAL LIABILITIES

2.6.1.   Co-financing payables

Co-financing payables represent funds received by the EDF in respect to the co-financing agreements. The EDF is required to use these contributions to deliver agreed services to third parties and return the unused funds to the contributors. Timing of the use of the co-financing amounts determines whether it is disclosed as current or non-current.
At the year end a case-by-case assessment of all co-financing payables is performed and all amounts that are unlikely to be used in the following 12 months are considered non-current.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Non-current co-financing payables



—


—



1




18




19




18






Current co-financing payables



—


—



38




31




69




68






Total



—


—



39




50




88




86





The increase of the total co-financing payables of EUR 2,6 million is a combined effect of new co-financing amounts received in 2019 (EUR 17 million) and expenses incurred in respect of co-financing projects (EUR 14,4 million). In line with the accounting rules on co-financing, the incurred amounts did not have any impact on the result of the year because they were recognised both in the co-financing expenses (note 3.4) and in the co-financing revenue (note 3.1.1).
2.7.   PAYABLES













EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Current payables



2.7.1


—



5




72




106




182




173






Sundry payables



2.7.2


—



(0)




36




298




334




68






Total



 


—



5




108




404




516




241





2.7.1.   Current payables












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Suppliers



—



4




67




27




97




102






Member States



—



0




0




2




2




1






Third states




0



—



4




74




78




37






Public bodies



—



2




70




20




92




43






Other current payables




(0)




(1)




(70)




(17)




(88)




(10)






Total



—



5




72




106




182




173





Payables include cost statements received by the EDF relating to its grant giving activity. They are recorded for the amount being claimed from the moment the payment request is received. The same procedure applies to invoices and credit notes received under procurement activities. The cost claims concerned have been taken into account for the year-end cut-off procedures. Following the cut-off entries, estimated eligible amounts have been recognised in the statement of financial performance. Non-eligible amounts have been shown as other current payables.
2.7.2.   Sundry payables













EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Co-financing payables



2.6.1


—


—



38




31




69




68






Deferred capital contributions



2.7.2.1


—


—


—



264




264



—





Other sundry payables



 


—


—



(2)




3




1




0






Total



 


—


—



36




298




334




68





2.7.2.1.   Deferred capital contributions

At 31 December 2019, the entire amount of EUR 264 million relates to 2020 contribution of the UK paid to the EDF at the end of December. At 31 December 2018, there were no capital contributions paid in advance.
2.8.   ACCRUED CHARGES AND DEFERRED INCOME












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Accrued charges



—



96




240




982




1 318 




1 279 






Other accruals and deferrals



—


—



0




1




1




3






Total



—



96




240




983




1 319 




1 281 





Accrued charges comprise estimated operating expenses for on-going or completed contracts without validated cost claims where the eligible expenses incurred by beneficiaries were estimated using the best available information. The portion of the estimated accrued charges, which relates to pre-financing paid, has been recorded as a reduction of the pre-financing amounts (see note 2.2 above).
The increase under this heading is a combined effect of an increase of accrued charges under the 11th EDF (2018: EUR 838 million) and a decrease of accrued charges under the 10th EDF (2018: EUR 358 million). This is in line with the lifecycle of the EDF and also related to the evolution of the number of open contracts under these EDFs: The 11th EDF was at the full cruising speed in 2019 and there were thus significantly more open contracts at 31 December 2019 for which the charges had to be estimated and accrued. Conversely, many contracts were completed and closed under the 10th EDF in 2019, which resulted into a decrease of open contracts and less accrued charges under this EDF.

NET ASSETS

2.9.   FAIR VALUE RESERVE

In accordance with the accounting rules, the adjustment to fair value of available for sale financial assets is accounted for through the fair value reserve.







EUR million




 


31.12.2019


31.12.2018





Included in fair value reserve




(2)



—





Included in statement of financial performance



—


—





Total




(2)



—




2.10.   FUND CAPITAL

2.10.1.   Called fund capital — active EDFs











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





Fund capital




12 164 




10 773 




20 960 




29 367 




73 264 






Uncalled fund capital



—



(0)




(0)




(22 840 )




(22 840 )






Called fund capital 31.12.2018




12 164 




10 773 




20 960 




6 527 




50 423 






Fund capital




12 164 




10 773 




20 960 




29 367 




73 264 






Uncalled fund capital



—



(15)




(0)




(18 440 )




(18 455 )






Called fund capital 31.12.2019




12 164 




10 758 




20 960 




10 927 




54 809 





The fund capital represents the total amount of contributions from Member States for the relevant EDF fund as laid down in each of the Internal Agreements. The uncalled funds represent amounts not yet called from Member States. The called fund capital represents the contributions, which have been called by the EDF and transferred to the treasury accounts by the Member States (see below 2.10.2.).
2.10.2.   Called and uncalled fund capital by Member State










EUR million




Contributions 11th EDF


%


Uncalled capital 31.12.2018


Capital called in 2019


Uncalled capital 31.12.2019





Austria




2,40 




548




(105)




442






Belgium




3,25 




742




(143)




599






Bulgaria




0,22 




50




(10)




40






Croatia




0,23 




51




(10)




42






Cyprus




0,11 




25




(5)




21






Czechia




0,80 




182




(35)




147






Denmark




1,98 




452




(87)




365






Estonia




0,09 




20




(4)




16






Finland




1,51 




345




(66)




278






France




17,81 




4 068 




(784)




3 285 






Germany




20,58 




4 700 




(906)




3 795 






Greece




1,51 




344




(66)




278






Hungary




0,61 




140




(27)




113






Ireland




0,94 




215




(41)




173






Italy




12,53 




2 862 




(551)




2 311 






Latvia




0,12 




27




(5)




21






Lithuania




0,18 




41




(8)




33






Luxemburg




0,26 




58




(11)




47






Malta




0,04 




9




(2)




7






Netherlands




4,78 




1 091 




(210)




881






Poland




2,01 




458




(88)




370






Portugal




1,20 




273




(53)




221






Romania




0,72 




164




(32)




132






Slovakia




0,38 




86




(17)




69






Slovenia




0,22 




51




(10)




41






Spain




7,93 




1 812 




(349)




1 463 






Sweden




2,94 




671




(129)




542






United Kingdom




14,68 




3 353 




(646)




2 707 






Total




100,00 




22 840 




(4 400 )




18 440 





Since the capital of the Eighth, Ninth and 10th EDF has been called up and received in its entirety in previous years, in 2019, an amount of EUR 4 400 million has been called which relates entirely to the 11th EDF.
2.10.3.   Called fund capital from closed EDFs carried forward












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Funds transferred from closed EDFs




627




1 625 



—


—



2 252 




2 252 





This heading includes the resources transferred from closed EDFs to the Eighth and Ninth EDFs.
2.10.4.   Called fund capital transfers between active EDFs











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





Balance at 31.12.2017




(2 503 )




2 177 




120




206



—





Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs




(7)




(40)




47



—



0






Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs



—


—



(112)




112



—





Balance at 31.12.2018




(2 509 )




2 137 




55




317



—





Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs




(1)




(27)




28



—



(0)






Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs



—


—



181




(181)



—





Balance at 31.12.2019




(2 510 )




2 109 




265




136



—




This heading includes the resources transferred between the active EDFs.
Since the entry into force of the Cotonou Agreement, all the unspent funds in previous active EDFs are transferred to the most recently opened EDF after decommitment. The resources transferred from other EDFs increase the appropriations of the receiving fund and reduce the appropriations of the fund of origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only under specific conditions set out in the Internal Agreements.
3.   NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE


REVENUE









EUR million




 


Note


2019


2018





Revenue from non-exchange transactions



3.1



28




4






Revenue from exchange transactions



3.2



46




57






Total



 



74




60





3.1.   REVENUE FROM NON-EXCHANGE TRANSACTIONS













EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Recovery of expenses



 



0




0




9




4




13




21






Recovery of STABEX funds



 


—


—



0



—



0




0






Co-financing revenue



3.1.1


—


—



9




5




14




(17)






Total



 



0




0




18




10




28




4





Non-exchange revenue can be broken down by management mode as follows:







EUR million




 


2019


2018





Direct Management



 


 










 



Implemented by:







 


 










 








 



Commission












1




1











 








 



EU delegations












6




3





 



6




4






Indirect Management



 


 










 



Implemented by:







 


 










 








 



Third countries












15




(13)











 








 



International organisations












5




12











 








 



Private law bodies with a public service mission












2




1





 



22



—





Total




28




4





3.1.1.   Co-financing revenue

The co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and as such should not affect the statement of financial performance when received. The contributions remain under liabilities (see note 2.6.1) until the conditions attached to the donated funds are met, i.e. eligible expenses are incurred (see note 3.4). The corresponding amount is then recognised in the statement of financial performance as non-exchange revenue from co-financing. Consequently, the effect on the economic result of the year is zero.
3.2.   REVENUE FROM EXCHANGE TRANSACTIONS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Financial revenue




(0)




(0)




3




4




7




10






Other revenue




1




6




21




12




39




46






Total




1




6




24




16




46




57





Financial revenue comprises essentially accrued interest on overdue recovery orders (EUR 6,6 million) and interest on pre-financing. Other revenue relates in its entirety foreign exchange gains. The corresponding foreign exchange losses are recorded under other expenses (see note 3.6).

EXPENSES

3.3.   AID INSTRUMENTS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Programmable aid




0




(0)




295




1 824 




2 119 




2 001 






Macro-economic support



—



29



—


—



29




26






Sectoral policy



—



0



—


—



0




2






Intra ACP projects



—



2




272




678




951




827






Emergency aid



—



4




12




97




112




873






Institutional support



—


—



0




7




7




18






Contributions to Trust Funds



—


—


—



535




535




307






Total




0




35




579




3 141 




3 755 




4 054 





The EDF operational expenditure covers various aid instruments and takes different forms, depending on how the money is paid out and managed.
The decrease under this heading is a combined effect of an increase of expenses under the 11th EDF (2018: EUR 3 012 million) and a decrease of expenses under the 10th EDF (2018: EUR 984 million). This is in line with the lifecycle of the EDF and also related to the evolution of the number of open contracts under these EDFs: The 11th EDF was at the full cruising speed in 2019 and there were thus significantly more open contracts at 31 December 2019 under which expenses were incurred. Conversely, many contracts were completed and closed under the 10th EDF in 2019, which resulted into less expenses incurred under this EDF.
As noted namely under the 11th EDF the structure of the aid instruments expenses changed compared to 2018. Under this EDF the Emergency aid expensed significantly decreased (2018: EUR 811 million), while the expenses related to Programmable aid, Intra ACP project and Contributions to the Trust funds significantly increased (2018: EUR 1 468 million, resp. EUR 410 million, resp. EUR 307 million respectively).
3.4.   CO-FINANCING EXPENSES












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Co-financing



—


—



9




5




14




(17)





Included under this heading are the expenses incurred on co-financing projects in 2019. It should be noted that the expenses incurred include estimated amounts related to the cut-off exercise (and consequently reversals of the estimated amounts related to last year).
Corresponding revenue has been recognised in the statement of financial performance (see note 3.1.1).

Aid instruments and co-financing expenses by management type








EUR million




 


2019


2018





Direct Management



 


 










 



Implemented by:







 


 










 








 



Commission












86




122











 








 



EU executive agencies












(13)




31











 








 



Trust Funds












483




594











 








 



EU delegations












1 141 




1 003 





 



1 697 




1 750 






Indirect Management



 


 










 



Implemented by:







 


 










 








 



EIB and EIF












145




44











 








 



International organisations












1 003 




920











 








 



Private law bodies with a public service mission












126




114











 








 



Public law bodies












184




231











 








 



Third countries












613




977











 








 



EU bodies with Public Private Partnership












1




1





 



2 073 




2 287 






Total




3 770 




4 037 





3.5.   FINANCE COSTS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Write-down of receivables




0




(2)




2




1




1




(7)





Included under this heading are the estimated expenses on irrecoverable amounts.
3.6.   OTHER EXPENSES












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2019


2018





Administrative and IT expenses



—


—



(41)




262




220




112






Provision for risks and charges



—


—


—


—


—



(4)






Realised losses on trade debtors



—



2




1




1




3




1






Exchange losses




1




6




21




9




37




39






Total




1




8




(20)




272




260




148





This heading includes mainly support expenditure, i.e. the administrative costs related to the programming and implementation of the EDFs. This includes expenses for preparation, follow-up, monitoring, and evaluation of projects as well as expenses for computer networks, technical assistance, etc.
4.   CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

4.1.   CONTINGENT ASSETS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Performance guarantees



—



10




5




0




15




11






Retention guarantees



—



5




4



—



9




7






Total



—



15




8




0




24




17





Performance guarantees are requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF.
Retention guarantees concern only works contracts. Typically, 10 % of the interim payments to beneficiaries are withheld to ensure that the contractors fulfil their obligations. These withheld amounts are reflected as amounts payable. Subject to the approval of the contracting authority, the contractor may instead submit a retention guarantee which replaces the amounts withheld on interim payments. These received guarantees are disclosed as contingent assets.
For contracts managed under indirect management, the guarantees belong to a contracting authority other than the EDF and they are therefore not disclosed by the EDF.
4.2.   OTHER SIGNIFICANT DISCLOSURES

4.2.1.   Outstanding commitments not yet expensed

The amount disclosed below is the budgetary RAL (‘Reste à Liquider’) less related amounts that have been included as expenses in the statement of financial performance. The budgetary RAL is an amount representing the commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multiannual programmes.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2019


31.12.2018





Outstanding commitments not yet expensed




(0)




42




576




7 946 




8 564 




9 071 





At 31 December 2019 the budgetary RAL totalled EUR 10 270 million (2018: EUR 10 616 million).
5.   FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EDF relate to the treasury operations carried out by the Commission on behalf of the EDF in order to implement its resources.
5.1.   RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES

The rules and principles for the management of the treasury operations are laid down in the 11th EDF Financial Regulation and in the Internal Agreement.
As a result of the above regulation, the following main principles apply:






(a)


The EDF contributions are paid by Member States in special accounts opened with the bank of issue of each Member State or the financial institution designated by it. The amounts of the contributions shall remain in those special accounts until the payments of EDF need to be made.










(b)


EDF contributions are paid by Member States in EUR, while the EDF’s payments are denominated in EUR and in other currencies.










(c)


Bank accounts opened by the Commission on behalf of the EDF may not be overdrawn.




In addition to the special accounts, other bank accounts are opened by the Commission in the name of the EDF, with financial institutions (central banks and commercial banks), for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.
Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line with the Financial Regulation, the Commission’s internal control standards, and audit principles.
A written set of guidelines and procedures regulate the management of the treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. They cover the different areas of operation, and compliance with the guidelines and procedures is checked regularly.
5.2.   CURRENCY RISK


Exposure of the EDF to currency risk at year end — net position




















EUR million




 


31.12.2019


31.12.2018




 


USD


GBP


DKK


SEK


EUR


Other


Total


USD


GBP


DKK


SEK


EUR


Other


Total





Financial assets



 


 


 


 


 


 


 


 


 


 


 


 


 


 





Receivables and recoverables



—


—


—


—



115




8




123




63



—



0



—



67




8




138






Cash and cash equivalents




1



—


—


—



1 178 



—



1 179 




1




0



—


—



386



—



387





 



1



—


—


—



1 293 




8




1 302 




64




0




0



—



453




8




525






Financial liabilities



 


 


 


 


 


 


 


 


 


 


 


 


 


 





Non-current financial liabilities



—


—


—


—



(19)



—



(19)



—


—


—


—



(18)



—



(18)






Payables




(7)



—


—


—



(509)



—



(516)




(1)



—


—


—



(218)




(22)




(241)





 



(7)



—


—


—



(528)



—



(535)




(1)



—


—


—



(236)




(22)




(259)






Total




(6)



—


—


—



765




8




767




63




0




0



—



217




(14)




267





All contributions are held in EUR, and other currencies are purchased only when they are needed for the execution of payments. As a result the EDF’s treasury operations are not exposed to currency risk.
5.3.   INTEREST RATE RISK

The EDF does not borrow money and consequently it is not exposed to interest rate risk.
Interest is accrued on balances it holds in its different banks accounts. The Commission, on behalf of the EDF, has therefore put in place measures to ensure that interest earned regularly reflects market interest rates as well as their possible fluctuation.
Contributions to the EDF budget are credited by each Member State to a special account opened with the financial institution designed by it. As the remuneration applied to some of these accounts may currently be negative, cash management procedures are in place to minimise balances kept on the accounts concerned. In addition, in accordance with Council Regulation (EU) 2016/888 (6), any negative remuneration on these accounts is borne by the relevant Member State.
Overnight balances held in commercial bank accounts are remunerated on a daily basis. The remuneration of balances on such accounts is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts, the interest calculation is linked to a market reference rate and is adjusted to reflect any fluctuations of this rate. As a result, no risk is taken by the EDF that its balances could be remunerated at rates lower than market rates.
5.4.   CREDIT RISK (COUNTERPARTY RISK)


Financial assets that are neither past due nor impaired











EUR million




 


Total


Neither past due nor impaired


Past due but not impaired




< 1 year


1-5 years


> 5 years





Exchange receivables and non-exchange recoverables




123




100




16




7



—





Total at 31.12.2019




123




100




16




7



—





Exchange receivables and non-exchange recoverables




138




121




12




5



—





Total at 31.12.2018




138




121




12




5



—








Financial assets by risk category












EUR million




 


31.12.2019


31.12.2018




Receivables


Cash


Total


Receivables


Cash


Total





Counterparties with external credit rating



 


 


 


 


 


 





Prime and high grade




7




958




965




5




303




308






Upper medium grade



—



220




220



—



80




80






Lower medium grade



—



1




1



—



4




4






Non- investment grade



—



0




0



—



0




0





 



7




1 179 




1 186 




5




387




391






Counterparties without external credit rating



 


 


 


 


 


 





Group 1 (debtors without defaults in the past)




116




0




116




133




0




134






Group 2 (debtors with defaults in the past)



—


—


—


—


—


—





Total




116




0




116




133




0




134






Total




123




1 179 




1 302 




138




387




525





Funds in the categories non-investment grade and lower medium grade relate mainly to Member State contributions to the EDF paid to the special accounts opened by Member States in accordance with Article 20(3) of the EDF FR. According to this regulation, the amount of such contributions must remain in those special accounts until the payments need to be made.
Most of the EDF's treasury resources are kept, in accordance with the EDF FR, in the special accounts opened by Member States for the payment of their contributions. The majority of such accounts are held with Member States’ treasuries or national central banks. These institutions carry the lowest counterparty risk for the EDF (exposure is with its Member States).
For the part of the EDF’s treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is executed on a just-in-time basis and is automatically managed by the Commission treasury's cash management system. Minimum cash levels, proportional to the average amount of daily payments made from it, are kept on each account. Therefore the amounts kept overnight on these accounts remain constantly at low levels which ensure the EDF's risk exposure is limited.
In addition, specific guidelines are applied for the selection of commercial banks in order to minimise counterparty risk to which the EDF is exposed.
All commercial banks are selected by calls for tender. The minimum short-term credit rating required for admission to the tendering procedures is Moody’s P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances.
5.5.   LIQUIDITY RISK


Maturity analysis of financial liabilities by remaining contractual maturity










EUR million




 


< 1 year


1-5 years


> 5 years


Total





Financial liabilities




516




2




17




535






Total at 31.12.2019




516




6




22




516






Financial liabilities




241




7




11




259






Total at 31.12.2018




241




7




11




259





Budget principles applied to the EDF ensure that overall cash resources for the budgetary period are always sufficient for the execution of payments. Indeed the total Member States’ contributions equal the overall amount of payment appropriations for the relevant budgetary period.
Member States contributions to EDF, however, are paid in three instalments per year, while payments are subject to seasonality.
In order to ensure that treasury resources are always sufficient to cover the payments to be executed in any given month, information on the treasury situation is regularly exchanged between the Commission's treasury and the relevant spending departments.
In addition to the above, in the context of the EDF’s treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the EDF's bank accounts, on a daily basis.
6.   RELATED PARTY DISCLOSURES

The related parties of the EDF are the Bêkou- and Africa EU Trust Funds and the European Commission. Transactions between these entities take place as part of the normal operations of the EDF and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.
The EDF has no separate management since it is managed by the Commission. The entitlements of the key management of the EU, including the Commission, have been disclosed in the consolidated annual accounts of the European Union under heading 7.2 ‘Key management entitlements’.
7.   EVENTS AFTER THE BALANCE SHEET DATE

At the date of transmission of these provisional accounts, apart from the matter highlighted below, no material issues had come to the attention of or were reported to the Accounting Officer of the EDF that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above.

Departure of United Kingdom from the European Union

On 1 February 2020, the United Kingdom ceased to be a Member State of the European Union. Following the conclusion of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (the ‘Withdrawal Agreement’) between the two parties, the United Kingdom committed to pay all its obligations under the current MFF and previous financial perspectives as if it were still a Member State.
The Withdrawal Agreement states that the United Kingdom shall remain party to the EDF until the closure of the 11th EDF and all previous unclosed EDFs, and shall in this respect assume the same obligations as the Member States under the Internal Agreement by which it was set up, as well as the obligations resulting from previous EDFs until their closure. It may participate, as observer, without voting rights, in the EDF Committee.
The Withdrawal Agreement also states that, where the amounts from projects under the 10th EDF or from previous EDFs have not been committed or have been decommitted on the date of entry into force of this agreement, the United Kingdom's share of those amounts shall not be reused. The same applies to the United Kingdom share of funds not committed or decommitted amounts under 11th EDF after 31 December 2020.
At the time of the transmission of these provisional accounts, and based on the Withdrawal Agreement concluded and already in operation, there is no financial impact to be reported in the 2019 EDF annual accounts.

Coronavirus disease 2019 (COVID-19)

During the first quarter of 2020, the coronavirus outbreak has had huge global impacts, including on the financial markets where significant falls in all major indices have occurred. This has led to increased volatility in the value of financial instruments recorded at fair value, including those on the EDF’s balance sheet. As a non-adjusting event, the outbreak of the coronavirus does not require any adjustments to the figures reported. For subsequent reporting periods, COVID-19 will likely affect the recognition and measurement of some assets and liabilities in the financial statements. Based on the information available at the time of transmission of these provisional accounts, the financial effects of the coronavirus outbreak cannot be reliably estimated.
8.   RECONCILIATION OF ECONOMIC RESULT AND BUDGET RESULT

The economic result of the year is calculated based on accrual accounting principles. The budget result is however based on cash accounting rules. As the economic result and the budget result both cover the same underlying operational transactions, it is a useful control to ensure that they are reconciliable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items. The notes to the table provide additional information on the nature of the key reconciling items.







EUR million




 


2019


2018





ECONOMIC RESULT OF THE YEAR




(3 956 )




(4 118 )






Revenue



 


 





Entitlements not affecting the budget result



—



(1)






Entitlements established in current year but not yet collected




(16)




(11)






Entitlements established in previous years and collected in current year




23




11






Net effect of pre-financing




53




36






Accrued revenue (net)




(67)




(39)






Other




(3)




(1)






Expenses



 


 





Expenses of the current year not yet paid




107




115






Expenses of previous years paid in the current year




(672)




(366)






Net effect of pre-financing




(44)




(179)






Accrued expenses (net)




719




484






BUDGET RESULT OF THE YEAR




(3 856 )




(4 069 )





8.1.   RECONCILING ITEMS — REVENUE

The budgetary revenue of a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years.
The entitlements not affecting the budget result are recorded in the economic result but from a budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves and cannot be recommitted without a Council decision.
The entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes, as they do not form part of budgetary revenue. On the contrary, the entitlements established in previous years and collected in the current year must be added to the economic result for reconciliation purposes.
The net effect of pre-financing line refers to clearing of pre-financing with amounts recovered from the beneficiaries. These cash receipts represent budgetary revenue but have no impact on the economic result and must be thus added for reconciliation purposes.
The net accrued revenue mainly consists of accruals made for year-end cut-off purposes. Only the net effect, i.e. the accrued revenue of the current year less the reversal of accrued revenue of the previous year, is taken into consideration.
8.2.   RECONCILING ITEMS — EXPENDITURE


Expenses of the current year not yet paid are to be added for reconciliation purposes as they are included in the economic result but do not form part of budgetary expenditure. On the contrary, the expenses of previous years paid in the current year must be deducted from the economic result for reconciliation purposes as they are part of the current year's budgetary expenditure but have either no effect on the economic result or they decrease the expenses in case of corrections.
The cash receipts from payment cancellations do not affect the economic result whereas they affect the budget result.
The net effect of pre-financing is the combination of the new pre-financing amounts paid in the current year (recognised as budgetary expenditure of the year) and the clearing of pre-financing paid in the current year or previous years through the acceptance of eligible costs. The latter represents an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.
The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is taken into consideration.

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF


FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2019 (7)


BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND


General background on Union Trust Funds

In accordance with Articles 234 and 235 of the Financial Regulation applicable to the general budget of the Union (EU FR) (8) and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR) (9), the European Commission may establish Union trust funds for external actions (‘EU trust funds’). The Union trust funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.
Union trust funds are established by the European Commission by a decision after consultation or approval of the European Parliament and the Council. This decision includes the constitutive agreement with other donors.
Union trust funds are only established and implemented subject to the following conditions:






—


There is added value of the Union intervention: the objectives of Union trust funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union,










—


Union trust funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions,










—


Union trust funds do not duplicate other existing funding channels or similar instruments without providing any additionality,










—


The objectives of Union trust funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.




A board, chaired by the Commission, is established for each Union trust fund to ensure a fair representation of the donors and to decide upon the use of the funds. The board includes a representative of each non-contributing Member State as an observer. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union trust fund.
Union trust funds are established for a limited duration as determined in their constitutive agreement. That duration may be extended upon request of the board of the Union trust fund and upon presentation by the Commission of a report justifying the extension. The European Parliament and/or the Council may request the Commission to discontinue the appropriations for the trust fund or revise the constitutive act with a view to liquidate it.
The Accounting Officer of the Commission serves as the Accounting Officer of the Union trust funds. The Accounting Officer is responsible for laying down accounting procedures and chart of accounts common to all Union trust funds. The Commission’s Internal Auditor, OLAF and the Court of Auditors exercise the same powers over Union trust funds as they do in respect of other actions carried out by the Commission. The Union trust funds are also subject to an independent external audit every year.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:






—


The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic’s exit from crisis and its reconstruction efforts. Established on 15 July 2014,










—


The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014,










—


The EUTF AFRICA, a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015,










—


The EUTF COLOMBIA, to support the implementation of the peace agreement in the early recovery and stabilisation post-conflict. Established on 12 December 2016.





The Bêkou EU Trust Fund

The first multi-donor EU Trust Fund called Bêkou, which means ‘hope’ in Sango, was established on 15 July 2014, by the Commission (represented by DGs DEVCO and ECHO, and the EEAS) and three EU Member States (Germany, France and the Netherlands), with the aim of promoting the stabilisation and reconstruction of the Central African Republic (CAR). It has been established for a maximum duration of 60 months. In May 2019 the EU approved an extension of the EUTF Bêkou until December 2020, thus bringing its total duration to 78 months.
The Trust Fund Board and the Operational Committee of the Bêkou EU Trust Fund are composed of representatives of the donors, of the Commission and observers.The Board adopts and reviews the strategy of the EUTF. The Board meets at least once a year.
The Operational Committee examines, approves and supervises the implementation of the actions financed by the Fund. The Committee also approves the annual accounts and the annual reports on the activities financed by the trust fund.

Annual accounts of the Bêkou EU Trust Fund

According to Article 8 of the Agreement establishing the European Union Trust Fund for the Central African Republic, the ‘Bêkou EU Trust Fund’ and Article 11.2.1 of the Constitutive agreement, the annual accounts comprise two parts: (1) the annual financial report which is the responsibility of the EUTF manager; and (2) the annual financial statements prepared by the Commission's Accounting Officer, who is, based on the same article, also the Accounting Officer of the trust fund.
According to Article 8 of the Constitutive agreement, the financial statements shall be prepared in accordance with the accounting rules adopted by the Commission's Accounting Officer (EU Accounting Rules, EAR) that are based on the International Public Sector Accounting Standards (IPSAS).
The annual accounts are subject to independent external audit and the final annual accounts are submitted by the EUTF manager and the Accounting Officer to the Operational Committee for approval (Article 8.3.4(c)).
The annual accounts of the EUTF Bêkou are consolidated in the annual accounts of the European Developement Fund.

Highlights of the year

Since its creation in July 2014, the EUTF Bêkou has adopted 19 programmes and has reached more than 2,5 million beneficiaries. The programmes are to assist the Central African Republic (CAR) and its population in the aftermath of the 2013 crisis. More specifically, the EUTF Bêkou aims to ensure access to basic services (mainly health, water and sanitation), support economic recovery and job creation, and promote social cohesion and reconciliation.
Despite the presence of a democratically elected government and the signature of a peace agreement in February 2019, the security situation in the CAR remains volatile. It is in this complex and fragile context that the EUTF Bêkou deploys its comparative advantages of flexibility and adaptability to changing circumstances. Additionally, the EUTF Bêkou remains the only instrument building resilience for both the population and the State, in a true LRRD (linking relief, rehabilitation and development) approach.
In May 2019, given the current situation in CAR, the EU approved an extension of the EUTF Bêkou until December 2020, thus bringing its total duration from 60 months to 78 months. The official procedure, which included a consultation of the European Parliament and the Council, was launched in 2018 after the official request of the EUTF Board.
Operational highlights of the year 2019 include:






—


In May, in the wake of the signature of the Peace Agreement, the EUTF Bêkou adopted a new multi-sectoral action to support the socio-economic recovery in the South-East, an area previously inaccessible. This action aims to renew the social contract between the State and the population, by supporting economic recovery, restoring basic health and water and sanitation services, promoting dialogue and social cohesion, and strengthening local authorities and the redeployment of the State. Budget allocated: EUR 18 million.










—


In October, the EUTF Bêkou adopted a Programme supporting the promotion of entrepreneurship in urban and rural areas for a total amount of EUR 15 million. A new Technical and Communication Assistance Facility was also adopted. Moreover, the EUTF Bêkou increased the budget of three on-going actions in the sectors of health (additional EUR 21,76 million), gender empowerment (additional EUR 0,5 million), and socio-economic rehabilitation (additional EUR 0,78 million).










—


Following the extension of the EUTF Bêkou, the Operational Strategy 2019 — 2020 was adopted at the November Board. It identifies three broad sectors of intervention that remain pertinent for the EUTF: (i) social sectors (mainly health and water and sanitation); (ii) actions in favour of economic resilience and recovery; and (iii) a reinforced support to the redeployment of the State and to reconciliation efforts.










—


The EUTF Bêkou projects were marked by the volatile security context (localised conflicts in Bangui and the hinterland followed by periods of relative stability), but also by the reinforced coordination among government, partners and humanitarian actors.




On the financial side, at the end of 2019 pledges by EUTF contributors amounted to nearly EUR 296 million. This is an increase of EUR 53 million compared to 2018. EUR 31 million out of these EUR 295 million are still to be certified.
In terms of contracts, the EUTF Bêkou signed 11 new contracts in 2019 for a total amount of more than EUR 28 million. They contribute to the implementation of its programmes in the sectors of health, rural resilience and job creation, opening-up of regions and socio-economic recovery.
Last but not least, nearly EUR 32 million was paid in 2019 on top of payments made during previous years; total disbursements have reached nearly EUR 151 million since the creation of the EUTF Bêkou.
In the financial statements, the impact of the abovementioned activities are most visible when looking at:






—


Pre-financing: a decrease of kEUR 11 405 due to the expensing of amounts open at end 2018 during 2019 and less advances being paid out,










—


Cash and cash equivalents: an increase of kEUR 3 506 (see cashflow statement) is mainly caused by the decreased payments of pre-financing;





BALANCE SHEET









EUR '000




 


Note


31.12.2019


31.12.2018





NON-CURRENT ASSETS



 


 


 





Pre-financing



 



3 273 




3 443 





 


 



3 273 




3 443 






CURRENT ASSETS



 


 


 





Pre-financing



 



18 312 




29 546 






Exchange receivables and non-exchange recoverables



 



1 853 




1 138 






Cash and cash equivalents



 



17 432 




13 926 





 


 



37 597 




44 611 






TOTAL ASSETS



 



40 870 




48 054 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities



 



(29 727 )




(42 737 )





 


 



(29 727 )




(42 737 )






CURRENT LIABILITIES



 


 


 





Payables



 



(10)




(918)






Accrued charges and deferred income



 



(11 133 )




(4 399 )





 


 



(11 143 )




(5 317 )






TOTAL LIABILITIES



 



(40 870 )




(48 054 )






NET ASSETS



 


—


—





FUNDS & RESERVES



 


 


 





Contribution from Members



 


—


—





Accumulated surplus



 


—


—





Economic result of the year



 


—


—





NET ASSETS



 


—


—





STATEMENT OF FINANCIAL PERFORMANCE









EUR '000




 


Note


2019


2018





REVENUE



 


 


 





Revenue from non-exchange transactions



 


 


 





Revenue from donations



 



48 343 




33 682 






Recovery of expenses



 



68




—





 


 



48 410 




33 682 






Revenue from exchange transactions



 


 


 





Financial revenue



 



(2)




1





 


 



(2)




1






Total revenue



 



48 408 




33 683 






EXPENSES



 


 


 





Operating expenses



 



(47 620 )




(32 825 )






Other expenses



 



(789)




(858)






Total expenses



 



(48 408 )




(33 683 )






ECONOMIC RESULT OF THE YEAR



 



—




—






CASHFLOW STATEMENT








EUR '000




 


2019


2018





(Increase)/decrease in pre-financing




11 405 




(24 839 )






(Increase)/decrease in exchange receivables and non-exchange recoverables




(715)




(261)






Increase/(decrease) in financial liabilities




(13 010 )




(1 982 )






Increase/(decrease) in payables




(908)




202






Increase/(decrease) in accrued charges & deferred revenue




6 734 




863






NET CASHFLOW




3 506 




(26 017 )






Net increase/(decrease) in cash and cash equivalents




3 506 




(26 017 )






Cash and cash equivalents at the beginning of the year




13 926 




39 943 






Cash and cash equivalents at year-end




17 432 




13 926 






FINANCIAL STATEMENTS OF THE EUTF AFRICA 2019 (10)


BACKGROUND INFORMATION ON THE EUTF AFRICA


General background on EU Trust Funds

In accordance with Articles 234 and 235 of the Financial Regulation applicable to the general budget of the Union (EU FR) (11) and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR) (12), the European Commission may establish Union trust funds for external actions (‘Union trust funds’). The Union trust funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.
Union trust funds are established by the European Commission by a decision after consultation on approval of the European Parliament and the Council. This decision includes the constitutive agreement with other donors.
Union trust funds are only established and implemented subject to the following conditions:






—


There is added value of the Union intervention: the objectives of Union trust funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union,










—


Union trust funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions,










—


Union trust funds do not duplicate other existing funding channels or similar instruments without providing any additionality,










—


The objectives of Union trust funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.




A board chaired by the Commission is established for each Union trust fund to ensure a fair representation of the donors and to decide upon the use of the funds. The board includes a representative of each non-contributing Member State as an observer. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union trust fund.
Union trust funds are established for a limited duration as determined in their constitutive agreement. That duration may be extended upon request of the board of the Union trust fund and upon presentation by the Commission of a report justifying the extension. The European Parliament and/or the Council may request the Commission to discontinue the appropriations for the Trust Fund or revise the constitutive act with a view to liquidate it.
The Accounting Officer of the Commission serves as the Accounting Officer of the Union trust funds. The Accounting Officer is responsible for laying down accounting procedures and chart of accounts common to all Union trust funds. The Commission’s Internal Auditor, OLAF and the Court of Auditors exercise the same powers over Union trust funds as they do in respect of other actions carried out by the Commission. The Union trust funds are also subject to an independent external audit every year.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:






—


The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic's exit from crisis and its reconstruction efforts. Established on 15 July 2014,










—


The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014,










—


The EUTF AFRICA; a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015,










—


The EUTF COLOMBIA; to support the implementation of the peace agreement in the early recovery and stabilisation post-conflict. Established on 12 December 2016.





The EUTF Africa

European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa (‘EUTF Africa’) was launched on 12 November 2015 during the Valletta Summit on Migration. The main objectives of this trust fund are to support all aspects of stability and contribute to better migration management as well as addressing the root causes of destabilisation, forced displacement and irregular migration, in particular by promoting resilience, economic and equal opportunities, security and development and addressing human rights abuses.
The trust fund operates in three main geographic areas, namely the Sahel region and Lake Chad area, the Horn of Africa and the North of Africa. The neighbouring countries of the eligible countries may benefit, on a case-by-case basis, from the trust fund’s projects. The trust fund is established for a limited period, until 31 December 2020, in order to provide a short and medium-term response to the challenges of the regions. The trust fund is managed from Brussels.
The Trust Fund Board and the Operational Committee of the EUTF Africa are composed of representatives of the donors and of the Commission, as well as representatives of non-contributing EU Member States, authorities of eligible countries' and regional organisations as observers.
The Board establishes and reviews the strategy of the EUTF. The Board shall meet at least once a year.
The Operational Committee examines, approves and supervises the implementation of the actions financed by the Fund. The Committee also approves the annual accounts and the annual reports on the activities financed by the Trust Fund.

Annual accounts of the EUTF Africa

According to Article 7 of ‘The agreement establishing the European Union emergency trust fund for stability and addressing root causes of irregular migration and displaced persons in Africa and its internal rules’ (‘Constitutive agreement’) the annual accounts comprise two parts: (1) the annual financial report which is the responsibility of the EUTF manager; and (2) the annual financial statements prepared by the EC Accounting Officer, who is, based on the same article, also the Accounting Officer of the trust fund.
According to Article 8 of the Constitutive agreement, the financial statements shall be prepared in accordance with the accounting rules adopted by the Commission’s Accounting Officer (EU Accounting Rules, EAR) that are based on International Public Sector Accounting Standards (IPSAS).
The annual accounts are subject to independent external audit and the final annual accounts are submitted by the EUTF manager and the Accounting Officer to the Operational Committee for approval (Article 8.3.4(c)).

Highlights of the year

In 2019, the EU Emergency Trust Fund for Africa (EUTF) further demonstrated itself to be a swift and effective implementation tool. It facilitated policy dialogue with African partner countries, applied innovative approaches, and produced tangible results across the three regions of the EUTF (Sahel and Lake Chad, Horn of Africa and North of Africa) by pooling funding and expertise from a wide range of stakeholders.
The EUTF further consolidated its achievements in partnership with EU Member States development agencies, UN organisations, NGOs and partner countries, with the approval of an additional 36 programmes and 16 ‘top-ups’ across the three regions by the operational committees for a total of EUR 851 million (13). This brings the total number of approved programmes to 223, for a total budget of EUR 4,4 billion. New contracts worth EUR 951 million were signed in 2019 with implementing partners, bringing the total amount of signed contracts to EUR 3,4 billion. By the end of 2019, payments had reached approximately EUR 2 billion.
In 2019, the EUTF continued addressing the twin goals of fostering stability and handling the root causes of forced displacement and irregular migration in the Sahel and Lake Chad, Horn of Africa and North of Africa regions. The EUTF continued to pursue a balanced approach in addressing the challenges of irregular migration, focusing on areas of mutual interest for the EU and Africa. These include the fight against smuggling of migrants and trafficking of human beings, and the support to voluntary return to, and sustainable reintegration of migrants in, their country of origin.
During the past year, the EUTF benefitted from additional financial pledges of EUR 486,6 million, including EUR 101 million from EU Member States and other donors. As a result, the overall resources pledged to the EUTF as of 31 December 2019 amounted to almost EUR 4,7 billion, of which EUR 590 million were pledged by EU Member States and other donors (Norway and Switzerland).
The EUTF has continued working in solid partnership with a wide range of implementing partners (agencies from Member States, UN and international organisations, local and international NGOs) along the same lines as in 2018.
The EUTF has also started to implement the recommendations formulated by the European Court of Auditors in its special report published at the end of 2018. In particular, the Commission has enhanced the transparency and evidence-driven approach of the EUTF, notably by adopting a risk assessment framework and revising the operational frameworks of the three regions initially adopted in 2016.
Throughout the year, the monitoring and learning system reports on the Sahel and Lake Chad and the Horn of Africa continued to show the tangible results achieved by the EUTF in different areas of work. The North of Africa region set up its monitoring and learning framework to steer EUTF actions in the region and ensure accountability. Its first report, published in September 2019, is now available on the EUTF website together with the monitoring and learning system reports of the other two regions.
During the year, the mid-term evaluation of the EUTF progressed well. The evaluation team selected around 50 programmes for review, and visited four countries across the three regions (Senegal, Niger, Ethiopia and Morocco), while relying on national consultants to visit and gather information on projects in Somalia and Libya. The final report of the mid-term evaluation is expected in April 2020.
Accountability and transparency have been improved through increased communication, all this in a context of continued fragility. This has been done by regularly updating the EUTF website, publishing posts on social media and by organising communication events such as two photography exhibitions.
The Sahel and Lake Chad region continued to face humanitarian, development, environmental and security challenges, and in particular a deteriorated situation in Mali and Burkina Faso. Against this background, the EUTF has approved new programmes totalling EUR 302,1 million, contributing to the stabilisation efforts in the region, which will reinforce the humanitarian-development-peace nexus. More than 70 % of approved funding will contribute to strengthening resilience and improving governance and security in the region. More than 20 % will further contribute to the EUTF-IOM Initiative and the Evacuation Transit Mechanism (ETM), which will support the most vulnerable migrants and refugees up to the end of 2020. The remaining part of the funding will contribute to boosting green employment and enterprise.
Despite positive political developments such as the rapprochement between Ethiopia and Eritrea, and the formation of a Transitional Civil Government in Sudan, the Horn of Africa region is still faced with several challenges (political, environmental, economic, etc.). Living conditions remain dire, and durable solutions for refugee and displaced people remain a high priority. To address such challenges, the EUTF has approved new programmes for a total of EUR 324,4 million, which will provide further support to the most vulnerable populations, including refugees and internally displaced people. These programmes will foster political and economic stability and improve migration management. In particular, the EUTF has approved five new programmes providing further support to the implementation of the Global Compact on Refugees in the region.
The North of Africa region was faced with challenges requiring a comprehensive EU response to save lives, protect the most vulnerable, support host communities and provide opportunities for safe mobility. As a result, in 2019 the EUTF approved new actions including ‘top-ups’ for a total of EUR 224,8 million. Four of these programmes will provide further support to Libya to:






(i)


Strengthen protection activities;










(ii)


Further improve social infrastructure;










(iii)


Build on community stabilisation activities;










(iv)


Enhance the resilience of local populations and migrants;










(v)


Support the voluntary humanitarian return of stranded migrants. A substantial budget support programme will support Morocco in managing its borders and combating the smuggling of migrants.




Moreover, four regional programmes will help strengthen the resilience of people in need, support rights of refugees and asylum seekers, promote investments by the diaspora in countries of origin and further promote labour mobility to advance legal migration. A top-up of the Technical Cooperation Facility was also approved.
In the balance sheet, the increase in activities of the trust fund, namely the signature of 188 new contracts, is most visible when looking at pre-financing, which increased by kEUR 157 912 due to advances paid out on these new contracts. In the statement of financial performance the new activities had the highest impact on the operating expenses, that increased by kEUR 201 322. At the same time there has been a substantial growth in revenue from donations (increase of kEUR 206 775 compared to 2018) to support the increase in expenses.

BALANCE SHEET









EUR '000




 


Note


31.12.2019


31.12.2018





NON-CURRENT ASSETS



 


 


 





Pre-financing



 



48 539 




34 144 





 


 



48 539 




34 144 






CURRENT ASSETS



 


 


 





Pre-financing



 



418 569 




273 214 






Exchange receivables and non-exchange recoverables



 



18 471 




16 656 






Cash and cash equivalents



 



26 915 




146 864 





 


 



463 955 




436 734 







TOTAL ASSETS




 



512 495 




470 878 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities



 



(384 411 )




(369 999 )





 


 



(384 411 )




(369 999 )






CURRENT LIABILITIES



 


 


 





Payables



 



(25 969 )




(12 733 )






Accrued charges and deferred income



 



(102 114 )




(88 146 )





 


 



(128 083 )




(100 879 )







TOTAL LIABILITIES




 



(512 495 )




(470 878 )






NET ASSETS



 


—


—





FUNDS & RESERVES



 


 


 





Contribution from Members



 


—


—





Accumulated surplus



 


—


—





Economic result of the year



 


—


—






NET ASSETS




 


—


—





STATEMENT OF FINANCIAL PERFORMANCE









EUR '000




 


Note


2019


2018





REVENUE



 


 


 





Revenue from non-exchange transactions



 


 


 





Recovery of expenses



 



467



—





Revenue from donations



 



774 090 




576 802 





 


 



774 557 




576 802 






Revenue from exchange transactions



 


 


 





Financial revenue



 



(7)




2






Other exchange revenue



 



1 855 




5





 


 



1 848 




6






Total revenue



 



776 405 




576 808 






EXPENSES



 


 


 





Operating expenses



 



(755 904 )




(561 761 )






Finance costs



 



(9)



—





Other expenses



 



(20 492 )




(15 047 )






Total expenses



 



(776 405 )




(576 808 )







ECONOMIC RESULT OF THE YEAR




 



—




—






CASHFLOW STATEMENT








EUR '000




 


2019


2018





Economic result of the year



—


—





Operating activities



 


 





(Increase)/decrease in pre-financing




(159 750 )




(57 110 )






(Increase)/decrease in exchange receivables and non-exchange recoverables




(1 815 )




(13 636 )






Increase/(decrease) in financial liabilities




14 412 




(26 713 )






Increase/(decrease) in payables




13 236 




12 207 






Increase/(decrease) in accrued charges & deferred revenue




13 968 




69 546 






NET CASHFLOW




(119 949 )




(15 706 )






Net increase/(decrease) in cash and cash equivalents




(119 949 )




(15 706 )






Cash and cash equivalents at the beginning of the year




146 864 




162 571 






Cash and cash equivalents at year-end




26 915 




146 864 






CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS (14)


CONSOLIDATED BALANCE SHEET








EUR million




 


31.12.2019


31.12.2018





NON-CURRENT ASSETS



 


 





Financial assets




36




—






Pre-financing




962




924





 



998




924






CURRENT ASSETS



 


 





Pre-financing




1 725 




1 751 






Exchange receivables and non-exchange recoverables




143




156






Cash and cash equivalents




1 223 




548





 



3 092 




2 455 






TOTAL ASSETS




4 090 




3 379 






NON-CURRENT LIABILITIES



 


 





Financial liabilities




(167)




(229)





 



(167)




(229)






CURRENT LIABILITIES



 


 





Payables




(542)




(255)






Accrued charges and deferred income




(1 432 )




(1 374 )





 



(1 974 )




(1 629 )






TOTAL LIABILITIES




(2 141 )




(1 857 )






NET ASSETS




1 948 




1 521 






FUNDS & RESERVES



 


 





Fair value reserve




(2)




—






Called fund capital — active EDFs




54 809 




50 423 






Called fund capital from closed EDFs carried forward




2 252 




2 252 






Economic result carried forward from previous years




(51 155 )




(47 037 )






Economic result of the year




(3 956 )




(4 118 )






NET ASSETS




1 948 




1 521 






CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE








EUR million




 


2019


2018





REVENUE



 


 





Revenue from non-exchange transactions



 


 





Recovery activities




28




4






Revenue from trust funds donations




287




303





 



316




307






Revenue from exchange transactions



 


 





Financial revenue




7




10






Other revenue




41




46





 



48




57






Total Revenue




364




364






EXPENSES



 


 





Aid instruments




(3 220 )




(3 747 )






Expenses implemented by trust funds




(804)




(595)






Co-financing expenses




(14)




17






Finance costs




(1)




7






Other expenses




(282)




(164)






Total Expenses




(4 320 )




(4 482 )






ECONOMIC RESULT OF THE YEAR




(3 956 )




(4 118 )






CONSOLIDATED CASH FLOW STATEMENT








EUR million




 


2019


2018





Economic result of the year




(3 956 )




(4 118 )






Operating activities



 


 





Capital increase — contributions




4 385 




4 250 






(Increase)/decrease in pre-financing




(12)




(317)






(Increase)/decrease in exchange receivables and non-exchange recoverables




13




(60)






Increase/(decrease) in provisions




—




(4)






Increase/(decrease) in financial liabilities




(62)




(63)






Increase/(decrease) in payables




288




(309)






Increase/(decrease) in accrued charges and deferred income




58




618






Other non-cash movements




(2)




—






Investing activities



 


 





(Increase)/decrease in available for sale financial assets




(36)




—






NET CASHFLOW




676




(2)






Net increase/(decrease) in cash and cash equivalents




676




(2)






Cash and cash equivalents at the beginning of the year




548




550






Cash and cash equivalents at year-end




1 223 




548






CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS













EUR million




 


Fund capital — active EDFs
(A)


Uncalled funds — active EDFs
(B)


Called fund capital — active EDFs
(C) = (A)-(B)


Cumulative Reserves
(D)


Called fund capital from closed EDFs carried forward
(E)


Fair value reserve
(F)


Total Net Assets
(C)+(D)+(E)+(F)






BALANCE AS AT 31.12.2017





73 264 




27 090 




46 173 




(47 037 )




2 252 




—




1 389 






Capital increase — contributions



 



(4 250 )




4 250 



—


—


 



4 250 






Economic result of the year




—




—




—




(4 118 )




—



 



(4 118 )







BALANCE AS AT 31.12.2018





73 264 




22 840 




50 423 




(51 155 )




2 252 




—




1 521 






Fair value movements



 


 


 


 


 



(2)




(2)






Capital increase — contributions



 



(4 385 )




4 385 



 


 


 



4 385 






Economic result of the year



 


 



—




(3 956 )



 


 



(3 956 )







BALANCE AS AT 31.12.2019





73 264 




18 455 




54 809 




(55 111 )




2 252 




(2)




1 948 






EDF REPORT ON FINANCIAL IMPLEMENTATION


INTRODUCTORY NOTE

1.   Previous EDFs

As the 6th EDF was closed in 2006 and the 7th EDF was closed in 2008, the annual accounts no longer contain implementation tables for these EDFs. However, implementation of the transferred balances can be found in the 9th EDF.
As in past years, to ensure transparency in the presentation of the accounts for 2019, the tables set out separately for the 8th EDF the part used for Lomé Convention programming and the part used for programming under the Cotonou Agreement.
In accordance with Article 1(2)(b) of the Internal Agreement of the 9th EDF, balances and decommitments of previous EDFs have been transferred to the 9th EDF, and, during the life of the 9th EDF, have been committed as 9th EDF funds.
In 2019, the Commission successfully finalised a special exercise for the closure of the remaining projects under the 8th EDF. A final report on the financial implementation of the 8th EDF is available with these 2019 annual accounts. The Commission aims to continue these efforts by closing the 9th EDF at the end of 2020.
2.   11th EDF

The ACP-EC Partnership Agreement signed on 23 June 2000 in Cotonou by the Member States of the European Community and the States of Africa, the Caribbean and the Pacific (ACP States) entered into force on 1 April 2003. The Cotonou Agreement was amended twice, firstly by the agreement signed in Luxembourg on 25 June 2005, secondly by the agreement signed in Ouagadougou on 22 June 2010.
The Council Decision 2001/822/EC of 27 November 2001 on the association of the Overseas Countries and Territories (OCT) with the European Community (‘Overseas Association Decision’) (1) entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Decision 2007/249/EC) (2).
The Internal Agreement on the financing of Community aid under the multiannual financial framework 2014-2020 in accordance with the revised Cotonou Agreement, adopted by the Representatives of the Governments of the Member States of the European Community on August 2013, entered into force on March 2015.
Under the Cotonou Agreement, the third period (2014-2020) of Community aid to the ACP States and OCTs is funded by the 11th EDF for an amount of EUR 30 506 million, of which:






—


EUR 29 089 million is allocated to the ACP countries in accordance with Article 1.2(a) and Article 2(d) of the Internal Agreement, of which EUR 27 955 million is managed by the European Commission,










—


EUR 364,5 million is allocated to the OCTs in accordance with Article 1.2(a) and Article 3.1 of the Internal Agreement, of which 359,5 million is managed by the European Commission,










—


EUR 1 052,5 million is for the Commission to finance the costs arising from the programming and implementation of 11th EDF resources, in accordance with Article 1.2(a) of the Internal Agreement.





Remaining funds on non-mobilisable performance reserves at 31.12.2019

The amounts decommitted from projects under the 9th and previous EDFs are transferred to the performance reserve of the 10th EDF, with the exception of Stabex funds.
The decommitted funds from projects under the 10th EDF are transferred to the performance reserve of the 11th EDF.
During 2019, all decommitted funds from previous EDFs were transferred to the respective reserves.
In accordance with Article 1.4 of the 11th EDF Internal Agreement and the Council Decision (EU) 2019/640 (3), an amount of decommitted funds from the 10th EDF has been allocated for the purpose of replenishing the African Peace Facility for the period 2019-2020 up to a maximum of EUR 445 860 000 of which EUR 14 860 000 is allocated for support of expenditure.






EUR millions




Total available on non-mobilisable performance reserves at 31.12.2019


 




non-mobilisable reserve from decommitted funds under the 8th and 9th EDF


197,3 




non-mobilisable reserve from decommitted funds under the 10th EDF


142,6 





Total available on non-mobilisable performance reserves at 31.12.2019




339,9 





Regarding EDF Co-financing under the 10th and 11th EDF, transfer agreements for co-financings from Member States were signed, and commitment appropriations were opened for a total amount of EUR 275,2 million. Payment appropriations were opened for the cashed amounts totalling EUR 258,4 million.
The situation of co-financing appropriations at 31.12.2019 is shown in the table below:







EUR millions




 


Commitments appropriations


Payment appropriations




Co-financing — A Envelope


230,8 


214,4 




Co-financing — Intra ACP


36,2 


36,2 




Co-financing — Administrative expenses


8,3 


7,8 




 



275,2 




258,4 





The following tables, concerning the amounts decided, contracted and paid, show net figures.
The tables presenting the situation by instrument are annexed.

Table 1.1


8th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2019


ANALYSIS OF CREDITS PER INSTRUMENT












 EUR million




 


INSTRUMENT


INITIAL APPROPRIATION


INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2018


INCREASE OR DECREASE IN RESOURCES IN 2019


Notes


CURRENT LEVEL APPROPRIATION




 



Lomé



 


 


 


 


 






Regular MS Contributions




—




47




 


 




47






ACP


Structural adjustment


—


18


 


 


18




Total indicative programmes


—


29


 


 


29




 



SUBTOTAL ACP



—



47



 


 



47





 



Lomé



 


 


 


 


 






Regular MS Contributions






12 967 






(3 332 )






(1)





 (15)





9 635 






ACP


Aid for refugees


120


(20)


 


 


100




Emergency aid (Lomé)


140


(4)


 


 


136




Heavily indebted poor countries (Lomé)


—


1 060 


 


 


1 060 




Interest-rate subsidies


370


(301)


 


 


69




Risk capital


1 000 


12


 


 


1 012 




Stabex


1 800 


(1 077 )


 


 


723




Structural adjustment


1 400 


79


—


 


1 479 




Sysmin


575


(474)


 


 


101




Total indicative programmes


7 562 


(2 640 )


(1)


 


4 921 




Utilisation of interest income


—


35


 


 


35





Cotonou



 


 


 


 


 






Regular MS Contributions




—




650




 


 




650






A Envelope — National Allocations


—


417


 


 


417




B Envelope — National Allocations


—


233


 


 


233




Interests and other receipts


—


—


 


 


—




 



SUBTOTAL ACP




12 967 




(2 681 )




(1)




 (15)




10 285 





 



Lomé



 


 


 


 


 






Regular MS Contributions




—




46




 


 




46






OCT


Interest-rate subsidies


—


1


 


 


1




Risk capital


—


6


 


 


6




Stabex


—


1


 


 


1




Sysmin


—


2


 


 


2




Total indicative programmes


—


35


 


 


35




 



SUBTOTAL OCT



—



46



 


 



46





 



TOTAL 8th EDF




12 967 




(2 588 )




(1)




 (15)




10 378 






Table 1.2


9th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2019


ANALYSIS OF CREDITS PER INSTRUMENT












 EUR million




 


INSTRUMENT


INITIAL APPROPRIATION


INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2018


INCREASE OR DECREASE IN RESOURCES IN 2019


Notes


CURRENT LEVEL APPROPRIATION




 



Lomé



 


 


 


 


 






Regular MS Contributions




—


—


 


 


—




ACP


Transfers from 7th EDF — Lomé


—


—


 


 


—





Cotonou



 


 


 


 


 






Regular MS Contributions




—




50




 


 




50






A Envelope — National Allocations


—


44


 


 


44




B Envelope — National Allocations


—


6


 


 


6




 



SUBTOTAL ACP



—



50



 


 



50





 



Lomé



 


 


 


 


 






Regular MS Contributions




—




667




—



 (16)





667






ACP


Transfers from 6th EDF — Lomé


—


20


 


 


20




Transfers from 7th EDF — Lomé


—


647


—



 (16)



647





Cotonou



 


 


 


 


 






Regular MS Contributions






8 919 






5 464 






(41)





 (16)





14 342 






A Envelope — National Allocations


5 318 


3 246 


(10)



 (16)



8 554 




B Envelope — National Allocations


2 108 


(905)


—



 (16)



1 203 




CDE, CTA and Parliamentary Assembly


164


(10)


 


 


154




Implementation costs


125


52


(1)



 (16)



177




Interests and other receipts


—


63


 


 


63




Other Intra-ACP allocations


300


2 289 


(5)



 (16)



2 584 




Peace facility


—


353


 


 


353




Regional allocations


904


(145)


(11)



 (16)



749




Special allocation R.D. Congo


—


105


 


 


105




Special allocation South Sudan


—


267


 



 (18)



267




Special allocation Sudan


—


110


 



 (17)



110




Voluntary contribution Peace facility


—


39


(15)



 (19)



24




 



SUBTOTAL ACP




8 919 




6 131 




(42)




 (16)
 (19)




15 009 





 



Lomé



 


 


 


 


 






Regular MS Contributions




—




3




 


 




3






OCT


Transfers from 6th EDF — Lomé


—


—


 


 


—




Transfers from 7th EDF — Lomé


—


3


 


 


3





Cotonou



 


 


 


 


 






Regular MS Contributions




—




287






(1)





 (16)





286






A Envelope — National Allocations


—


237


—



 (16)



236




B Envelope — National Allocations


—


4


 


 


4




Regional allocations


—


45


—



 (16)



45




Studies / Technical assistance OCT


—


1


 


 


1




 



SUBTOTAL OCT



—



290




(1)




 (16)




289





 



TOTAL 9th EDF




8 919 




6 471 




(42)




 (16)
 (19)




15 348 






Table 1.3


10th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2019


ANALYSIS OF CREDITS PER INSTRUMENT












 EUR million




 


INSTRUMENT


INITIAL APPROPRIATION


INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2018


INCREASE OR DECREASE IN RESOURCES IN 2019


Notes


CURRENT LEVEL APPROPRIATION




 




Regular MS Contributions




—




66






(1)





 (21)





65






ACP


A Envelope — National Allocations


—


57


(1)



 (21)



56




B Envelope — National Allocations


—


9


 


 


9




National allocations Reserve A Envelope STABEX


—


—


 


 


—




 



SUBTOTAL ACP



—



66




(1)




 (21)




65





 




Regular MS Contributions






20 896 






(19)






213





 (21)
 (23)





20 891 






ACP


A Envelope — National Allocations


—


12 865 


(169)



 (21)



12 696 




A Envelope reserve


13 500 


(13 500 )


 


 


—




B Envelope — National Allocations


—


1 991 


(9)



 (21)



1 983 




B Envelope reserve


1 800 


(1 800 )


 


 


—




Implementation costs


430


15


15



 (23)



460




Institutional and support expenditure


—


230


(5)



 (21)



226




Interests and other receipts


—


85


(14)



 (21)



71




Intra-ACP Reserve


2 700 


(2 700 )


 


 


—




National allocations Reserve A Envelope STABEX


—


—


—



 (21)



—




NIP/RIP reserve


683


(683)


 


 


—




Non-mobilisable reserve


—


131


40



 (20)



171




Other Intra-ACP allocations


—


1 868 


(13)



 (21)



1 855 




Peace facility


—


1 119 


408



 (23)



1 527 




Regional allocations


—


1 942 


(40)



 (21)



1 902 




Regional allocations reserve


1 783 


(1 783 )


 


 


—






Co-financing




—




204






(2)





 (22)





203






A Envelope — National Allocations


—


187


(2)



 (22)



185




Implementation costs


—


5


—



 (22)



5




Other Intra-ACP allocations


—


12


 


 


12




Peace facility


—


1


 


 


1




 



SUBTOTAL ACP




20 896 




186




211




 (21)
 (23)




21 093 





 




Regular MS Contributions




—




275






(4)





 (21)





271






OCT


A Envelope — National Allocations


—


190


(4)



 (21)



187




A Envelope reserve


—


—


 


 


—




B Envelope — National Allocations


—


15


—



 (21)



15




B Envelope reserve


—


—


 


 


—




National allocations Reserve A Envelope STABEX


—


—


 


 


—




Non-mobilisable reserve


—


25


1



 (20)



26




Regional allocations


—


40


(1)



 (21)



39




Regional allocations reserve


—


—


 


 


—




Studies / Technical assistance OCT


—


5


—



 (21)



5




 



SUBTOTAL OCT



—



275




(4)




 (21)




271





 



TOTAL 10th EDF




20 896 




527




206




 (21)
 (23)




21 430 






Table 1.4


11th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2019


ANALYSIS OF CREDITS PER INSTRUMENT












 EUR million




 


INSTRUMENT


INITIAL APPROPRIATION


INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2018


INCREASE OR DECREASE IN RESOURCES IN 2019


Notes


CURRENT LEVEL APPROPRIATION




 




Regular MS Contributions




—




82




 


 




82






ACP


A Envelope — National Allocations


—


65


 


 


65




B Envelope — National Allocations


—


17


 


 


17




National allocations Reserve A Envelope STABEX


—


—


 


 


—




 



SUBTOTAL ACP



—



82



 


 



82





 




Regular MS Contributions






29 008 






253






(179)




 




29 081 






ACP


A Envelope — National Allocations


—


15 354 


213


 


15 567 




B Envelope — National Allocations


—


700


139


 


838




B Envelope reserve


—


—


 


 


—




Implementation costs


1 053 


—


 


 


1 053 




Institutional and support expenditure


—


246


(49)


 


197




Interests and other receipts


—


16


2


 


18




Intra-ACP Reserve


3 590 


(3 521 )


(42)


 


27




National allocations Reserve A Envelope STABEX


—


—


 


 


—




NIP/RIP reserve


24 365 


(23 095 )


(731)


 


540




Non-mobilisable reserve


—


311


(181)



 (24)



130




Other Intra-ACP allocations


—


2 700 


91


 


2 791 




Peace facility


—


1 000 


 


 


1 000 




Regional allocations


—


6 541 


379


 


6 920 






Co-financing




—




38






35





 (25)





73






A Envelope — National Allocations


—


23


19



 (25)



42




Implementation costs


—


2


1



 (25)



3




Peace facility


—


11


13



 (25)



24




Regional allocations


—


2


2



 (25)



4






EC Internal SLA




—




1




 


 




1






A Envelope — National Allocations


—


1


 


 


1




 



SUBTOTAL ACP




29 008 




291



 


 



29 155 





 




Regular MS Contributions




—




350






5




 




355






OCT


A Envelope — National Allocations


—


196


 


 


196




B Envelope — National Allocations


—


8


 


 


8




NIP/RIP reserve


—


49


(18)


 


32




Non-mobilisable reserve


—


7


5



 (24)



12




Regional allocations


—


81


18


 


99




Studies / Technical assistance OCT


—


9


 


 


9






Co-financing




—


—


 


 


—




A Envelope — National Allocations


—


—


 


 


—






EC Internal SLA




—


—


 


 


—




A Envelope — National Allocations


—


—


 


 


—




 



SUBTOTAL OCT



—



350



 


 



355





 




Regular MS Contributions




—




17




 


 




17






 


A Envelope — National Allocations


—


10


 


 


10




B Envelope — National Allocations


—


7


 


 


7




 



SUBTOTAL



—



17



 


 



17





 



TOTAL 11th EDF



29 008 


740


(139)


 


29 608 





Table 2.1


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


PROGRESS REPORT












EUR million




 


ALLOCATION


EDF




 


8


9


10


11


TOTAL





Lomé



Sundry Income


35


 


 


 


35




Total indicative programmes


4 985 


 


 


 


4 985 




Total Non-Programmable Aid


4 707 


 


 


 


4 707 




Transfers from other funds


 


670


 


 


670





SUBTOTAL: REGULAR MS CONTRIBUTIONS



9 728 


670


 


 


10 398 





Cotonou



A Envelope — National Allocations


417


8 835 


12 939 


15 838 


38 029 




B Envelope — National Allocations


233


1 213 


2 006 


870


4 322 




Bridging facility


 


 


 


—


—




CDE, CTA and Parliamentary Assembly


 


154


 


 


154




Country reserve


 


 


—


—


—




Implementation Costs and Interests Revenues


—


240


535


1 079 


1 855 




Intra-ACP allocations


 


2 937 


3 608 


3 988 


10 534 




Intra-ACP Reserve


 


 


—


27


27




National allocations Reserve A Envelope STABEX


 


 


—


—


—




NIP/RIP reserve


 


 


—


571


571




Non-mobilisable reserve


 


 


197


142


340




Regional allocations


 


793


1 941 


7 018 


9 752 




Regional allocations reserve


 


 


—


 


—




Special allocation R.D. Congo


 


105


 


 


105




Special allocation South Sudan


 


267


 


 


267




Special allocation Sudan


 


110


 


 


110




Voluntary contribution Peace facility


 


24


 


 


24





SUBTOTAL: REGULAR MS CONTRIBUTIONS



650


14 678 


21 227 


29 535 


66 089 




A Envelope — National Allocations


 


 


 


1


1





SUBTOTAL: EC INTERNAL SLA



 


 


 


1


1




A Envelope — National Allocations


 


 


185


42


227




Implementation Costs and Interests Revenues


 


 


5


3


8




Intra-ACP allocations


 


 


12


24


36




Regional allocations


 


 


 


4


4





SUBTOTAL: CO-FINANCING



 


 


203


73


275




 



TOTAL



10 378 


15 348 


21 430 


29 608 


76 764 

























 


EDF


Aggregate Total


Cummulative Figures


Annual Figures




At 31.12.2019


RAL


% of allocation


2008


2009


2010


2011


2012


2013


2014


2015


2016


2017


2018


2019





Decisions



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


8


10 375 


1


100 %


10 786 


(42)


(45)


(60)


(64)


(98)


(63)


(12)


(13)


(9)


(4)


(2)




 


9


15 335 


134


100 %


16 633 


(54)


(116)


(9)


(297)


(72)


(381)


(170)


(104)


(38)


(33)


(22)




 


10


21 088 


1 803 


98 %


4 766 


3 501 


2 349 


3 118 


3 524 


4 131 


(95)


(156)


(80)


(5)


(147)


183




 


11


26 511 


13 959 


90 %


 


 


 


 


 


 


1 160 


5 372 


6 688 


5 807 


4 332 


3 153 





Total



 



73 309 




15 896 



 



32 185 




3 405 




2 187 




3 049 




3 163 




3 961 




621




5 034 




6 491 




5 754 




4 147 




3 311 






Assigned Funds



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


8


10 374 


—


100 %


10 541 


(42)


8


(13)


(46)


(11)


(37)


(16)


(6)


(3)


—


(1)




 


9


15 302 


100


100 %


14 209 


997


476


9


(187)


(96)


(1)


(52)


(46)


(20)


16


(4)




 


10


20 310 


1 025 


95 %


130


3 184 


2 820 


2 514 


3 460 


3 457 


2 687 


783


541


550


236


(51)




 


11


21 697 


9 144 


73 %


 


 


 


 


 


 


731


3 293 


3 745 


5 684 


4 687 


3 557 





Total



 



67 683 




10 269 



 



24 881 




4 140 




3 304 




2 509 




3 226 




3 350 




3 380 




4 008 




4 234 




6 211 




4 940 




3 501 






Payments



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


8


10 374 


 


100 %


9 930 


152


158


90


15


18


16


(3)


—


(1)


—


—




 


9


15 201 


 


99 %


10 011 


1 806 


1 304 


906


539


231


145


43


68


111


23


14




 


10


19 285 


 


90 %


90


1 111 


1 772 


1 879 


2 655 


2 718 


2 760 


2 024 


1 466 


1 277 


1 076 


456




 


11


12 553 


 


42 %


 


 


 


 


 


 


595


1 024 


1 816 


2 770 


2 970 


3 377 





Total



 



57 414 



 


 



20 031 




3 069 




3 233 




2 874 




3 209 




2 967 




3 516 




3 088 




3 350 




4 158 




4 069 




3 847 






Table 2.2


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


CLASS OF AID

















EUR million




 


EDF




8


%


9


%


10


%


11


%


TOTAL


%




 



 (4)




 (4)




 (4)




 (4)




 (4)






Lomé




Sundry Income



 


 


 


 


 


 


 


 


 


 




Appropriations


35


 


 


 


 


 


 


 


35


 




Decisions


35


100 %


 


 


 


 


 


 


35


100 %




Assigned funds


35


100 %


 


 


 


 


 


 


35


100 %




Payments


35


100 %


 


 


 


 


 


 


35


100 %





Total indicative programmes



 


 


 


 


 


 


 


 


 


 




Appropriations


4 985 


 


 


 


 


 


 


 


4 985 


 




Decisions


4 985 


100 %


 


 


 


 


 


 


4 985 


100 %




Assigned funds


4 985 


100 %


 


 


 


 


 


 


4 985 


100 %




Payments


4 985 


100 %


 


 


 


 


 


 


4 985 


100 %





Total Non-Programmable Aid



 


 


 


 


 


 


 


 


 


 




Appropriations


4 707 


 


 


 


 


 


 


 


4 707 


 




Decisions


4 706 


100 %


 


 


 


 


 


 


4 706 


100 %




Assigned funds


4 706 


100 %


 


 


 


 


 


 


4 706 


100 %




Payments


4 706 


100 %


 


 


 


 


 


 


4 706 


100 %





Transfers from other funds



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


670


 


 


 


 


 


670


 




Decisions


 


 


670


100 %


 


 


 


 


670


100 %




Assigned funds


 


 


670


100 %


 


 


 


 


670


100 %




Payments


 


 


670


100 %


 


 


 


 


670


100 %





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




 


 





Cotonou




A Envelope — National Allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


417


 


8 835 


 


12 939 


 


15 838 


 


38 029 


 




Decisions


417


100 %


8 834 


100 %


12 837 


99 %


14 456 


91 %


36 545 


96 %




Assigned funds


417


100 %


8 822 


100 %


12 621 


98 %


11 325 


72 %


33 186 


87 %




Payments


417


100 %


8 800 


100 %


12 011 


93 %


6 248 


39 %


27 477 


72 %





B Envelope — National Allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


233


 


1 213 


 


2 006 


 


870


 


4 322 


 




Decisions


231


99 %


1 213 


100 %


2 005 


100 %


853


98 %


4 301 


100 %




Assigned funds


231


99 %


1 209 


100 %


1 984 


99 %


734


84 %


4 158 


96 %




Payments


231


99 %


1 203 


99 %


1 964 


98 %


644


74 %


4 042 


94 %





Cotonou




Bridging facility



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


 


 


—


 


—


 




Decisions


 


 


 


 


 


 


 


 


 


 




Assigned funds


 


 


 


 


 


 


 


 


 


 




Payments


 


 


 


 


 


 


 


 


 


 





CDE, CTA and Parliamentary Assembly



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


154


 


 


 


 


 


154


 




Decisions


 


 


154


100 %


 


 


 


 


154


100 %




Assigned funds


 


 


154


100 %


 


 


 


 


154


100 %




Payments


 


 


154


100 %


 


 


 


 


154


100 %





Implementation Costs and Interests Revenues



 


 


 


 


 


 


 


 


 


 




Appropriations


—


 


240


 


535


 


1 079 


 


1 855 


 




Decisions


 


 


240


100 %


514


96 %


871


81 %


1 625 


88 %




Assigned funds


 


 


240


100 %


512


96 %


836


77 %


1 588 


86 %




Payments


 


 


240


100 %


512


96 %


779


72 %


1 531 


83 %





Intra-ACP allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


2 937 


 


3 608 


 


3 988 


 


10 534 


 




Decisions


 


 


2 931 


100 %


3 600 


100 %


3 524 


88 %


10 054 


95 %




Assigned funds


 


 


2 924 


100 %


3 139 


87 %


3 020 


76 %


9 083 


86 %




Payments


 


 


2 920 


99 %


2 973 


82 %


2 256 


57 %


8 149 


77 %





Regional allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


793


 


1 941 


 


7 018 


 


9 752 


 




Decisions


 


 


792


100 %


1 935 


100 %


6 748 


96 %


9 475 


97 %




Assigned funds


 


 


786


99 %


1 863 


96 %


5 724 


82 %


8 373 


86 %




Payments


 


 


777


98 %


1 658 


85 %


2 604 


37 %


5 040 


52 %





Special allocation R.D. Congo



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


105


 


 


 


 


 


105


 




Decisions


 


 


105


100 %


 


 


 


 


105


100 %




Assigned funds


 


 


105


100 %


 


 


 


 


105


100 %




Payments


 


 


105


100 %


 


 


 


 


105


100 %





Special allocation South Sudan



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


267


 


 


 


 


 


267


 




Decisions


 


 


266


100 %


 


 


 


 


266


100 %




Assigned funds


 


 


263


99 %


 


 


 


 


263


99 %




Payments


 


 


208


78 %


 


 


 


 


208


78 %





Cotonou




Special allocation Sudan



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


110


 


 


 


 


 


110


 




Decisions


 


 


107


97 %


 


 


 


 


107


97 %




Assigned funds


 


 


105


95 %


 


 


 


 


105


95 %




Payments


 


 


101


91 %


 


 


 


 


101


91 %





Voluntary contribution Peace facility



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


24


 


 


 


 


 


24


 




Decisions


 


 


24


100 %


 


 


 


 


24


100 %




Assigned funds


 


 


24


100 %


 


 


 


 


24


100 %




Payments


 


 


24


100 %


 


 


 


 


24


100 %





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





A Envelope — National Allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


185


 


42


 


227


 




Decisions


 


 


 


 


181


98 %


31


75 %


212


94 %




Assigned funds


 


 


 


 


177


96 %


31


75 %


208


92 %




Payments


 


 


 


 


152


82 %


2


5 %


154


68 %





Implementation Costs and Interests Revenues



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


5


 


3


 


8


 




Decisions


 


 


 


 


5


100 %


3


86 %


8


95 %




Assigned funds


 


 


 


 


3


65 %


1


24 %


4


49 %




Payments


 


 


 


 


3


51 %


—


1 %


3


31 %





Intra-ACP allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


12


 


24


 


36


 




Decisions


 


 


 


 


11


92 %


23


95 %


34


94 %




Assigned funds


 


 


 


 


11


91 %


22


93 %


33


92 %




Payments


 


 


 


 


11


91 %


17


73 %


29


79 %





Regional allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


 


 


4


 


4


 




Decisions


 


 


 


 


 


 


2


50 %


2


50 %




Assigned funds


 


 


 


 


 


 


2


50 %


2


50 %




Payments


 


 


 


 


 


 


2


50 %


2


50 %





Co-financing



 


 


 


 


 


 


 


 


 


 





Cotonou




A Envelope — National Allocations



 


 


 


 


 


 


 


 


 


 




Appropriations


 


 


 


 


 


 


1


 


1


 




Decisions


 


 


 


 


 


 


1


71 %


1


71 %




Assigned funds


 


 


 


 


 


 


1


52 %


1


52 %




Payments


 


 


 


 


 


 


1


52 %


1


52 %





EC Internal SLA



 


 


 


 


 


 


 


 


 


 




 


 




 


Appropriations


8


%


9


%


10


%


11


%


TOTAL


%




 



 (4)




 (4)




 (4)




 (4)




 (4)






Cotonou



Country reserve


 


 


 


 



—



 



—



 



—



 




Intra-ACP Reserve


 


 


 


 



—



 



27



 



27



 




National allocations Reserve A Envelope STABEX


 


 


 


 



—



 



—



 



—



 




NIP/RIP reserve


 


 


 


 



—



 



571



 



571



 




Regional allocations reserve


 


 


 


 



—



 


 


 



—



 





Mobilisable reserves



 


 


 


 


 


 


 


 


 


 




Non-mobilisable reserve


 


 


 


 



197



 



142



 



340



 





Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 




 


 


8


%


9


%


10


%


11


%


TOTAL


%




 



 (4)




 (4)




 (4)




 (4)




 (4)





 


Appropriations


10 378 


 


15 348 


 


21 630 


 


29 608 


 


76 964 


 




Decisions


10 375 


100 %


15 335 


100 %


21 088 


97 %


26 511 


90 %


73 309 


95 %




Assigned funds


10 374 


100 %


15 302 


100 %


20 310 


94 %


21 697 


73 %


67 683 


88 %




Payments


10 374 


100 %


15 201 


99 %


19 285 


89 %


12 553 


42 %


57 414 


75 %





TOTAL: ALL ALLOCATIONS



 


 


 


 


 


 


 


 


 


 





Table 2.3


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


CLASS OF AID


ACP + PTOM — 8 th EDF

















 EUR million




 


 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2):(1)


(3)


 


(3):(2)


(4)


 


(4):(3)





Lomé




ACP


Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Total indicative programmes


29


29


 


100 %


29


 


100 %


29


 


100 %





SUBTOTAL: TOTAL INDICATIVE PROGRAMMES




29




29



 



100 %




29



 



100 %




29



 



100 %





Structural adjustment


18


18


 


100 %


18


 


100 %


18


 


100 %





SUBTOTAL: TOTAL NON-PROGRAMMABLE AID




18




18



 



100 %




18



 



100 %




18



 



100 %






TOTAL ACP




47




47



 



100 %




47



 



100 %




47



 



100 %






Lomé




ACP


Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Utilisation of interest income


35


35


 


100 %


35


 


100 %


35


 


100 %





SUBTOTAL: SUNDRY INCOME




35




35



 



100 %




35



 



100 %




35



 



100 %





Total indicative programmes


4 921 


4 921 


—


100 %


4 921 


—


100 %


4 921 


—


100 %





SUBTOTAL: TOTAL INDICATIVE PROGRAMMES




4 921 




4 921 




—




100 %




4 921 




—




100 %




4 921 




—




100 %





Aid for refugees


100


100


 


100 %


100


 


100 %


100


 


100 %




Emergency aid (Lomé)


136


136


 


100 %


136


 


100 %


136


 


100 %




Heavily indebted poor countries (Lomé)


1 060 


1 060 


 


100 %


1 060 


 


100 %


1 060 


 


100 %




Interest-rate subsidies


69


69


—


100 %


68


 


100 %


68


 


100 %




Risk capital


1 012 


1 012 


 


100 %


1 012 


 


100 %


1 012 


 


100 %




Stabex


723


722


—


100 %


722


 


100 %


722


 


100 %




Structural adjustment


1 479 


1 479 


 


100 %


1 479 


 


100 %


1 479 


 


100 %




Sysmin


101


101


 


100 %


101


 


100 %


101


 


100 %





SUBTOTAL: TOTAL NON-PROGRAMMABLE AID




4 679 




4 678 




—




100 %




4 677 



 



100 %




4 677 



 



100 %






Cotonou




ACP


Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


417


417


—


100 %


417


—


100 %


417


 


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




417




417



—



100 %




417



—



100 %




417



 



100 %





B Envelope — National Allocations


233


 


 


 


 


 


 


 


 


 




Compensation export earnings


 


231


(2)


 


231


—


100 %


231


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




233




231




(2)




99 %




231




—




100 %




231



 



100 %





Interests and other receipts


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




—



 


 


 


 


 


 


 


 


 




 



TOTAL ACP (A)




10 285 




10 282 




(2)




100 %




10 282 




(1)




100 %




10 282 




—




100 %






Lomé




OCT


Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Total indicative programmes


35


35


 


100 %


35


 


100 %


35


 


100 %





SUBTOTAL: TOTAL INDICATIVE PROGRAMMES




35




35



 



100 %




35



 



100 %




35



 



100 %





Interest-rate subsidies


1


1


 


100 %


1


 


100 %


1


 


100 %




Risk capital


6


6


 


100 %


6


 


100 %


6


 


100 %




Stabex


1


1


 


100 %


1


 


100 %


1


 


100 %




Sysmin


2


2


 


100 %


2


 


100 %


2


 


100 %





SUBTOTAL: TOTAL NON-PROGRAMMABLE AID




10




10



 



100 %




10



 



100 %




10



 



100 %





 



TOTAL OCT




46




46



 



100 %




46



 



100 %




46



 



100 %





 



TOTAL: ACP+OCT (A+B)




10 378 




10 375 




(2)




100 %




10 374 




(1)




100 %




10 374 




—




100 %






Table 2.4


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


CLASS OF AID


ACP + PTOM — 9 th EDF

















 EUR million




 


 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2):(1)


(3)


 


(3):(2)


(4)


 


(4):(3)





Lomé




ACP



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Transfers from 7th EDF — Lomé


—


—


 


100 %


—


 


100 %


—


 


100 %





SUBTOTAL: TRANSFERS FROM OTHER FUNDS




—




—



 



100 %




—



 



100 %




—



 



100 %






Cotonou




ACP



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


44


44


 


100 %


44


 


100 %


44


 


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




44




44



 



100 %




44



 



100 %




44



 



100 %





B Envelope — National Allocations


6


 


 


 


 


 


 


 


 


 




Emergency aid


 


6


 


 


6


 


100 %


6


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




6




6



 



100 %




6



 



100 %




6



 



100 %






TOTAL: ACP




50




50



 



100 %




50



 



100 %




50



 



100 %






Lomé




ACP



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Transfers from 6th EDF — Lomé


20


20


 


100 %


20


 


100 %


20


 


100 %




Transfers from 7th EDF — Lomé


647


647


—


100 %


646


(1)


100 %


646


—


100 %





SUBTOTAL: TRANSFERS FROM OTHER FUNDS




667




667




—




100 %




667




(1)




100 %




667




—




100 %






Cotonou




ACP



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


8 554 


8 553 


(3)


100 %


8 543 


(3)


100 %


8 521 


1


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




8 554 




8 553 




(3)




100 %




8 543 




(3)




100 %




8 521 




1




100 %





B Envelope — National Allocations


1 203 


 


 


 


 


 


 


 


 


 




Compensation export earnings


 


148


 


 


148


 


100 %


148


 


100 %




Emergency aid


 


1 044 


—


 


1 040 


—


100 %


1 034 


—


99 %




Heavily indebted poor countries


 


11


 


 


11


 


100 %


11


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




1 203 




1 203 




—




100 %




1 199 




—




100 %




1 193 




—




100 %





CDE, CTA and Parliamentary Assembly


154


154


 


100 %


154


 


100 %


154


 


100 %





SUBTOTAL: CDE, CTA AND PARLIAMENTARY ASSEMBLY




154




154



 



100 %




154



 



100 %




154



 



100 %






Cotonou



Implementation costs


177


177


 


100 %


177


 


100 %


177


 


100 %




Interests and other receipts


63


63


 


100 %


63


 


100 %


63


 


100 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




239




239



 



100 %




239



 



100 %




239



 



100 %





Other Intra-ACP allocations


2 584 


2 578 


(9)


100 %


2 571 


(7)


100 %


2 567 


(1)


100 %




Peace facility


353


353


 


100 %


353


 


100 %


353


 


100 %





SUBTOTAL: INTRA-ACP ALLOCATIONS




2 937 




2 931 




(9)




100 %




2 924 




(7)




100 %




2 920 




(1)




100 %





Regional allocations


749


748


(8)


100 %


741


(4)


99 %


732


4


99 %





SUBTOTAL: REGIONAL ALLOCATIONS




749




748




(8)




100 %




741




(4)




99 %




732




4




99 %





Special allocation R.D. Congo


105


105


 


100 %


105


 


100 %


105


 


100 %





SUBTOTAL: SPECIAL ALLOCATION R.D. CONGO




105




105



 



100 %




105



 



100 %




105



 



100 %





Special allocation South Sudan


267


266


(1)


100 %


263


10


99 %


208


8


79 %





SUBTOTAL: SPECIAL ALLOCATION SOUTH SUDAN




267




266




(1)




100 %




263




10




99 %




208




8




79 %





Special allocation Sudan


110


107


—


97 %


105


(1)


98 %


101


3


96 %





SUBTOTAL: SPECIAL ALLOCATION SUDAN




110




107




—




97 %




105




(1)




98 %




101




3




96 %





Voluntary contribution Peace facility


24


24


 


100 %


24


 


100 %


24


 


100 %





SUBTOTAL: VOLUNTARY CONTRIBUTION PEACE FACILITY




24




24



 



100 %




24



 



100 %




24



 



100 %





 



TOTAL: ACP (A)




15 009 




14 996 




(21)




100 %




14 964 




(4)




100 %




14 864 




14




99 %






Lomé




OCT



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




Transfers from 6th EDF — Lomé


—


—


 


100 %


—


 


100 %


—


 


100 %




Transfers from 7th EDF — Lomé


3


3


 


100 %


3


 


100 %


3


 


100 %





SUBTOTAL: TRANSFERS FROM OTHER FUNDS




3




3



 



100 %




3



 



100 %




3



 



100 %






Cotonou




OCT



 


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


236


236


—


100 %


235


—


99 %


235


—


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




236




236




—




100 %




235




—




99 %




235




—




100 %





B Envelope — National Allocations


4


 


 


 


 


 


 


 


 


 




Emergency aid


 


4


 


 


4


 


100 %


4


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




4




4



 



100 %




4



 



100 %




4



 



100 %





Studies / Technical assistance OCT


1


1


 


100 %


1


 


100 %


1


 


100 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




1




1



 



100 %




1



 



100 %




1



 



100 %





Regional allocations


45


45


—


100 %


45


 


100 %


45


 


100 %





SUBTOTAL: REGIONAL ALLOCATIONS




45




45




—




100 %




45



 



100 %




45



 



100 %





 



TOTAL: OCT




289




289




(1)




100 %




288




—




99 %




288




—




100 %





 



TOTAL: ACP+OCT (A+B)




15 348 




15 335 




(22)




100 %




15 302 




(4)




100 %




15 201 




14




99 %






Table 2.5


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


CLASS OF AID


ACP + PTOM — 10 th EDF

















 EUR million




 


 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2):(1)


(3)


 


(3):(2)


(4)


 


(4):(3)





ACP




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


56


56


(1)


100 %


56


—


99 %


56


—


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




56




56




(1)




100 %




56



—



99 %




56



—



100 %





B Envelope — National Allocations


9


 


 


 


 


 


 


 


 


 




Other chocs with budgetary impact


 


9


 


 


9


 


100 %


9


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




9




9



 



100 %




9



 



100 %




9



 



100 %






Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




National allocations Reserve A Envelope STABEX


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX



—


 


 


 


 


 


 


 


 


 





ACP




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


12 696 


12 594 


(168)


99 %


12 384 


(42)


98 %


11 798 


286


95 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




12 696 




12 594 




(168)




99 %




12 384 




(42)




98 %




11 798 




286




95 %






ACP



B Envelope — National Allocations


1 983 


 


 


 


 


 


 


 


 


 




Compensation export earnings


 


202


(1)


 


197


(4)


97 %


191


—


97 %




Emergency aid


 


835


(4)


 


829


(2)


99 %


821


8


99 %




Heavily indebted poor countries


 


49


—


 


49


 


100 %


49


 


100 %




Other chocs with budgetary impact


 


895


—


 


887


—


99 %


880


3


99 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




1 983 




1 981 




(5)




100 %




1 961 




(6)




99 %




1 941 




11




99 %





Implementation costs


460


440


4


96 %


440


4


100 %


440


5


100 %




Interests and other receipts


71


68


—


96 %


67


—


98 %


67


—


100 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




530




509




4




96 %




507




4




100 %




507




5




100 %





Institutional and support expenditure


226


226


(3)


100 %


226


(3)


100 %


209


—


93 %




Other Intra-ACP allocations


1 855 


1 848 


(17)


100 %


1 826 


2


99 %


1 726 


43


95 %




Peace facility


1 527 


1 527 


408


100 %


1 087 


(12)


71 %


1 038 


15


95 %





SUBTOTAL: INTRA-ACP ALLOCATIONS




3 608 




3 600 




388




100 %




3 139 




(13)




87 %




2 973 




58




95 %





Regional allocations


1 902 


1 896 


(30)


100 %


1 827 


8


96 %


1 625 


70


89 %





SUBTOTAL: REGIONAL ALLOCATIONS




1 902 




1 896 




(30)




100 %




1 827 




8




96 %




1 625 




70




89 %






Co-financing



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


185


181


(2)


98 %


177


(1)


98 %


152


9


86 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




185




181




(2)




98 %




177




(1)




98 %




152




9




86 %





Implementation costs


5


5


—


100 %


3


—


65 %


3


1


78 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




5




5



—



100 %




3



—



65 %




3




1




78 %






ACP



Other Intra-ACP allocations


12


11


—


92 %


10


—


99 %


10


—


100 %




Peace facility


1


1


—


99 %


1


 


100 %


1


 


100 %





SUBTOTAL: INTRA-ACP ALLOCATIONS




12




11



—



92 %




11



—



99 %




11



—



100 %






Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




A Envelope reserve


—


 


 


 


 


 


 


 


 


 




B Envelope reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: COUNTRY RESERVE



—


 


 


 


 


 


 


 


 


 




Intra-ACP Reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: INTRA-ACP RESERVE



—


 


 


 


 


 


 


 


 


 




National allocations Reserve A Envelope STABEX


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX



—


 


 


 


 


 


 


 


 


 




NIP/RIP reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NIP/RIP RESERVE



—


 


 


 


 


 


 


 


 


 




Regional allocations reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: REGIONAL ALLOCATIONS RESERVE



—


 


 


 


 


 


 


 


 


 





Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




Non-mobilisable reserve


171


 


 


 


 


 


 


 


 


 





SUBTOTAL: NON-MOBILISABLE RESERVE




171



 


 


 


 


 


 


 


 


 





OCT




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


187


187


(2)


100 %


182


—


97 %


157


13


87 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




187




187




(2)




100 %




182



—



97 %




157




13




87 %





B Envelope — National Allocations


15


 


 


 


 


 


 


 


 


 




Emergency aid


 


9


—


 


8


—


99 %


8


1


99 %




Other chocs with budgetary impact


 


6


 


 


6


 


100 %


6


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




15




15



—



100 %




14



—



99 %




14




1




99 %





Studies / Technical assistance OCT


5


5


—


100 %


5


 


100 %


5


 


100 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




5




5



—



100 %




5



 



100 %




5



 



100 %





Regional allocations


39


39


—


100 %


36


(1)


93 %


34


2


94 %





SUBTOTAL: REGIONAL ALLOCATIONS




39




39



—



100 %




36




(1)




93 %




34




2




94 %






OCT




Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




A Envelope reserve


—


 


 


 


 


 


 


 


 


 




B Envelope reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: COUNTRY RESERVE



—


 


 


 


 


 


 


 


 


 




National allocations Reserve A Envelope STABEX


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX



—


 


 


 


 


 


 


 


 


 




Regional allocations reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: REGIONAL ALLOCATIONS RESERVE



—


 


 


 


 


 


 


 


 


 





Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




Non-mobilisable reserve


26


 


 


 


 


 


 


 


 


 





SUBTOTAL: NON-MOBILISABLE RESERVE




26



 


 


 


 


 


 


 


 


 




 



TOTAL: ACP+OCT (INCL. RESERVES) (A+B)




21 430 




21 088 




183




97 %




20 310 




(51)




96 %




19 285 




456




95 %






Table 2.6


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2019


CLASS OF AID


ACP + PTOM — 11 th EDF

















 EUR million




 


 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2):(1)


(3)


 


(3):(2)


(4)


 


(4):(3)





ACP




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


65


65


—


100 %


64


5


98 %


45


18


70 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




65




65



—



100 %




64




5




98 %




45




18




70 %





B Envelope — National Allocations


17


 


 


 


 


 


 


 


 


 




Emergency aid


 


17


 


 


17


 


100 %


17


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




17




17



 



100 %




17



 



100 %




17



 



100 %






Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




National allocations Reserve A Envelope STABEX


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX



—


 


 


 


 


 


 


 


 


 





ACP




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


15 567 


14 186 


1 617 


91 %


11 063 


1 920 


78 %


6 077 


1 637 


55 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




15 567 




14 186 




1 617 




91 %




11 063 




1 920 




78 %




6 077 




1 637 




55 %






ACP



B Envelope — National Allocations


838


 


 


 


 


 


 


 


 


 




Emergency aid


 


712


137


 


600


29


84 %


511


35


85 %




Other chocs with budgetary impact


 


109


—


 


109


—


100 %


109


—


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




838




821




137




98 %




709




29




86 %




620




35




87 %





Bridging facility


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: BRIDGING FACILITY



—


 


 


 


 


 


 


 


 


 




Implementation costs


1 053 


855


155


81 %


824


177


96 %


769


166


93 %




Interests and other receipts


18


9


—


51 %


8


1


85 %


7


—


85 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




1 071 




864




154




81 %




832




178




96 %




775




166




93 %





Institutional and support expenditure


197


127


(6)


64 %


103


5


81 %


95


10


93 %




Other Intra-ACP allocations


2 791 


2 397 


281


86 %


1 938 


591


81 %


1 279 


380


66 %




Peace facility


1 000 


1 000 


—


100 %


980


34


98 %


881


22


90 %





SUBTOTAL: INTRA-ACP ALLOCATIONS




3 988 




3 524 




275




88 %




3 020 




630




86 %




2 256 




413




75 %





Regional allocations


6 920 


6 649 


846


96 %


5 644 


704


85 %


2 591 


1 038 


46 %





SUBTOTAL: REGIONAL ALLOCATIONS




6 920 




6 649 




846




96 %




5 644 




704




85 %




2 591 




1 038 




46 %






Co-financing



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


42


31


11


75 %


31


11


100 %


2


1


6 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




42




31




11




75 %




31




11




100 %




2




1




6 %





Implementation costs


3


3


1


86 %


1


1


28 %


—


—


3 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




3




3




1




86 %




1




1




28 %



—


—



3 %






ACP



Peace facility


24


23


21


95 %


22


20


98 %


17


16


78 %





SUBTOTAL: INTRA-ACP ALLOCATIONS




24




23




21




95 %




22




20




98 %




17




16




78 %





Regional allocations


4


2


 


50 %


2


—


100 %


2


2


100 %





SUBTOTAL: REGIONAL ALLOCATIONS




4




2



 



50 %




2



—



100 %




2




2




100 %






Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




B Envelope reserve


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: COUNTRY RESERVE



—


 


 


 


 


 


 


 


 


 




Intra-ACP Reserve


27


 


 


 


 


 


 


 


 


 





SUBTOTAL: INTRA-ACP RESERVE




27



 


 


 


 


 


 


 


 


 




National allocations Reserve A Envelope STABEX


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX



—


 


 


 


 


 


 


 


 


 




NIP/RIP reserve


540


 


 


 


 


 


 


 


 


 





SUBTOTAL: NIP/RIP RESERVE




540



 


 


 


 


 


 


 


 


 





Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




Non-mobilisable reserve


130


 


 


 


 


 


 


 


 


 





SUBTOTAL: NON-MOBILISABLE RESERVE




130



 


 


 


 


 


 


 


 


 





EC Internal SLA



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


1


1


—


71 %


1


—


73 %


1


 


100 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




1




1



—



71 %




1



—



73 %




1



 



100 %






OCT




Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


196


196


13


100 %


192


13


98 %


120


44


63 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




196




196




13




100 %




192




13




98 %




120




44




63 %





B Envelope — National Allocations


8


 


 


 


 


 


 


 


 


 




Emergency aid


 


5


2


 


5


2


99 %


4


2


78 %




Other chocs with budgetary impact


 


3


 


 


3


 


100 %


3


 


100 %





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




8




8




2




100 %




8




2




99 %




7




2




87 %





Bridging facility


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: BRIDGING FACILITY



—


 


 


 


 


 


 


 


 


 




Studies / Technical assistance OCT


9


7


2


84 %


5


—


65 %


4


1


87 %





SUBTOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




9




7




2




84 %




5



—



65 %




4




1




87 %





Regional allocations


99


99


62


100 %


80


43


81 %


13


5


16 %





SUBTOTAL: REGIONAL ALLOCATIONS




99




99




62




100 %




80




43




81 %




13




5




16 %






Co-financing



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS



—


 


 


 


 


 


 


 


 


 





OCT




Mobilisable reserves



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




NIP/RIP reserve


32


 


 


 


 


 


 


 


 


 





SUBTOTAL: NIP/RIP RESERVE




32



 


 


 


 


 


 


 


 


 





Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




Non-mobilisable reserve


12


 


 


 


 


 


 


 


 


 





SUBTOTAL: NON-MOBILISABLE RESERVE




12



 


 


 


 


 


 


 


 


 





EC Internal SLA



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


—


 


 


 


 


 


 


 


 


 





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS



—


 


 


 


 


 


 


 


 


 





Regular MS Contributions



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 




A Envelope — National Allocations


10


10


4


100 %


6


—


59 %


6


—


99 %





SUBTOTAL: A ENVELOPE — NATIONAL ALLOCATIONS




10




10




4




100 %




6



—



59 %




6



—



99 %





B Envelope — National Allocations


7


 


 


 


 


 


 


 


 


 




Emergency aid


 


7


7


 


 


 


 


 


 


 





SUBTOTAL: B ENVELOPE — NATIONAL ALLOCATIONS




7




7




7




100 %



 


 


 


 


 


 




 



TOTAL: ACP+OCT (INCL. RESERVES) (A+B)




29 608 




26 511 




3 153 




90 %




21 697 




3 557 




82 %




12 553 




3 377 




58 %






ANNUAL REPORT ON IMPLEMENTATION — FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK









EUROPEAN INVESTMENT BANK






CA/531/20


12 March 2020




 



Document 20/108







BOARD OF DIRECTORS







INVESTMENT FACILITY


FINANCIAL STATEMENTS


AS AT 31 DECEMBER 2019











a)


Statement of financial position










b)


Statement of profit or loss and other comprehensive income










c)


Statement of changes in contributors′ resources










d)


Statement of cash flows










e)


Notes to the financial statements









STATEMENT OF FINANCIAL POSITION


AS AT 31 DECEMBER 2019









in EUR’000




 


Notes


31.12.2019


31.12.2018





ASSETS



 


 


 




Cash and cash equivalents


5


837 777 


573 708 




Amounts receivable from contributors


9/17


86 330 


100 000 




Treasury financial assets


10


330 587 


335 140 




Derivative financial instruments


6


14 184 


9 873 




Loans and advances


7


1 518 675 


1 540 991 




Shares and other variable yield securities


8


619 928 


567 292 




Other assets


11


—


171





Total assets



 



3 407 481 




3 127 175 






LIABILITIES AND CONTRIBUTORS’ RESOURCES



 


 


 





LIABILITIES



 


 


 




Derivative financial instruments


6


191


8 493 




Deferred income


12


32 566 


33 764 




Provisions for guarantees issued


13


628


793




Provisions for loan commitments


14


37 269 


23 822 




Amount owed to third parties


15


147 438 


143 813 




Other liabilities


16


2 353 


2 493 





Total liabilities



 



220 445 




213 178 






CONTRIBUTORS’ RESOURCES



 


 


 




Facility Member States Contribution called


17


2 967 000 


2 697 000 




Retained earnings


 


220 036 


216 997 





Total contributors’ resources



 



3 187 036 




2 913 997 






Total liabilities and contributors’ resources



 



3 407 481 




3 127 175 









STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


FOR THE YEAR ENDED 31 DECEMBER 2019









in EUR’000




 


Notes


From 1.1.2019


From 1.1.2018




to 31.12.2019


to 31.12.2018




Interest and similar income (5)



19


93 923 


96 730 




Interest and similar expenses


19


-2 948 


-2 539 





Net interest and similar income



 



90 975 




94 191 





Fee and commission income


20


4 438 


284




Fee and commission expenses


20


- 721


- 106





Net fee and commission income



 



3 717 




178





Fair value change of derivative financial instruments


 


12 611 


-9 987 




Net result on shares and other variable yield securities


21


9 904 


-10 179 




Net result on loans and advances measured at FVTPL


7


-8 331 


- 702




Net result on sale of loans


7


2 064 


—




Net foreign exchange result


 


-61 998 


-32 436 





Net result on financial operations



 



-45 750 




-53 304 





Change in impairment on loans and advances, net of reversals


7


17 243 


-22 771 




Change in provisions for guarantees, net of reversals


13


107


- 485




Change in provisions for loan commitments, net of reversals


14


-13 244 


-19 612 




General administrative expenses


22


-50 009 


-47 799 





Profit / (Loss) for the year



 



3 039 




-49 602 






Other comprehensive income



 


—


—





Total comprehensive income profit / (loss) for the year



 



3 039 




-49 602 









STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES


FOR THE YEAR ENDED 31 DECEMBER 2019










in EUR’000




 


Notes


Contribution called


Retained earnings


Total





At 1 January 2019



 



2 697 000 




216 997 




2 913 997 





Member States contribution called during the year


17


270 000 


—


270 000 




Profit for the year 2019


 


—


3 039 


3 039 





Changes in contributors’ resources



 



270 000 




3 039 




273 039 






At 31 December 2019



 



2 967 000 




220 036 




3 187 036 






At 1 January 2018



 



2 517 000 




266 599 




2 783 599 





Member States contribution called during the year


 


180 000 


—


180 000 




Loss for the year 2018


 


—


-49 602 


-49 602 





Changes in contributors’ resources



 



180 000 




-49 602 




130 398 






At 31 December 2018



 



2 697 000 




216 997 




2 913 997 









STATEMENT OF CASH FLOWS


FOR THE YEAR ENDED 31 DECEMBER 2019









in EUR’000




 


Notes


From 1.1.2019 to 31.12.2019


From 1.1.2018 to 31.12.2018





OPERATING ACTIVITIES



 


 


 




Profit / (Loss) for the financial year


 


3 039 


-49 602 




Adjustments made for


 


 


 




Net result in fair value on shares and other variable yield securities


8


-8 629 


20 665 




Change in impairment on loans and advances, net of reversals


7


-17 243 


22 771 




Net result on loans and advances at FVTPL


 


8 331 


702




Change in accrued interest and amortised cost on loans and advances


7


-5 087 


-1 833 




Net change in provisions for guarantees issued, net of reversals


13


- 107


309




Net change in provisions for loan commitments, net of reversals


 


13 447 


19 666 




Fair value changes on derivatives


 


-12 611 


9 987 




Change in accrued interest and amortised cost on treasury financial assets


10


331


-1 645 




Change in deferred income


 


-1 198 


7 962 




Effect of exchange rate changes on loans


7


-17 752 


-44 927 




Effect of exchange rate changes on shares and other variable yield securities


8


-6 812 


-17 300 




Effect of exchange rate changes on cash held


 


2 369 


2 561 





Loss on operating activities before changes in operating assets and liabilities



 



-41 922 




-30 684 





Loan disbursements


7


- 311 185 


- 259 214 




Repayments of loans


7


355 078 


354 855 




Sale of loans


 


2 194 


—




Change in accrued interest on cash and cash equivalents


5


- 93


- 178




(Increase) in treasury financial assets


10


-2 948 021 


-2 219 062 




Maturities of treasury financial assets


10


2 952 905 


2 026 659 




(Increase) in shares and other variable yield securities


8


- 106 943 


-95 434 




Net proceeds from shares and other variable yield securities


 


71 024 


32 802 




(Decrease) in other assets


 


- 171


-4 214 




Increase in other liabilities


 


140


31




Increase in amounts payable to the European Investment Bank


 


2 187 


2 168 





Net cash flows used in operating activities



 



-24 807 




- 192 271 






FINANCING ACTIVITIES



 


 


 




Contribution received from Member States


 


284 820 


230 000 




Amounts received from Member States with regard to interest subsidies and technical assistance


 


30 000 


20 000 




Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance


 


-28 220 


-35 641 





Net cash flows from financing activities



 



286 600 




214 359 






Net increase in cash and cash equivalents



 



261 793 




22 088 






Summary statement of cash flows:



 


 


 





Cash and cash equivalents at the beginning of financial year



 



573 818 




549 169 





Net cash from:


 


 


 




Operating activities


 


-24 937 


- 192 271 




Financing activities


 


286 730 


214 359 




Effects of exchange rate changes on cash and cash equivalents


 


2 369 


2 561 





Cash and cash equivalents at the end of financial year



 



837 980 




573 818 






Cash and cash equivalents are composed of:



 


 


 




Cash in hand


5


72 166 


51 936 




Term deposits (excluding accrued interest)


5


622 991 


521 882 




Commercial papers


5


142 823 


—




 


 



837 980 




573 818 






Notes to the financial statements as at 31 December 2019

1.   General information

The Investment Facility (‘the Facility’ or ‘IF’) has been established within the framework of the Cotonou Agreement (the ‘Agreement’) on co-operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the ‘ACP States’) and the European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010.
The Facility is not a separate legal entity and the European Investment Bank (‘EIB’ or ‘the Bank’) manages the contributions on behalf of the Member States (‘Donors’) in accordance with the terms of the Agreement and acts as an administrator of the Facility.
Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute with the amounts allocated to finance the IF and grants for the financing of the interest subsidies as provided for under the multi-annual financial frameworks (First Financial Protocol covering the period 2000 — 2007 and referred to as the 9th European Development Fund (EDF), Second Financial Protocol covering the period 2008 — 2013 and referred to as the 10th EDF and the Third Financial Protocol covering the period 2014 — 2020 referred to as the 11th EDF). The EIB is entrusted with the management of:






—


the Facility, a EUR 3 685,5 million risk-bearing revolving fund geared to fostering private sector investment in ACP States of which EUR 48,5 million are allocated to Overseas Countries and territories (‘OCT countries’),










—


grants for the financing of interest subsidies worth max. EUR 1 220,85 million for ACP States and max. EUR 8,5 million for OCT countries. Up to 15 % of these subsidies can be used to fund project-related technical assistance (‘TA’).




Transitional arrangements that would allow EIB financing to carry on operations in ACP region until the end of 2020 have been agreed on the EU and ACP sides (Decision No 3/2019 of the ACP-EU Committee of Ambassadors of 17 December 2019 to adopt transitional measures pursuant to Article 95(4) of the ACP-EU Partnership Agreement). The Bank will continue approving operations in line with its Mandate until the end of 2020, which is the end of the commitment period for the use of IF revolving funds specified under the 11th EDF.
In June 2018, the Commission also published the budget proposal for the external action of the EU for the period 2021-2027, the regulation establishing the Neighbourhood, Development and International Cooperation Instrument (‘NDICI’). An important aspect of the proposal is the simplification of its funding architecture, bringing together nine separate instruments and funds, as well as the integration of the current extra-budgetary EDF into the EU budget. The NDICI Regulation will provide the legal basis for the Commission to entrust future EU mandates to the EIB for its activity outside the EU. It will also provide the external investment framework for the Union to cooperate with partner institutions through grants or guarantees from the EU budget. NDICI negotiations are still on-going Without prejudice to a Council decision, the EIB and the EC are in talks about a proposal to continue the use of the IF reflows for an agreed number of years.
The present financial statements cover the period from 1 January 2019 to 31 December 2019.
On a proposal from the Management Committee of EIB, the Board of Directors of EIB adopted the Financial Statements on 12 March 2020, and authorised their submission to the Board of Governors for approval by 24 April 2020.
2.   Significant accounting policies

2.1.   
Basis of preparation — Statement of compliance


The Facility’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
2.2.   
Significant accounting judgments and estimates


The preparation of financial statements requires the use of accounting estimates. It also requires the Bank’s Management to exercise its judgment in the process of applying the Investment Facility’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed hereafter.
The most significant use of judgments and estimates are as follows:
—   Measurement of fair value of financial instruments

Fair values of financial assets (‘FA’) and financial liabilities (‘FL’) that are traded in active markets are based on quoted market prices or broker price quotations. Where the fair values cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The valuations are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as described and disclosed in Notes 2.4.2 and 4.
—   Impairment losses on loans and advances

The expected credit loss (‘ECL’) measurement requires management to apply significant judgments, in particular, the assessment of a significant increase in credit risk since initial recognition, the incorporation of forward looking information and further the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses. These estimates are driven by a number of factors, changes in which can result in significant changes to the timing and amount of allowance for credit loss to be recognised (Note 2.4.2).
—   Valuation of unquoted equity investments

Valuation of unquoted equity investments is normally based on one of the following:






—


recent arm’s length market transactions,










—


current fair value of another instrument that is substantially the same,










—


the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics,










—


adjusted net assets method, or










—


other valuation models.




The determination of the cash flows and discount factors for unquoted equity investments requires significant estimation. The Facility calibrates the valuation techniques periodically and tests them for validity using either price from observable current market transactions in the same instrument or from other available observable market data.
—   Consolidation of entities in which the Facility holds interest

The Facility made significant judgements that none of the entities in which it holds interest, are controlled by the Facility. This is due to the fact that in all such entities, either the General Partner or the Fund Manager or the Management Board have the sole responsibility for the management and control of the activities and affairs of the partnership and have the power and authority to do all things necessary to carry out the purpose and objectives of the partnership complying with the investment and policy guidelines.
2.3.   
Changes in accounting policies


Except for the changes below, the Facility has consistently applied the accounting policies set out in Note 2.4 to all periods presented in these financial statements. The Facility has adopted the following new standards and amendments to standards.

Standards adopted

The following interpretations as well as the amendments to and revision of existing standards became effective for the Facility`s financial statements as of 1 January 2019:

IFRS 16 Leases

IFRS 16 became effective for annual reporting periods beginning on or after 1 January 2019 and replaces the existing guidance of IAS 17. It results in almost all leases are being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exemptions are short-term and low-value leases. The accounting for lessors not changed significantly.
This change had no material impact on the Facility`s financial statements.

Prepayment Features with Negative Compensation — Amendments to IFRS 9

The amendments clarify, that a financial asset passes the Solely Payments of Principal and Interest (‘SPPI’) criterion, regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract. The basis for conclusions to the amendments clarified that the early termination can result from a contractual term or from an event outside the control of the parties to the contract, such as a change in law or regulation leading to the early termination of the contract.
The adoption of the amendments had no material impacts on the Facility’s financial statements.

Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)

The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of the net investment in the associate or joint venture (long-term interests). This clarification is relevant because it implies that the expected credit loss model in IFRS 9 applies to such long-term interests.
The amendments also clarify that, in applying IFRS 9, an entity does not take account of any losses of the associate or joint venture, or any impairment losses on the net investment, recognised as adjustments to the net investment in the associate or joint venture that arise from applying IAS 28 Investments in Associates and Joint Ventures.
The amendments had no material impact on the Facility’s financial statements.

Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)

The amendments specify that when a plan amendment, curtailment or settlement occurs during the annual reporting period, an entity is required to:






—


Determine current service cost for the remainder of the period after the plan amendment, curtailment or settlement, using the actuarial assumptions used to remeasure the net defined benefit liability reflecting the benefits offered under the plan and the plan assets after that event










—


Determine net interest for the remainder of the period after the plan amendment, curtailment or settlement using: the net defined benefit liability reflecting the benefits offered under the plan and the plan assets after that event; and the discount rate used to remeasure that net defined benefit liability




These amendments had no impact on the Facility’s financial statements.

Annual Improvements to IFRSs 2015–2017 Cycle (Amendments to IFRS 3, IFRS 11)

These amendments had no impact on the Facility’s financial statements as there is no transaction where joint control is obtained.

Standards issued but not yet adopted


Definition of Material — Amendments to IAS 1 ‘Presentation of financial statements’ and lAS 8 ‘Accounting policies, changes in accounting estimates and errors’ Effective for annual periods beginning on or after 1 January 2020.

The amendments clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards themselves.
The amended definition states that ‘Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.’
The amendment also clarifies the meaning of ‘primary users of general purpose financial statements’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose financial statements for much of the financial information they need.
The amendments are effective for annual periods beginning on or after 1 January 2020. The Facility did not adopt these amendments early and does not expect it to have a significant impact on the Facility’s financial statements.

Interest Rate Benchmark Reform — Amendments to IFRS 9, IAS 39 and IFRS 7

In September 2019, the IASB issued amendments to IFRS 9, IAS 39 and IFRS 7, which provide temporary reliefs that would enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate (a RFR).
The amendments to IFRS 9 include a number of reliefs, which apply to all hedging relationships that are directly affected by the interest rate benchmark reform. The first three reliefs provide for:






—


The assessment of whether a forecast transaction (or component thereof) is highly probable,










—


Assessing when to reclassify the amount in the cash flow hedge reserve to profit and loss,










—


The assessment of the economic relationship between the hedged item and the hedging instrument.




For each of these reliefs, it is assumed that the benchmark on which the hedged cash flows are based are not altered as a result of IBOR reform.
The fourth relief provides that, a non-contractually specified risk component only needs to be separately identifiable need at initial hedge designation and not on ongoing basis.
Application of the reliefs is mandatory and the reliefs continue indefinitely in the absence of any of the events described in the amendments.
The amendments also introduce specific disclosure requirements for hedging relationships to which the reliefs are applied.
The amendments are effective for annual periods beginning on or after 1 January 2020. The Facility did not adopt these amendments early and the Bank established a cross-services IBOR working group to assess the impact and manage its transition.
Amendments to References to Conceptual Framework in IFRS Standards — effective 1 January 2020.
The revised Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards.
The revised Conceptual Framework for Financial Reporting is not a standard, and none of the concepts override those in any standard or any requirements in a standard, but mainly has the purpose to assist the Board in developing standards, to help preparers develop consistent accounting policies if there is no applicable standard in place and to assist all parties to understand and interpret the standards.
The Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.
The Facility did not adopt the revised Conceptual Framework early and does not expect it to have a significant impact on the Facility`s financial statements.
2.4.   
Summary of significant accounting policies


The statement of financial position represents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non-current items.
2.4.1.   Foreign currency translation

The Facility uses the Euro (EUR) for presenting its financial statements, which is also the functional currency. Except as otherwise indicated, financial information presented in EUR has been rounded to the nearest thousand.
Foreign currency transactions are translated, at the exchange rate prevailing on the date of the transaction.
Monetary assets and liabilities denominated in currencies other than Euro are translated into Euro at the exchange rate prevailing at the statement of financial position date. The gain or loss arising from such translation is recorded in the statement of profit or loss and other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of transactions at rates different from those at the date of the transaction, and unrealised foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognised in the statement of profit or loss and other comprehensive income.
2.4.2.   Financial assets other than derivatives

Non-derivative financial instruments are initially recognised using the settlement date basis.

Classification and measurement


Financial assets

On initial recognition, a financial asset is classified as measured at amortised cost (‘AC’), fair value through other comprehensive income (‘FVOCI’) or fair value through P&L (‘FVTPL’) and a financial liability is classified as measured at AC or FVTPL.
Under IFRS 9, classification starts with determining whether the financial asset shall be considered as a debt or equity instrument. IFRS 9 refers to the definitions in IAS 32 Financial Instruments: Presentation.
Debt instruments are those instruments that meet the definition of a financial liability from the counterparty’s perspective, loans and debt securities including bonds, notes or certificates issued by structured entities, government or corporates.
A debt instrument is classified at AC if it meets both of the following conditions and is not designated as at FVTPL:






—


the asset is held within a business model whose objective is to hold assets to collect contractual cash flows, and










—


the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI criteria).




A debt instrument is classified at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:






—


the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and










—


the contractual terms of the financial asset give rise on specific dates to cash flows that are fulfilling the SPPI criteria.




The above requirements should be applied to an entire financial asset, even if it contains an embedded derivative.
Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Equity instruments are measured at FVTPL.
On initial recognition of an equity investment that is not held for trading, the Facility may irrevocably elect to present subsequent changes in other comprehensive income. This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.

Business model assessment

The EIB, as a manager of the Facility, makes an assessment of the objective of a business model in which a debt instrument is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:






—


the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets,










—


how the performance of the portfolio is evaluated and reported to the Facility’s management,










—


the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed, and










—


the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectation about future sales activity.




However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Facility stated objective for managing the financial assets is achieved and how cash flows are realised.
The business model for the Impact Financing Envelope direct loan operations has been changed as described and disclosed in Note 7 and Note 24.

Solely payment of principal and interests (‘SPPI’) criteria

For the purpose of this assessment, ‘principal’ is defined as the fair value of the debt instrument on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the contractual terms of the instrument are considered. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Derecognition

The Facility derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or the rights to receive the contractual cash flow are transferred in a transaction in which either the Facility transfers the risks and rewards of ownership of the financial asset or it retains substantially all of the risks and rewards of ownership but does not retain control of the financial asset.
On derecognition of a financial asset or financial liability (Note 2.4.4), the difference between the carrying amount of the asset or liability (or the carrying amount allocated to the portion of the asset or liability derecognised) and the sum of (i) the consideration received or paid; and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss except for the cumulative gains or losses recognised in other comprehensive income for equity investments measured at fair value through other comprehensive income which are transferred to the reserve fund rather than profit or loss on disposal.

Reclassification

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Facility changes its business model for managing financial assets.

Modification

A financial asset measured at amortised cost is considered modified when its contractual cash flows are renegotiated or otherwise modified. Renegotiation or modification may or may not lead to derecognition of the old and recognition of the new financial instrument.
A substantial contractual modification on the cash flows of a financial asset measured at amortised cost which results in the derecognition of the financial asset, leads to the recognition of the new financial asset at its fair value, and the recording of the modification gain or loss impact in the consolidated income statement under ‘Result on financial operations’.

Measurement of fair values of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Facility has access at that date.
When applicable, the EIB on behalf of the Facility measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an on-going basis.
Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction.
These valuation techniques may include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist, Black-Scholes and polynomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.
The Facility uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like interest rate and currency swaps that use only observable market data and require limited management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and simple over the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.
For more complex instruments, the Facility uses own valuation models, which are developed from recognised valuation models. Some or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Example of instruments involving significant unobservable inputs includes certain loans and guarantees for which there is no active market. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument being valued, determination of probability or counterparty default and prepayments and selection of appropriate discount rates.
The Facility measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:






—


Level 1: inputs that are unadjusted quoted market prices in active markets for identical instruments to which the Facility has access.










—


Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques where all significant inputs are directly or indirectly observable from market data.










—


Level 3: inputs that are not observable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.




The Facility recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

Impairment on financial assets

IFRS 9 forward-looking ‘expected credit loss’ (‘ECL’) impairment model apply to financial assets measured at AC, to financial guarantee contracts, as well as to off-balance sheet commitments. This require judgement to determine the underlying variable (PD, LGD, EAD) used in order to assess how changes in economic and other factors affect ECLs, which will be determined on a probability-weighted basis.
Under IFRS 9, loss allowances is measured on either of the following bases:






—


12-month ECLs: these are the ECLs that result from possible default events within the 12 months after the reporting date, and










—


Lifetime ECLs: these are the ECLs that result from all possible default events over the expected life of a financial instrument.




The IFRS 9 Standard sets out a ‘three-stage’ model for impairment based on changes in credit quality since initial recognition. Financial instruments are classified in Stage 1 except for those instruments for which significant increase in credit risk (‘SICR’) since initial recognition is identified. This includes both quantitative and qualitative information and analysis, based on the Bank’s expertise, including forward-looking information.
Purchased or originated credit-impaired assets (‘POCI’) are the financial assets which are, from the moment of initial recognition, deemed to be classified as Stage 3. For POCI financial assets, the cumulative changes in lifetime ECL since initial recognition are recognised in the statement of profit or loss.
The Facility’s assessment of the Stage is based on a sequential approach which is consistent with the Credit Risk Guidelines (‘CRG’) and the Financial Monitoring Guidelines and Procedures (‘FMGs’), notably covering watch list, internal rating and arrears.
If significant increase in credit risk has occurred, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-impaired. If the financial instrument is credit-impaired, the financial instrument is then moved to Stage 3.
To identify Stage 3 exposures, the Facility determines whether or not there is objective evidence of default event. A financial asset is considered to be in default when the borrower is unlikely to pay its credit obligations to the Facility in full, without recourse by the Facility or the borrower is past due more than 90 days on any material credit obligation to the Facility.
In this respect, a financial asset is considered impaired when it is determined that it is probable that the Facility will not be able to collect all amounts due according to the original contractual terms or an equivalent value. Individual credit exposures are evaluated based upon the borrower’s characteristics, overall financial condition, resources and payment record, the prospects for support from any financially responsible guarantors and, where applicable, the realisable value of any collateral.
All impaired claims are reviewed and analysed at least semi-annually. Any subsequent changes to the amounts and timing of the expected future cash flows compared to the prior estimates will result in a change in the provision for credit losses and be charged or credited to the income statement. An allowance for impairment is reversed only when the credit quality has improved such that there is reasonable assurance of timely collection of principal and interest in accordance with the original contractual terms of the claim agreement. A write-off is made when all or part of a claim is deemed uncollectible or forgiven. Write-offs are charged against previously established impairments or directly to the income statement and reduce the principal amount of a claim. Recoveries in part or in full of amounts previously written off are credited to the income statement.

Measuring ECL — Inputs, Assumptions and Techniques

Lifetime ECL measurement applies to Stage 2 and Stage 3 assets, while 12-month ECL measurement applies to Stage 1 assets.
The expected credit losses were calculated based on the following variables:






—


Probability of default (PD),










—


Loss Given default (LGD),










—


Exposure at default (EAD).




The probability of default represents the likelihood of a counterpart defaulting on its financial obligation, either over the next 12 months, or over the remaining lifetime of the obligation. PD is estimated at a certain date, which are calculated based on statistical rating models, and assessed using rating tools tailored to the various categories of counterparties and exposures.
Ratings are primary input into the determination of the term structure of PD for exposures. The EIB collects performance and default information about the Facility’s credit risk exposures. The collected data are segmented by type of industry and by type of region. Different industries and regions reacting in a homogenous manner to credit cycles are analysed together.
The EIB employs statistical models to analyse the data collected and generate estimates of the remaining lifetime PD of exposures and how these are expected to change as a result of the passage of time.
The loss given default represents the EIB’s expectation of the ratio of the loss on an exposure due to the default of a counterparty to the amount outstanding at default. Loss given default can be also defined as ‘1 — Recovery Rate’. LGD estimates are determined mainly by geography and by type of counterparty, with five main exposure classes: Sovereigns, Public Institutions, Financial Institutions, Corporate and Project Finance. LGD values can be further adjusted based on the product and contract specific features of the exposure.
The EAD represents the expected exposure in the event of a default EAD and is based on the current exposure to the counterparty and potential changes to the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross carrying amount. For lending commitments and financial guarantees, the EAD includes the amount drawn, as well as potential future amounts that may be drawn under the contract.
The EIB incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement of expected credit losses.
2.4.2.1.   Cash and cash equivalents

The Facility defines cash and cash equivalents as current accounts, short-term deposits or commercial papers with original maturities of three months or less. Cash and cash equivalents are carried at AC in the statement of financial position.
2.4.2.2.   Treasury financial assets

Treasury financial assets comprise quoted and unquoted bonds with the intention of holding them to maturity, and commercial papers with original maturities of more than three months and are consequently classified at AC.
Those bonds and commercial papers are initially measured at cost, which is the fair value plus any directly attributable transaction cost. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.
2.4.2.3.   Loans and advances

The loan and advances portfolio may consist of debt instruments such as loans and debt securities including bonds, notes or certificates issued by structured entities with the intention of holding them to maturity and to collect the contractual cash flows.
Loans and advances include:






—


Loans and advances measured at AC,










—


Loans and advances mandatorily measured at FVTPL.




Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. Undisbursed parts of loans are recorded in the off-balance at their nominal value. Loans passing the SPPI test are initially recorded at cost (their net disbursed amounts), which is the fair value of the cash given to originate the loan, including any transaction costs, and are subsequently measured at AC using the effective interest rate method.
Debt securities are recognised in the assets of the Facility when cash is advanced to the issuer and can take the form of a contractually linked or single tranche debt instrument. Undisbursed parts of debt securities are recorded in the off-balance at their nominal value. Debt securities are initially measured at cost, which is the fair value plus any directly attributable transaction cost, and are subsequently measured at AC using the effective interest rate method. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.
Impairment policy on loans and advances is described under the note 2.4.2.
Loans and advances not fulfilling the SPPI criterion are mandatorily measured at FVTPL. The fair value measurement technique used is based on a discounted cash flow technique.
2.4.2.4.   Shares and other variable yield securities

There are two types of equity investments at the Facility: (i) direct equity investments; and (ii) venture capital funds. The shares and other variable yield securities are initially recognised at fair value plus transactions costs. Subsequently changes in fair value, including foreign currency translation gains and losses, are recognised in the statement of profit or loss and other comprehensive income under the caption net result on shares and other variable yield securities.
For unquoted investment, when the fair value cannot be derived from active markets, the fair value is determined by applying recognised valuation techniques (Note 4.2.1).
The participations acquired by the Facility typically represent investments in private equity or venture capital funds. According to industry practice, such investments are generally investments jointly subscribed by a number of investors, none of whom is in a position to individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in a governing body of such fund does not in principle entitle such investor to influence the day-to-day operations of the fund. In addition, individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on dividends or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders agreement governing the rights and obligations of the management and all shareholders of the fund. The shareholders’ agreement also generally prevents individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel or obtaining privileged access to essential technical information. The Facility’s investments are executed in line with the above stated industry practice, ensuring that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10 and IAS 28 over any of these investments, including those investments in which the Facility holds over 20 % of the voting rights.
2.4.3.   Financial guarantees

Financial guarantee contracts are contracts that require the Facility to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Under the existing rules, these guarantees do not meet the definition of an insurance contract (IFRS 4 Insurance Contracts).
Financial guarantees are accounted for under IFRS 9 — Financial Instruments, either as ‘Derivatives’ or as ‘Financial Guarantees’, depending on their features and characteristics as defined by IFRS 9.
The accounting policy for derivatives is disclosed under Note 2.4.5.
Financial guarantees are initially recognised in the statement of financial position under ‘Provisions for guarantees issued’ at fair value plus transaction costs that are directly attributable to the issuance of the financial guarantees. At initial recognition the obligation to pay corresponds to the Net Present Value (NPV) of expected premium inflows or the initial expected loss.
Subsequent to initial recognition, financial guarantees are measured at the higher of:






—


The amount of the loss allowance as determined under IFRS 9, and










—


The premium initially recognised less income recognised in accordance with the principles of IFRS 15.




Any increase or decrease in the net liability (as measured per IFRS 9) relating to financial guarantees other than the payment of guarantee calls is recognised in the statement of profit or loss and other comprehensive income under ‘Change in provisions for guarantees’.
The premium received is recognised in the statement of profit or loss and other comprehensive income in ‘Fee and commission income’ on the basis of an amortisation schedule in accordance with IFRS 15 over the life of the financial guarantee.
In addition, when a guarantee agreement is signed, it is presented as a contingent liability for the Facility and when the guarantee is engaged, as a commitment for the Facility.
2.4.4.   Financial liabilities other than derivatives



Classification and measurement



Financial liabilities

A financial liability is measured at amortised cost except for financial liabilities that meet the definition of held for trading (e.g. derivative liabilities).
The Facility derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
2.4.5.   Derivative financial instruments

Derivative financial instruments include cross currency swaps, cross currency interest rate swaps, short term currency swaps (‘FX swaps’) and interest rate swaps.
Derivative financial instruments are initially recognised using the trade date basis.
In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contract with a view to hedge its currency positions, denominated in actively traded currencies other than the Euro, in order to offset any gain or loss caused by foreign exchange rate fluctuations.
All derivatives are measured at FVTPL and are reported as derivative financial instruments. Fair values are derived primarily from discounted cash-flow models, option-pricing models and from third party quotes.
Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivative financial instruments are shown in the statement of profit and loss and other comprehensive income under ‘Fair value change of derivative financial instruments’.
Under IFRS 9, bifurcation requirements regarding embedded derivatives have been eliminated for financial assets or financial liabilities and therefore, the hybrid contract is treated as a whole for classification of financial assets or financial liability accordingly.
2.4.6.   Contributions

Contributions from Member States are recognised as receivables in the statement of financial position on the date of the Council Decision fixing the financial contribution to be paid by the Member States to the Facility.
The Member States contributions meet the following conditions and are consequently classified as equity:






—


as defined in the contribution agreement, they entitle the Member States to decide on the utilisation of the Facility’s net assets in the events of the Facility’s liquidation;










—


they are in the class of instruments that is subordinated to all other classes of instruments;










—


all financial instruments in the class of instruments that are subordinated to all other classes of instruments have identical features;










—


the instrument does not include any features that would require classification as a liability; and










—


the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Facility over the life of the instrument.




Contributions are classified and measured at AC in the financial statements.
2.4.7.   Interest and similar income

Interest on loans originated by the Facility is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’) and in the statement of financial position (‘Loans and advances’) on an accrual basis using the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the net carrying amount of the loan. Once the recorded value of a loan has been reduced due to impairment, interest income continues to be recognised using the original effective interest rate applied to the new carrying amount.
Interest on the POCI loans is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’) and in the statement of financial position (‘Loans and advances’) on an accrual basis using the credit- adjusted effective interest rate through the whole life of the loan, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the amortised cost of the loan.
Commitment fees are deferred and recognised in income using the effective interest method over the period from disbursement to repayment of the related loan, and are presented in the statement of profit or loss and other comprehensive income within interest and similar income.
2.4.8.   Interest subsidies and technical assistance

As part of its activity, the Facility manages interest subsidies and technical assistance on behalf of the Member States.
The part of the Member States contributions allocated to the payment of interest subsidies and TA is not accounted for in the Facility’s contributors’ resources but is classified as amounts owed to third parties. The Facility operates the disbursement to the final beneficiaries and then decreases the amounts owed to third parties.
When amounts contributed with regard to interest subsidies and TA are not fully granted, they are reclassified as contribution to the Facility.
2.4.9.   Interest income on cash and cash equivalents

Interest income on cash and cash equivalents is recognised in the statement of profit or loss and other comprehensive income of the Facility on an accrual basis.
2.4.10.   Fees, commissions and dividends

Fees received in respect of services provided over a period of time are recognised as income as the services are provided, while fees that are earned on the execution of a significant act are recognised as income when the significant act has been completed. These fees are presented in the statement of profit or loss and other comprehensive income within fee and commission income.
Dividends relating to shares and other variable yield securities are recognised when received and presented in the statement of profit or loss and other comprehensive income within net realised gains on shares and other variable yield securities.
2.4.11.   Taxation

The Protocol on the Privileges and Immunities of the European Union, appended to the treaty on the European Union and the treaty of the functioning of the European Union, stipulates that the assets, revenues and other property of the Institutions of the Union are exempt from all direct taxes.
3.   Risk Management

This note presents information about the Facility’s exposure to and its management and control of credit and financial risks, in particular the primary risks associated with its use of financial instruments. These are:






—


credit risk — the risk of loss resulting from client or counterparty default and arising on credit exposure in all forms, including settlement risk,










—


liquidity risk — the risk that an entity is not able to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses,










—


market risk — the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.




3.1.   
Risk management organisation


The EIB adapts the IF`s risk management framework on an ongoing basis.
The Risk Management Directorate of EIB independently identifies, assesses, monitors and reports the risks to which the Facility is exposed. Within a framework whereby the segregation of duties is preserved, the Risk Management Directorate is independent of the Front Office. At EIB level the Director General of Risk Management reports for risk matters to the designated Vice-President for Risk Management. The designated Vice-President is responsible for overseeing risk reporting to the EIB’s Management Committee and the Board of Directors.
3.2.   
Credit risk


Credit risk is the potential loss that could result from client or counterparty default and arising on credit exposure in all forms, including settlement.
3.2.1.   Credit risk policy

In carrying out the credit analysis on loan counterparts, EIB assesses the credit risk and expected loss with a view to quantify and price the risk. EIB has developed an Internal Rating Methodology (IRM) to determine the Internal Ratings of its credit-relevant borrower/guarantor counterparts. The methodology is based on a system of scoring sheets tailored for each major credit counterpart type (e.g. Corporates, Banks, Public Sector Entities, etc). Taking into consideration both, Best Banking Practice and the principles set under the Basel International Capital Accord (Basel II), all counterparts that are material to the credit profile of a specific transaction are classified into internal rating categories using the IRM for the specific counterpart type. Each counterpart is assigned an Internal Rating reflecting its probability of default foreign currency rating following an in-depth analysis of the counterpart’s business and financial risk profile and its country risk operating context.
The credit assessment of project finance and other structured limited recourse operations is using credit risk tools relevant for the sector, focused mainly on cash flow availability and debt service capacity. These tools include the analysis of projects’ contractual framework, counterpart’s analysis and cash flow simulations. Similarly to corporates and financial institutions, each project is assigned an internal risk rating.
All Internal Ratings are monitored over loan life, and periodically updated.
All non-sovereign (or non sovereign guaranteed/assimilated) operations are subject to specific transaction-level and counterpart size limits. Counterpart limits are set at consolidated group exposure level, where applicable. Such limits typically reflect e.g. the size of counterparts own funds.
In order to mitigate credit risk the EIB uses, where appropriate and on a case-by-case basis, various credit enhancements which are:






—


Counterparty or project related securities (e.g., pledge over the shares; pledge over the assets; assignment of rights; pledge over the accounts), or/and










—


guarantees, generally provided by the sponsor of the financed project (e.g., completion guarantees, first demand guarantees) or bank guarantees.




The Facility does not use any credit derivatives to mitigate credit risk.
3.2.2.   Maximum exposure to credit risk without taking into account any collateral and other credit enhancements

The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral.







in EUR’000




Maximum exposure


31.12.2019


31.12.2018





ASSETS



 


 




Cash and cash equivalents


837 777 


573 708 




Amounts receivable from contributors


86 330 


100 000 




Treasury financial assets


330 587 


335 140 




Derivative financial instruments


14 184 


9 873 




Loans and advances


1 518 675 


1 540 991 




Other assets


—


171





Total




2 787 553 




2 559 883 






Provisions for loan commitments




-37 269 




-23 822 






OFF BALANCE SHEET



 


 





OFF BALANCE SHEET



 


 




Contingent liabilities


 


 










—


Issued Guarantees






200 013 


2 800 




Commitments


 


 










—


Undisbursed loans






1 357 320 


1 283 932 










—


Non-issued guarantees






1 359 818 


1 553 668 





Total off balance sheet




2 917 151 




2 840 400 






Total credit exposure




5 667 435 




5 376 461 





3.2.3.   Credit risk on loans and advances

3.2.3.1.   Credit risk measurement for loans and advances

Loans and advances or guarantee undertaken by the Facility benefits from a comprehensive risk assessment and quantification of expected loss estimates that are reflected in a Loan Grading (‘LG’). Operations under the IFE (as described in Note 24), with the exception of intermediated loans, are not subject to the Credit Risk Policy Guidelines and are subject to a different procedure. LGs are established according to generally accepted criteria, based on the quality of the borrower, the maturity of the loan, the guarantee and, where appropriate, the guarantor.
The loan grading system comprises the methodologies, processes, databases and IT systems supporting the assessment of credit risk in lending operations and the quantification of expected loss estimates. It summarises a large amount of information with the purpose of offering a relative ranking of loans’ credit risks. LGs reflect the present value of the estimated level of the ‘expected loss’, this being the product of the probability of default of the main obligors, the exposure at risk and the loss severity in the case of default. LGs are used for the following purposes:






—


as an aid to a finer and more quantitative assessment of lending risks,










—


as help in distributing monitoring efforts,










—


as a description of the loan’s portfolio quality at any given date,










—


as one input in risk-pricing decisions based on the expected loss.




The following factors enter into the determination of an LG:






(i)


The borrower’s creditworthiness: Risk Management independently reviews borrowers and assesses their creditworthiness based on internal methodologies and external data. In line with the Basel II Advanced Approach chosen, the Bank has developed an internal rating methodology (IRM) to determine the internal ratings of borrowers and guarantors. This is based on a set of scoring sheets specific to defined counterparty types.










(ii)


The default correlation: it quantifies the chances of simultaneous financial difficulties arising for both the borrower and the guarantor. The higher the correlation between the borrower and the guarantor’s default probabilities, the lower the value of the guarantee and therefore the lower (worse) the LG.










(iii)


The value of guarantee instruments and of securities: this value is assessed on the basis of the combination of the issuer’s creditworthiness and the type of instrument used.










(iv)


The applicable recovery rate: being the amount assumed to be recovered following a default by the relevant counterpart expressed as a percentage of the relevant loan exposure










(v)


The contractual framework: a sound contractual framework will add to the loan’s quality and enhance its internal grading.










(vi)


The duration of the loan or, more generally, the cash-flows of the loan: all else being equal, the longer the loan, the higher the risk of incurring difficulties in the servicing of the loan.




A loan’s expected loss is computed by combining the five elements discussed above. Depending on the level of this loss, a loan is assigned to one of the following LG classes listed below:






‘A’ –


Prime quality loans of which there are three sub-categories:






—


‘A0’ comprising loans to or guaranteed by an EU Member State which have an expected loss of 0 % (based on the Bank’s preferred creditor status and statutory protection which are deemed to assure a full recovery of the Bank’s assets upon maturity).










—


‘A+’ comprising loans granted to (or guaranteed by) entities other than EU Member States in respect of which there is no expectation of deterioration in quality over their term.










—


‘A-’ includes those lending operations where there is some doubt about the maintenance of their current status but where any downside is expected to be limited.














‘B’ –


High quality loans: these represent an asset class with which the bank feels comfortable, although a minor deterioration is not ruled out in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring.










‘C’ –


Good quality loans: an example could be unsecured loans to solid banks and corporates with a 7-year bullet, or equivalent amortising, maturity at disbursement.










‘D’ –


This rating class represents the borderline between ‘acceptable quality’ loans and those that have experienced some difficulties. This watershed in loan grading is more precisely determined by the sub-classifications D+ and D-. Loans rated D- require heightened monitoring.










‘E’ –


This LG category includes loans with a risk profile greater than generally accepted. It also includes loans which in the course of their lives have experienced severe problems and their sliding into a situation of loss cannot be excluded. For this reason, the loans are subject to close and high monitoring. The sub-classes E+ and E- differentiate the intensity of this special monitoring process, with those operations graded E- being in a position where there is a strong possibility that debt service cannot be maintained on a timely basis and therefore some form of debt restructuring is required, possibly leading to an impairment loss.










‘F’ –


F (fail) denotes loans representing unacceptable risks. F- graded loans can only arise out of outstanding transactions that have experienced, after signature, unforeseen, exceptional and dramatic adverse circumstances. All operations where there is a loss of principal to the Facility are graded F and a specific provision is applied.




Generally, loans internally graded D- or below are placed on the Watch List. However, if a loan was originally approved with a risk profile of D- or weaker, it will only be placed on the Watch List as a result of a material credit event causing a further deterioration of its LG classification.
The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described above.
3.2.3.2.   Analysis of lending credit risk exposure

The following table shows the maximum exposure (net carrying amount) to credit risk on loans and advances signed (disbursed and undisbursed) by nature of borrower taking into account guarantees provided by guarantors:










in EUR’000




At 31.12.2019


Guaranteed


Other credit enhancements


Not guaranteed


Total


% of Total disbursed




Banks


111 806 


—


803 861 



915 667 




60 %





Corporates


190 006 


36 704 


172 082 



398 792 




26 %





Public institutions


26 908 


—


1 686 



28 594 




2 %





States


—


2 085 


173 537 



175 622 




12 %






Total disbursed




328 720 




38 789 




1 151 166 




1 518 675 




100 %






Undisbursed




191 191 




—




1 128 860 




1 320 051 



 





Total disbursed and undisbursed




519 911 




38 789 




2 280 026 




2 838 726 



 

















in EUR’000




At 31.12.2018


Guaranteed


Other credit enhancements


Not guaranteed


Total


% of Total disbursed




Banks


88 263 


—


856 484 



944 747 




61 %





Corporates


147 551 


45 820 


205 198 



398 569 




26 %





Public institutions


29 182 


—


—



29 182 




2 %





States


—


2 647 


165 846 



168 493 




11 %






Total disbursed




264 996 




48 467 




1 227 528 




1 540 991 




100 %






Undisbursed




170 356 




—




1 089 753 




1 260 110 



 





Total disbursed and undisbursed




435 352 




48 467 




2 317 281 




2 801 101 



 




Transaction Management and Restructuring Directorate is tasked with the responsibility of performing borrower and guarantor monitoring, as well as project-related financial and contractual monitoring. Thus, the creditworthiness of the Facility’s loans, borrowers and guarantors are continually monitored, at least annually but more frequently on an as-needed basis and as a function of credit events taking place. In particular, Transaction Management and Restructuring Directorate reviews if contractual rights are met and, in case of a rating deterioration and/or contractual default, remedy action is taken. Mitigation measures are pursued, whenever necessary in accordance with the credit risk guidelines. Also, in case of renewals of bank guarantees received for its loans, it is ensured that these are replaced or action is taken in a timely manner.
3.2.3.3.   Credit quality analysis per type of borrower

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2019 and 31 December 2018 by the Loan Grading applications, based on the exposure signed (disbursed and undisbursed):













in EUR’000




At 31.12.2019


High Grade


Standard Grade


Min. Accept. Risk


High Risk


No grading (26)



Total


% of Total




A to B-


C


D+


D- and below




Borrower


Banks


234 072 


219 467 


335 841 


817 894 


—



1 607 274 




57 %





Corporates


100 115 


49 458 


—


524 532 


95 925 



770 030 




27 %





Public institutions


—


26 908 


—


—


1 686 



28 594 




1 %





States


—


6 285 


4 486 


422 057 


—



432 828 




15 %






Total




334 187 




302 118 




340 327 




1 764 483 




97 611 




2 838 726 




100 %





















in EUR’000




At 31.12.2018


High Grade


Standard Grade


Min. Accept. Risk


High Risk


No grading


Total


% of Total




A to B-


C


D+


D- and below




Borrower


Banks


232 467 


238 619 


349 756 


698 562 


—



1 519 404 




54 %





Corporates


103 845 


7 564 


744


693 100 


50 000 



855 253 




31 %





Public institutions


—


—


29 182 


2 994 


—



32 176 




1 %





States


—


4 786 


7 681 


381 801 


—



394 268 




14 %






Total




336 312 




250 969 




387 363 




1 776 457 




50 000 




2 801 101 




100 %





3.2.3.4.   Risk concentrations of loans and advances

3.2.3.4.1.   
Geographical analysis


Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions.







in EUR‘000




Country of borrower


31.12.2019


31.12.2018




Kenya


230 837 


233 269 




Nigeria


179 499 


172 515 




Egypt


101 316 


74 431 




Tanzania


96 640 


124 718 




Mauritius


96 014 


133 132 




Barbados


75 342 


74 638 




Congo (Democratic Republic)


66 754 


62 708 




Uganda


64 882 


81 766 




Ethiopia


62 005 


55 215 




Mauritania


49 139 


50 727 




Rwanda


48 839 


28 704 




Dominican Republic


45 393 


54 326 




New Caledonia


43 980 


21 124 




Zambia


43 036 


17 700 




Senegal


42 750 


18 330 




Jamaica


33 436 


72 165 




Cameroon


32 238 


14 784 




Ghana


31 635 


39 246 




Malawi


21 800 


26 827 




Guinea


20 399 


—




Angola


19 269 


20 651 




Togo


18 022 


30 634 




Cape Verde


17 226 


18 923 




Regional-ACP


14 674 


24 335 




Mozambique


12 709 


14 719 




French Polynesia


12 556 


17 453 




Cayman Islands


12 203 


13 213 




Niger


5 399 


9 655 




Mali


4 234 


4 767 




Seychelles


4 201 


4 786 




Haiti


3 345 


4 748 




Samoa


3 036 


3 986 




Burkina Faso


1 861 


4 649 




Vanuatu


1 527 


1 848 




Botswana


1 004 


7 278 




Palau


768


1 107 




Micronesia


648


759




Benin


59


—




Liberia


—


1 153 




South Africa


—


2





Total




1 518 675 




1 540 991 





3.2.3.4.2.   
Industry sector analysis


The table below analyses the Facility’s loan portfolio by industry sector of the borrower. Operations which are first disbursed to a financial intermediary before being disbursed to the final beneficiary are reported under ‘Tertiary and other’:







in EUR’000




Industry sector of borrower



31.12.2019




31.12.2018





Tertiary and other


932 901 


957 602 




Electricity, coal and others


226 314 


181 317 




Urban development, renovation and transport


195 042 


192 400 




Chemicals, plastics and pharmaceuticals


51 865 


20 436 




Basic material and mining


44 746 


45 820 




Airports and air traffic management systems


26 908 


29 182 




Telecommunications


21 546 


26 095 




Food chain


8 355 


15 386 




Waste recuperation


6 812 


7 564 




Investment goods, Consumer durables


4 186 


—




Materials processing, construction


—


33 144 




Roads and motorways


—


32 043 




Social infrastructure, education and health


—


2





Total




1 518 675 




1 540 991 





3.2.3.5.   Credit risk exposure for each internal risk rating

The Facility uses an internal rating methodology in line with the Internal ratings based approach under Basel III. The majority of the Facility’s counterparties have been assigned an internal rating according to this methodology. The table below shows a breakdown of the Facility’s loan portfolio by the better of the borrower’s or guarantor’s internal ratings, where available. In cases where an internal rating is not available, the external rating has been used for this analysis.
The table shows both the exposures signed (disbursed and undisbursed) and the risk-weighted exposures, based on an internal methodology that the Facility uses for limit management.












in EUR’000




 


 


2019




 


Moody’s equiv. grade


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


POCI


FVTPL


Total





Loans and advances at AC



 


 


 


 


 


 


 




Internal Rating 1 — minimal credit risk


Aaa


—


82 211 


—


—


—


82 211 




Internal Rating 2 — very low credit risk


Aa1 — Aa3


75 352 


—


—


—


—


75 352 




Internal Rating 3 — low credit risk


A1 — A3


5 399 


—


—


—


—


5 399 




Internal Rating 4 — moderate credit risk


Baa1 — Baa3


60 385 


16 449 


—


—


—


76 834 




Internal Rating 5 — financially weak counterpart


Ba1 — Ba3


192 201 


6 199 


—


—


—


198 400 




Internal Rating 6 — high credit risk


B1 — B3


708 162 


159 858 


—


—


—


868 020 




Internal Rating 7 — very high credit risk


below Caa1


79 411 


145 176 


—


—


—


224 587 




Internal Rating 8 — counterpart in default


below Caa1 but in default


—


—


136 749 


—


—


136 749 





Loans and advances at FVTPL



 


—


—


—


—



37 366 




37 366 






Loss allowance and FV adjustment



 



-17 191 




-38 509 




- 114 307 



—



-16 236 




- 186 243 






Carrying amount of loans and advances



 



1 103 719 




371 384 




22 442 



—



21 130 




1 518 675 






Loan commitments



 


 


 


 


 


 


 




Internal Rating 1 — minimal credit risk


Aaa


—


—


—


—


—


—




Internal Rating 2 — very low credit risk


Aa1 — Aa3


102 092 


—


—


—


—


102 092 




Internal Rating 3 — low credit risk


A1 — A3


12 000 


—


—


—


—


12 000 




Internal Rating 4 — moderate credit risk


Baa1 — Baa3


61 461 


—


—


—


—


61 461 




Internal Rating 5 — financially weak counterpart


Ba1 — Ba3


323 080 


—


—


—


—


323 080 




Internal Rating 6 — high credit risk


B1 — B3


405 773 


126 076 


—


—


—


531 849 




Internal Rating 7 — very high credit risk


below Caa1


14 883 


104 328 


—


—


—


119 211 




Internal Rating 8 — counterpart in default


below Caa1 but in default


—


—


51 377 


—


—


51 377 




No internal rating (27)



 


79 669 


—


—


—


—


79 669 





Loans and advances at FVTPL



 


—


—


—


—



76 581 




76 581 






Loss allowance and FV adjustment



 


-3 943 


-33 326 


—


—


—


-37 269 





Carrying amount of loan commitments



 



995 015 




197 078 




51 377 



—



76 581 




1 320 051 




















in EUR’000




 


 


2018




 


Moody’s equiv. grade


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


POCI


FVTPL


Total





Loans and advances at AC



 


 


 


 


 


 


 




Internal Rating 1 — minimal credit risk


Aaa


—


90 875 


—


—


—


90 875 




Internal Rating 2 — very low credit risk


Aa1 — Aa3


74 650 


—


—


—


—


74 650 




Internal Rating 3 — low credit risk


A1 — A3


17 804 


—


—


—


—


17 804 




Internal Rating 4 — moderate credit risk


Baa1 — Baa3


39 295 


18 783 


—


—


—


58 078 




Internal Rating 5 — financially weak counterpart


Ba1 — Ba3


165 551 


—


—


—


—


165 551 




Internal Rating 6 — high credit risk


B1 — B3


834 194 


94 749 


—


—


—


928 943 




Internal Rating 7 — very high credit risk


below Caa1


75 057 


134 701 


—


—


—


209 758 




Internal Rating 8 — counterpart in default


below Caa1 but in default


—


—


185 273 


3 588 


—


188 861 





Loans and advances at FVTPL



 


—


—


—


—



1 806 




1 806 






Loss allowance and FV adjustment



 



-22 023 




-27 342 




- 143 092 




-1 794 




-1 084 




- 195 335 






Carrying amount of loans and advances



 



1 184 528 




311 766 




42 181 




1 794 




722




1 540 991 






Loan commitments



 


 


 


 


 


 


 




Internal Rating 2 — very low credit risk


Aa1 — Aa3


102 092 


—


—


—


—


102 092 




Internal Rating 3 — low credit risk


A1 — A3


12 000 


—


—


—


—


12 000 




Internal Rating 4 — moderate credit risk


Baa1 — Baa3


12 463 


—


—


—


—


12 463 




Internal Rating 5 — financially weak counterpart


Ba1 — Ba3


230 455 


—


—


—


—


230 455 




Internal Rating 6 — high credit risk


B1 — B3


567 573 


22 467 


—


—


—


590 040 




Internal Rating 7 — very high credit risk


below Caa1


100 055 


96 074 


—


—


—


196 129 




Internal Rating 8 — counterpart in default


below Caa1 but in default


—


—


16 932 


—


—


16 932 




No internal rating (28)



 


123 821 


—


—


—


—


123 821 





Loss allowance and FV adjustment



 



-7 225 




-16 597 



—


—


—



-23 822 






Carrying amount of loan commitments



 



1 141 234 




101 944 




16 932 



—


—



1 260 110 





The Facility continually monitors events affecting its borrowers and guarantors, especially banks. In particular, the Facility is assessing on a case-by-case basis its contractual rights in case of rating deterioration and is seeking mitigating measures. It is also closely following the renewals of bank guarantees received for its loans to ensure that these are replaced or action is taken in a timely manner if need be.
3.2.3.6.   Arrears on loans and impairments

Amounts in arrears are identified, monitored and reported according to the procedures defined into the bank wide ‘Finance Monitoring Guidelines and Procedures’. These procedures are in line with best banking practices and are adopted for all loans managed by the EIB.
The monitoring process is structured in order to make sure that (i) potential arrears are detected and reported to the services in charge with minimum delay; (ii) critical cases are promptly escalated to the right operational and decision level; (iii) regular reporting to EIB management and to Member States is provided on the overall status of arrears and on the recovery measures already taken or to be taken.
The arrears and impairments on loans can be analysed as follows:







in EUR’000




 


Loans and advances


Loans and advances




 


31.12.2019


31.12.2018





Carrying amount




1 518 675 




1 540 991 






Lifetime ECL credit-impaired



 


 




Gross amount


136 749 


188 861 




Impairment-loss allowance


- 114 307 


- 144 886 





Carrying amount of lifetime ECL credit-impaired




22 442 




43 975 






Past due but not credit-impaired



 


 





Past due comprises



 


 




0-30 days


61


804




30-60 days


924


—




60-90 days


—


—




90-180 days


135


—




more 180 days


26


1





Carrying amount past due but not credit-impaired




1 146 




805






Carrying amount neither past due nor credit-impaired




1 495 087 




1 496 211 






Total carrying amount loans and advances




1 518 675 




1 540 991 





3.2.3.7.   Loan renegotiation and forbearance

The Facility considers loans to be forborne if in response to adverse changes in the financial position of a borrower the Facility renegotiates the original terms of the contractual arrangements with this borrower affecting directly the future cash flows of the financial instrument, which may result in a loss to the Facility. However, the financial impact of restructuring activities is in general limited to impairment losses, if any, as financial neutrality is generally applied by the Facility and reflected in the renegotiated pricing conditions of the operations restructured.
In the normal course of business, the Loan Grading (LG) of the loans in question would have deteriorated and the loan would have been included in the Watch List before renegotiation. Once renegotiated, the Facility will continue to closely monitor these loans. If the renegotiated payment terms will not recover the original carrying amount of the asset, it will be considered as impaired. The corresponding impairment losses will be calculated based on the forecasted cash flows discounted at the original effective interest rate. The need for impairment for all loans whose LG deteriorated to E- is assessed regularly; all loans with a LG of F require impairment. Once the Loan Grading of a loan has improved sufficiently, it will be removed from the Watch List in line with the procedures of the Facility.
Forbearance measures and practices undertaken by the Bank’s restructuring team during the reporting period includes extension of maturity, deferral of capital only, deferral of capital and interest and capitalisation of arrears. Such forbearance measures do not lead to the derecognition of the underlying operation unless the impact of the contractual changes on the net present value of the loan at the date of restructuring is considered significant. If such newly recognised financial asset is credit-impaired, it would meet the definition of the POCI financial asset.
Exposures subject to changes in contractual terms which do not affect future cash flows, such as collateral or other security arrangements or the waiver of contractual rights under covenants, are not considered as forborne and hence those events are not considered as sufficient to indicate impairment on their own.
Operations subject to forbearance measures are reported as such in the table below:







in EUR’000




 


31.12.2019


31.12.2018




Number of operations subject to forbearance practices


28


33




Carrying values (incl. interest and amounts in arrears)


245 534 


280 720 




ECL allowance recognised


7 916 


9 506 




Impairment recognised


57 321 


86 334 




Interest income in respect of forborne operations


8 985 


13 465 




Exposures written off (following the termination/sale of the operation)


280


—



















in EUR’000




 


Forbearance measures




 


31.12.2018


Extension of maturities


Deferral of capital only


Breach of material financial covenants


Other


Contractual repayment and termination (29)



31.12.2019




Banks


27 592 


0


97


33 524 


507


-10 252 


51 468 




Corporates


253 128 


134


0


0


0


-59 196 


194 066 





Total




280 720 




134




97




33 524 




507




-69 448 




245 534 





3.2.4.   Credit risk on cash and cash equivalents

Available funds are invested in accordance with the Facility’s schedule of contractual disbursement obligations. As of 31 December 2019 and 31 December 2018, investments were in the form of bank deposits, certificates of deposit and commercial papers.
The authorised entities have a rating similar to the short-term and long-term ratings required for the EIB’s own treasury placements. In case of different ratings being granted by more than one credit rating agency, the lowest rating governs. The maximum authorised limit for each authorised bank is currently EUR 50 000 000(fifty million euro). An exception to this rule has been granted to Societe Generale where the Facility has its operational cash accounts. The short term credit limit for Societe Generale as at 31 December 2019 and 31 December 2018 amounts to EUR 110 000 000 (one hundred and ten million euro). The increased limit applies to the sum of the cash held at the operational cash accounts and the instruments issued by this counterpart and held by the treasury portfolio.
All investments have been done with authorised entities with a maximum tenor of three months from value date. All credit exposure limit breaches have been reported to the mandators. As at 31 December 2019 and as at 31 December 2018 all term deposits, commercial papers and cash in hand held by the treasury portfolio of the Facility had a minimum rating of at least P-2 (Moody’s equivalent) at settlement day.
The following table shows the situation of cash and cash equivalents including accrued interest:










in EUR’000




Minimum short-term rating


Minimum long-term rating


31.12.2019


31.12.2018




(Moody’s term)


(Moody’s term)




P-1


Aaa


98 945 


12 %


71 914 


13 %




P-1


Aa2


67 799 


8 %


—


0 %




P-1


Aa3


89 983 


11 %


49 972 


9 %




P-1


A1


213 914 


26 %


199 938 


34 %




P-1


A2


212 199 


25 %


201 899 


35 %




P-1


A3


104 944 


12 %


—


0 %




P-2


A3


49 993 


6 %


49 985 


9 %





Total




837 777 




100 %




573 708 




100 %





3.2.5.   Credit risk on derivatives

3.2.5.1.   Credit risk policy of derivatives

The credit risk with respect to derivatives is represented by the loss which a given party would incur where the other counterparty to the deal would be unable to honour its contractual obligations. The credit risk associated with derivatives varies according to a number of factors (such as interest and exchange rates) and generally corresponds to only a small portion of their notional value.
In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contracts, with a view to hedge its currency positions denominated in actively traded currencies other than the Euro. All the swaps are executed by the EIB with an external counterpart. The swaps are arranged by the same Master Swap Agreements and Credit Support Annexes signed between the EIB and its external counterparts.
3.2.5.2.   Credit risk measurement for derivatives

All the swaps executed by the EIB that are related to the Facility are treated within the same contractual framework and methodologies applied for the derivatives negotiated by the EIB for its own purposes. In particular, eligibility of swap counterparts is determined by the EIB based on the same eligibility conditions applied for its general swap purposes.
The EIB measures the credit risk exposure related to swaps and derivatives transactions using the Net Market Exposure (‘NME’) and Potential Future Exposure (‘PFE’) approach for reporting and limit monitoring. The NME and the PFE fully include the derivatives related to the Investment Facility.
The following table shows the maturities of cross currency interest rate swaps, sub-divided according to their notional amount and fair value:










in EUR’000




Swap contracts as at 31.12.2019


less than


1 year


5 years


more than


Total 2019




1 year


to 5 years


to 10 years


10 years




Notional amount


—


—


—


—



—





Fair Value (i.e. net discounted value)


—


—


—


—



—


















in EUR’000




Swap contracts as at 31.12.2018


less than


1 year


5 years


more than


Total 2018




1 year


to 5 years


to 10 years


10 years




Notional amount


—


5 245 


—


—



5 245 





Fair Value (i.e. net discounted value)


—


- 325


—


—



- 325





The Facility enters into foreign exchange short-term currency swaps (‘FX swaps’) contracts in order to hedge currency risk on loan disbursements in currencies other than EUR. FX swaps have a maturity of maximum three months and are regularly rolled over. The notional amount of FX swaps stood at EUR 1 545,0 million as at 31 December 2019 against EUR 1 460,6 million as at 31 December 2018. The fair value of FX swaps amounts to EUR 14,1 million as at 31 December 2019 against EUR 1,1 million as at 31 December 2018.
The Facility enters into interest rate swap contracts in order to hedge the interest rate risk on loans disbursed. As at 31 December 2019, there are two interest rate swaps outstanding with a notional amount of EUR 24,2 million (2018: EUR 28,5 million) and a fair value of EUR -0,1 million (2018: EUR 0,7 million).
3.2.6.   Credit risk on treasury financial assets

The following table shows the situation of the treasury portfolio entirely composed of commercial papers issued by sub-sovereigns, banks and non-bank entities with remaining maturities of up to three months. EU Member States, their agencies, banks and non-bank entities are eligible issuers. The maximum authorised limit for each authorised issuer is EUR 50 000 000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the investment guidelines and depending on liquidity requirements:










Minimum short-term rating


Minimum long-term rating


31.12.2019


31.12.2018




(Moody’s term)


(Moody’s term)




P-1


Aa1


50 046 


15 %


—


0 %




P-1


Aa2


19 997 


6 %


80 041 


24 %




P-1


Aa3


50 025 


15 %


95 055 


29 %




P-1


A1


55 050 


17 %


15 005 


4 %




P-1


A2


—


0 %


45 008 


13 %




P-2


A2


—


0 %


50 015 


15 %




P-2


A3


85 027 


26 %


50 016 


15 %




P-2


Baa1


30 433 


9 %


—


0 %




P-2


Baa3


40 009 


12 %


—


0 %





Total




330 587 




100 %




335 140 




100 %





3.3.   
Liquidity risk


Liquidity risk refers to an entity’s ability to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. It can be split into funding liquidity risk and market liquidity risk. Funding liquidity risk is the risk that an entity will not be able to meet efficiently both expected and unexpected current and future cash flow needs without affecting its daily operations or its financial condition. Market liquidity risk is the risk that an entity cannot easily offset or eliminate a position at the market price because of inadequate market depth or market disruption.
3.3.1.   Liquidity risk management

The Facility is primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s operations. The Facility manages its funding liquidity risk primarily by planning its net liquidity needs and the required Member States annual contributions.
In order to calculate Member States’ annual contributions, disbursement patterns of the existing and pipelined portfolio is analysed and followed up throughout the year. Special events, such as early reimbursements, sales of shares or default cases are taken into account to correct annual liquidity requirements.
To further minimise the liquidity risk, the Facility maintains a liquidity reserve sufficient to cover at any point in time forecasted cash disbursements, as communicated periodically by EIB’s Lending Department. Funds are invested on the money market and bond markets in the form of interbank deposits and other short term financial instruments by taking into consideration the Facility’s cash disbursement obligations. The Facility’s liquid assets are managed by the Bank’s Treasury Department with a view to maintain appropriate liquidity to enable the Facility to meet its obligations.
In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the investment of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore, the authorisation of counterparts and limits for treasury investments, as well as the monitoring of such limits, are the responsibility of the Bank’s Risk Management Directorate.
3.3.2.   Liquidity risk measurement

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the balance sheet date and the contractual maturity date (based on undiscounted cash flows).
In terms of non-derivative financial liabilities, the Facility holds commitments in form of undisbursed portions of the credit under signed loan agreements, of undisbursed portions of signed capital subscription/investment agreements, of loan guarantees granted, or of committed interest subsidies and TA.
Loans under the IF have a disbursement deadline. However, disbursements are made at times and in amounts reflecting the progress of underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence their disbursement schedule is subject to a significant degree of uncertainty.
Capital investments become due when and as soon as equity fund managers issue valid calls for capital, reflecting the progress in their investment activities. The drawdown period is usually of 3 years, with frequent prolongation by one or two years. Some disbursement commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s liquidity may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.
Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding is reduced alongside the repayment schedule of guaranteed loans.
Committed interest subsidies’ cash outflows occur in the case of subsidised loans financed by the Bank’s own resources. Therefore, reported outflows represent only commitments related to these loans rather than the total amount of committed undisbursed interest subsidies. As in the case of loans, their disbursement schedule is uncertain.
Committed TA ‘gross nominal outflow’ in the ‘Maturity profile of non-derivative financial liabilities’ table refers to the total undisbursed portion of signed TA contracts. The disbursement time pattern is subject to a significant degree of uncertainty. Cash outflows classified in the ‘3 months or less’ bucket represent the amount of outstanding invoices received by the reporting date.
Commitments for non-derivative financial liabilities for which there is no defined contractual maturity date are classified under ‘Maturity Undefined’. Commitments, for which there is a recorded cash disbursement request at the reporting date, are classified under the relevant time bucket.
In terms of derivative financial liabilities, the maturity profile represents the contractual undiscounted gross cash flows of swap contracts including cross currency swaps (CCS), cross currency interest rate swaps (CCIRS), short-term currency swaps and interest rate swaps.











in EUR’000




Maturity profile of non-derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Maturity Undefined


Gross nominal outflow




As at 31.12.2019




Outflows for committed but undisbursed loans


33 038 


—


—


—


1 324 282 


1 357 320 




Outflows for committed investment funds and share subscription


369


—


—


—


405 551 


405 920 




Others (signed non-issued guarantees, issued guarantees)


—


—


—


—


1 559 831 


1 559 831 




Outflows for committed interest subsidies


—


—


—


—


350 678 


350 678 




Outflows for committed TA


3 898 


—


—


—


21 166 


25 064 





Total




37 305 



—


—


—



3 661 508 




3 698 813 



















in EUR’000




Maturity profile of non-derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Maturity Undefined


Gross nominal outflow




As at 31.12.2018




Outflows for committed but undisbursed loans


7 854 


—


—


—


1 276 078 


1 283 932 




Outflows for committed investment funds and share subscription


2 023 


—


—


—


345 144 


347 167 




Others (signed non-issued guarantees, issued guarantees)


—


—


—


—


1 556 468 


1 556 468 




Outflows for committed interest subsidies


—


—


—


—


360 655 


360 655 




Outflows for committed TA


2 373 


—


—


—


24 082 


26 455 





Total




12 250 



—


—


—



3 562 427 




3 574 677 


















in EUR’000




Maturity profile of derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than v5 years


Gross nominal inflow/outflow




As at 31.12.2019




CCS and CCIRS — Inflows


—


—


—


—


—




CCS and CCIRS — Outflows


—


—


—


—


—




Short term currency swaps — Inflows


1 545 000 


—


—


—


1 545 000 




Short term currency swaps — Outflows


-1 535 571 


—


—


—


-1 535 571 




Interest Rate Swaps — Inflows


310


820


2 045 


 


3 175 




Interest Rate Swaps — Outflows


—


-1 128 


-2 138 


 


-3 266 





Total




9 739 




- 308




- 93




—




9 338 


















in EUR’000




Maturity profile of derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Gross nominal inflow/outflow




as at 31.12.2018




CCS and CCIRS — Inflows


5


3 281 


1 816 


—


5 102 




CCS and CCIRS — Outflows


—


-4 081 


-1 770 


—


-5 851 




Short term currency swaps — Inflows


1 460 608 


—


—


—


1 460 608 




Short term currency swaps — Outflows


-1 465 498 


—


—


—


-1 465 498 




Interest Rate Swaps — Inflows


397


1 171 


3 473 


204


5 245 




Interest Rate Swaps — Outflows


—


-1 340 


-3 030 


- 175


-4 545 





Total




-4 488 




- 969




489




29




-4 939 





3.3.3.   Long term financial assets and liabilities

The following table sets out the carrying amounts of non-derivative financial assets and financial liabilities expected to be recovered or settled more than 12 months after the reporting date.







in EUR’000




 


31.12.2019


31.12.2018





Financial assets:



 


 




Loans and advances


1 636 520 


1 666 232 




Shares and other variable yield securities


619 928 


567 292 




Other assets


—


171





Total




2 256 448 




2 233 695 






Financial liabilities:



 


 




Provisions for guarantees issued


628


793




Amount owed to third parties (30)



93 531 


93 641 




Provisions for loan commitments


37 269 


23 822 





Total




131 428 




118 256 





3.4.   
Market risk


Market risk represents the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.
3.4.1.   Interest rate risk

Interest rate risk arises from the volatility in the economic value of, or in the income derived from, interest rate bearing positions due to adverse movements in interest rates.
The Facility is not directly impacted by the fluctuation of its economic value or to pricing mismatches between different assets, liabilities and hedge instruments because (i) it does not have any direct borrowing costs or interest rate bearing liabilities and (ii) it accepts the impact of interest rate fluctuations on the revenues from its investments.
The Facility measures the sensitivity of its loan portfolio and micro hedging swaps to interest rate fluctuations via a Basis Point Value (BPV) calculation.
The BPV measures the gain or loss in the net present value of the relevant portfolio, due to a 1 basis point (0,01 %) increase in interest rates tenors ranging within a specified time bucket ‘money market — up to one year’, ‘very short — 2 to 3 years’, ‘short — 4 to 6 years’, ‘medium — 7 to 11 years’, ‘long — 12 to 20 years’ or ‘extra-long — more than 21 years’.
To determine the net present value (NPV) of the loans’ cash flows denominated in EUR, the Facility uses the EIB’s EUR base funding curve (EUR swap curve adjusted with EIB’s global funding spread). The EIB’s USD funding curve is used for the calculation of the NPV of loan’s cash flows denominated in USD. The NPV of the loans’ cash flows denominated in currencies for which a reliable and sufficiently complete discount curve is not available, is determined by using EIB’s EUR base funding curve as a proxy.
To calculate the net present value of the micro hedging swaps, the facility uses the EUR swap curve for cash flows denominated in EUR and the USD swap curve for cash flows denominated in USD.
As shown in the following table the net present value of the loan portfolio including related micro-hedging swaps as at 31 December 2019 would decrease by EUR 533k (as at 31 December 2018: decrease by EUR 483k) if all relevant interest rates curves are simultaneously shifted upwards in parallel by 1 basis point.












in EUR’000




Basis point value


Money


Very Short


Short


Medium


Long


Extra Long


Total




Market




As at 31.12.2019


1 year


2 to 3 years


4 to 6 years


7 to 11 years


12 to 20 years


21 years




Total sensitivity of loans and micro hedging swaps


- 42


- 99


- 172


- 163


- 57


—


- 533



















in EUR’000




Basis point value


Money


Very Short


Short


Medium


Long


Extra Long


Total




Market




As at 31.12.2018


1 year


2 to 3 years


4 to 6 years


7 to 11 years


12 to 20 years


21 years




Total sensitivity of loans and micro hedging swaps


- 38


- 94


- 168


- 154


- 29


—


- 483




3.4.2.   Foreign exchange risk

Foreign exchange (‘FX’) risk for the IF is the risk of loss in earnings or economic value due to adverse movements of FX rates.
Given a reference accounting currency (EUR for the IF), the Facility is exposed to FX risk whenever there is a mismatch between assets and liabilities denominated in a non-reference accounting currency. FX risk also includes the effect of changes in the value of future cash flows denominated in non-reference accounting currency, e.g. interest and dividend payments, due to fluctuations in exchange rates.
3.4.2.1.   Foreign exchange risk and treasury assets

The IF’s treasury assets are denominated in either EUR or USD.
FX risk is hedged by means of FX cross currency spot or forward transactions, FX swaps or cross-currency swaps. The EIB’s Treasury Department can, where deemed necessary and appropriate, use any other instrument, in line with the Bank’s policy, that provide protection against market risks incurred in connection with the IF’s financial activities.
3.4.2.2.   Foreign exchange risk and operations financed or guaranteed by the IF

Member States’ IF contributions are received in EUR. The operations financed or guaranteed by the IF as well as interest subsidies can be denominated in EUR, USD or any other authorised currency.
A foreign exchange risk exposure (against the EUR reference currency) arises whenever transactions denominated in currencies other than the EUR are left un-hedged. The IF’s foreign exchange risk hedging guidelines are set out below.
3.4.2.2.1.   
Hedging of operations denominated in USD


The FX risk generated by IF operations denominated in USD shall be covered on an aggregated basis via the use of EUR/USD FX swaps, rolled over and adjusted in terms of amount on a periodic basis. The use of FX swaps serves a dual purpose. On one side the necessary liquidity for new disbursements (loans and equity) is generated and on the other side an FX macro hedge is maintained.
At the beginning of each period, the cash flows to be received or paid in USD during the next period shall be estimated on the basis of planned or expected reflows/disbursements. Subsequently, the maturing FX swaps shall be rolled over, their amount being adjusted to cover at least the USD liquidity needs projected over the next period.
On a monthly basis, the USD FX position shall be hedged, if exceeding the relevant limits, by means of a spot or forward operation.
Within a roll-over period, unexpected USD liquidity deficits shall be covered by means of ad hoc FX swap operations while liquidity surpluses shall either be invested in treasury assets or converted into EUR if occurred from an increase of the FX position.
3.4.2.2.2.   
Hedging of operations denominated in currencies other than EUR or USD


IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with the same financial profile as the underlying Loan, provided that a swap market is operational.
IF has operations denominated in currencies for which hedging possibilities are either not efficiently available or available at a high cost. These operations are denominated in local currencies (LCs) but settled in EUR or USD. IF’s financial risk framework, which was approved by the IF Committee on 22 January 2015, offers the possibility to hedge the FX exposure in LCs that exhibit a significant positive correlation with the USD synthetically via USD-denominated derivatives. The LCs hedged synthetically with USD denominated derivatives are reported in the table in section 3.4.2.2.3. below under item ‘Local currencies (under synthetic hedge)’, while the LCs not hedged synthetically with the USD are reported in the same table under item ‘Local currencies (not under synthetic hedge)’.
3.4.2.2.3.   
Foreign exchange position (in EUR’000)


The tables of this note show the Facility’s foreign exchange position.
The foreign exchange position is presented in the tables below in accordance with the IF’s Risk Policies (as described in the IF’s financial risk framework). The FX position as per Risk Policies is based on accounting figures and defined as the balance between selected assets and liabilities. The assets and liabilities defined in the FX position as per Risk Policies are selected to ensure that the earnings will only be converted into the reporting currency (EUR) when received.
The fair value change on shares and other variable yield securities are included in the FX position as per Risk Policies, as well as impairments on loans and advances. Derivatives included in the FX position as per Risk Policies are considered at their nominal value instead of their fair value, in order to be aligned with the retained value of the assets, considered also at their nominal value adjusted by the impairment for loans.
In the tables below, the remaining part of the assets and liabilities, which includes mainly interest accruals on loans, derivatives and subsidies, are presented under ‘FX position excluded from Risk Policies’.









As at 31 December 2019


Assets and liabilities


Commitments and contingent liabilities




Currencies


FX position as per Risk Policies


FX position excluded from Risk Policies


Balance sheet FX position





USD



- 103 746 


-56 632 


- 160 378 


637 693 





Local currencies


(under synthetic hedge)
 (6)



 


 


 


 





KES



29 472 


464


29 936 


—





TZS



48 092 


354


48 446 


—





DOP



25 383 


602


25 985 


—





UGX



37 132 


574


37 706 


—





RWF



30 766 


47


30 813 


—





Local currencies


(not under synthetic hedge)
 (6)



 


 


 


 





HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR



99 864 


- 530


99 334 


—





Total non-EUR currencies




166 963 




-55 121 




111 842 




637 693 






EUR



—



3 075 194 




3 075 194 




2 741 023 






Total EUR and non-EUR




166 963 




3 020 073 




3 187 036 




3 378 716 

















As at 31 December 2018


Assets and liabilities


Commitments and contingent liabilities




Currencies


FX position as per Risk Policies


FX position excluded from Risk Policies


Balance sheet FX position





USD



- 157 177 


-52 111 


- 209 288 


600 271 





Local currencies


(under synthetic hedge)
 (7)



 


 


 


 





KES



35 806 


252


36 058 


—





TZS



71 195 


814


72 009 


—





DOP



35 311 


821


36 132 


—





UGX



45 731 


769


46 500 


—





RWF



24 176 


17


24 193 


—





Local currencies


(not under synthetic hedge)
 (7)



 


 


 


 





HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR



74 265 


- 432


73 833 


—





Total non-EUR currencies




129 307 




-49 870 




79 437 




600 271 






EUR



—



2 834 560 




2 834 560 




3 044 623 






Total EUR and non-EUR




129 307 




2 784 690 




2 913 997 




3 644 894 





3.4.2.3.   Foreign exchange sensitivity analysis

As at 31 December 2019, a 10 percent depreciation of EUR versus all non-EUR currencies would result in an increase of the contributors’ resources amounting to EUR 14,0 million (31 December 2018: EUR 8,8 million). A 10 percent appreciation of the EUR versus all non-EUR currencies would result in a decrease of the contributors’ resources amounting to EUR 11,4 million (31 December 2018: EUR 7,2 million).
3.4.2.4.   Conversion rates

The following conversion rates were used for establishing the balance sheet at 31 December 2019 and 31 December 2018:







 


31 December 2019


31 December 2018





Non-EU currencies



 


 




Botswana Pula (BWP)


11,8376 


12,2038 




Dominican Republic Pesos (DOP)


59,3644 


57,4037 




Fiji Dollars (FJD)


2,4045 


2,4104 




Haitian Gourde (HTG)


100,99 


86,92 




Jamaican Dollar (JMD)


147,6966 


144,081 




Kenya Shillings (KES)


113,63 


116,24 




Mauritania Ouguiyas (MRU)


42,2135 


41,1660 




Mauritius Rupees (MUR)


40,63 


39,05 




Mozambican Metical (MZN)


68,64 


70,14 




Nigerian Naira (NGN)


343,45 


351,05 




Rwanda Francs (RWF)


1 051,12 


1 020,10 




Tanzania Shillings (TZS)


2 573,66 


2 624,33 




Uganda Shillings (UGX)


4 108 


4 239 




United States Dollars (USD)


1,1234 


1,145 




Franc CFA Francs (XAF/XOF)


655,957 


655,957 




South Africa Rand (ZAR)


15,7773 


16,4594 




Zambia Kvacha (ZMW)


15,7894 


13,6077 




3.4.3.   Equity price risk

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity prices and/or the value of equity investments.
The IF is exposed to equity price risk via its investments in direct equity and venture capital funds.
The value of non-listed equity positions is not readily available for the purpose of monitoring and control on a continuous basis. For such positions, the best indications available include prices derived from any relevant valuation techniques.
The effect on the Facility’s contributors’ resources (as a result of a change in the fair value of the equity instruments portfolio) due to a +/-10 % change in the value of individual direct equity and venture capital investments, with all other variables held constant, is EUR 62,0 million and EUR -62,0 million respectively as at 31 December 2019 (EUR 56,7 million and EUR -56,7 million respectively as at 31 December 2018).
4.   Fair values of financial instruments

4.1.   
Accounting classifications and fair values


The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. These do not include fair value information for financial assets and financial liabilities not carried at fair value if the carrying amount is a reasonable approximation of fair value.















in EUR’000




At 31 December 2019


Carrying amount


Fair value




 


Derivative financial instruments


Shares and other variable yield securities


Cash, loans and advances


Treasury financial assets


Other financial liabilities


Total


Level 1


Level 2


Level 3


Total





Financial assets mandatorily measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


14 184 


—


—


—


—


14 184 


—


14 184 


—


14 184 




Venture Capital Fund


—


504 694 


—


—


—


504 694 


362


—


504 332 


504 694 




Direct Equity Investment


—


115 234 


—


—


—


115 234 


15 255 


—


99 979 


115 234 




Loans and advances


—


—


21 702 


—


—


21 702 


—


—


21 702 


21 702 





Total financial assets mandatorily measured at FVTPL




14 184 




619 928 




21 702 



—


—



655 814 




15 617 




35 886 




604 311 




655 814 






Financial assets measured at AC



 


 


 


 


 


 


 


 


 


 




Cash and cash equivalents


—


—


837 777 


—


—


837 777 


—


—


—


—




Loans and advances


—


—


1 496 973 


—


—


1 496 973 


—


1 699 057 


—


1 699 057 




Amounts receivable from contributors


—


—


86 330 


—


—


86 330 


—


—


—


—




Treasury financial assets


—


—


—


330 587 


—


330 587 


144 097 


186 083 


—


330 180 




Other assets


—


—


—


—


—


—


—


—


—


—





Total financial assets measured at AC



—


—



2 421 080 




330 587 



—



2 751 667 




144 097 




1 885 140 



—



2 029 237 






Total financial assets




14 184 




619 928 




2 442 782 




330 587 



—



3 407 487 



 


 


 


 





Financial liabilities measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


- 191


—


—


—


—


- 191


—


- 191


—


- 191





Total financial liabilities measured at FVTPL




- 191



—


—


—


—



- 191



—



- 191



—



- 191






Financial liability measured at AC:



 


 


 


 


 


 


 


 


 


 




Provisions for guarantees issued


—


—


—


—


- 628


- 628


 


 


 


 




Provisions for loan commitments


—


—


—


—


-37 269 


-37 269 


 


 


 


 




Amounts owed to third parties


—


—


—


—


- 147 438 


- 147 438 


 


 


 


 




Other liabilities


—


—


—


—


-2 353 


-2 353 


 


 


 


 





Total financial liabilities measured at AC



—


—


—


—



- 187 688 




- 187 688 



 


 


 


 





Total financial liabilities




- 191



—


—


—



- 187 688 




- 187 879 



 


 


 


 






















in EUR’000




As at 31 December 2018 tito


Carrying amount


Fair value




 


Derivative financial instruments


Shares and other variable yield securities


Cash, loans and receivables


Treasury financial assets


Other financial liabilities


Total


Level 1


Level 2


Level 3


Total





Financial assets mandatorily measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


9 873 


—


—


—


—


9 873 


—


9 873 


—


9 873 




Venture Capital Funds


—


467 152 


—


—


—


467 152 


—


—


467 152 


467 152 




Direct Equity Investments


—


100 140 


—


—


—


100 140 


16 675 


—


83 465 


100 140 




Loans and advances


—


—


720


—


—


720


—


720


—


720





Total financial assets mandatorily measured at FVTPL




9 873 




567 292 




720



—


—



577 885 




16 675 




10 593 




550 617 




577 885 






Financial assets measured at AC



 


 


 


 


 


 


 


 


 


 




Cash and cash equivalents


—


—


573 708 


—


—


573 708 


—


—


—


—




Loans and advances


—


—


1 540 271 


—


—


1 540 271 


—


1 760 576 


—


1 760 576 




Amounts receivable from contributors


—


—


100 000 


—


—


100 000 


—


—


—


—




Treasury financial assets


—


—


—


335 140 


—


335 140 


191 475 


145 061 


—


336 536 




Other assets


—


—


171


—


—


171


—


—


—


—





Total financial assets measured at AC



—


—



2 214 150 




335 140 



—



2 549 290 




191 475 




1 905 637 



—



2 097 112 






Total financial assets




9 873 




567 292 




2 214 870 




335 140 



—



3 127 175 



 


 


 


 





Financial liabilities measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


-8 493 


—


—


—


—


-8 493 


—


-8 493 


—


-8 493 





Total financial liabilities measured at FVTPL




-8 493 



—


—


—


—



-8 493 



—



-8 493 



—



-8 493 






Financial liabilities measured at AC:



 


 


 


 


 


 


 


 


 


 




Provisions for guarantees issued


—


—


—


—


- 793


- 793


 


 


 


 




Provisions for loan commitments


—


—


—


—


-23 822 


-23 822 


 


 


 


 




Amounts owed to third parties


—


—


—


—


- 143 813 


- 143 813 


 


 


 


 




Other liabilities


—


—


—


—


-2 493 


-2 493 


 


 


 


 





Total financial liabilities measured at AC



—


—


—


—



- 170 921 




- 170 921 



 


 


 


 





Total financial liabilities




-8 493 



—


—


—



- 170 921 




- 179 414 



 


 


 


 




4.2.   
Measurement of fair values


4.2.1.   Valuation techniques and significant unobservable inputs

The table below sets out information about the valuation techniques and significant unobservable inputs used in measuring financial instruments, categorised as Level 2 and 3 in the fair value hierarchy:








Valuation technique


Significant unobservable inputs


Relationship of unobservable inputs to fair value measurement





Financial instruments carried at fair value



 


 




Derivative financial instruments


Discounted cash flow: Future cash flows are estimated based on forward exchange/interest rates (from observable forward exchange rates and yield curves at the end of the reporting period) and contract forward/interest rates, discounted at a rate that reflects the credit risk of various counterparties.


Not applicable.


Not applicable.




Venture Capital Fund (VCF)


Adjusted net assets method: The fair value is determined by applying either the Facility’s percentage ownership in the underlying vehicle to the net asset value reflected in the most recent report adjusted for cash flows or, where available, the precise share value at the same date, submitted by the respective Fund Manager. In order to bridge the interval between the last available Net assets value (NAV) and the year-end reporting, a subsequent event review procedure is performed and if necessary the reported NAV is adjusted.


Adjustment for time elapsed between the last reporting date of the VCF and the measurement date, taking into account: operating expenses and management fees, subsequent changes in the fair value of the VCF’s underlying assets, additional liabilities incurred, market changes or other economic condition changes.


The longer the period between the fair value measurement date and the last reporting date of the VCF, the higher the adjustment for time elapsed.




Direct Equity Investment


Adjusted net assets.


Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control.
Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30 %.


The higher the marketability discount, the lower the fair value.




Loans at fair value (IFE)


For going concern borrowers: Discounted cash flow using contractual/expected future cash flows discounted with appropriate risk-adjusted discount rate that captures the risk inherent to the loan (including credit risk of the borrower). The discount rate is compared/assessed with any relevant market benchmark.
For borrowers not going concern: Net assets approach (liquidation value approach).


Components of the discount rate to reflect the credit risk of borrower compared to the risk-free market rates.


The higher the discount rate the lower the fair value.





Financial instruments not carried at fair value



 


 




Loans and advances


Discounted cash flows: The valuation model uses contractual cash flows that are conditional upon the non-occurrence of default by the debtor and do not take into account any collateral values or early repayments’ scenarios. To obtain the Net Present Value (NPV) of the loans, the model retained discounts the contractual cash flows of each loan using an adjusted market discount curve. The individual loan NPV is then adjusted to take into consideration the relevant associated Expected Loss. The results are then summed to obtain the fair value of loans and advances.


Not applicable.


Not applicable.




Treasury financial assets


Discounted cash flows.


Not applicable.


Not applicable.




With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives as at 31 December 2019 and 31 December 2018, namely:






—


Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR -32,8k as at 31 December 2019 and to EUR -37,4k as at 31 December 2018.










—


Debit valuation adjustments (DVA), reflecting own credit risk on derivative transactions, amounting to EUR +28,7k as at 31 December 2019 and EUR +15,1k as at 31 December 2018.




4.2.2.   Transfers between Level 1 and 2

The Facility’s policy is to recognise the transfers between Levels as of the date of the event or change in circumstances that caused the transfer.
In 2019 and 2018, the Facility did not make transfers from Level 1 to 2 or Level 2 to 1 of the fair value hierarchy.
4.2.3.   Level 3 fair values


Reconciliation of Level 3 fair values

The following tables present the changes in Level 3 instruments for the year ended 31 December 2019 and 31 December 2018:






in EUR’000




Shares and other variable yield securities





Balance as at 1 January 2019




550 617 






Gains or losses included in profit or loss:



 










—


net realised result on shares and other variable yield securities






1 708 










—


net fair value change on shares and other variable yield securities






17 666 





Total




19 374 





Disbursements


106 943 




Repayments


-79 435 




Foreign exchange rates differences


6 812 





Balance as at 31 December 2019




604 311 














in EUR’000




Shares and other variable yield securities





Balance as at 1 January 2018




473 081 






Gains or losses included in profit or loss:



 










—


net realised result on shares and other variable yield securities






-10 622 










—


net fair value change on shares and other variable yield securities






-13 411 





Total




-24 033 





Disbursements


95 434 




Repayments


-11 165 




Foreign exchange rates differences


17 300 





Balance as at 31 December 2018




550 617 





In 2019 and 2018, the Facility did not make transfers out or to Level 3 of the fair value hierarchy.
5.   Cash and cash equivalents

The cash and cash equivalents are composed of:







in EUR’000




 


31.12.2019


31.12.2018




Cash in hand


72 166 


51 936 




Term deposits


622 991 


521 882 




Commercial papers


142 823 


—





Cash and cash equivalents in the cash flow statement




837 980 




573 818 





Accrued interest


- 203


- 110





Cash and cash equivalents in the statement of financial position




837 777 




573 708 





6.   Derivative financial instruments

The main components of derivative financial instruments, classified as held for trading, are as follows:








in EUR’000




As at 31 December 2019


Fair Value


Notional amount




Assets


Liabilities




Cross currency swaps


—


—


—




Interest rate swaps


99


- 191


24,181 




FX swaps


14 085 


—


1 545 000 





Total derivative financial instruments




14 184 




- 191




1 569 181 
















In EUR'000




As at 31 December 2018


Fair Value


Notional amount




Assets


Liabilities




Cross currency interest rate swaps


340


- 665


5 245 




Interest rate swaps


654


—


28 470 




FX swaps


8 879 


-7 828 


1 460 608 





Total derivative financial instruments




9 873 




-8 493 




1 494 323 





7.   Loans and advances

7.1.   
Loans and advances


The following table show reconciliation from the opening to the closing balance of the loans and advances with ECL IFRS 9 impairment model.










in EUR’000




 


Global loans (8)



Senior loans


Subordinated loans


POCI


Total





Nominal of loans at AC as at 1 January 2019




1 051 317 




593 324 




60 717 




3 588 




1 708 946 





Disbursements


164 308 


123 416 


—


—


287 724 




Write offs


- 2


- 278


—


—


- 280




Repayments


- 206 517 


- 113 100 


-34 496 


—


- 354 113 




Sale of loans


-2 591 


—


—


—


-2 591 




Business model change (IFE) (9)



—


-10 062 


—


-3 588 


-13 650 




Foreign exchange rates differences


15 041 


4 064 


1 493 


—


20 598 





Nominal of loans at AC as at 31 December 2019




1 021 556 




597 364 




27 714 




—




1 646 634 






Impairment — loss allowance as at 1 January 2019




- 103 868 




-49 609 




-29 360 




-1 794 




- 184 631 





Net changes of the 12 month ECL


5 164 


- 86


—


—


5 078 




Net changes of lifetime ECL not credit-impaired


-15 558 


2 559 


2 205 


—


-10 794 




Lifetime ECL credit-impaired


-4 397 


- 47


—


—


-4 444 




Reversal of lifetime ECL credit-impaired


21 811 


5 592 


—


—


27 403 




Sale of loans


2 591 


—


—


—


2 591 




Business model change (IFE) (9)



—


5 031 


—


1 794 


6 825 




Write offs


2


278


—


—


280




Foreign exchange rates differences


-1 911 


- 368


- 559


—


-2 838 





Impairment — loss allowance as at 31 December 2019




-96 166 




-36 650 




-27 714 




—




- 160 530 






Loans and advances at AC as at 31 December 2019




925 390 




560 714 




—




—




1 486 104 






Nominal of loans at FVTPL as at 1 January 2019




1 800 




—




—




—




1 800 





Disbursements


—


23 461 


—


—


23 461 




Business model change (IFE) (9)



—


13 650 


—


—


13 650 




Repayments


- 720


- 245


—


—


- 965




Write offs


—


—


—


—


—




Foreign exchange rates differences


—


- 8


—


—


- 8





Nominal of loans at FVTPL as at 31 December 2019




1 080 




36 858 




—




—




37 938 






Fair value adjustment as at 1 January 2019




-1 080 




—




—




—




-1 080 





Net FV change


—


-8 331 


—


—


-8 331 




Business model change (IFE) (9)



—


-6 825 


—


—


-6 825 





Fair value adjustment as at 31 December 2019




-1 080 




-15 156 




—




—




-16 236 






Loans and advances at FVTPL as at 31 December 2019




—




21 702 




—




—




21 702 





Amortised Cost


-3 545 


-4 950 


10


—


-8 485 




Interest


10 451 


8 903 


—


—


19 354 





Loans and advances as at 31 December 2019




932 296 




- 586 369 




10




—




1 518 675 


















in EUR’000




 


Global loans (10)



Senior loans


Subordinated loans


POCI


Total





Nominal of loans at AC as at 1 January 2018




1 003 294 




687 499 




62 546 




—




1 753 339 





Disbursements


203 352 


52 274 


—


3 588 


259 214 




Write offs


—


—


—


—


—




Repayments


- 192 355 


- 157 952 


-4 548 


—


- 354 855 




Interest capitalised


—


—


—


—


—




Foreign exchange rates differences


37 026 


11 503 


2 719 


—


51 248 





Nominal of loans at AC as at 31 December 2018




1 051 317 




593 324 




60 717 




3 588 




1 708 946 






Impairment — loss allowance as at 1 January 2018




-35 082 




-57 911 




-62 546 




—




- 155 539 





Net changes of the 12 month ECL


-1 853 


288


—


—


-1 565 




Net changes of lifetime ECL not credit-impaired


4 696 


870


-2 146 


—


3 420 




Lifetime ECL credit-impaired


-71 204 


—


—


-1 794 


-72 998 




Reversal of lifetime ECL credit-impaired


2 214 


8 480 


37 678 


—


48 372 




Write offs


—


—


—


—


—




Foreign exchange rates differences


-2 639 


-1 336 


-2 346 


—


-6 321 





Impairment — loss allowance as at 1 January 2018




- 103 868 




-49 609 




-29 360 




-1 794 




- 184 631 






Loans and advances at AC as at 31 December 2018




947 449 




543 715 




31 357 




1 794 




1 524 315 






Nominal of loans at FVTPL as at 1 January 2018




1 800 




—




—




—




1 800 





Disbursements


—


—


—


—


—




Repayments


—


—


—


—


—




Write offs


—


—


—


—


—




Foreign exchange rates differences


—


—


—


—


—





Nominal of loans at FVTPL as at 31 December 2018




1 800 




—




—




—




1 800 






Fair value adjustment as at 1 January 2018




- 378




—




—




—




- 378





Net FV change


- 702


—


—


—


- 702





Fair value adjustment as at 31 December 2018




-1 080 




—




—




—




-1 080 






Loans and advances at FVTPL as at 31 December 2018




720




—




—




—




720





Amortised Cost


-3 550 


-3 109 


11


—


-6 648 




Interest


12 330 


9 243 


1 031 


—


22 604 





Loans and advances as at 31 December 2018




956 949 




549 849 




32 399 




1 794 




1 540 991 





7.2.   
Impairment on loans and advances — Loss allowances, net of reversals












in EUR’000




 


2019




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


POCI


Total





Loans and advances at AC



 


 


 


 


 





Balance as at 1 January 2019




22 023 




27 342 




133 472 




1 794 




184 631 





Transfer to 12-month ECL


3 952 


—


—


—


3 952 




Transfer to lifetime ECL not credit-impaired


-4 005 


25 150 


—


—


21 145 




Transfer to lifetime ECL credit-impaired


—


- 46


—


—


- 46




Sale of loans


—


—


-2 591 


—


-2 591 




Business model change (IFE) (11)



—


- 10


-5 031 


-1 794 


-6 835 




Financial assets that have been derecognised


- 129


-10 049 


—


—


-10 178 




Write-offs


—


—


- 280


—


- 280




Foreign exchange rates differences


247


371


2 221 


—


2 839 





Balance as at 31 December 2019




17 191 




38 509 




104 830 




—




160 530 


















in EUR’000




 


2018




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


POCI


Total





Loans and advances at AC



 


 


 


 


 





Balance as at 1 January 2018




19 738 




29 975 




105 826 




—




155 539 





Transfer to 12-month ECL


2 285 


—


—


—


2 285 




Transfer to lifetime ECL not credit-impaired


—


-2 633 


—


—


-2 633 




Transfer to lifetime ECL credit-impaired


—


—


27 646 


1 794 


29 440 





Balance as at 31 December 2018




22 023 




27 342 




133 472 




1 794 




184 631 





8.   Shares and other variable yield securities

The following table show reconciliation from the opening to the closing balance of the Equity investments:








in EUR’000




 


Venture Capital Funds


Direct Equity Investments


Total





Cost as at 1 January 2019




421 593 




93 214 




514 807 





Disbursements


90 972 


15 971 


106 943 




Repayments / sales


-56 387 


-13 361 


-69 748 




Foreign exchange rates differences


6 126 


281


6 407 





Cost as at 31 December 2019




462 304 




96 105 




558 409 






Unrealised gains and losses as at 1 January 2019




45 559 




6 926 




52 485 





Net change in unrealised gains and losses


-3 488 


12 117 (1) (12)



8 629 




Foreign exchange rates differences


319


86


405





Unrealised gains and losses as at 31 December 2019




42 390 




19 129 




61 519 






Shares and other variable yield securities as at 31 December 2019




504 694 




115 234 




619 928 
















in EUR’000




 


Venture Capital Funds


Direct Equity Investments


Total





Cost as at 1 January 2018




356 086 




70 310 




426 396 





Disbursements


73 250 


22 184 


95 434 




Repayments / sales


-21 681 


- 635


-22 316 




Foreign exchange rates differences


13 938 


1 355 


15 293 





Cost as at 31 December 2018




421 593 




93 214 




514 807 






Unrealised gains and losses as at 1 January 2018




64 018 




7 125 




71 143 





Net change in unrealised gains and losses


-20 493 


- 172


-20 665 




Foreign exchange rates differences


2 034 


- 27


2 007 





Unrealised gains and losses as at 31 December 2018




45 559 




6 926 




52 485 






Shares and other variable yield securities as at 31 December 2018




467 152 




100 140 




567 292 





9.   Amounts receivable from contributors

The amounts of EUR’000 86 330 receivable from contributors are entirely composed of Member States contribution called but not paid.
10.   Treasury financial assets

The treasury portfolio is composed of quoted bonds which have a remaining maturity of less than three months at reporting date. The following table shows the movements of the treasury portfolio:






in EUR’000





Balance as at 1 January 2019




335 140 





Acquisitions


2 948 021 




Maturities


-2 952 905 




Change in amortisation of premium/discount


- 93




Change in accrued interest


424





Balance as at 31 December 2019




330 587 














in EUR’000





Balance as at 1 January 2018




144 382 





Acquisitions


2 219 062 




Maturities


-2 026 659 




Change in amortisation of premium/discount


149




Change in accrued interest


-1 794 





Balance as at 31 December 2018




335 140 





11.   Other assets

The main components of other assets are as follows:







in EUR’000




 


31.12.2019


31.12.2018




Financial guarantees


—


171





Total other assets




—




171





12.   Deferred income

The main components of deferred income are as follows:







in EUR’000




 


31.12.2019


31.12.2018




Deferred interest subsidies


32 085 


32 658 




Deferred commissions on loans and advances


481


1 106 





Total deferred income




32 566 




33 764 





13.   Provisions for guarantees issued, net of reversals

The following tables show reconciliation from the opening to the closing balance of the provision for financial guarantees under ECL IFRS 9 model:









in EUR’000




 


2019




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Guarantees issued



 


 


 


 





Balance as at 1 January




94




699




—




793





Transfer to 12-month ECL


534


—


—


534




Transfer to lifetime ECL not credit-impaired


—


—


—


—




Transfer to lifetime ECL credit-impaired


—


—


—


—




Guarantees that have been derecognised


—


- 588


—


- 588




Guarantee calls


—


- 53


—


- 53




Amortisation of upfront fees


—


- 71


—


- 71




Foreign exchange rates differences


—


13


—


13





Balance as at 31 December




628




—




—




628

















in EUR’000




 


2018




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Guarantees issued



 


 


 


 





Balance as at 1 January




—




484




—




484





Transfer to 12-month ECL


94


—


—


94




Transfer to lifetime ECL not credit-impaired


—


391


—


391




Transfer to lifetime ECL credit-impaired


—


—


—


—




Guarantees that have been derecognised


—


—


—


—




Guarantee calls


—


—


—


—




Amortisation of upfront fees


—


- 128


—


- 128




Foreign exchange rates differences


—


- 48


—


- 48





Balance as at 31 December




94




699




—




793





14.   Provisions for loan commitments, net of reversals

The following table shows reconciliation from the opening to the closing balance of the loss allowance for undisbursed loans (loan commitments) under ECL IFRS 9 model:









in EUR’000




 


2019




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loans commitments



 


 


 


 





Balance as at 1 January




7 225 




16 597 




—




23 822 





Transfer to 12-month ECL


1 669 


9 983 


—


11 652 




Transfer to lifetime ECL not credit-impaired


- 836


15 138  (13)



—


14 302 




Transfer to lifetime ECL credit-impaired


—


—


—


—




Net measurement of loss allowance


696


773


—


1 469 




Business model change (IFE) (14)



-2 974 


-1 387 


—


-4 361 




Financial assets that have been derecognised


-1 960 


-7 858 


—


-9 818 




Foreign exchange rates differences


123


80


—


203





Balance as at 31 December




3 943 




33 326 




—




37 269 

















in EUR’000




 


2018




12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loans commitments



 


 


 


 





Balance as at 1 January




1 993 




2 163 




—




4 156 





Transfer to 12-month ECL


5 192 


—


—


5 192 




Transfer to lifetime ECL not credit-impaired


—


14 420 


—


14 420 




Transfer to lifetime ECL credit-impaired


—


—


—


—




Foreign exchange rates differences


40


14


—


54





Balance as at 31 December




7 225 




16 597 




—




23 822 





15.   Amounts owed to third parties

The main components of amounts owed to third parties are as follows:







in EUR’000




 


31.12.2019


31.12.2018




Net general administrative expenses payable to EIB


50 009 


47 799 




Other amounts payable to EIB


31


54




Interest subsidies and TA not yet disbursed owed to Member States


97 398 


95 960 





Total amounts owed to third parties




147 438 




143 813 





16.   Other liabilities

The main components of other liabilities are as follows:







in EUR’000




 


31.12.2019


31.12.2018




Loan repayments received in advance


1 961 


2 124 




Deferred income from interest subsidies


339


369




Financial guarantee calls


53


—





Total other liabilities




2 353 




2 493 





17.   Member States Contribution called










in EUR’000




Member States


Contribution to the Facility


Contribution to interest subsidies and technical assistance


Total contributed


Called and not paid (15)





Austria


76 442 


9 592 


86 034 


2 410 




Belgium


112 757 


14 105 


126 862 


3 530 




Bulgaria


1 274 


336


1 610 


140




Cyprus


819


216


1 035 


90




Czechia


4 641 


1 224 


5 865 


510




Denmark


62 220 


7 875 


70 095 


2 000 




Estonia


455


120


575


50




Finland


43 821 


5 655 


49 476 


1 470 




France


677 756 


81 837 


759 593 


19 550 




Germany


667 065 


82 766 


749 831 


20 500 




Greece


39 090 


5 324 


44 414 


1 470 




Hungary


5 005 


1 320 


6 325 


550




Ireland


21 034 


3 075 


24 109 


910




Italy


374 974 


48 883 


423 857 


12 860 




Latvia


637


168


805


70




Lithuania


1 092 


288


1 380 


120




Luxembourg


8 422 


1 065 


9 487 


270




Malta


273


72


345


30




Netherlands


151 510 


19 140 


170 650 


4 850 




Poland


11 830 


3 120 


14 950 


1 300 




Portugal


30 418 


4 154 


34 572 


2 300 




Romania


3 367 


888


4 255 


370




Slovakia


1 911 


504


2 415 


210




Slovenia


1 638 


432


2 070 


180




Spain


191 564 


27 231 


218 795 


7 850 




Sweden


81 090 


10 499 


91 589 


2 740 




United Kingdom


395 895 


53 802 


449 697 


—





Total as at 31 December 2019




2 967 000 




383 691 




3 350 691 




86 330 






Total as at 31 December 2018




2 697 000 




353 691 




3 050 691 




100 000 





18.   Commitments and contingent liabilities








in EUR’000




 


31.12.2019


31.12.2018






Commitments




 


 




Undisbursed loans


1 357 320 


1 283 931 




Undisbursed commitment in respect of shares and other variable yield securities


405 920 


347 167 




Issued guarantees


200 013 


2 800 




Interest subsidies and technical assistance


455 671 


457 328 






Contingent liabilities




 


 




Signed non-issued guarantees


1 359 818 


1 553 668 





Total commitments and contingent liabilities




3 778 742 




3 644 894 





19.   Interest and similar income and expenses

The main components of interest and similar income are as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Loans and advances


89 244 


92 506 




Interest subsidies


4 679 


4 224 





Total interest and similar income




93 923 




96 730 





The main components of interest and similar expenses are as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Derivative financial instruments


- 261


- 563




Cash and cash equivalents


- 722


- 654




Treasury financial assets


-1 965 


-1 322 





Total interest and similar expense




-2 948 




-2 539 





20.   Fee and commission income and expenses

The main components of fee and commission income are as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Fee and commission on loans and advances


4 399 


107




Fee and commission on financial guarantees


39


170




Other


—


7





Total fee and commission income




4 438 




284





The main component of fee and commission expenses is as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Commission paid to third parties with regard to shares and other variable yield securities


- 721


- 106





Total fee and commission expenses




- 721




- 106





21.   Net result on shares and other variable yield securities

The main components of net realised gains on shares and other variable yield securities are as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Net realised result on shares and other variable yield securities


- 133


3 166 




Dividend income


1 408 


7 320 




Net fair value change


8 629 


-20 665 





Net result on shares and other variable yield securities




9 904 




-10 179 





22.   General administrative expenses

General administrative expenses represent the actual costs incurred by the EIB for managing the Facility less income generated from standard appraisal fees directly charged by the EIB to clients of the Facility.
The main components of general administrative expenses are as follows:







in EUR’000




 


From 1.1.2019
to 31.12.2019


From 1.1.2018
to 31.12.2018




Actual cost incurred by the EIB


-52 982 


-50 021 




Income from appraisal fees directly charged to clients of the Facility


2 973 


2 222 





Total general administrative expenses




-50 009 




-47 799 





23.   Involvement with unconsolidated structured entities (in EUR’000)


Definition of a structured entity

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:






—


Restricted activities;










—


A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors;










—


Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;










—


Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).





Unconsolidated structured entities

The term ‘unconsolidated structured entities’ refers to all structured entities that are not controlled by the Facility and includes interests in structured entities that are not consolidated.

Definition of Interests in structured entities

IFRS 12 defines ‘interests’ broadly to include any contractual or non-contractual involvement that exposes the reporting entity to variability in returns from the performance of the entity. Examples of such interests include the holding of equity interests and other forms of involvement such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other entity. IFRS 12 states that a reporting entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.
The table below describes the types of structured entities that the Facility does not consolidate but in which it holds an interest.







Type of structured entity


Nature and purpose


Interest held by the Facility




Project Finance — lending to Special Purposes Vehicles (‘SPV’)


Project Finance Transactions (PF Operations) are transactions where the Facility relies for the servicing of its debt on a borrower whose sole or main source of revenue is generated by a single or limited number of assets being financed by such debt or other pre-existing assets contractually linked to the project. PF operations are often financed through SPV.


Net disbursed amounts;
Interest income.




Venture capital operations


The Facility finances venture capital and investment funds. Venture capital and investment funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential as well as financing infrastructure projects.


Investments in units/shares issued by the venture capital entity;
Dividends received as dividend income.




The table below shows the carrying amounts of unconsolidated structured entities in which the Facility has an interest at the reporting date, as well as the Facility's maximum exposure to loss in relation to those entities. The maximum exposure to loss includes the carrying amounts and the related undisbursed commitments.










Type of structured entity


Caption


Carrying amount at 31.12.2019


Carrying amount at 31.12.2018


Maximum exposure to loss at 31.12.2019


Maximum exposure to loss at 31.12.2018




Venture capital funds


Shares and other variable yield securities


504 332 


467 152 


834 955 


797 775 





Total



 



504 332 




467 152 




834 955 




797 775 





24.   Impact financing envelope (in EUR’000)

In June 2013 the ACP-EU Joint Ministerial Council approved the new financial protocol for the 11th European Development Fund (EDF), covering the period 2014-2020.
A new EUR 500m endowment was agreed for the Investment Facility, the so called ‘impact financing envelope’ or ‘IFE’, enabling the Facility to support projects that promise a particularly high development impact whilst bearing the greater risks inherent in such investments. This envelope will present new possibilities for enhancing the Facility’s private sector lending through investments in the following instruments:

Social impact equity funds — promoted by an emerging population of private equity fund managers who put the alleviation of social or environmental issues at the core of their funds' investment strategy but still target sustainability at the levels of both the fund and its investee companies.

Loans to financial intermediaries — (e.g. microfinance institutions, local banks and credit unions) operating in ACP countries in which the EIB cannot consider financing — in particular in local currency — under the existing credit risk guidelines, e.g. due to either high country risks, currency volatility or lack of pricing benchmarks. The main objective of such loans is to fund projects with a high developmental impact, especially in the field of support to micro and small enterprises (MSEs) and agriculture, which generally do not qualify for IF financing.

Risk sharing facilitating instruments — which take the form of first loss guarantees (‘first loss pieces’) that facilitate risk sharing operations of the EIB with local financial intermediaries (mainly commercial banks) for the benefit of underserved SMEs and small projects that meet the Impact Financing Criteria in situations where a market gap has been identified in relation to the access of SMEs/small projects to finance. The first loss pieces would be structured as a counter-guarantee in favour of senior guarantee tranches funded by the EIB — under the Investment Facility — and by other International Financial Institutions/Development Financial Institutions, thus generating a substantial leverage effect.

Direct financing — through debt (i.e. loans) or equity instruments in projects with sound and experienced promoters and high developmental impacts, but that will, however, also entail higher expectations of losses and difficulties to recover the investment (equity type risk with higher than usual expectation of losses). The EIB applies strict selection and eligibility criteria for this instrument, as these projects, notwithstanding their high developmental impact, would not be able to meet acceptable financing criteria (i.e. low expectation of recovering the investment or offsetting the losses through interest rates /equity returns).
The IFE also allows diversification into new sectors, such as health and education, agriculture and food security, and the development of new and innovative risk-sharing instruments.
From a financial and accounting perspective the IFE forms part of the IF portfolio and is accounted for in the overall IF annual financial statements.
The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset:












Type of IFE investment


Caption


Measurement


Gross carrying amount as at 31.12.2019


Loss allowance/FV adj. amount as at 31.12.2019


Carrying amount as at 31.12.2019


Undisbursed amount as at 31.12.2019


OFF BS ECL adj. amount as at 31.12.2019




Social impact equity funds


Shares and other variable yield securities


FVTPL


33 417 


-3 175 


30 242 


66 840 


—




Loans to financial intermediaries


Loans and advances


AC


22 347 


- 354


21 993 


42 400 


-1 251 




Risk sharing facilitating instruments


Issued guarantees


higher of approach (16)



—


—


—


47 331 


- 50




Direct equity participations


Shares and other variable yield securities


FVTPL


58 643 


19 626 


78 269 


14


—




Direct loan operations


Loans and advances


FVTPL


37 136 


-15 156 


21 980 


75 700 


—





Total



 


 



151 543 




941




152 484 




232 285 




-1 301 

















Type of IFE investment


Caption


Measurement


Carrying amount as at 31.12.2018


Undisbursed amount as at 31.12.2018




Social impact equity funds


Shares and other variable yield securities


FVTPL


19 134 


53 672 




Loans to financial intermediaries


Loans and advances


AC


29 566 


24 700 




Risk sharing facilitating instruments


Issued guarantees


higher of approach (17)



- 786


43 668 




Direct equity participations


Shares and other variable yield securities


FVTPL


53 183 


1 014 




Direct loan operations


Loans and advances


AC


6 711 


114 629 





Total



 


 



107 808 




237 683 





Starting from 1 January 2019, the management decided to apply the General Mandate Risk Principles to IFE direct loan operations (excluding Loans to financial intermediaries), as envisaged in the EIB’s Credit and Equity Risk Guidelines, and to monitor and report the risk associated with the IFE direct loan operations on the basis of their fair value.
According to the new methodology, the Bank performs Qualitative Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations. In this context, IFE direct loan operations are reclassified from loans measured at amortised cost to loans measured at fair value.
The change of the business model requires prospective change of the portfolio from the reclassification date. Therefore, the change has no effect on prior years. The effect on the current year Statement of profit and loss and other comprehensive income is recognised under the caption ‘Change in provisions for loan commitments’ in amount of EUR 4,4million.
25.   Subsequent events

There have been no material post-balance sheet events which could require disclosure or adjustment to the 31 December 2019 financial statements.

GLOSSARY


ABAC

This is the name given to the Commission’s accounting system, which since 2005 has been enriched by accrual accounting rules. Apart from the cash-based budget accounts, the Commission produces accrual-based accounts which recognise revenue when earned, rather than when collected. Expenses are recognised when incurred rather than when paid. This contrasts with cash basis budgetary accounting that recognises transactions and other events only when cash is received or paid.

Accounting

The act of recording and reporting financial transactions, including the creation of the transaction, its recognition, processing, and summarisation in the financial statements.

Accounting Officer

The role, powers and responsibilities of the accounting officer are set out in the Financial Regulation:






—


proper implementation of payments,










—


collection of revenue,










—


recovery of amounts and offsetting,










—


keeping, preparing and presenting the accounts,










—


laying down the accounting rules and methods and the chart of accounts,










—


laying down and validating the accounting systems and validating systems laid down by the authorising officer to supply or justify accounting information (local systems),










—


treasury management,










—


designation of the Imprest Administrators,










—


opening and closing bank accounts in the name of the Institution.





Administrative appropriations

Administrative appropriations cover the running costs of the Institutions and entities (staff, buildings, office equipment).

Adjustment

Amending budget or transfer of funds from one budget item to another.

Adopted budget

Draft budget becomes the adopted budget as soon as approved by the Budgetary Authority.
Cf. Budget

Agencies

EU bodies having a distinct legal personality, and to whom budget implementing powers may be delegated under strict conditions. They are subject to a distinct discharge from the discharge authority.

Amending budget

Decision adopted during the budget year to amend (increase, decrease, transfer) aspects of the adopted budget of that year.

Annuality

The budgetary principle according to which expenditure and revenue is programmed and authorised for one year, starting on 1 January and ending on 31 December.

Appropriations

Budget funding.
The budget forecasts both commitments (legal pledges to provide finance, provided that certain conditions are fulfilled) and payments (cash or bank transfers to the beneficiaries). Appropriations for commitments and payments often differ — differentiated appropriations — because multiannual programmes and projects are usually fully committed in the year they are decided and are paid over the years as the implementation of the programme and project progresses. Non-differentiated appropriations apply to administrative expenditure and commitment appropriations equal payment appropriations.

Assigned revenue External/Internal

Dedicated revenue received to finance specific items of expenditure.
Main sources of external assigned revenue are financial contributions from third countries to programmes financed by the Union.


Main sources of internal assigned revenue are revenue from third parties in respect of goods, services or work supplied at their request, revenue arising from the repayment of amounts wrongly paid and revenue from the sale of publications and films, including those on an electronic medium.

The complete list of items constituting assigned revenue is given in the Financial Regulation Article 21.

Authorising Officer by Delegation (AOD)

The AOD is responsible in each entity for authorising revenue and expenditure operations in accordance with the principles of sound financial management and for ensuring that the requirements of legality and regularity are complied with.
The AOD is responsible for taking all financial decision concerning actions under his/her responsibility. Particularly, he/she must take decisions to implement the budget based on his/her risk analysis.

Budget

Annual financial plan, drawn up according to budgetary principles, that provides forecasts and authorises, for each financial year, an estimate of future costs and revenue and expenditures and their detailed description and justification, the latter included in budgetary remarks.

Budget result

The difference between income received and amounts paid, including adjustments for carry-overs, cancellations and exchange rate differences.
For agencies, the resulting amount will have to be reimbursed to the funding authority as provided in the Financial Regulation for agencies.

Budget implementation

Consumption of the budget through expenditure and revenue operations.

Budget item / Budget line / Budget position

As far as the budget structure is concerned, revenue and expenditure are shown in the budget in accordance with a binding nomenclature, which reflects the nature and purpose of each item, as imposed by the budgetary authority. The individual headings (title, chapter, article or item) provide a formal description of the nomenclature.

Budgetary authority

Institutions with decisional powers on budgetary matters: for the EU institutions, the European Parliament and the Council of Ministers.
For the agencies and joint undertakings, their board is the budgetary authority.

Budgetary commitment

A budgetary commitment is a reservation of appropriations to cover for subsequent expenses.

Cancellation of appropriations

Unused appropriations that may no longer be used.

Carryover of appropriations

Exception to the principle of annuality in so far as appropriations that could not be used in a given budget year may, under strict conditions, be exceptionally carried over for use during the following year.

Commitment appropriations

Commitment appropriations cover the total cost of legal obligations (contracts, grant agreements/decisions) that could be signed in the current financial year. Financial Regulation Article 7: Commitment appropriations cover the total cost in the current financial year of legal obligations (contracts, grant agreements/decisions) entered into for operations extending over more than one year.


De-commitment

Cancellation of a reservation of appropriations.

Differentiated appropriations

Differentiated appropriations are used to finance multiannual operations; they cover, for the current financial year, the total cost of the legal obligations entered into for operations whose implementation extends over more than one financial year. Financial Regulation Article 7: Differentiated appropriations are entered for multiannual operations. They consist of commitment appropriations and payment appropriations.


Earmarked revenue

Revenue earmarked for a specific purpose, such as income from foundations, subsidies, gifts and bequests, including the earmarked revenue specific to each institution.
Cf. Assigned revenue

Economic result

Impact on the balance sheet of expenditure and revenue based on accrual accounting rules.

Entitlements established

Entitlements are recovery orders that the European Union must establish for collecting income.

Exchange rate difference

The difference resulting from currency exchange rates applied to the transactions concerning countries outside the euro area, or from the revaluation of assets and liabilities in foreign currency at the closure.

Expenditure

Term used to describe spending the budget from all types of funds sources.

Financial regulation (FR)

Adopted through the ordinary legislative procedure after consulting the European Court of Auditors, this regulation lays down the rules for the establishment and implementation of the general budget of the European Union.
For reference, Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (31).

Funds Source

Type of appropriations

Grants

Direct financial contributions, by way of donation, from the budget in order to finance either an action intended to help achieve an objective part of an EU policy or the functioning of a body, which pursues an aim of general European interest or has an objective forming part of an EU policy.

Implementation

Cf. Budget implementation

Income

Cf. Revenue

Joint Undertakings (JUs)

A legal EU-body established under the Treaty on the Functioning of the European Union. The term can be used to describe any collaborative structure proposed for the ‘efficient execution of Union research, technological development and demonstration programmes’.


Lapsing appropriations

Unused appropriations to be cancelled at the end of the financial year. Lapsing means the cancellation of all or part of the authorisation to make expenditures and/or incur liabilities, which is represented by an appropriation.
Only for joint undertakings, as specified in theirs Financial Rules, any unused appropriations may be entered in the estimate of revenue and expenditure of up to the following three financial years (the so-called ‘N+3’ rule). Hence, lapsing appropriations for JUs could be re-activated until financial year ‘N+3’.

Legal base (basic act)

The legal base or basis is, as a general rule, a law based on an article in the Treaty on the Functioning of the European Union giving competence to the Community for a specific policy area and setting out the conditions for fulfilling that competence including budget implementation. Certain articles from the treaty authorise the Commission to undertake certain actions, which imply spending, without there being a further legal act.

Legal commitment

A legal commitment establishes a legal obligation towards third parties.

Non-differentiated appropriations

Non-differentiated appropriations are for operations of an annual nature. (Financial Regulation Article 9). In the EU Budget, non-differentiated appropriations apply to administrative expenditure, for agricultural market support and direct payments.

Operational appropriations

Operational appropriations finance the different policies, mainly in the form of grants or procurement.

Outstanding commitment

Outstanding commitments (or RAL, from the French ‘reste à liquider’) are defined as the amount of appropriations committed that have not yet been paid or legal commitments having not fully given rise to liquidation by payments. They stem directly from the existence of multiannual programmes and the dissociation between commitment and payment appropriations.

Outturn

Cf. Budget result

Payment

A payment is a disbursement to honour legal obligations.

Payment appropriations

Payment appropriations cover expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years (Financial Regulation Article 7).

RAL

Sum of outstanding commitments. Cf. Outstanding commitments

Recovery

The recovery order is the procedure by which the Authorising officer by Delegation (AOD) registers an entitlement by the Commission in order to retrieve the amount, which is due. The entitlement is the right that the Commission has to claim the sum, which is due by a debtor, usually a beneficiary.

Result

Cf. Budget result

Revenue

Term used to describe income from all sources financing the budget.

Rules of application

Detailed rules for the implementation of the financial regulation. They are set out in a Commission regulation adopted after consulting all institutions and cannot alter the financial regulation upon which they depend.

Surplus

Positive difference between revenue and expenditure (Cf. Budget result) which has to be returned to the funding authority as provided in the Financial Regulation.

Transfer

Transfers between budget lines imply the relocation of appropriations from one budget line to another, in the course of the financial year, and thereby they constitute an exception to the budgetary principle of specification. However, they are expressly authorised by the Treaty on the Functioning of the European Union under the conditions laid down in the Financial Regulation. The Financial Regulation identifies different types of transfers depending on whether they are between or within budget titles, chapters, articles or headings and require different levels of authorisation.


(1)  OJ L 210, 6.8.2013, p. 1.

(2)  Council Regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU) 2015/323 (OJ L 307, 3.12.2018, p. 1).

(3)  It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add up.

(4)  It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add up.

(5)  In accordance with Article 53 of the Financial Regulation applicable to the 11th European Development Fund, the treasury is presented in the balance sheet of the 11th EDF. The nature of the various bank accounts is outlined in Chapter 5, Financial Risk Management.

(6)  Council Regulation (EU) 2016/888 of 6 June 2016 amending Regulation (EU) 2015/323 on the financial regulation applicable to the 11th European Development Fund as regards payment of the instalments (OJ L 149, 7.6.2016, p. 1).

(7)  It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to add up.

(8)  Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

(9)  Council Regulation (EU) 2018/1877.

(10)  It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to addup.

(11)  Regulation (EU, Euratom) 2018/1046.

(12)  Council Regulation (EU) 2018/1877.

(13)  There is a time lag between the approval of programmes and ‘top-ups’ by Operational committees and the formal commitment in ABAC. At year-end, the total committed amount in 2019 was of EUR 722,7 million.

(14)  It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add up.

(1)  OJ L 314, 30.11.2001, p. 1.

(2)  OJ L 109, 26.4.2007, p. 33.

(3)  Council Decision (EU) 2019/640 of 15 April 2019 concerning the allocation of funds decommitted from projects under the 10th European Development Fund for the purpose of replenishing the African Peace Facility (OJ L 109, 24.4.2019, p. 24).

(15)  Decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDF.

(16)  All decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDF.

(17)  Following Council Decision 2010/406/EU (OJ L 189,22.7.2010, p.14), 150 million was added from non-mobilisable performance reserve 10th EDF for Sudan (147 million to special allocation Sudan and 3 million to implementation costs).

(18)  Following Council Decision 2011/315/EU (OJ L 142, 28.5.2011, p. 61), 200 million was added from non-mobilisable performance reserve 10th EDF for Sudan (194 million to special allocation South Sudan and 6 million to implementation costs).

(19)  All decreases of voluntary contribution are refund to donors.

(20)  Transfers in / from 8th and 9th EDF decommitments to the 10th EDF reserves.

(21)  All decreases are decommitments transferred to the non-mobilisable performance reserve of the 11th EDF.

(22)  For the cofinancings, the table only presents the commitment appropriations.

(23)  Following Council Decision (EU) 2019/640, EUR 445,86 million was added from non-mobilisable performance reserve 10th EDF for African Peace Facility, of which EUR 408 million in 2019.

(24)  Transfers in / from 10th EDF decommitments to the 10th EDF reserves.

(25)  For the cofinancings, the table only presents the commitment appropriations.

(4)  % of appropriations.

(5)  For the year ended 31 December 2019, interest and similar income included EUR 93,9 million (2018: EUR 96,7 million) calculated on assets held at amortised cost based on effective interest method.

(26)  Loan operations measured at FVTPL.

(27)  Agency agreements for which at reporting date there is no underlying counterparts.

(28)  Agency agreements for which at reporting date there is no underlying counterparts.

(29)  Decreases are explained by repayments of capital occurred during the year on operations already considered as forborne as of 31 December 2019 and by termination of forborne measures during the year.

(30)  The amounts owed to third parties are including the Interest subsidies and TA not yet disbursed owed to Member States, where the maturity is mainly undefined.

(6)  See section 3.4.2.2.2 for explanations on synthetic hedge.

(7)  See section 3.4.2.2.2 for explanations on synthetic hedge.

(8)  Including agency agreements.

(9)  For details, please refer to Note 24.

(10)  Including agency agreements.

(11)  For details, please refer to Note 24.

(12)  Includes misstatement in relation to the fair valuation performed as at 31 December 2018 in an amount of EUR’000 5 853, which was corrected in 2019. Excluding this, the net change in unrealised gains and losses would amount to EUR’000 17 970 for the financial year 2019.

(13)  The methodology for the estimation of provisions for loan commitments as at 31 December 2019 was changed for the Stage 2 loan commitments, and such as the Facility did not apply the Credit Conversion Factors in the calculation. This change resulted an additional ECL in amount of EUR 7,7 million.

(14)  For details, please refer to Note 24.

(15)  On 24 October 2019, the Council fixed the amount of financial contributions to be paid by each Member State by 21 January 2020. As at 31 December 2019, EUR 86 330 were not paid in.

(16)  For details, please refer to section subsequent measurement of Note 2.4.3.

(17)  For details, please refer to section subsequent measurement of Note 2.4.3.

(31)  OJ L 193, 30.7.2018, p. 1.