Communication from the Commission to the European Parliament, the Council and the Court of Auditors - Annual accounts of the European Development Fund 2020
Date: 2021-06-30
Institutions: Directorate-General for Budget, European Commission
Subjects: European Development Fund, balance sheet, closing of accounts, consolidated account, financial situation, implementation of the budget

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 30.6.2021  COM(2021) 379 final    Communication from the Commission to the European Parliament, the Council and the Court of Auditors - Annual accounts of the European Development Fund 2020  
 
 
Annual accounts of the European Development Fund 2020 

CONTENTS 

CERTIFICATION OF THE ACCOUNTS ..................................................................... 2 

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES ................................ 3 

FUNDS MANAGED BY THE EUROPEAN COMMISSION ............................................... 8 

FINANCIAL STATEMENTS OF THE EDF ......................................................................... 10 

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF ................... 48 

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2020 .................................... 49 

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2020 ................................................... 57 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS .......... 66 

EDF REPORT ON FINANCIAL IMPLEMENTATION ............................................................ 71 

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANAGED BY THE EUROPEAN 
INVESTMENT BANK .......................................................................................... 91 

1 

 
 
 
 
Annual accounts of the European Development Fund 2020 

CERTIFICATION OF THE ACCOUNTS 

The  annual  accounts  of  the  European  Development  Fund  for  the  year  2020  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 

2 

 
 
 
 
Annual accounts of the European Development Fund 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 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  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 20131. It came into force on 1 March 2015.  

In  2018,  the  Council  adopted  the  Financial  Regulation  applicable  to  the  11th  EDF2.  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. 

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. 

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Annual accounts of the European Development Fund 2020 

2.  HOW IS THE EDF FUNDED? 

The  Council  of  2  December  2013  adopted  the  Regulation  1311/2013  laying  down  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,  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 in principle for one year. Unlike the EU Budget, the EDF is a fund operating 
based on multi-annuality, to implement development cooperation during a period of usually five years. As 
resources are allocated on a multi-annual basis, the allocated funds may be used over the period of the 
EDF. This multiannual approach 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  above  mentioned  contributions,  it  is  also  possible  for  Member  States  to  enter  into 
co-financing arrangements or to make voluntary financial contributions to the EDF. 

3. 

EDF ACTIVITIES AFTER 31 DECEMBER 2020 

The  11th  EDF  has  reached  its  final  stage  as  the  sunset  clause  came  into  effect  on  31  December  2020. 
This  clause  sets  a  cut-off  date  for  commitments  under  the  11th  EDF.  As  of  2021  no  further  financing 
agreements  can  be  signed  under  the  11th  EDF.  However,  specific  contracts  for  the  existing  financing 
agreements will still be signed until 31 December 2023.  

To ensure continuity of the development programmes, from 2021, the EDF programmes will be included 
in  the  EU  multi-annual  financial  framework  (MFF).  This  means  that  while  so  far  the  EDF  programmes 
were  funded  by  the  voluntary  contributions of  EU  Member  States  as  of  2021  development  programmes 
will be funded through the EU budget. This also implies that the funding of development programmes will 
be subject to the authorisation of the European Parliament and that the transactions will have to comply 
with the EU financial regulations in the same way as other EU funding programmes.  

4.  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  or  WA)  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  UK 
continued involvement with the EDF is dealt with under Part Five, Chapter 5 of the WA.  

According to Article 152 of the WA, the United Kingdom remains party to the EDF until the closure of the 
11th EDF and all previous unclosed EDFs, and assumes the same obligations as the Member States in this 
respect. UK beneficiaries remain eligible to participate in projects under the 11th EDF and previous EDFs 
under the same  conditions as before.  The  UK  may  participate, as an observer, without voting rights, in 
the  EDF  Committee  and  the  Investment  Facility  Committee  (Art.  152(2)  WA).  The  UK  share  of  the 
Investment Facility of the EDF shall be reimbursed  to the UK as the investment matures. Unless agreed 
otherwise, the United Kingdom's capital share shall not be recommitted beyond the end of the 11th EDF 
commitment period or rolled over into subsequent periods (Art. 152(4) WA).  

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 the 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 the 11th EDF after 31 December 2020 (Art. 153).  

4 

 
 
Annual accounts of the European Development Fund 2020 

The  UK  remains  liable  in  respect  of  the  guarantees  provided  under  all  EDFs.  At  the  same  time  it  is 
entitled to its share of any amount recovered under the terms of the Member States' guarantees and to 
the  balance  of  its  Member  State  Call  Account  in  proportion  to  its  respective  participation  in  each 
guarantee agreement (Art. 154). 

At  the  time  of  the  transmission  of  these  provisional  accounts,  and  based  on  the  WA  concluded  and 
already in operation, there is no financial impact to be reported in the EDF annual accounts. 

5. 

YEAR-END REPORTING 

5.1.  ANNUAL ACCOUNTS 

In  accordance  with  Articles  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 
also 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. 

6.  AUDIT AND DISCHARGE 

6.1.  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. 

5 

 
 
 
Annual accounts of the European Development Fund 2020 

6.2.  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. 

6 

 
 
 
 
Annual accounts of the European Development Fund 2020 

HIGHLIGHTS OF FINANCIAL 
IMPLEMENTATION 2020 

Commitments

Contracts

Payments

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

* Net amount, only 10th & 11th EDF 

Budget implementation 

In  2020  the  financial  implementation  (10th  and  11th  EDF)  for  decisions  (global  commitments:  2  687 
million  euros),  contracts  (individual  commitments:  3  670  million  euros)  and  payments  (4  599  million 
euros)  were  all  impacted  by  the  EU  response  to  the  unpredicted  crisis  of  COVID-19,  which  became  a 
priority  for  the  Commission.  Therefore  2020  was  a  record  year  for  payments,  due  to  the  increased 
disbursements to projects contributing to fighting the COVID crisis. This also led to the acceleration of the 
absorption period, which improved to 3 years in 2020. The sunset clause for the 11th EDF was reached 
on the 31st of December 2020. This means that as of 2021 there will be no further global commitments 
of  projects  under  the  11th  EDF  (for  the  details  please  refer  to  Report  on  Financial  Implementation 
section). 

Impact of the activities in the financial statements 

In the financial statements, the impact of the above mentioned activities is most visible when looking at: 

• 
contracts signed and advances paid during 2020; 

Pre-financing  (see  note  2.2):  an  increase  by  EUR  29  million  largely  as  a  result  of  the  new 

• 
The aid instrumens expenses (see note 3.3): a substantial increase (by EUR 852 million) as a 
result of the increased activity during the year in order to combat the negative effects of  the COVID-19 
pandemic,  in  particular  as  projects  were  reoriented  to  deal  with  the  crisis,  but  also  due  to  the  normal 
lifecycle of the EDF whereby the activities of the 11th EDF are peaking. 

Cash  and  cash  equivalents  (see  note  2.5):  a  decrease  by  EUR  451  million  as  a  result  of  the 
• 
significant increase  in payments during  the  year to cover the augmented expenses  and advances  made 
on new contracts; 

Accrued charges (see note 2.8): an increased by EUR 208 million as a result of the increase in 
• 
the number of open contracts at the end of the year for which no cost claims were validated at the year 
end. 

7 

 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EUROPEAN DEVELOPMENT FUND 
FINANCIAL YEAR 2020 

FUNDS MANAGED BY THE EUROPEAN 
COMMISSION 

8 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONTENTS 

FINANCIAL STATEMENTS OF THE EDF ................................................................ 10 

EDF BALANCE SHEET ................................................................................................ 11 

EDF STATEMENT OF FINANCIAL PERFORMANCE ........................................................... 12 

EDF CASHFLOW STATEMENT ..................................................................................... 13 

EDF STATEMENT OF CHANGES IN NET ASSETS ............................................................ 14 

BALANCE SHEET BY EDF ........................................................................................... 15 

STATEMENT OF FINANCIAL PERFORMANCE BY EDF ...................................................... 17 

STATEMENT OF CHANGES IN NET ASSETS BY EDF ....................................................... 18 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ................................................... 20 

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF ........... 48 

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2020 ............................ 49 

BALANCE SHEET ...................................................................................................... 54 

STATEMENT OF FINANCIAL PERFORMANCE ................................................................. 55 

CASHFLOW STATEMENT ............................................................................................ 56 

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2020 ........................................... 57 

BALANCE SHEET ...................................................................................................... 63 

STATEMENT OF FINANCIAL PERFORMANCE ................................................................. 64 

CASHFLOW STATEMENT ............................................................................................ 65 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS . 66 

CONSOLIDATED BALANCE SHEET ............................................................................... 67 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE .......................................... 68 

CONSOLIDATED CASH FLOW STATEMENT ................................................................... 69 

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ........................................... 70 

EDF REPORT ON FINANCIAL IMPLEMENTATION .................................................... 71 

9 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

FINANCIAL STATEMENTS OF THE EDF 

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. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EDF BALANCE SHEET 

NON-CURRENT ASSETS 
Financial assets 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Fair value reserve 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

Note 

EUR million 
31.12.2020  31.12.2019 

2.1 
2.2 
2.3 

2.2 
2.4 
2.5 

2.6 

2.7 
2.8 

2.9 
2.10 
2.10 

 33 
 873 
 394 
1 300 

1 355 
 140 
 728 
2 223 
3 523 

 36 
 910 
 266 
1 213 

1 288 
 123 
1 179 
2 590 
3 803 

 (2) 
 (2) 

 (19) 
 (19) 

 (615) 
(1 527) 
(2 143) 
(2 145) 

 (516) 
(1 319) 
(1 835) 
(1 854) 

1 379 

1 948 

 (5) 
58 986 
2 252 
(55 111) 
(4 744) 
1 379 

 (2) 
54 809 
2 252 
(51 155) 
(3 956) 
1 948 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EDF STATEMENT OF FINANCIAL PERFORMANCE 

REVENUE 
Revenue from non-exchange transactions 
Recovery activities 

Revenue from exchange transactions 
Financial revenue 
Other revenue 

Total Revenue 
EXPENSES 
Aid instruments 
Co-financing expenses 
Finance costs 
Other expenses 
Total Expenses 

ECONOMIC RESULT OF THE YEAR 

Note 

3.1 

3.2 

3.3 
3.4 
3.5 
3.6 

2020 

EUR million 
2019 

 92 
 92 

 6 
 37 
 43 
 135 

 28 
 28 

 7 
 39 
 46 
 74 

(4 607) 
 (53) 
 (21) 
 (197) 
(4 878) 

(3 755) 
 (14) 
 (1) 
 (260) 
(4 030) 

(4 744) 

(3 956) 

12 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EDF CASHFLOW STATEMENT 

Economic result of the year 
Operating activities 
Capital increase - contributions (net) 
(Increase)/decrease in trust funds contributions 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-exchange recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred income 
Other non-cash movements 
Investing activities 
(Increase)/decrease in available for sale financial assets  

NET CASHFLOW 

Note 

EUR 
million 
2019 
(4 744)  (3 956) 

2020 

4 177 
 (127) 
 (29) 
 (17) 
 (17) 
 99 
 209 
 (3) 

4 385 
 (65) 
 136 

 15 
 2 
 275 
 37 
 (2) 

 2 
 (452) 

 (36) 
 792 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2.5 
2.5 

 (451) 
1 179 
 728 

 792 
 387 
1 179 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EDF STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2020 

Fund 
capital - 
active 
EDFs 
(A) 
 73 264 

– 
– 
 73 264 

  (223) 
– 
 73 041 

Uncalled 
funds - 
active 
EDFs (B) 

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

Cumulative 
Reserves (D) 

 22 840 

 50 423 

 (51 155) 

 (4 385) 
– 
 18 455 

 (4 400) 
– 
 14 055 

 4 385 
– 
 54 809 

 4 177 
– 
 58 986 

– 
 (3 956) 
 (55 111) 

– 
 (4 744) 
 (59 854) 

Called fund 
capital from 
closed EDFs 
carried forward 
(E) 

EUR million 

Fair value 
reserve (F) 

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

 2 252 

– 
– 
 2 252 

– 
– 
 2 252 

– 
  (2) 

  (2) 
  (3) 

  (5) 

 1 521 
  (2) 
 4 385 
 (3 956) 
 1 948 
  (3) 
 4 177 
 (4 744) 
 1 378 

BALANCE AS AT 31.12.2018 
Fair value movements 
Capital increase -  contributions 
Economic result of the year 
BALANCE AS AT 31.12.2019 
Fair value movements 
Capital increase - contributions 
Economic result of the year 
BALANCE AS AT 31.12.2020 

14 

 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET BY EDF 

Annual accounts of the European Development Fund 2020 

Note 

Eighth 
EDF 

Ninth 
EDF 

10th 
EDF 

11th 
EDF 

Total 

Eighth 
EDF 

31.12.2020 

NON-CURRENT ASSETS 
Financial assets 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-
exchange recoverables 
Inter-EDF accounts 
Cash and cash equivalents 

TOTAL ASSETS 

2.1 
2.2 
2.3 

2.2 

2.4 

2.5 

NON-CURRENT LIABILITIES 
Financial liabilities 

2.6 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred 
income 

2.7 

2.8 

TOTAL LIABILITIES 

– 
– 
– 
– 

– 

– 
 3 
 29 
  33 

 (2) 
 292 
 9 
  299 

 35 
 578 
 355 
  969 

 33 
 873 
 394 
 1 300 

 9 

 341 

1 005 

1 355 

– 
– 
– 
– 

– 

 181 

 (177) 

1 723 

(1 586) 

 140 

 183 

 121 

2 201 

(2 382) 

 181 
– 
  362 
  362 

 (246) 
– 
  (414) 
  (381) 

1 663 
– 

(1 598) 
 728 
 3 726   (1 451) 
  (483) 
 4 025 

– 
 728 
 2 224 
 3 523 

 182 
– 
  365 
  365 

 53 
– 
  201 
  207 

2 160 
– 

(2 395) 
1 179 
 4 801   (2 777) 
 5 127   (1 896) 

31.12.2019 
Ninth 
EDF 

10th 
EDF 

– 
 6 
– 
  6 

– 
 325 
– 
  325 

11th 
EDF 

 36 
 580 
 266 
  882 

 26 

 441 

 821 

 EUR million 

Total 

 36 
 910 
 266 
 1 213 

1 288 

 123 

– 
1 179 
 2 590 
 3 803 

– 
– 

– 

– 

– 
– 

– 
– 

– 
– 

 (2) 
  (2) 

 (1) 

 (62) 

 (554) 

 (2) 
  (2) 
– 
 (615) 

 (67) 

 (217) 

(1 244) 

(1 527) 

  (67) 
  (67) 

  (279)   (1 798)   (2 143) 
  (279)   (1 800)   (2 145) 
– 
 1 379 

 3 747   (2 282) 

– 
– 

– 

– 

– 
– 

– 
– 

 (1) 
  (1) 

 (18) 
  (18) 

 (19) 
  (19) 

 (5) 

 (108) 

 (404) 

 (516) 

 (96) 

 (240) 

 (983) 

(1 319) 

  (101) 
  (101) 

  (348)   (1 386) 
  (349)   (1 405) 

 (1 835) 
 (1 854) 

  365 

  106 

 4 778   (3 300) 

 1 948 

NET ASSETS 

  362 

  (448) 

2.9 

Fair value reserves 
Called fund capital - active EDFs  2.10 
Called fund capital from closed 
EDFs carried forward 
Called fund capital transfers 
between active EDFs 

2.10 

2.10 

– 
12 164 

– 
10 535 

 (2) 
20 960 

 (4) 
15 327 

 (5) 
58 986 

– 
12 164 

– 
10 758 

– 
20 960 

 (2) 
10 927 

 (2) 
54 809 

 627 

1 625 

– 

– 

2 252 

 627 

1 625 

– 

– 

2 252 

(2 512) 

2 041 

 188 

 283 

– 

(2 510) 

2 109 

 265 

 136 

– 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

Note 

Eighth 
EDF 

Ninth 
EDF 

10th 
EDF 

11th 
EDF 

Total 

Eighth 
EDF 

31.12.2020 

31.12.2019 
Ninth 
EDF 

10th 
EDF 

11th 
EDF 

 EUR million 

Total 

Economic result carried forward 
from previous years 
Economic result of the year 

(10 098)  (14 440)  (18 606)  (11 966)  (55 111)  (10 098)  (14 406)  (18 077) 

(8 573) 

(51 155) 

– 

 36 

 (457) 

(4 324) 

(4 744) 

– 

 (34) 

 (529) 

(3 393) 

(3 956) 

NET ASSETS 

  181 

  (203) 

 2 084 

  (683) 

 1 379 

  183 

  53 

 2 618 

  (905) 

 1 948 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF FINANCIAL PERFORMANCE BY EDF 

Annual accounts of the European Development Fund 2020 

Note 

Eighth 
EDF 

Ninth 
EDF 

2020 
10th 
EDF 

11th 
EDF 

Total 

Eighth 
EDF 

Ninth 
EDF 

2019 

10th 
EDF 

11th 
EDF 

EUR million 

Total 

REVENUE 
Revenue from non-exchange 
transactions 
Recovery activities 

3.1 

Revenue from exchange transactions  3.2 
Financial revenue 
Other revenue 

Total revenue 
EXPENSES 
Aid instruments 
Co-financing expenses 
Finance costs 
Other expenses 
Total expenses 

3.3 
3.4 
3.5 
3.6 

 (1) 
  (1) 

– 
– 
– 
  (1) 

– 
– 
 1 
- 
  1 

5 
  5 

 5 
5 
 10 
  15 

 69 
  69 

 1 
 18 
 19 
  88 

 19 
  19 

 1 
 13 
 13 
  32 

 92 
  92 

 6 
 37 
 43 
  135 

– 
– 

– 
 1 
 1 
  1 

- 
– 

– 
 6 
 6 
  6 

 18 
  18 

 3 
 21 
 24 
  42 

 10 
  10 

 4 
 12 
 16 
  26 

 28 
  28 

 7 
 39 
 46 
  74 

 34 
– 
 (3) 
 (9) 
  21 

 (462) 
 (41) 
 (16) 
 (25) 

(4 607) 
(4 179) 
 (53) 
 (12) 
 (21) 
 (4) 
 (197) 
 (162) 
 (545)   (4 356)   (4 878) 

– 
– 
– 
 (1) 
  (1) 

 (35) 
– 
 2 
 (8) 
  (40) 

 (579) 
 (9) 
 (2) 
 20 

(3 141) 
 (5) 
 (1) 
 (272) 
  (571)   (3 418) 

(3 755) 
 (14) 
 (1) 
 (260) 
 (4 030) 

ECONOMIC RESULT OF THE YEAR 

- 

  36 

 (457)   (4 324)   (4 744) 

- 

  (35) 

  (529)   (3 393) 

 (3 956) 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN NET ASSETS BY EDF 

Annual accounts of the European Development Fund 2020 

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) 

BALANCE AS AT 31.12.2018 
Transfers to/from the 10th EDF 
BALANCE AS AT 31.12.2019 
Transfers to/from the 10th EDF 
BALANCE AS AT 31.12.2020 

 12 164 

 12 164 

 12 164 

– 

– 

– 

 12 164 
– 
 12 164 
– 
 12 164 

 (10 098) 

  627 

 (10 098) 

  627 

 (10 098) 

  627 

Called fund 
capital 
transfers 
between 
active EDFs 
(F) 
 (2 509) 
 (1) 
 (2 510) 
 (2) 
 (2 512) 

EUR million 

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

  184 
 (1) 
  183 
 (2) 
  181 

Cumulative 
Reserves (D) 

 (14 406) 

 (34) 
 (14 440) 

Called fund 
capital from 
 1 625 
closed EDFs 
carried 
forward (E) 

 1 625 

 2 137 

Called fund 
capital 
transfers 
between 
 (27) 
active EDFs 
(F) 

 2 109 

 (69) 

EUR million 

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

  129 
 (15) 
 (27) 
 (34) 
  53 
– 
 (69) 

– 
 (14 440) 

 1 625 

– 
 2 041 

– 
  (203) 

Ninth EDF 

BALANCE AS AT 31.12.2018 
Transfers to/from the 10th EDF 
Transfers to/from the 10th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2019 
Capital increase - contributions 
Transfers to/from the 10th EDF 
Refund to Member States 
Economic result of the year 
BALANCE AS AT 31.12.2020 

Fund 
capital - 
 10 773 
active 
EDFs (A) 

Uncalled 
funds - 
– 
active EDFs 
 15 
(B) 

 10 773 

 (223) 

  15 
– 

 10 550 

  15 

Called fund capital 
- active EDFs (C) = 
 10 773 
(A)-(B) 
 (15) 
– 
– 
 10 758 
– 
– 
 (223) 
– 
 10 535 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

10th EDF 

BALANCE AS AT 31.12.2018 
Transfers to/from the Eighth and 
Ninth EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2019 
Transfers to/from the Eighth and 
Ninth EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2020 

Fund capital - 
active EDFs 
(A) 

Uncalled 
funds - active 
EDFs (B) 

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

Cumulative 
Reserves (D) 

 20 960 

– 

 20 960 

 (18 077) 

– 

– 
– 
 20 960 

– 

– 
– 
 20 960 

 (529) 
 (18 606) 

 (457) 
 (19 063) 

– 

– 

 20 960 

 20 960 

Called fund 
capital from 
closed EDFs 
carried forward 
(E) 

– 

– 

– 

11th EDF 
BALANCE AS AT 31.12.2018 
Fair value movements 
Capital increase - contributions 
Transfers to/from the Eighth, 
Ninth and 10th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2019 
Fair value movements 
Capital increase - contributions 
Economic result of the year 
BALANCE AS AT 31.12.2020 

Fund 
capital - 
 29 367 
active 
EDFs (A) 

Uncalled 
funds - 
 22 840 
active EDFs 
(B) 
(4 400) 

 29 367 

 18 440 

Called fund 
capital - 
 6 527 
active EDFs 
(C) = (A)-
4 400 
(B) 
– 
– 
 10 927 

Cumulative 
Reserves 
 (8 573) 
(D) 

(3 393) 
 (11 966) 

Called fund 
capital 
– 
from 
closed 
EDFs 
carried 
forward (E) 
– 

– 

Called fund 
capital 
  317 
transfers 
– 
between 
active EDFs 
 (181) 
(F) 
– 
  136 

(4 400) 

 29 367 

 14 040 

4 400 
– 
 15 327 

(4 324) 
 (16 290) 

 147 
– 
  283 

– 

EUR million 

Called fund 
capital transfers 
between active 
EDFs (F) 

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

  55 

 2 938 

 28 

 181 

  265 

 71 

 (147) 
– 
  188 

 28 

 181 
 (529) 
 2 618 

 71 

 (147) 
 (457) 
 2 084 

Fair value 
reserve (G) 
– 
 (2) 

  (2) 
 (2) 

  (4) 

EUR million 

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

 (1 729) 
 (2) 
4 400 
 (181) 
(3 393) 
  (905) 
 (2) 
4 547 
(4 324) 
  (683) 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

NOTES TO THE FINANCIAL STATEMENTS 
OF THE EDF 

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

20 

 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 stakeholders.  

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 

31.12.2020 

31.12.2019  Currency 

31.12.2020 

31.12.2019 

BGN 
CZK 
DKK 
GBP 
HRK 
HUF 

1.9558 
26.2420 
7.4409 
0.8990 
7.5519 
363.8900 

1.9558  PLN 
25.4080  RON 
7.4715  SEK 
0.8508  CHF 
7.4395  JPY 
330.5300  USD 

4.5597 
4.8683 
10.0343 
1.0802 
126.4900 
1.2271 

4.2568 
4.783 
10.4468 
1.0854 
121.9400 
1.1234 

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 

21 

 
 
Annual accounts of the European Development Fund 2020 

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. 

1.2.4.  Application of new and amended European Union Accounting Rules (EAR) 

New EAR which are effective for annual periods beginning on or after 1 January 2020 

There are no new EAR which became effective for annual periods beginning on or after 1 January 2020. 

New EAR adopted but not yet effective at 31 December 2020 

On 17 December 2020  the Accounting  Officer  of the  European Commission adopted the revised EAR 11 
‘Financial  Instruments’,  which  is  effective  for  accounting  periods  beginning  on  or  after  1  January  2021. 
The  revised  EAR  11  has  been  updated  in  line  with  the  new  IPSAS  41  ‘Financial  Instruments’  and 
establishes the principles for the financial reporting of the financial assets and financial liabilities held by 
the EU entities. For more information please refer to the EU annual accounts of 2020. No material impact 
of this change is expected due to the small amount of financial instruments in the financial statements of 
the entity. 

1.3.  BALANCE SHEET

1.3.1. 

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. 

22 

 
 
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.

1.3.2. 

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 recognised 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. 

1.3.3.  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. 

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. 

23 

 
 
1.3.4.  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. 

1.3.5. 

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,  at  the  moment  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. The corresponding expenses are entered in the accounts when the supplies or services 
are delivered and accepted by the entity. 

1.3.6.  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,  or  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. These 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, 
revenue 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.  For  the  EU  entities,  transfers  mostly  comprise  funds  received  from  the 
Commission  (e.g.  balancing  subsidy  to  the  traditional  agencies,  operating  subsidy  for  the  delegation 
agreements). 

24 

 
 
 
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. 

(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 the incurring of liabilities that result in decreases in net assets. 
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. 

25 

 
 
 
1.5.2.  Contingent liabilities  

A contingent liability  is either a possible  obligation  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 where it is not probable that an outflow of resources embodying economic 
benefits or service potential will be required to settle the obligation.  

A contingent liability also arises in the rare circumstances where a present obligation exists but cannot be 
measured with sufficient reliability.  

Contingent  liabilities  are  not  recognised  in  the  accounts.  They  are  disclosed unless  the  possibility  of  an 
outflow of resources embodying economic benefits or service potential is remote. 

1.6.  FUND CAPITAL 

The EDF member states provide contributions to the Fund for the implementation of EDF programmes as 
laid down in the Internal Agreement of each EDF. According to the applicable legal basis the capital calls, 
i.e. the requests for funding for a given year N, are decided by a Council  Decision in year N-1, with the 
funds to be received clearly assigned to specified future periods.  

The  contributions  meet  the  criteria  of  contribution  from  owners  (EAR  1)  and  are  thus  treated  as  fund 
capital in the EDF financial statements. The fund capital represents the total amount of contributions to 
be received from the EDF members states. As the uncalled fund capital is openly deducted from the total 
fund capital (see Statement of Changes in  Net Assets), only the called fund capital is recognised in the 
Balance Sheet. 

As the agreed contributions are assigned to specified reporting periods, with the EDF’s legal claim against 
the EDF member states arising only in these periods, any amounts received in advance are recognised as 
deferred capital contributions under Payables rather than as called capital. 

1.7.  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 the economic result of the 
year is nil. 

26 

 
 
 
Annual accounts of the European Development Fund 2020 

2.  NOTES TO THE BALANCE SHEET 

ASSETS 

2.1.  FINANCIAL ASSETS 

The  financial  assets  of  the  EDF  amounted  to  EUR  33  million  at  31  December  2020  (2019:  36  million). 
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. 

Non-current pre-financing 
Current pre-financing 
Total 

Note 

2.2.1 
2.2.2 

Eighth 
EDF 
– 
– 
– 

Ninth 
EDF 
 3 
 9 
  12 

10th 
EDF 
 292 
 341 
  633 

11th 
EDF 
 578 
1 005 
 1 583 

EUR million 

31.12.2020  31.12.2019 

 873 
1 355 
 2 228 

 910 
1 288 
 2 199 

The increase in total pre-financing by EUR 29 million at 31 December 2020 is a combined effect of the 
increase of pre-financing of the 11th EDF (2019: EUR 1 401 million) and decrease of pre-financing of the 
10th EDF (2019: EUR766 million).  

The increase of pre-financing in the 11th EDF can be largely explained by increase of advances paid out 
on new contracts signed during the year.  The 11th EDF started in  2015 and in 2020 the contracting for 
the EDF activities reached a peak. As a result, the number of open contracts increased from around 3 400 
in 2019 to 3 550 in 2020. This increase in pre-financing led to an increase in cash outflows and therefore 
to a decrease in cash and cash equivalents (see note 2.5). 

The decrease of pre-financing in the 10th EDF is a consequence of the normal lifecycle of the EDF. As a 
result of phasing out of the 10th  EDF  many  contracts were  completed  and  closed. The number of  open 
contracts  under  this  EDF  dropped  from  approximately  2  600  in  2019  to  circa  2  500  in  2020. 
Consequently, the level of pre-financing payments made to beneficiaries decreased while the clearing of 
pre-financing increased.  

27 

 
 
 
 
Annual accounts of the European Development Fund 2020 

2.2.1.  Non-current pre-financing by management mode 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 
EIB and EIF 
International organisations 
Private law bodies with a public service mission 
Public law bodies 
Third countries 
EU bodies and Public Private Partnership 

Total 

2.2.2.  Current pre-financing 

31.12.2020 

EUR million 
31.12.2019 

 139 
 8 
 25 
  171 

 266 
 347 
 28 
 49 
 11 
 1 
  702 
  873 

 190 
 6 
 49 
  244 

 313 
 291 
 22 
 22 
 17 
 1 
  666 
  910 

Pre-financing (gross) 
Cleared via cut-off 
Total 

EUR million 
Eighth EDF  Ninth EDF  10th EDF  11th EDF  31.12.2020  31.12.2019 
5 030 
(3 742) 
 1 288 

3 472 
(2 467) 
 1 005 

1 527 
(1 186) 
  341 

5 097 
(3 742) 
 1 355 

 98 
 (89) 
  9 

– 
– 
– 

2.2.3.  Current pre-financing by management mode 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 
EIB and EIF 
International organisations 
Private law bodies with a public service mission 

Public law bodies 

Third countries 
EU bodies and Public Private Partnership 

Total 

31.12.2020 

EUR million 
31.12.2019 

 (40) 
 14 
 206 
  180 

 224 
 572 
 73 

 146 

 155 
 4 

 1 175 

 1 355 

 80 
 15 
 188 
  283 

 50 
 569 
 86 

 119 

 180 
 1 

 1 005 

 1 288 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.2.4.  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. 

Guarantees for Pre-financing 

31.12.2020 
 49 

EUR million 
31.12.2019 
 46 

The increase of the pre-financing guarantees is a consequence of increase of pre-financing. 

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 Commission under the direct management mode. 

Net contribution at 
31.12.2019 

Contributions 
paid in 2020 

Allocation of TF's net 
expenses  2020 

Net contribution 
at 31.12.2020 

 263 
 4 
  266 

 771 
 29 
  800 

 (649) 
 (24) 
  (673) 

 385 
 9 
  394 

EUR million 

Africa 
Bêkou 
Total 

The contributions to the trust funds increased from EUR 600 million in 2019 to EUR 800 million in 2020. 
The increase of the funding was necessary to cover the increased activity of the trust funds resulting in 
higher expenses in this area.   

2.4.  NON-EXCHANGE RECOVERABLES AND EXCHANGE 

RECEIVABLES 

Exchange  transactions  are  transactions  in  which  the  entity  receives  assets  or  services,  or  has  liabilities 
extinguished,  and  directly  gives  approximately  equal  value  (primarily  in  the  form  of  goods,  services  or 
use  of  assets)  to  the  other  party  in  exchange.  Non-exchange  transactions  are  transactions  in  which  an 
entity  either  receives  value  from  another  entity  without  directly  giving  approximately  equal  value  in 
exchange,  or  gives  value  to  another  entity  without  directly  receiving  approximately  equal  value  in 
exchange.  

Recoverables from non-exchange transactions 
Receivables from exchange transactions 
Total 

Note 
2.4.1 
2.4.2 

EUR million 
31.12.2020  31.12.2019 
 32 
 91 
  123 

 48 
 92 
  140 

29 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.4.1.  Recoverables from non-exchange transactions 

Member States 
Customers 
Public bodies 
Third states 
Write down 
Inter-company accounts with EU 
institutions 
Total 

Eighth 
EDF 
– 
– 
– 
– 
– 

Ninth 
EDF 
– 
 5 
 11 
 1 
 (15) 

10th 
EDF 
– 
 50 
 14 
 2 
 (28) 

– 

– 

– 

– 

  2 

  38 

11th 
EDF 
– 
 5 
 2 
 1 
 (4) 

 4 

  8 

EUR million 

31.12.2020  31.12.2019 

– 
 61 
 27 
 4 
 (49) 

 4 

  48 

 1 
 27 
 21 
 7 
 (27) 

 5 

  32 

2.4.2.  Receivables from exchange transactions 

Accrued income 
Inter-EDF accounts 
Other 
Total 

Eighth 
EDF 
– 
 181 
– 

Ninth 
EDF 
 67 
 (246) 
– 
  181    (179) 

10th 
EDF 
 21 
1 663 
– 

11th 
EDF 
– 
(1 598) 
 4 
 1 684   (1 594) 

EUR million 

31.12.2020  31.12.2019 

 88 
– 
 4 
  92 

 88 
– 
 4 
  91 

Included under accrued income are amounts of accrued interest on pre-financing, namely an amount of 
EUR 62.6 million relating to a debt relief project with the World Bank and EUR 18 million relating to the 
EU Africa Infrastructure Fund with the EIB.  

The  heading  “other”  entirely  comprises  a  receivable  to  the  Global  Energy  Efficiency  and  Renewable 
Energy Fund (GEEREF).  

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. 

30 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.5.  CASH AND CASH EQUIVALENTS3 

Eighth 
EDF 

Ninth 
EDF 

10th 
EDF 

11th 
EDF 

31.12.2020  31.12.2019 

EUR million 

Special accounts 
Central banks 

Current accounts 
Commercial banks 
Cash belonging to financial instruments 

Total 

– 
– 

– 
– 
– 
– 

– 
– 

– 
– 
– 
– 

– 
– 

– 
– 
– 
– 

 693 
  693 

 8 
 27 
  35 
  728 

 693 
  693 

 8 
 27 
  35 
  728 

 729 
  729 

 421 
 30 
  450 
 1 179 

The decrease of amounts under this heading of EUR 451 million can be explained mainly by the increase 
in payments made from the commercial bank accounts which is in line with the increase in expenses (see 
note 3.3) and the increase in pre-financing (see note 2.2). EDF net payments reached a record high of 
EUR  4  605  million  in  2020  (2019:  EUR  3  910  million),  mostly  due  to  the  impact  of  the  COVID-19 
pandemic. As a response to the pandemic, the EU is adapting its priorities and programmes with partner 
countries, which led to the increased disbursements, in particular to projects aimed at fighting the COVID 
crisis.  

As  in  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  relation  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 they 
are 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.  Current  amounts  are 
shown under note 2.7.2. 

Non-current co-financing payables 
Current co-financing payables 
Total 

Eighth 
EDF 
– 
– 
– 

Ninth 
EDF 
– 
– 
– 

10th 
EDF 
– 
 10 
  10 

11th 
EDF 
 2 
 32 
  34 

EUR million 
31.12.2020  31.12.2019 
 19 
 69 
  88 

 2 
 42 
  44 

The decrease in total co-financing payables of EUR 44 million is mainly due to the increase in expenses 
incurred in respect of co-financed projects (EUR 53.2 million), namely related to 11th EDF (see note 3.4) 
which was partially offset by new co-financing projects of EUR 9 million. The substantial decrease of the 
non-current co-financing is in line with the life cycle of the co-financing projects: at the year-end a case 
by case analysis of the open co-financing is performed  and only the amounts that  will not be expensed 
next year are classified under non-current co-financing.  

3

  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. 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Annual accounts of the European Development Fund 2020 

2.7.  PAYABLES 

Current payables 
Sundry payables 
Total 

Note 

2.7.1 
2.7.2 

Eighth 
EDF 
– 
– 
– 

Ninth 
EDF 
 1 
– 
  1 

10th 
EDF 
 53 
 8 
  62 

11th 
EDF 
 291 
 262 
  553 

EUR million 

31.12.2020  31.12.2019 

 345 
 270 
  615 

 182 
 334 
  516 

2.7.1. 

 Current payables 

Suppliers 
Member States 
Third states 
Public bodies 
Other current payables 
Total 

Eighth 
EDF 
– 
– 
– 
– 
– 
– 

Ninth 
EDF 
 4 
– 
– 
– 
 (4) 
– 

10th 
EDF 
 44 
– 
 2 
 21 
 (13) 
 53 

11th 
EDF 
 93 
– 
 187 
 79 
 (68) 
 291 

EUR million 

31.12.2020  31.12.2019 

 141 
– 
 189 
 100 
 (85) 
 345 

 97 
 2 
 78 
 92 
 (88) 
 182 

Payables  largely  comprise  cost  statements  received  by  the  EDF  in  relation  to  grants  provided  to  the 
beneficiaries.  They  are  recorded  at  the  moment  when  the  cost  statement  is  received  and  for  the  full 
amount  of  the  cost  statement.  Following  an  eligibility  check  only  the  eligible  amounts  are  paid  to  the 
beneficiaries.  At  the  year-end  the  outstanding  cost  claims  are  analysed  and  the  estimated  eligible 
amounts  related  to  those  cost  claims  are  recognised  in  the  statement  of  financial  performance.  The 
estimated non-eligible amounts are shown under other current payables. 

The increase in payables in particular for  suppliers and third states is due to several invoices that  have 
not been validated and paid before year-end.  

2.7.2.  Sundry payables 

Co-financing payables 
Deferred capital contributions 
Other sundry payables 
Total 

Note 

2.6.1 
2.7.2.1 

Eighth 
EDF 
– 
– 
– 
– 

Ninth 
EDF 
– 
– 
– 
– 

10th 
EDF 
 10 
– 
 (2) 
 8 

11th 
EDF 
 32 
 223 
 7 
 262 

EUR million 

31.12.2020  31.12.2019 

 42 
 223 
 5 
 270 

 69 
 264 
 1 
 334 

2.7.2.1.  Deferred capital contributions 

At 31 December 2020, the entire amount of EUR 223 million relates to a refund to Member States from 
decommitted  or  unused  funds  from  projects  under  the  Eight  and  Ninth  EDF  (see  note  2.10.1).  The 
Member states agreed for the refund to be offset with the contributions from the 11th EDF during the first 
call for contributions in 2021. 

At 31 December 2020 apart from the refund, there were no capital contributions paid in advance. 

32 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.8.  ACCRUED CHARGES AND DEFERRED INCOME 

Accrued charges 
Other accruals and deferrals 
Total 

Eighth 
EDF 
– 
– 
– 

Ninth 
EDF 
 67 
– 
  67 

10th 
EDF 
 217 
– 
  217 

11th 
EDF 
1 243 
 1 
 1 244 

EUR million 

31.12.2020  31.12.2019 

1 526 
 1 
 1 527 

1 318 
 1 
 1 319 

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  (2019:  EUR  983  million)  and  a  decrease  of  accrued  charges  under  the  10th  EDF  (2019:  EUR 240 
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 full cruising speed in 2020 and there were thus 
significantly  more  open  contracts  at  31  December  2020,  for  which  charges  had  to  be  estimated  and 
accrued (see note 2.2).  

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. 

Fair value reserve 

2.10.  FUND CAPITAL 

2.10.1.  Called fund capital – active EDFs 

31.12.2020 
 5 

EUR million 
31.12.2019 
 2 

Fund capital 
Uncalled fund capital 
Called fund capital 31.12.2019 
Fund capital 
Uncalled fund capital 
Called fund capital 31.12.2020 

Eighth EDF  Ninth EDF  10th EDF  11th EDF 
29 367 
(18 440) 
 10 927 
29 367 
(14 040) 
 15 327 

20 960 
 - 
 20 960 
20 960 
 - 
 20 960 

12 164 
– 
 12 164 
12 164 
– 
 12 164 

10 773 
 (15) 
 10 758 
10 550 
 (15) 
 10 535 

EUR million 
Total 
73 264 
(18 455) 
 54 809 
73 041 
(14 055) 
 58 986 

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). 

By  means  of  Council  Decision  (EU)  2020/1708  the  Member  States'  contributions  set  out  in  the  Internal 
Agreements of the Eighth and Ninth EDF were reduced accordingly for an amount of EUR 223 million from 
funds decommitted under the Eighth and the Ninth EDF. As the funds decommitted under the Eighth EDF 
have been already transferred to the other EDFs, EUR 223 million was deducted from the capital of the 
Ninth EDF.  Refunds arising  from  this reduction have been  compensated against additional call for funds 

33 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

under the 11th EDF. In fact, the refund will be used against the first instalment of 2021 which explains 
the EUR 223 million of deferred capital (see note 2.7.2).  

On 1 February 2020, the United Kingdom ceased to be a Member State of the European Union. While the 
United  Kingdom  remains  party  to  the  EDF  until  the  closure  of  all  programs,  and  assumes  the  same 
obligations as the Member States, in accordance with Article 153 of the Withdrawal Agreement, its share 
of uncommitted and decommitted funds from the Eight, Ninth and 10th EDF cannot be reused. 

2.10.2.  Called and uncalled fund capital by Member States and the UK 

Contributions 11th EDF 

% 

Uncalled capital 
31.12.2019 

Capital called 
in 2020 

EUR million 
Uncalled capital 
31.12.2020 

Austria 
Belgium 
Bulgaria 
Croatia 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Luxemburg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
United Kingdom 
Total 

2.40 
3.25 
0.22 
0.23 
0.11 
0.80 
1.98 
0.09 
1.51 
17.81 
20.58 
1.51 
0.61 
0.94 
12.53 
0.12 
0.18 
0.26 
0.04 
4.78 
2.01 
1.20 
0.72 
0.38 
0.22 
7.93 
2.94 
14.68 
100.00 

 442 
 599 
 40 
 42 
 21 
 147 
 365 
 16 
 278 
3 285 
3 795 
 278 
 113 
 173 
2 311 
 21 
 33 
 47 
 7 
 881 
 370 
 221 
 132 
 69 
 41 
1 463 
 542 
2 707 
18 440 

 (105) 
 (143) 
 (10) 
 (10) 
 (5) 
 (35) 
 (87) 
 (4) 
 (66) 
 (784) 
 (906) 
 (66) 
 (27) 
 (41) 
 (551) 
 (5) 
 (8) 
 (11) 
 (2) 
 (210) 
 (88) 
 (53) 
 (32) 
 (17) 
 (10) 
 (349) 
 (129) 
 (646) 
(4 400) 

 337 
 456 
 31 
 32 
 16 
 112 
 278 
 12 
 212 
2 501 
2 889 
 212 
 86 
 132 
1 759 
 16 
 25 
 36 
 5 
 671 
 282 
 168 
 101 
 53 
 32 
1 114 
 413 
2 061 
14 040 

Since  the  capital  of  the  Eighth,  Ninth  and  10th  EDF  has  been  called  up  and  received  in  its  entirety  in 
previous  years,  in  2020,  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 

Funds transferred from closed EDFs 

Eighth 
EDF 
 627 

Ninth 
EDF 
1 625 

10th 
EDF 
– 

11th 
EDF 
– 

31.12.2020  31.12.2019 

2 252 

2 252 

EUR million 

This heading includes the resources transferred from closed EDFs to the Eighth and Ninth EDFs. 

34 

 
 
 
Annual accounts of the European Development Fund 2020 

2.10.4.  Called fund capital transfers between active EDFs 

Balance at 31.12.2018 
Transfer of decommitted amounts to the 10th EDF 
performance reserve from previous EDFs 
Transfer of decommitted amounts to the 11th EDF 
performance reserve from previous EDFs 
Balance at 31.12.2019 
Transfer of decommitted amounts to the 10th EDF 
performance reserve from previous EDFs 
Transfer of decommitted amounts to the 11th EDF 
performance reserve from previous EDFs 
Balance at 31.12.2020 

Eighth 
EDF 
 (2 509) 

Ninth 
EDF 
 2 137 

10th 
EDF 
  55 

11th 
EDF 
  317 

 (1) 

 (27) 

 28 

– 

– 

– 

 181 

 (181) 

 (2 510) 

 2 109 

  265 

  136 

 (2) 

 (69) 

 71 

– 

– 

–   (147) 

 147 

 (2 512) 

 2 041 

  188 

  283 

EUR million 

Total 

– 

– 

– 

– 

– 

– 

– 

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, as set out in the Internal Agreements. 

35 

 
 
 
Annual accounts of the European Development Fund 2020 

3.  NOTES  TO  THE  STATEMENT  OF  FINANCIAL 

PERFORMANCE 

REVENUE 

Revenue from non-exchange transactions 
Revenue from exchange transactions 
Total 

Note 
3.1 
3.2 

EUR million 
2019 
 28 
 46 
 74 

2020 
 92 
 43 
 135 

3.1.  REVENUE FROM NON-EXCHANGE TRANSACTIONS 

Recovery of expenses 
Co-financing revenue 
Total 

Note 

3.1.1 

Eighth 
EDF 
 (1) 
– 
  (1) 

Ninth 
EDF 
 5 
– 
  5 

10th 
EDF 
 28 
 41 
  69 

11th 
EDF 
 7 
 12 
  19 

EUR million 

2020 

2019 

 39 
 53 
  92 

 13 
 14 
  28 

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

Direct Management 
Implemented by: 
Commission 
EU delegations 

Indirect Management 
Implemented by : 
Third countries 
Public law bodies 
International organisations 
Private law bodies with a public service mission 

Total 

3.1.1.  Co-financing revenue 

2020 

EUR million 
2019 

 2 
 11 
 13 

 42 
 13 
 17 
 7 
 79 
  92 

 1 
 6 
 6 

 15 

 5 
 2 
 22 
  28 

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. The contributions 
remain under liabilities (see note  2.6.1 & 2.7.2) 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. 

36 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.2.  REVENUE FROM EXCHANGE TRANSACTIONS 

Financial revenue 
Other revenue 
Total 

  Eighth EDF  Ninth EDF 
 5 
– 
 5 
– 
  10 
– 

10th EDF 
 1 
 18 
  19 

11th EDF 
 1 
 13 
  14 

EUR million 
2019 
 7 
 39 
  46 

2020 
 6 
 37 
  43 

Financial  revenue  comprises  essentially  accrued  interest  on  overdue  recovery  orders  (EUR  1.5  million) 
and interest on pre-financing (EUR 4.7 million). Other revenue relates mainly to foreign exchange gains. 
The corresponding foreign exchange losses are recorded under other expenses (see note 3.6).  

EXPENSES 

Included under this heading are expenses incurred in relation to operational activities. 

3.3.  AID INSTRUMENTS 

Programmable aid 
Macro-economic support 
Sectoral policy 
Intra ACP projects 
Emergency aid 
Institutional support 
Contributions to Trust Funds 
Total 

Eighth EDF  Ninth EDF  10th EDF  11th EDF 
2 646 
– 
– 
 (8) 
– 
 3 
 829 
 (22) 
 21 
 (7) 
 10 
– 
 673 
– 
 4 179 
  (33) 

 244 
– 
– 
 212 
 5 
 2 
– 
  462 

– 
– 
– 
– 
– 
– 
– 
– 

2020 
2 889 
 (8) 
 3 
1 019 
 19 
 13 
 673 
 4 607 

EUR million 
2019 
2 120 
 29 
 (0) 
 951 
 112 
 7 
 535 
 3 755 

The EDF operational expenditure covers various aid instruments and takes different forms, depending on 
how the money is paid out and managed. 

In  2020,  operational  expenditure  increased  significantly  by  EUR  852  million  mainly  as  a  result  of  the 
increase in expenses  under the 11th EDF (kEUR  3 141 in 2019 to kEUR 4 179 in 2020). The COVID-19 
crisis led to an increase in expenses under the 11th EDF in particular as projects were reoriented to deal 
with the crisis. In addition, the changes in expenses under the 10th and 11th EDF are also in line with the 
lifecycle of the EDF and related to the evolution of the number of open contracts under these EDFs. The 
11th  EDF  has  reached  maturity  in  2020,  which  means  that  at  year-end  there  were  significantly  more 
contracts  under  which  expenses  were  incurred  (see  note  2.2).  Conversely,  many  contracts  were 
completed  and  closed  under  the  10th  and  previous  EDF’s  in  2020,  which  resulted  in  less  expenses 
incurred under those EDF’s. 

Under the 11th EDF, the increase in expenses comes mainly from the increase in the programmable aid 
(increase  from  kEUR  2  120  in  2019  to  kEUR  2  889  in  2020)  and  the  Contributions  to  the  Trust  funds 
(increase from EUR 535 million in 2019 to EUR 673 million in 2020). On the other hand expenses relating 
to  emergency  aid  decreased  by  EUR  92  million.  As  noted  above,  primarily  under  the  11th  EDF  the 
structure  of  the  aid  instruments  expenses  changed  compared  to  2019  so  as  to  address  the  needs 
triggered by the COVID 19 pandemic.  

The negative amount under the Ninth EDF is mainly due to the reversal of 2019 closure bookings. 

37 

 
 
 
Annual accounts of the European Development Fund 2020 

3.4.  CO-FINANCING EXPENSES 

Co-financing 

  Eighth EDF  Ninth EDF 
– 
– 

10th EDF 
 41 

11th EDF 
 12 

2020 
 53 

EUR million 
2019 
 14 

Included  under  this  heading  are  the  expenses  incurred  on  co-financing  projects  in  2020.  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).   

In 2020, many co-financed projects under the 11th EDF have been finalised or reached maturity, which 
led to an increase in expenses and a decrease in co-financing liabilities (see note 2.6.1 & 2.7.2). 

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 and in the co-financing 
revenue (note 3.1.1).    

AID INSTRUMENTS AND CO-FINANCING EXPENSES BY MANAGEMENT TYPE 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
Trust Funds 
EU delegations 

Indirect Management 
Implemented by: 
EIB and EIF 
International organisations 
Private law bodies with a public service mission 
Public law bodies 
Third countries 
EU bodies with Public Private Partnership 

Total 

3.5.  FINANCE COSTS 

2020 

 168 
 14 
 19 
1 969 
2 170 

 (67) 
1 268 
 243 
 248 
 795 
 2 
2 490 
4 660 

EUR million 
2019 

 86 
 (13) 
 483 
1 141 
1 697 

 145 
1 003 
 126 
 184 
 613 
 1 
2 073 
3 770 

Write-down of receivables 

EUR million 
Eighth EDF  Ninth EDF  10th EDF  11th EDF  2020  2019 
 1 

 (1) 

 16 

 21 

 3 

 4 

The  increase  under  this  heading  is  due  to  the  increase  in  the  estimated  expenses  on  irrecoverable 
amounts arising from ageing recovery orders (over 2 years), bankruptcies and waivers. 

3.6.  OTHER EXPENSES 

The  heading  Administrative  and  IT  expenses  includes  amounts  that  are  based  on  the  EDF  internal 
agreement  allocated  to  the  Commission  to  cover  the  administrative  costs  incurred  by  both  the 
Headquarters and the Delegations in  respect to  managing  the  EDF  programmes. The so called “support 
expenditure” relate mainly to expenses for preparation, follow-up, monitoring, and evaluation of projects 
as well as expenses  for computer networks, technical assistance,  financial  management and  forecasting 
etc. 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

Administrative and IT expenses 
Provision for risks and charges 
Realised losses on trade debtors 
Exchange losses 
Total 

  Eighth EDF  Ninth EDF  10th EDF  11th EDF 
 120 
– 
 – 
– 
 4 
– 
 42 
 6 
  162 
  9 

– 
– 
– 
 – 
  (0) 

– 
– 
 1 
 24 
  25 

EUR million 
2020  2019 
 220 
– 
 3 
 37 
  260 

 120 
– 
 4 
 72 
  196 

The  decrease  under  this  heading  is  a  combined  effect  of  the  significant  decrease  in  the  year-end 
estimation  of  administrative  and  IT  expenses  (2019:  EUR  220  million)  and  the  increase  of  expenses 
relating to exchange losses (2019: EUR 37 million). 

39 

 
 
 
Annual accounts of the European Development Fund 2020 

4.  CONTINGENT  ASSETS  &  LIABILITIES  AND 

OTHER SIGNIFICANT DISCLOSURES 

4.1.  CONTINGENT ASSETS 

Performance guarantees 
Retention guarantees 
Total 

Eighth 
EDF 
– 
– 
– 

Ninth 
EDF 
 7 
 5 
  13 

10th 
EDF 
 4 
 3 
  7 

11th 
EDF 
– 
– 
– 

EUR million 

31.12.2020 

31.12.2019 

 12 
 9 
  21 

 15 
 9 
  24 

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 retention 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. 

Outstanding commitments not yet 
expensed 

Eighth 
EDF 

Ninth 
EDF 

10th 
EDF 

11th 
EDF 

EUR million 

31.12.2020  31.12.2019 

– 

 42 

 580 

6 602 

7 224 

8 564 

At 31 December 2020 the budgetary RAL totalled EUR 9 286 million (2019: EUR 10 270 million). 

40 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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. 

41 

 
 
5.2.  CURRENCY RISK 

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

Annual accounts of the European Development Fund 2020 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

31.12.2020 

31.12.2019 

EUR million 

Financial assets 
Receivables and 
recoverables 
Cash and cash 
equivalents 

Financial liabilities 
Non-current financial 
liabilities 
Payables 

Total 

 65 

 2 

  67 

– 

 (16) 
  (16) 
  51 

– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 

– 

– 

– 

 69 

 6 

 140 

 726 

– 

 728 

  795 

  6 

  868 

– 

 1 

  1 

– 

 (2) 

– 

 (2) 

– 

 (6) 
  (6) 
  (6) 

– 
 (603) 
–    (605) 
  190 
– 

 10 
 (615) 
  10    (617) 
  251 
  16 

 (7) 
  (7) 
  (6) 

– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 

– 
– 
– 

– 

– 

 115 

 8 

 123 

1 178 

– 

1 179 

– 

 1 293 

  8 

 1 302 

– 

 (19) 

– 

 (19) 

– 
 (509) 
–    (528) 
  765 
– 

– 
 (516) 
–    (535) 
  767 

  8 

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. 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

5.3.  INTEREST RATE RISK 

The EDF does not borrow money and consequently it is not exposed to credit interest rate risk. However, 
since the ECB deposit facility rate is negative (-0.5% since September 2019), deposits in EUR generate 
negative interests.  

Contributions to the EDF budget are credited by each Member State to a special account opened with the 
financial institution designated by it. In accordance with Council Regulation (EU) 2016/888, any negative 
remuneration on these accounts is borne by the relevant Member State.  

Overnight balances held in commercial bank accounts are however subject to negative interest charges. 
The  Commission,  on  behalf  of  the  EDF,  has  therefore  put  in  place  cash  management  procedures  to 
minimise  balances  kept  on  these  accounts  and  limit  as  much  as  possible  the  negative  interest  costs. 
Interest charges are calculated based on variable market rates to which a contractual margin (positive or 
negative)  is  applied.  Controls  are  in  place  to  ensure  that  these  interest  charges  are  in  line  with 
contractual agreements. 

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 
1-5 
years 

< 1 
year 

> 5 
years 

Exchange receivables and non-exchange 
recoverables 
Total at 31.12.2020 
Exchange receivables and non-exchange 
recoverables 
Total at 31.12.2019 

 140 

  140 

 123 

  123 

Financial assets by risk category: 

 124 

  124 

 100 

 7 

  7 

 16 

  100 

  16 

 9 

  9 

 7 

  7 

– 

– 

– 

– 

  Receivables 

31.12.2020 
Cash 

Total  Receivables 

31.12.2019 
Cash 

Total 

EUR million 

Counterparties with external credit 
rating 
Prime and high grade 
Upper medium grade 
Lower medium grade 
Non- investment grade 

Counterparties without external 
credit rating 
Group 1 (debtors without defaults 
in the past) 
Group 2 (debtors with defaults in 
the past) 
Total 
Total 

 9 
– 
– 
– 
  9 

 372 
 211 
 145 
– 
  728 

 381 
 211 
 145 
– 
  737 

 7 
– 
– 
– 
  7 

 958 
 220 
 1 
– 
 1 179 

 965 
 220 
 1 
– 
 1 186 

 131 

– 

– 

– 

 131 

 116 

– 

– 

– 

– 

 116 

– 

  131 
  140 

– 
  728 

  131 
  868 

  116 
  123 

– 
 1 179 

  116 
 1 302 

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.  

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 

Financial liabilities at 31.12.2020 

Financial liabilities at 31.12.2019 

  < 1 year 
 615 

 516 

1-5 years 

 2 

 2 

> 5 years 
– 

 17 

EUR million 
Total 

 617 

 535 

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.

44 

 
 
Annual accounts of the European Development Fund 2020 

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  accounts,  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. 

45 

 
 
Annual accounts of the European Development Fund 2020 

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. 

ECONOMIC RESULT OF THE YEAR 

Revenue 

Entitlements not affecting the budget result 
Entitlements established in current year but not yet collected 
Entitlements established in previous years and collected in current year 
Net effect of pre-financing 
Accrued revenue (net) 
Other 
Expenses 

Expenses of the current year not yet paid 
Expenses of previous years paid in the current year 
Net effect of pre-financing 
Accrued expenses (net) 

2020 
 (4 744) 

EUR million 
2019 
 (3 956) 

 (2) 
 (23) 
 13 
 61 
 (33) 
– 

 119 
 (817) 
 (281) 
1 102 

– 
 (16) 
 23 
 53 
 (67) 
 (3) 

 107 
 (672) 
 (44) 
 719 

BUDGET RESULT OF THE YEAR  

 (4 604) 

 (3 856) 

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 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
   
Annual accounts of the European Development Fund 2020 

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. 

47 

 
 
Annual accounts of the European Development Fund 2020 

FINANCIAL STATEMENTS OF THE EU 
TRUST FUNDS CONSOLIDATED IN EDF 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

FINANCIAL STATEMENTS OF THE BÊKOU 
EU TRUST FUND 2020 

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. 

49 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST 
FUND 

1.1.  General background on Union Trust Funds 

Establishment 

In accordance  with Articles 234 and 235 of the Financial Regulation applicable to the general budget of 
the  Union  (EU  FR)4  and  Article  35  of  the  Financial  Regulation  applicable  to  the  11th  European 
Development  Fund  (EDF  FR)5,  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. 

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. 

Mission 

The EUTF Bêkou,  was established,  with the  aim of promoting the stabilisation and reconstruction of the 
Central  African  Republic  (CAR).  Its  main  objective,  as  set  out  in  the  Constitutive  Agreement,  is  “to 
provide consistent, targeted aid for the resilience of vulnerable groups and support for all aspects of the 
Central  African  Republic's  exit  from  the  crisis  and  reconstruction,  to  coordinate  actions  over  the  short, 
medium and long term and to help neighbouring countries cope with the consequences of the crisis”. 

4 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. 
5 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 

50 

 
                                                 
Annual accounts of the European Development Fund 2020 

Main operational activities  

The Union trust fund pools together resources from different donors to finance programmes on the basis 
of  agreed objectives.  Since  its  creation  in  July  2014,  the  EUTF  Bêkou  has  adopted  22  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. 

Governance 

The  management  of  the  EUTF  Bêkou  is  ensured  by  the  European  Commission,  which  also  acts  as  the 
secretariat of its two governing bodies – the Trust Fund Board and the Operational Board. The Trust Fund 
Board and the Operational Committee of the EUTF Bêkou are composed of representatives of the donors, 
of  the  Commission,  of  the  European  Parliament,  a  representative  of  the  Central  African  Republic’s 
authorities and observers. The rules for the composition of the board and its internal rules are laid down 
in the constitutive agreement of the Union trust fund. 

The  main  task  of  the  Board  is  to  establish  and  review  the  overall  strategy  of  the  trust  fund.  The 
Operational Board is responsible for the selection of the actions financed by the Fund and supervises their 
implementation. It also approves the annual accounts and the annual reports on the activities financed by 
the trust fund. 

Sources of financing 

The EUTF Bêkou is financed through contributions from donors.  

Annual accounts 

Basis for preparation 

The  legal  framework  and  the  deadlines  for  the  preparation  of  the  annual  accounts  are  set  by  the 
“Agreement establishing the European Union trust fund for the Central African Republic, “The Bêkou EU 
Trust Fund”, and  its internal  rules”  (“Constitutive Agreement”). As per  this Constitutive Agreement, the 
annual  accounts  are  prepared  in  accordance  with  the  rules  adopted  by  the  Accounting  Officer  of  the 
Commission  (EU  Accounting  Rules,  EAR),  which  are  based  on  internationally  accepted  accounting 
standards for the public sector (IPSAS).  

Accounting Officer 

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. 

Composition of the annual accounts 

The  annual  accounts  cover  the  period  from  1  January  to  31  December  and  comprise  the  financial 
statements and the reports on the implementation of the budget. While the financial statements and the 
complementary  notes  are  prepared  on  an  accrual  accounting  basis,  the  budget  implementation  reports 
are primarily based on movements of cash. 

Process from provisional accounts to discharge 

The annual accounts are subject to independent external audit. The provisional annual accounts prepared 
by  the  Accounting  Officer  are  transmitted,  by  the  1st  of  March    of  the  following  year,  to  the  audit 
company selected by the entity following a tender procedure. Following the audit, the Accounting Officer 
prepares the final annual accounts and submits them 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. 

51 

 
 
Annual accounts of the European Development Fund 2020 

Operational highlights 

Achievements of the year 

The  EU  launched  its  first ever  Trust  Fund  (EUTF),  named  Bêkou  (meaning  hope  in  Sango  language), in 
July  2014  to  assist  the  Central  African  Republic  (CAR)  and  its  population  in  the  aftermath  of  the  2013 
crisis. The EUTF Bêkou aims to ensure access to basic services (mainly health and water and sanitation), 
support  rural  development  and  economic  recovery,  and  promote  reconciliation.  Since  its  creation,  the 
EUTF Bêkou has adopted 23 programmes and has reached more than 2.8 million beneficiaries. 

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 currently the only instrument building resilience for 
both  the  population  and  the  State,  in  a  true  LRRD  (linking  relief,  rehabilitation  and  development) 
approach. 

Operational highlights of the year 2020 include: 

• 
In April, the EUTF Bêkou adopted three new programmes by written procedure. These include 
the  third  phase  of  the  Gender  programme,  the  second  phase  of  the  Reconciliation  action,  which 
envisages the continuation of the support to Central African radios and notably Radio Ndeke Luka, as 
well as a new programme on Vocational Training in the rural sector.  

In response  to the COVID-19 outbreak, the EUTF Bêkou made substantial efforts to re-orient, 
• 
accelerate  and  prioritise  actions  for  the  most  effective  response  to  the  crisis.  In  this  context,  the 
Health  and  Water  and  Sanitation  programmes  were  of  critical  importance  for  supporting  the  Team 
Europe’s  response  to  the  crisis  that  amplified  existing  needs  in  the  two  sectors.  In  June,  the  EUTF 
Bêkou approved a revision of the two actions, increasing the budget of the Health programme by EUR 
2.2 million and that of the Water and Sanitation action by EUR 2 million.  

• 
In  December,  the  EUTF  Bêkou  adopted  a  programme  supporting  the  deployment  of  civil 
protection for a total amount of EUR 4 million. Moreover, in order to avoid any financing gap in the all-
important  health  sector,  the  EUTF  Bêkou  increased  again  the  budget  of  the  on-going  health 
programme (phase III) (additional EUR 10 million). 

• 
The  implementation  of  EUTF  Bêkou  projects  were  marked  by  the  volatile  security  context 
(localised  conflicts  in  Bangui  and  the  hinterland  followed  by  periods  of  relative  stability),  as  well  as 
incertitude as the presidential elections of December 2020 were approaching.  

In December 2020, following an official request from the EUTF Board, the EU decided an extension of the 
EUTF Bêkou until 31 December 2021, thus bringing its total duration from 78 months to 90 months. This 
will  allow  the  EUTF  Bêkou  to  commit  and  contract  all  received  contributions  in  a  timely  way  and 
responding to CAR’s needs. This is the second and last extension of the EUTF. 

Budget and budget implementation 

On the financial side, by the end of 2020, pledges by EUTF contributors amounted to nearly EUR 308.3 
million. This is an increase of EUR 12.5 million compared to 2019. EUR 1 million out of these EUR 308.3 
million is still to be certified. 

In  terms  of  contracts,  the  EUTF  Bêkou  signed  7  new  contracts  and  9  cost-extension  contract  riders  in 
2020  for  a  total  amount  of  nearly  EUR  53  million.  They  contribute  to  the  implementation  of  its 
programmes  in  the  sectors  of  health,  water  and  sanitation,  rural  development  and  economic  recovery, 
and reconciliation.  

Last but not least, more than EUR 46 million was paid in 2020 on top of payments made during previous 
years; total disbursements have reached nearly EUR 197 million since the creation of the EUTF Bêkou. 

The main impact of COVID-19 on the budget implementation of EUTF Bêkou in 2020 is a follows: 

• 

Less contracts as a result of difficulties to prepare actions; 

52 

 
Annual accounts of the European Development Fund 2020 

Reduced  expenses  as  a  result  of  inability  to  implement  projects  and  of  difficulties  to  finalise 

• 
financial reports and expenditure verification reports. 

Impact of the activities in the financial statements 

In the financial statements, the impact of the above mentioned activities is most visible when looking at: 

  Operating  expenses  (see  note  3.3):  which  have  overall  decreased  by  kEUR  661;  however  the 
expenses  relating  to  basic  health  have  increased  as  a  result  of  the  increase  in  the  budget  in 
response to the additional challenges brought about by the COVID-19 pandemic; 

 

 

Pre-financing (see notes 2.1): decreased by kEUR 3 685 as a result of less advances being paid 
out due to fewer contracts being signed (7 new contracts in 2020 compared to 11 in 2019); 

Financial  liabilities  (see  note  2.4):  decreased  by  kEUR  11  889  mainly  due  to  the  fact  that  the 
cashed  contributions  from  the  donors  are  not  sufficient  to  cover  the  yearly  payment  outflows. 
This also led to the shrinking of the cash and cash equivalents (see note 2.3). 

53 

 
Annual accounts of the European Development Fund 2020 

BALANCE SHEET 

NON-CURRENT ASSETS 
Pre-financing 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Payables  
Accrued charges  

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Contribution from Members 
Accumulated surplus 
Economic result of the year 
NET ASSETS 

Note 

31.12.2020 

 EUR '000 
31.12.2019 

2.1 

2.1 
2.2 
2.3 

2.4 

2.5 
2.6 

 2 418 
 2 418 

 15 482 
 5 340 
 7 339 
 28 161 
 30 579 

 3 273 
 3 273 

 18 312 
 1 853 
 17 432 
 37 597 
 40 870 

 (17 838) 
 (17 838) 

 (29 727) 
 (29 727) 

  (795) 
 (11 947) 
 (12 741) 
 (30 579) 

  (10) 
 (11 133) 
 (11 143) 
 (40 870) 

– 

– 
– 
– 
– 

– 

– 
– 
– 
– 

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

STATEMENT OF FINANCIAL PERFORMANCE 

Note 

2020 

EUR '000 
2019 

 48 343 
  68 
 48 410 

  (2) 
  (2) 
 48 408 

 47 889 
  115 
 48 004 

– 
– 
 48 004 

 (46 959) 
  (68) 
  (978) 
 (48 004) 

 (47 620) 
– 
  (789) 
 (48 408) 

REVENUE 
Revenue from non-exchange transactions 
Revenue from donations 
Recovery of expenses 

Revenue from exchange transactions 
Financial revenue 

Total revenue 
EXPENSES 
Operating expenses 
Finance costs 
Other expenses 
Total expenses 

ECONOMIC RESULT OF THE YEAR 

3.1 
3.2 

3.3 
3.4 
3.5 

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CASHFLOW STATEMENT 

(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-exchange recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges  
NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2020 
 3 685 
 (3 487) 
 (11 889) 
  784 
  814 
 (10 093) 

 (10 093) 
 17 432 
 7 339 

EUR '000 
2019 
 11 405 
  (715) 
 (13 010) 
  (908) 
 6 734 
 3 506 

 3 506 
 13 926 
 17 432 

56 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

FINANCIAL STATEMENTS OF THE EUTF 
AFRICA 2020 

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. 

57 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

BACKGROUND INFORMATION ON THE EUTF AFRICA 

General background on Union Trust Funds 

Establishment 

In accordance  with Articles 234 and 235 of the Financial Regulation applicable to the general  budget of 
the  Union  (EU  FR)6  and  Article  35  of  the  Financial  Regulation  applicable  to  the  11th  European 
Development  Fund  (EDF  FR)7,  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. 

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. 

Mission 

The  main  objectives  of  the  EUTF  Africa  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. 

Main operational activities  

6 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. 

7 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. 

58 

 
 
 
                                                 
Annual accounts of the European Development Fund 2020 

The Union trust fund pools together resources from different donors to finance an action on the basis of 
agreed  objectives.  EUTF  Africa  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, in order to provide a short and medium-term response to the challenges 
of the regions. 

Governance 

The  management  of  the  EUTF  Africa  is  ensured  by  the  European  Commission,  which  also  acts  as  the 
secretariat of its two governing bodies – the Trust Fund Board and the Operational Board. 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 rules for the composition of the board and 
its internal rules are laid down in the constitutive agreement of the Union trust fund. 

The  main  task  of  the  Board  is  to  establish  and  review  the  overall  strategy  of  the  trust  fund.  The 
Operational Board is responsible for the selection of the actions financed by the Fund and supervises their 
implementation. It also approves the annual accounts and the annual reports on the activities financed by 
the trust fund. 

Sources of financing 

The EUTF Africa is financed through contributions from donors.  

Annual accounts 

Basis for preparation 

The  legal  framework  and  the  deadlines  for  the  preparation  of  the  annual  accounts  are  set  by  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”). As per this Constitutive Agreement,  the annual accounts are  prepared in accordance  with 
the  rules  adopted  by  the  Accounting  Officer  of  the  Commission  (EU  Accounting  Rules,  EAR),  which  are 
based on internationally accepted accounting standards for the public sector (IPSAS).  

Accounting Officer 

Based on the Constitutive Agreement, the Accounting Officer of the Commission serves as the Accounting 
Officer of the Trust Fund.  

Composition of the annual accounts 

The  annual  accounts  cover  the  period  from  1  January  to  31  December  and  comprise  the  financial 
statements and the reports on the implementation of the budget. While the financial statements and the 
complementary  notes  are  prepared  on  an  accrual  accounting  basis,  the  budget  implementation  reports 
are primarily based on movements of cash. 

Process from provisional accounts to discharge 

The annual accounts are subject to independent external audit. The provisional annual accounts prepared 
by  the  Accounting  Officer  are  transmitted,  by  the  1st  of  March    of  the  following  year,  to  the  audit 
company selected by the entity following a tender procedure. Following the audit, the Accounting Officer 
prepares the final annual accounts and submits them to the Operational Committee for approval. 

The  annual  accounts  of  the  EUTF  Africa  are  consolidated  in  the  annual  accounts  of  the  European 
Developement Fund. 

59 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

Operational highlights 

Achievements of the year 

In  2020,  EUTF  Africa  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  Africa  (Sahel  and  Lake  Chad,  Horn  of  Africa  and 
North of Africa) by pooling funding and expertise from a wide range of stakeholders. 

The  EUTF  Africa  further  consolidated  its  achievements  in  partnership  with  EU  Member  States 
development agencies, UN organisations, NGOs and partner countries, with the approval of an additional 
37  programmes  and  26  ‘top-ups’  across  the  three  regions  by  the  operational  committees  for  a  total  of 
EUR 560 million . This brings the total number of approved programmes to 254 including 4 cross-window 
programmes,  for  a  total  budget  of  over  EUR  4.8  billion.  New  contracts  worth  over  EUR  1  billion  were 
signed in 2020 with implementing partners, bringing the total amount of signed contracts to over EUR 4.5 
billion. By the end of 2020, payments had reached approximately EUR 3 billion. 

In 2020, the EUTF Africa 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  Africa  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 Africa benefitted  from  additional financial pledges of  EUR 361.9  million, 
including EUR 29.2 million from  EU  Member  States and other donors. As a result, the overall resources 
pledged to the EUTF Africa as of 31 December 2020 amounted to over EUR 5 billion, of which EUR 619.7 
million were pledged by EU Member States and other donors (Norway and Switzerland). 

The EUTF Africa 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 2019. 

The Mid-Tem Evaluation of the EUTF for Africa, launched in 2019 to provide the EU external co-operation 
services  and  the  wider  public  with  an  overall  independent  mid-term  assessment  of  the  EUTF  for  Africa, 
was  fully  carried  out  in  the  course  of  2020.  The  scope  of  the  evaluation  included  over  200  out  of  600 
projects  implemented  between  2016  and  2019.  All  relevant  Commission  services,  EEAS  and  EU 
Delegations  across  the  three  regions  were  consulted.  Field  visits  were  conducted  in  six  countries: 
Ethiopia,  Libya,  Morocco,  Niger,  Senegal,  and  Somalia.  The  Final  Report  completed  in  2020  will  be 
published in spring 2021. 

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  Africa  in  different  areas  of 
work. The Monitoring & Learning system of the North of Africa region generated two Monitoring Reports 
available on the EUTF website whose purpose is to analyze how EUTF-funded projects are contributing to 
the five strategic objectives of the EUTF in the North of Africa region 

Accountability and transparency have been improved through increased communications including regular 
updates  on  the  EUTF  Africa  website,  publishing  posts  on  social  media  and  organising  communication 
events. 

In 2020, the COVID-19 pandemic had a profound impact, including in Africa. In response to the outbreak 
of the COVID-19 pandemic, in April 2020 the Commission adopted a Joint Communication  on the Global 
EU  response  to  COVID-19    that  called  to  focus  on  the  most  vulnerable  people,  including  migrants, 
refugees, internally displaced persons and their host communities. The EU and its Member States, acting 
together as ‘Team Europe’, took comprehensive and decisive actions to tackle the destructive impact of 
COVID-19,  adapting  priorities  and  programmes,  including  EUTF  for  Africa  programmes,  with  partner 
countries to address the crisis. 

In the Sahel and Lake Chad region, massive displacement, combined with climate change, uncontrollable 
population  growth,  endemic  poverty  and  the  COVID-19  pandemic  aggravated  the  pre-existing  pressure 
and  had  an  increasing  impact  on  migration  and  conflict.  Throughout  the  year,  increasing  violence  and 
mass  forced  displacement  have  led  to  rising levels of  insecurity  in  the  region.  Against  this  background, 
the EUTF Africa’s operational committee has approved 15 new programmes and 10 top-ups, for a total of 

60 

 
Annual accounts of the European Development Fund 2020 

EUR 225.9 million  . In order to improve governance  and enhance  social cohesion, 57%  of the  EUTF for 
Africa actions approved in 2020 have been directed towards this stabilisation effort. Special attention has 
been dedicated also to helping stranded migrants and internally displaced populations. 24% of new EUTF 
for Africa actions have been committed to strengthening resilience of beneficiaries by supporting food and 
nutrition security, protecting vulnerable livelihoods and promoting social protection schemes for the most 
vulnerable as well as IDPs, refugees and their host communities. 

The  onset  of  the  COVID-19  pandemic  in  early  2020  further  exacerbated  fragilities  across  the  Horn  of 
Africa  region  already  affected  by  consecutive  droughts  and  floods;  conflicts  and  insecurity;  protracted 
refugee and internal displacement crises;  and the worst desert locust outbreak in decades. All countries 
in  the  region  suffered  from  a  serious  shortage of medical  care  and  equipment,  access  to  basic  services 
was hampered by curfews and lockdowns, and several political developments were postponed,  including 
general elections in Ethiopia. Several existing  projects reoriented activities to combat the spread  of the 
virus and mitigate economic effects of the pandemic. New commitments, reallocations and top-ups were 
made  with  this  challenge  in  mind.  Overall,  12  new  programmes  and  13  top-ups  were  approved  by  the 
operational committee in 2020 for a total of EUR 212.15 million . 

In 2020, the EUTF for Africa had to respond comprehensively to challenges in the North of Africa region 
to save lives, protect the most vulnerable, support host communities, provide opportunities for safe and 
organised mobility and tackle the consequences of the COVID-19 pandemic. The North of Africa window 
has  continued  to  work  according  to  the  strands  of  action  agreed  by  the  EUTF  Strategic  Board  including 
support  to  improve  migration  governance;  support  for  labour  migration  and  mobility;  protection  of 
vulnerable  migrants,  voluntary  return  and  sustainable  reintegration  as  well  as  community  stabilisation; 
and  integrated  border  management.    Overall,  10  new  actions  for  a  total  of  EUR  113.6  million    were 
adopted in 2020 by the operational committee. This includes also EUR 30 million re-allocated funds from 
the Libya Border Management  Programme (phase  II) whose  amount was reduced to EUR 15  million. In 
addition, EUR 12.3 million were adopted by the operational committee through three budgetary top-ups 
to existing actions. 

Budget and budget implementation  

The total amount of budgetary commitments in 2020 amounted to EUR 740.7 million, compared to EUR 
722.7  million  in  2019.  The  total  amount  contracted  in  2020  amounted  to  EUR  1.1  billion,  whereas  it 
reached EUR 951.3 million in 2019. 

In 2020, the budget implementation in terms of available commitments used by contracts reached 99 %, 
whereas payments in the reporting period exceeded EUR 1 billion. Total payments in 2020 were EUR 143 
million higher than in 2019. 

In the Sahel / Lake Chad, the combined effect of COVID-19 and rising violence put a significant strain on 
health services, and several EUTF programmes have been created or engaged in activities that aimed to 
support the pandemic response and address its economic consequences. Overall, EUR 377.6 million have 
been allocated to strengthen the health  systems of  partner countries, put in place  emergency response 
and prevention and support the economic response to the COVID-19 pandemic. 

In  the  Horn  of  Africa,  right  at  the  start  of  the  pandemic,  several  EUTF  for  Africa  projects  reoriented 
activities  to  combat  the  spread  of  the  virus,  mitigate  economic  effects  and  support  these  vulnerable 
populations, including refugees and stranded migrants. In the region, the EUTF for Africa provided a total 
of  EUR  56.1  million  to  hold  up  the  health  systems  and  EUR  144.05  million  to  address  the  economic 
impact of COVID-19. 

In the face of the challenging situation created by COVID-19, the EUTF Africa has ensured the continuity 
of its ongoing actions in North Africa, including quick re-allocation of existing actions and adoption of new 
actions  to  address  the  consequences  of  the  pandemic.  In  particular,  the  EUTF  Africa  has  adopted  very 
quickly  a  EUR  20  million  COVID-19  response  programme  for  Libya  and  a  EUR  10  million  Emergency 
Response  Facility  to  coronavirus  to  cover  North  African  countries  focusing  on  the  most  vulnerable 
populations. 

Impact of the activities in the financial statements 

In the financial statements, the impact of the above mentioned activities is most visible when looking at: 

 

Pre-financing  (see  note  2.1):  an  increase  by  kEUR  184  933  as  a  result  of  the  new  contracts 
signed and advances paid during 2020; 

61 

 
Annual accounts of the European Development Fund 2020 

  Operating  expenses  (see  note  3.4):  an  increase  by  kEUR  133  110  as  a  result  of  the  increased 
activity during the year in particular to combat the negative effects of the COVID pandemic; 

  Revenue  from  donations  (see  note  3.1):  increased  substiantially  (increase  of  kEUR  146  923 

compared to 2019) to fund the increase in expenses; 

 

Financial liabilities (see note 2.4): increased by kEUR 161 968 mainly due to the increase in the 
cashed contributions received from donors during the year. 

62 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

BALANCE SHEET 

NON-CURRENT ASSETS 

Pre-financing 

CURRENT ASSETS 

Pre-financing 

Exchange receivables and non-exchange recoverables 

Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 

Financial liabilities 

CURRENT LIABILITIES 

Payables  

Accrued charges  

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 

Contribution from Members 

Accumulated surplus 

Economic result of the year 

NET ASSETS 

Note 

31.12.2020 

 EUR '000 
31.12.2019 

2.1 

2.1 

2.2 

2.3 

 92 655 

 92 655 

 559 386 

 6 346 

 57 971 

 623 703 

 716 359 

 48 539 

 48 539 

 418 569 

 18 471 

 26 915 

 463 955 

 512 495 

2.4 

 (546 379) 

 (384 411) 

 (546 379) 

 (384 411) 

2.5 

2.6 

 (45 377) 

 (124 602) 

 (25 969) 

 (102 114) 

 (169 979) 

 (128 083) 

 (716 359) 

 (512 495) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR '000 
2019 

  467 
 774 090 
 774 557 

  (7) 
 1 855 
 1 848 
 776 405 

– 
 921 014 
 921 014 

– 
 2 883 
 2 883 
 923 897 

 (889 014) 
  (518) 
 (34 365) 
 (923 897) 
  – 

 (755 904) 
  (9) 
 (20 492) 
 (776 405) 
– 

Annual accounts of the European Development Fund 2020 

STATEMENT OF FINANCIAL PERFORMANCE 

Note 

2020 

REVENUE 
Revenue from non-exchange transactions 
Recovery of expenses 
Revenue from donations 

Revenue from exchange transactions 
Financial revenue 
Other exchange revenue 

Total revenue 
EXPENSES 
Operating expenses 
Finance cost 
Other expenses 
Total expenses 
ECONOMIC RESULT OF THE YEAR 

3.1 

3.2 

3.3 
3.4 
3.5 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CASHFLOW STATEMENT 

Economic result of the year 
Operating activities 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-exchange 
recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges  
NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2020 
– 

EUR '000 
2019 
– 

 (184 933) 

 (159 750) 

 12 125 
 161 968 
 19 408 
 22 488 
 31 056 

 (1 815) 
 14 412 
 13 236 
 13 968 
 (119 949) 

 31 056 
 26 915 
 57 971 

 (119 949) 
 146 864 
 26 915 

65 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONSOLIDATED FINANCIAL STATEMENTS 
OF THE EDF AND THE EU TRUST FUNDS 

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. 

66 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONSOLIDATED BALANCE SHEET 

NON-CURRENT ASSETS 
Financial assets 
Trust Funds contributions 
Pre-financing 

CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Payables 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Fair value reserve 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

31.12.2020 

 EUR million 
31.12.2019 

 33 
 (2) 
 968 
 999 

1 930 
 152 
 793 
2 875 
 3 874 

 36 
- 
 962 
 998 

1 725 
 143 
1 223 
3 092 
 4 090 

 (173) 
  (173) 

 (167) 
  (167) 

 (661) 
(1 664) 
(2 325) 
 (2 498) 

 (542) 
(1 432) 
(1 974) 
 (2 141) 

 1 376 

 1 948 

 (5) 
58 986 
2 252 
(55 111) 
(4 746) 
 1 376 

 (2) 
54 809 
2 252 
(51 155) 
(3 956) 
 1 948 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE 

REVENUE 
Revenue from non-exchange transactions 
Recovery activities 
Revenue from trust funds donations 

Revenue from exchange transactions 
Financial revenue 
Other revenue 

Total Revenue 
EXPENSES 
Aid instruments 
Expenses implemented by trust funds 
Co-financing expenses 
Finance costs 
Other expenses 

Total Expenses 

ECONOMIC RESULT OF THE YEAR 

2020 

EUR million 
2019 

 92 
 296 
  388 

 6 
 40 
  46 
  434 

(3 937) 
 (936) 
 (53) 
 (22) 
 (232) 

 28 
 287 
  316 

 7 
 41 
  48 
  364 

(3 220) 
 (804) 
 (14) 
 (1) 
 (282) 

 (5 180) 

 (4 320) 

 (4 746) 

 (3 956) 

68 

 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONSOLIDATED CASH FLOW STATEMENT 

Economic result of the year 
Operating activities 
Capital increase - contributions 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-exchange recoverables 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred income 
Other non-cash movements 

Investing activities 
(Increase)/decrease in available for sale financial assets  

NET CASHFLOW 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 
Cash and cash equivalents at year-end 

2020 
 (4 746) 

EUR million 
2019 
 (3 956) 

4 177 
 (210) 
 (7) 
 6 
 119 
 232 
 (3) 

 2 

  (431) 

 (430) 
 1 223 
  793 

4 385 
 (12) 

  13 
 (62) 
 288 

  58 
 (2) 

  (36) 

  676 

 676 
  548 
 1 223 

69 

 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2020 

Fund 
capital - 
active EDFs 
(A) 
 73 264 

Uncalled 
funds - active 
EDFs (B) 

 22 840 

Called fund 
capital - 
active EDFs 
(C) = (A)-(B) 
 50 423 

Cumulative 
Reserves (D) 

 (51 155) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 
 2 252 

– 
 73 264 

 (223) 

(4 385) 
– 
 18 455 

4 385 
– 
 54 809 

– 
(3 956) 
 (55 111) 

– 
– 
 2 252 

(4 400) 

4 400 

Fair value 
reserve (F) 

– 

 (2) 

  (2) 
 (3) 

 73 041 

 14 055 

– 
 58 986 

(4 746) 
 (59 857) 

 2 252 

  (5) 

EUR million 

Total Net Assets 
(C)+(D)+(E)+(F) 
 1 521 

 (2) 

4 385 
(3 956) 
 1 948 
 (3) 
4 400 
– 
(4 746) 
 1 376 

BALANCE AS AT 31.12.2018 

Fair value movements 

Capital increase -  contributions 
Economic result of the year 
BALANCE AS AT 31.12.2019 
Fair value movements 
Capital increase - contributions 
Refund to the Member States 
Economic result of the year 
BALANCE AS AT 31.12.2020 

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EDF REPORT ON FINANCIAL 
IMPLEMENTATION 

71 

 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

CONTENTS 

BACKGROUND ................................................................................................. 73 

PREVIOUS EDFS....................................................................................................... 73 

10TH AND 11TH EDF ................................................................................................ 73 

FINANCIAL IMPLEMENTATION ........................................................................... 75 

FINANCIAL OUTTURN ............................................................................................... 75 

REVENUE ................................................................................................................ 79 

OPERATIONAL EXPENDITURE AND SPECIFIC PROGRAMMES .......................................... 80 

GLOSSARY ...................................................................................................... 86 

72 

 
 
 
 
Annual accounts of the European Development Fund 2020 

1. 

BACKGROUND 

Launched  in  1959,  the  European  Development  Fund  is  the  main  instrument  for  providing  EU  aid  for 
development cooperation to the African, Caribbean and Pacific (ACP) States and Overseas Countries and 
Territories (OCTs).  Its primary objective is to reduce and ultimately eradicate poverty.  

The  EDF  is  established  by  an  Internal  Agreement  of  the  Representatives  of  the  Member  States  and 
managed  by  a  specific  committee.  The  EDF  resources  are  "ad  hoc"  contributions  from  the  EU  Member 
States, who decide on an overall amount that will be allocated to the fund (over a period of five years). 
In  addition  to  these  contributions,  it  is  also  possible  for  Member  States  to  enter  into  co-financing 
arrangements  or  to  make  voluntary  financial  contributions  to  the  EDF.  The  European  Commission  is 
responsible  for  the  financial  implementation  of  the  operations  carried  out  with  EDF  resources.  The 
European Investment Bank manages the Investment Facility.  

The EDF is a fund operating based on multiannuality. Each EDF is concluded for a period of around five 
years  and  it  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.  

The Internal Agreement establishing the last EDF, the 11th EDF (2014-2020), came into force on 1 March 
2015. As of 2021, the cooperation with the ACP countries is included in the Neighbourhood, Development 
and  International  Cooperation  Instrument  (NDICI).  However,  the  ongoing  projects,  funded  under  the 
EDF, will continue their implementation, under the respective EDF legal basis. 

This report is produced in accordance with Article 39 of the Financial Regulation of 11th EDF8. It presents 
a true and fair view of the revenue and expenditure operations of the EDF, with the focus on important 
events that had a significant impact on financial implementation of year 2020. 

Given that there are no ongoing operations under previous EDFs9, this report includes figures only for the 
10th and 11th EDF. 

1.1 

PREVIOUS EDFS 

The 6th EDF was closed in 2006 and the 7th EDF was closed in 2008. In 2019, the Commission closed the 
remaining outstanding transactions of the 8th EDF projects. A final report on the financial implementation 
of the 8th EDF is available with the 2019 annual accounts. The Commission aims to close the 9th EDF at 
the end of 2021. 

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. 

1.2 

10TH AND 11TH EDF  

The ACP-EC Partnership Agreement was 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). It entered into 
force on 1 April 2003 (establishing the 9th EDF). The Cotonou Agreement was amended twice, firstly by 
the  agreement  signed  in  Luxembourg  on  25  June  2005  (establishing  the  10th  EDF),  secondly  by  the 
agreement signed in Ouagadougou on 22 June 2010 (establishing the 11th EDF). 

The  EU  Council  Decision  of  27  November  2001  (2001/822/EC)  on  the  association  of  the  overseas 
countries  and  territories  (OCT)  with  the  European  Union  entered  into  force  on  2  December  2001.  This 
Decision was amended on 19 March 2007 (Decision 2007/249/EC). 

The  Internal  Agreement  on  the  financing  of  Community  aid  under  the  multi-annual  financial  framework 
for  the  period  2014-2020  in  accordance  with  the  revised  Cotonou  Agreement,  adopted  by  the 

8

9

 COUNCIL REGULATION (EU) 2018/1877 
 Except for operations in South-Sudan 

73 

 
 
                                                 
Annual accounts of the European Development Fund 2020 

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,  for  the  second  period  (2008-2013),  the  10th  EDF  an  overall  budget  of 
EUR22 682 million. Of this amount,  

  EUR 21 966 million were allocated to the ACP countries,  

  EUR 286 million to the OCT and  

  EUR 430 million to the Commission as support expenditure for programming and implementation 

of the EDF.  

The amount for the ACP countries is divided accordingly:  

  EUR 17  766 million to national and regional indicative programmes,  

  EUR 2 700 million to intra-ACP and intra-regional cooperation and  

  EUR 1 500 million to Investment Facilities.  

Notably, an increased share of the budget is devoted to regional programmes, thereby emphasising the 
importance of regional economic integration as the basic framework for national and local development. 
An innovation in the 10th EDF was the creation of ‘incentive amounts’ for each country. 

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. 

74 

 
 
 
 
Annual accounts of the European Development Fund 2020 

2. 

FINANCIAL IMPLEMENTATION 

2.1 

FINANCIAL OUTTURN 

EVOLUTION OF 10th EDF APPROPRIATIONS 

10th EDF 
EVOLUTION OF APPROPRIATIONS:  31 December 2020 
ANALYSIS OF CREDITS PER INSTRUMENT 

INSTRUMENT 

INITIAL 
APPROPRIATION 

Regular MS Contributions 

ACP  

Co-financing 

SUB TOTAL ACP  

Regular MS Contributions 

OCT 

SUB TOTAL OCT 

20.896 

0 

20.896 

0 

0 

TOTAL 10th EDF 

20.896 

INCREASES/DECREASES 
IN CUMULATIVE  
RESOURCES AT 
31 DECEMBER 2019 

INCREASE OR 
DECREASE IN 
RESOURCES IN 
2020 

(EUR million) 

Notes 

CURRENT 
LEVEL 
APPROPRIATION 

60 

202 

262 

271 

271 

533 

(340) 

(0) 

(340) 

(28) 

(28) 

(368) 

20.616 

202 

20.818 

243 

243 

21.061 

75 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
Annual accounts of the European Development Fund 2020 

EVOLUTION OF 11th EDF APPROPRIATIONS 

11th EDF 
EVOLUTION OF APPROPRIATIONS:  31 December 2020 
ANALYSIS OF CREDITS PER INSTRUMENT 

INSTRUMENT 

INITIAL 
APPROPRIATION 

INCREASES/DECREASES 
IN CUMULATIVE  
RESOURCES AT 
31 DECEMBER 2019 

(EUR million) 

Notes 

CURRENT 
LEVEL 
APPROPRIATION 

INCREASE 
OR 
DECREASE 
IN 
RESOURCES 
IN 2020 

Regular MS Contributions 

Co-financing 

ACP  

EC Internal SLA 

SUB TOTAL ACP  

Regular MS Contributions 

Co-financing 

OCT 

EC Internal SLA 

SUB TOTAL OCT 

29.008 

0 

0 

29.008 

0 

0 

0 

0 

TOTAL 11th EDF 

29.008 

172 

73 

1 

246 

355 

0 

0 

355 

601 

124 

3 

127 

(4) 

(4) 

123 

29.304 

75 

1 

29.381 

351 

0 

0 

351 

29.731 

76 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
Annual accounts of the European Development Fund 2020 

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 10TH EDF 

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020 
CLASS OF AID 
ACP + PTOM - 10 th EDF 

CREDIT
S 

(1) 

DECISIONS 
ANNUA
L 

AGGRE
G. 
(2) 

% 

(2) : (1) 

ASSIGNED FUNDS 
ANNUA
L 

% 

AGGRE
G. 
(3) 

(3) : (2) 

(EUR million) 

PAYMENTS 
ANNUA
L 

AGGRE
G. 
(4) 

% 

(4) : (3) 

   Regular MS Contributions 

A
C
P 

NATIONAL ALLOCATIONS 
(enveloppe A) (programmed) 
NATIONAL ALLOCATIONS 
(enveloppe B)(emergency) 
IMPLEMENTATION COSTS AND 
INTERESTS REVENUES 
INTRA-ACP ALLOCATIONS 

REGIONAL ALLOCATIONS 

Co-financing 
NATIONAL ALLOCATIONS 
IMPLEMENTATION COSTS AND 
INTERESTS REVENUES 
INTRA-ACP ALLOCATIONS 

Non-mobilisable reserve 
NON-MOBILISABLE RESERVE 

   Regular MS Contributions 

NATIONAL ALLOCATIONS 

NATIONAL ALLOCATIONS 
IMPLEMENTATION COSTS AND 
INTERESTS REVENUES 
REGIONAL ALLOCATIONS 

O
C
T 

Non-mobilisable reserve 
NON-MOBILISABLE RESERVE 

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

12.513 

12.500 

(150) 

100% 

12.382 

(57) 

99% 

12.047 

193 

97% 

1.980 

1.980 

(11) 

100% 

1.968 

(2) 

99% 

1.955 

5 

99% 

529 

526 

18 

99% 

522 

15 

99% 

507 

97% 

3.691 

1.857 

3.683 

1.851 

83 

100% 

(45) 

100% 

3.460 

1.807 

321 

(20) 

94% 

98% 

3.074 

1.667 

100 

89% 

43 

92% 

185 

180 

(0) 

97% 

177 

5 

11 

0 

111% 

(0) 

91% 

3 

11 

186 

15 

5 

35 

(0) 

100% 

0 

0 

100% 

100% 

(3) 

98% 

183 

14 

5 

34 

5 

12 

46 

186 

15 

5 

36 

1 

0 

0 

0 

1 

0 

98% 

65% 

100% 

98% 

99% 

100% 

(2) 

96% 

161 

3 

11 

167 

14 

5 

34 

9 

0 

91% 

87% 

   100% 

10 

91% 

0  100% 

   100% 

(0) 

99% 

21.061 

20.978 

(110) 

100% 

20.567 

256 

98% 

19.645 

360 

96% 

77 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
Annual accounts of the European Development Fund 2020 

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 11TH EDF 

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020 
CLASS OF AID 
ACP + PTOM - 11 th EDF 

   Regular MS Contributions 

A ENVELOPE - NATIONAL 
ALLOCATIONS (programmed) 
B ENVELOPE - NATIONAL 
ALLOCATIONS (emergency) 
IMPLEMENTATION COSTS 
AND INTERESTS REVENUES 
INTRA-ACP ALLOCATIONS 

REGIONAL ALLOCATIONS 

Co-financing 
A ENVELOPE - NATIONAL 
ALLOCATIONS 
IMPLEMENTATION COSTS 
AND INTERESTS REVENUES 
INTRA-ACP ALLOCATIONS 

A
C
P 

REGIONAL ALLOCATIONS 

Mobilisable reserves 
INTRA-ACP RESERVE 

NIP/RIP RESERVE 

Non-mobilisable reserve 
NON-MOBILISABLE RESERVE 

EC Internal SLA 
A ENVELOPE - NATIONAL 
ALLOCATIONS 

   Regular MS Contributions 

A ENVELOPE - NATIONAL 
ALLOCATIONS 
B ENVELOPE - NATIONAL 
ALLOCATIONS 
BRIDGING FACILITY 
IMPLEMENTATION COSTS 
AND INTERESTS REVENUES 
REGIONAL ALLOCATIONS 

O
C
T 

Non-mobilisable reserve 
NON-MOBILISABLE RESERVE 

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

CREDIT
S 

(1) 

DECISIONS 
ANNUA
L 

AGGRE
G. 
(2) 

% 

(2) : (1) 

ASSIGNED FUNDS 
ANNUA
L 

% 

AGGRE
G. 
(3) 

(3) : (2) 

(EUR million) 

PAYMENTS 

ANNUAL 

% 

(4) : (3) 

AGGRE
G. 
(4) 

15.582 

15.555 

1.294 

100% 

13.093 

1.960 

84% 

8.332 

2.204 

64% 

926 

873 

3.443 

6.398 

41 

1 

24 

4 

200 

87% 

42 

82% 

423 

754 

88% 

88% 

744 

803 

2.701 

3.971 

107 

80% 

27 

92% 

445 

78% 

1.380 

62% 

10 

98% 

0 

2 

2 

21% 

91% 

100% 

6 

0 

22 

4 

4 

0 

5 

15% 

47% 

93% 

2  100% 

1.072 

1.064 

219 

99% 

1.071 

1.070 

206 

100% 

4.014 

7.317 

3.912 

7.296 

389 

647 

97% 

100% 

42 

4 

26 

4 

10 

100% 

1 

4 

2 

100% 

100% 

100% 

42 

4 

26 

4 

1 

(100) 

347 

1 

1 

(0) 

52% 

1 

0 

100% 

1 

   100% 

213 

213 

17 

100% 

193 

12 

4 

100% 

9 

1 

1 

91% 

171 

51 

88% 

79% 

8 

1 

84% 

8 

103 

1 

4 

100% 

100% 

5 

99 

0 

56% 

19 

97% 

4 

25 

0 

90% 

12 

25% 

12 

0 

9 

103 

15 

29.731 

29.309 

2.798 

99% 

25.110 

3.413 

86% 

16.791 

4.239 

67% 

78 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.2  REVENUE  

Nature of Revenue  

The  main  revenue  of  the  EDF  is  the  Member  States  contributions.  Three  times  per  year,  the  European 
Commission  and  the  European  Investment  Bank  call  the  Member  States  to  contribute  to  the  EDF.  The 
amount  of  the  contributions  called  each  year  reflects  the  amount  of  payment  to  be  covered  during  the 
year.  

Overview of contributions by Member State 

10th and 11th contribution to EDF by MS  (in  EUR million) 

12.000,0

10.000,0

8.000,0

6.000,0

4.000,0

2.000,0

0,0

DE FR UK IT SP NL BE SE AT DK PL FI GR PT IE CZ HU RO SK LU SI BG LT CY HR LV EE MT

10th 11th
EDF called

10th 11th
EDF uncalled

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

2.3  OPERATIONAL EXPENDITURE AND SPECIFIC 

PROGRAMMES  

Nature of Expenditure  

The amount available under the multiannual financial framework consists of 3% allocated to Commission 
for  support  expenditure  and  97%  allocated  to  the  implementation  of  EDF  projects.  Amounts  are  set  by 
each  Internal  Agreement  and  can  be  increased  by  voluntary  contributions  and  income  yielded  from 
operations. 

Breakdown of committed, contracted and paid amount per nature of expenditure: 

PAYMENTS 

ANNUAL  % 

AGGRE
G. 

(4) 

1.322 

28 

35.114 

4.571 

36.436 

4.599 

(4) 
: 
(3) 

81
%  

71
%  

80
% 

CREDIT
S 

DECISIONS 
ANNUA
L 

AGGRE
G. 

(1) 

(2) 

1.622 

1.619 

226 

49.170 

48.668 

2.461 

50.792 

50.287 

2.687 

ASSIGNED FUNDS 

AGGRE
G. 

ANNUA
L 

(3) 

1.409 

57 

44.268 

3.613 

45.677 

3.670 

% 

(3) 
: 
(2) 

87
% 

90
% 

91
% 

% 

(2) 
: 
(1) 

10
0
% 

99
% 

99
% 

TOTAL: 
ADMINISTRATIVE 
IMPLEMENTATION 
COSTS AND INTERESTS 
REVENUES 
TOTAL: OPERATIONNAL 
IMPLEMENTATION 
TOTAL 10+11th EDF: 
ACP+OCT (INCL. 
RESERVES)    (A+B) 

Implementation rate 

120%

100%

80%

60%

40%

20%

0%

Commitment rate

contract rate

payment rate

Administrative

Operational

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
 
Annual accounts of the European Development Fund 2020 

Breakdown of committed, contracted and paid amount per region and country 

EDF CUMULATIVE ACCOUNTS AT 31 DECEMBER 2020 BY COUNTRY 
% APPR. 

10+11th EDF 

TOTAL 10th and 11th EDF (EUR in million) 

Cumulative 2020 

Appropriations 

Decisions 

% of 
Appr. 

Assigned 
funds 

% of 
Appr. 

Payments  % of Appr. 

Administrative and financial expenditure 

All ACP countries 

Administrative and financial expenditure+ All ACP 
countries 

Angola 

Benin 

Botswana 

Burkina Faso 

Burundi 

Cabo Verde 

Cameroon 

Central African Republic 

Chad 

Comoros 

Congo (Brazzaville) 

Democratic Republic of Congo 

Djibouti 

Eritrea 

Ethiopia 

Gabon 

Gambia 

Ghana 

ACP 

Guinea Bissau 

Guinea (Conakry) 

Ivory Coast 

Kenya 

Lesotho 

Liberia 

Madagascar 

Malawi 

Mali 

Mauritania 

Mauritius 

Mozambique 

Namibia 

Niger 

Nigeria 

Rwanda 

Sao Tome & Principe 

Senegal 

Seychelles 

Sierra Leone 

Somalia 

1.605 

100% 

2.553 

4.158 

349 

739 

130 

90% 

93% 

100% 

100% 

100% 

1.399 

2.553 

3.952 

309 

685 

128 

1.310 

100% 

1.293 

572 

147 

522 

625 

940 

80 

164 

99% 

100% 

100% 

100% 

100% 

99% 

100% 

544 

146 

489 

612 

794 

68 

145 

1.430 

100% 

1.223 

186 

215 

100% 

100% 

148 

215 

1.655 

100% 

1.530 

35 

316 

793 

186 

506 

713 

881 

259 

495 

791 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

1.026 

100% 

33 

307 

722 

185 

453 

694 

834 

241 

432 

684 

893 

1.424 

100% 

1.390 

349 

83 

100% 

100% 

1.470 

100% 

189 

100% 

1.289 

100% 

1.175 

99% 

841 

56 

670 

23 

663 

902 

100% 

100% 

100% 

100% 

100% 

100% 

319 

81 

1.135 

174 

1.258 

1.138 

812 

44 

625 

21 

600 

898 

87% 

90% 

89% 

88% 

92% 

98% 

99% 

94% 

99% 

94% 

98% 

84% 

85% 

88% 

85% 

80% 

100% 

92% 

92% 

97% 

91% 

99% 

89% 

97% 

95% 

93% 

87% 

86% 

87% 

98% 

91% 

98% 

77% 

92% 

97% 

96% 

96% 

79% 

93% 

95% 

90% 

99% 

1.609 

2.846 

4.455 

349 

741 

130 

1.310 

579 

147 

522 

626 

940 

80 

164 

1.430 

186 

215 

1.656 

35 

316 

796 

186 

506 

715 

881 

259 

495 

792 

1.026 

1.425 

349 

83 

1.476 

189 

1.294 

1.187 

841 

56 

671 

23 

663 

905 

81 

1.313 

1.821 

3.134 

239 

623 

119 

1.183 

425 

144 

384 

475 

663 

62 

99 

996 

112 

35 

1.301 

26 

226 

676 

141 

372 

603 

583 

165 

373 

448 

726 

1.147 

246 

77 

866 

155 

1.102 

920 

750 

39 

564 

21 

502 

653 

82% 

64% 

70% 

68% 

84% 

91% 

90% 

73% 

98% 

74% 

76% 

71% 

78% 

60% 

70% 

60% 

16% 

79% 

75% 

72% 

85% 

76% 

74% 

84% 

66% 

64% 

75% 

57% 

71% 

80% 

70% 

93% 

59% 

82% 

85% 

78% 

89% 

70% 

84% 

92% 

76% 

72% 

 
 
 
 
 
  
  
South Soudan 

Sudan 

Swaziland 

Tanzania 

Togo 

Uganda 

Zambia 

Zimbabwe 

Antigua & Barbuda 

Barbados 

Belize 

Dominica 

Dominican Republic 

Grenada 

Guyana 

Haiti 

Jamaica 

Saint Kitts & Nevis 

Saint Lucia 

Saint Vincent & the Grenadines 

Suriname 

Trinidad & Tobago 

Cook Islands 

East Timor 

Fiji 

Kiribati 

Marshall Islands 

Micronesia 

Nauru 

Niue 

Palau 

Papua New Guinea 

Solomon Islands 

Tonga 

Tuvalu 

Vanuatu 

Western Samoa 

Caribbean Region 

Central Africa Region 

Annual accounts of the European Development Fund 2020 

92 

298 

135 

1.179 

379 

1.000 

837 

472 

91 

298 

135 

100% 

100% 

100% 

91 

228 

107 

1.179 

100% 

1.003 

378 

100% 

1.000 

100% 

837 

472 

100% 

100% 

354 

943 

682 

466 

* Total Africa 

28.638 

28.589 

100% 

26.176 

16 

22 

43 

41 

283 

21 

84 

1.031 

243 

9 

32 

27 

27 

29 

16 

22 

43 

41 

98% 

100% 

100% 

100% 

283 

100% 

21 

81 

100% 

97% 

1.030 

100% 

243 

100% 

9 

32 

27 

27 

29 

100% 

100% 

100% 

100% 

100% 

15 

18 

28 

41 

277 

20 

78 

829 

236 

8 

32 

26 

27 

28 

* Total Caribbean 

1.909 

1.905 

100% 

1.665 

5 

100% 

174 

99% 

49 

42 

17 

23 

4 

3 

5 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

5 

172 

46 

41 

17 

21 

4 

3 

4 

246 

100% 

202 

69 

28 

14 

55 

67 

803 

531 

556 

100% 

100% 

100% 

100% 

100% 

100% 

98% 

100% 

60 

28 

13 

49 

67 

732 

429 

461 

5 

175 

49 

42 

17 

23 

4 

3 

5 

246 

69 

29 

14 

55 

67 

804 

540 

556 

3.040 

7.744 

62 

324 

142 

1.959 

14.369 

82 

* Total Pacific 

Eastern, Southern Africa and the Indian Ocean 

Intra ACP Allocations 

Multiregional PALOP 

Pacific Region 

Southern Africa Region 

West Africa Region 

* Total regional cooperation ACP 

3.032 

100% 

2.617 

86% 

1.727 

57% 

7.632 

62 

324 

142 

99% 

99% 

100% 

100% 

6.938 

59 

253 

142 

1.951 

100% 

1.696 

14.230 

99% 

12.594 

90% 

94% 

78% 

100% 

87% 

88% 

5.808 

45 

170 

134 

1.171 

9.629 

75% 

72% 

52% 

95% 

60% 

67% 

100% 

76% 

80% 

85% 

93% 

94% 

81% 

99% 

91% 

97% 

83% 

67% 

99% 

98% 

97% 

93% 

80% 

97% 

90% 

99% 

96% 

97% 

99% 

87% 

99% 

98% 

95% 

97% 

98% 

89% 

96% 

98% 

70% 

82% 

87% 

99% 

99% 

90% 

99% 

91% 

80% 

83% 

91 

128 

92 

844 

315 

647 

498 

409 

21.266 

13 

17 

21 

37 

262 

20 

69 

690 

202 

6 

25 

22 

20 

22 

1.425 

5 

129 

36 

25 

11 

10 

4 

3 

3 

126 

56 

28 

10 

35 

66 

548 

283 

291 

100% 

43% 

68% 

72% 

83% 

65% 

59% 

87% 

74% 

83% 

79% 

48% 

90% 

92% 

95% 

82% 

67% 

83% 

66% 

76% 

80% 

73% 

75% 

75% 

99% 

74% 

73% 

59% 

66% 

43% 

89% 

96% 

60% 

51% 

82% 

98% 

74% 

65% 

98% 

68% 

52% 

52% 

 
 
Annual accounts of the European Development Fund 2020 

ACP 

50.174 

49.686 

99% 

45.118 

90% 

36.002 

72% 

All OCT countries 

Anguilla 

Falkland Islands 

Montserrat 

Pitcairn Islands 

Saint Helena 

Turks & Caicos Islands 

Aruba 

All OCT countries 

* Total British OCT 

Antilles néerlandaises - Bonaire 

OCT 

Antilles néerlandaises - Saba 

Antilles néerlandaises - Sint-Eustatius 

Netherlands Antilles 

Sint Maarten 

French Polynesia 

Mayotte 

New Caledonia 

Saint Pierre & Miquelon 

Wallis & Futuna 

Regional cooperation OCT 

* Total Dutch OCT 

* Total French OCT 

* Total regional cooperation OCT 

OCT 

30 

30 

28 

2 

10 

33 

5 

38 

33 

148 

21 

4 

4 

2 

41 

14 

86 

51 

29 

50 

47 

39 

215 

139 

139 

618 

14 

14 

28 

2 

10 

33 

5 

38 

33 

148 

21 

4 

4 

2 

41 

14 

86 

51 

29 

50 

47 

39 

215 

138 

138 

601 

46% 

46% 

100% 

100% 

100% 

100% 

99% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

100% 

99% 

99% 

97% 

10 

10 

27 

2 

10 

33 

5 

38 

32 

146 

21 

4 

3 

2 

23 

6 

60 

49 

29 

49 

46 

36 

209 

133 

133 

559 

33% 

33% 

97% 

98% 

100% 

100% 

99% 

100% 

100% 

99% 

99% 

91% 

97% 

97% 

57% 

45% 

70% 

97% 

100% 

98% 

98% 

94% 

97% 

96% 

96% 

90% 

9 

9 

26 

2 

8 

29 

5 

35 

31 

135 

14 

0 

3 

2 

18 

0 

38 

45 

29 

48 

46 

25 

193 

59 

59 

434 

31% 

31% 

95% 

90% 

77% 

88% 

99% 

92% 

95% 

92% 

66% 

0% 

97% 

97% 

43% 

0% 

44% 

89% 

100% 

96% 

98% 

64% 

90% 

42% 

42% 

70% 

TOTAL:  
ACP+OC
T 

50.792 

50.287 

99% 

45.677 

90% 

36.436 

72% 

83 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
Annual accounts of the European Development Fund 2020 

Breakdown of committed, contracted and paid amount by spending area for the 11th EDF  

11TH EDF Breakdown of committed, contracted and paid amount by spending area (DAC sector codes)10 

Sector  
Social infrastructure and services 
110-Education 
120-Health 
130-Population policies/programmes and reproductive health 
140-Water and sanitation 
150-Government and civil society 
160-Other social infrastructure and services 

Social infrastructure and services TOTAL 

Economic infrastructure and services 
210-Transport and storage 
220-Communications 
230-Energy 
240-Banking and financial services 
250-Business and other services 

 Economic infrastructure and services TOTAL 

Production sectors 
310-Agriculture, forestry and fishing 
320-Industry, mineral resources and mining, construction 
330-Trade and tourism 

Production sectors TOTAL 

Multisector/Cross-cutting 
410-General environmental protection 
430-Other multisector 

Multisector/Cross-cutting TOTAL 

Commodity aid and general programme assistance 
510-General budget support 
520-Developmental food assistance 

Commodity aid and general programme assistance TOTAL 

Action relating to debt 
600-Action relating to debt 

Action relating to debt TOTAL 

Humanitarian aid 
720-Emergency response 
730-Reconstruction relief and rehabilitation 
740-Disaster preparedness 

Humanitarian aid TOTAL 

Administrative costs of donors / Unallocated / Unspecified 
910-Administrative costs of donors 
998-Unallocated / Unspecified 
N/A-Not Available 

Administrative costs of donors / Unallocated / Unspecified TOTAL 
 GRAND TOTAL OF 11TH EDF of committed, contracted and paid 
amount  

Committed4 

Contracted4 

Paid11 

(EUR million) 

1.197,26 
2.226,42 
352,44 
775,90 
5.905,39 
979,35 
11.436,77 

1.445,48 
140,96 
2.016,01 
93,93 
346,23 
4.042,59 

3.187,79 
623,58 
497,21 
4.308,58 

999,94 
3.841,16 
4.841,10 

3.116,32 
614,50 
3.730,82 

91,50 
91,50 

746,19 
137,83 
133,29 
1.017,31 

978,02 
586,30 
214,40 
1.778,72 

1.038,76 
2.323,60 
38,39 
639,26 
5.450,64 
1.339,34 
10.829,99 

1.827,48 
99,39 
1.566,30 
96,23 
178,15 
3.767,55 

2.509,57 
356,84 
353,36 
3.219,77 

760,45 
2.343,95 
3.104,40 

3.059,65 
385,27 
3.444,92 

- 
- 

505,17 
43,40 
106,16 
654,72 

786,39 
434,28 
0,64 
1.221,31 

758,36 
1.907,70 
20,24 
283,71 
4.156,20 
1.128,02 
8.254,24 

595,21 
64,78 
675,00 
38,59 
84,80 
1.458,38 

1.478,27 
115,46 
138,53 
1.732,26 

390,13 
609,07 
999,19 

2.345,18 
332,91 
2.678,10 

- 
- 

458,31 
33,36 
69,14 
560,80 

739,89 
421,68 
- 
1.161,57 

31.247,39 

26.242,65 

16.844,55 

10

11

 Gross amounts (i.e. excluding decommitments and recovery orders) 
 Amounts in columns Committed, Contracted, Paid are color weighted 

84 

 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
EUR million 

 10.500,00

 9.000,00

 7.500,00

 6.000,00

 4.500,00

 3.000,00

 1.500,00

 -

 12.000,00

 10.500,00

 9.000,00

 7.500,00

 6.000,00

 4.500,00

 3.000,00

 1.500,00

 -

EUR million 
 9.000,00

 8.000,00

 7.000,00

 6.000,00

 5.000,00

 4.000,00

 3.000,00

 2.000,00

 1.000,00

 -

Annual accounts of the European Development Fund 2020 

Evolution of cumulative Committed, Contracted and Paid amount by spending area for the 11th 
EDF  

Cumulative Contracted amounts per year for each sector for the 11th EDF 

Social infrastructure and services

2014

2015

2016

2017
Financial Year 

2018

2019

2020

EUR million 

Cumulative Committed amounts per year for each sector for the 11th EDF 

Economic infrastructure and
services

Production sectors

Multisector/Cross-cutting

Commodity aid and general
programme assistance

Humanitarian aid

Other : Administrative costs of
donors / Unallocated /
Unspecified
N/A-Not Available

Social infrastructure and
services

Economic infrastructure and
services

Production sectors

Multisector/Cross-cutting

Commodity aid and general
programme assistance

Action relating to debt

Humanitarian aid

2014

2015

2016

2017
Financial Year 

2018

2019

2020

Other : Administrative costs of
donors / Unallocated /
Unspecified

Cumulative Paid amounts per year for each sector for the 11th EDF 

2014

2015

2016

2017

2018

2019

2020

Financial Year 

85 

Social infrastructure and
services

Economic infrastructure
and services

Production sectors

Multisector/Cross-cutting

Commodity aid and
general programme
assistance

Humanitarian aid

Other : Administrative
costs of donors /
Unallocated / Unspecified

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3. 

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 

86 

 
 
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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 Art. 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 

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Commitment  appropriations 
(contracts,  grant 
agreements/decisions)  that  could  be  signed  in  the  current  financial  year.  Financial  Regulation  Art.  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. 

legal  obligations 

cost  of 

cover 

total 

the 

De-commitment 

An act whereby a previous commitment (or part of it) is cancelled. 

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 Art. 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) No 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 

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 

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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 Art. 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 Art. 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 

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Annual accounts of the European Development Fund 2020 

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. 

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

91 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

EUROPEAN INVESTMENT BANK 

CA/541/21 

11 March 2021 

Document 21/101 

B O A R D   O F   D I R E C T O R S  

IN V E ST M ENT  F AC ILI T Y  

FINANCIAL STATEMENTS 

AS AT 31 DECEMBER 2020 

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 

f) 

Independent auditor’s report 

ORG.: E 

92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

STATEMENT OF FINANCIAL POSITION 
AS AT 31 DECEMBER 2020 
(in EUR’000) 

Notes 

31.12.2020 

31.12.2019 

ASSETS 

Cash and cash equivalents 

Amounts receivable from contributors 

Treasury financial assets 

Derivative financial instruments 

Loans and advances 

Shares and other variable yield securities 

Other assets 

Total assets 

LIABILITIES AND CONTRIBUTORS' RESOURCES 

LIABILITIES 

Derivative financial instruments 

Deferred income 

Provisions for guarantees issued 

Provisions for loan commitments 

Amounts owed to third parties 

Other liabilities 

Total liabilities 

CONTRIBUTORS' RESOURCES 

Facility Member States Contribution called 

Retained earnings 

5 

9/17 

10 

6 

7 

8 

11 

6 

12 

13 

14 

15 

16 

17 

923,940 

68,908 

351,873 

33,584 

1,673,445 

526,810 

109 

837,777 

86,330 

330,587 

14,184 

1,518,675 

619,928 

- 

3,578,669 

3,407,481 

642 

29,732 

851 

33,152 

152,378 

3,446 

191 

32,566 

628 

37,269 

147,438 

2,353 

220,201 

220,445 

3,221,695 

136,773 

2,967,000 

220,036 

Total contributors' resources 

3,358,468 

3,187,036 

Total liabilities and contributors' resources 

3,578,669 

3,407,481 

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Annual accounts of the European Development Fund 2020 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME  
FOR THE YEAR ENDED 31 DECEMBER 2020 
(in EUR’000) 

Notes 

From 01.01.2020 

From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

Interest and similar income* 

Interest and similar expenses 

Net interest and similar income 

Fee and commission income 

Fee and commission expenses 

Net fee and commission income 

Fair value change of derivative financial instruments  

Net result on shares and other variable yield securities 

Net result on loans and advances measured at FVTPL 

Sale of loans and proceeds from recovery actions 

Net foreign exchange result 

Net result on financial operations 

Change in impairment on loans and advances, net of reversals 

Change in provisions for guarantees, net of reversals 

Change in provisions for loan commitments, net of reversals 

General administrative expenses 

(Loss) / profit for the year 

Other comprehensive income 

Total comprehensive income (loss) / profit for the year 

19 

19 

20 

20 

21 

7 

7 

13 

14 

22 

84,783 

-5,250 

79,533 

353 

-225 

128 

18,949 

-46,717 

-29,621 

2,362 

-48,545 

93,923 

-2,948 

90,975 

4,438 

-721 

3,717 

12,611 

9,904 

-8,331 

2,064 

-61,998 

-103,572 

-45,750 

-4,312 

-228 

3,715 

-58,527 

-83,263 

- 

-83,263 

17,243 

107 

-13,244 

-50,009 

3,039 

- 

3,039 

* For the year ended 31 December 2020, interest and similar income included EUR 77.9 million (2019: EUR 93.9 million) calculated on 
assets held at amortised cost based on effective interest method.  

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Annual accounts of the European Development Fund 2020 

STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES 
FOR THE YEAR ENDED 31 DECEMBER 2020 
(in EUR’000) 

At 1 January 2020 

Member States contribution called during the year 
Reallocation of 9th EDF Contribution to interest subsidies and 
technical assistance to Contributor’s resources 
(Loss) for the year 2020 

Changes in contributors’ resources 

Notes 

17 

17 

Contribution 
called 

2,967,000 

Retained 
earnings 

220,036 

Total  

3,187,036 

209,614 

45,081 

- 

254,695 

- 

- 

-83,263 

-83,263 

209,614 

45,081 

-83,263 

171,432 

At 31 December 2020 

3,221,695 

136,773 

3,358,468 

At 1 January 2019 

Contribution 
called  

Retained 
earnings  

Total  

2,697,000 

216,997 

2,913,997 

Member States contribution called during the year 

17 

Profit for the year 2019 

Changes in contributors’ resources 

270,000 

- 

270,000 

- 

3,039 

3,039 

270,000 

3,039 

273,039 

At 31 December 2019 

2,967,000 

220,036 

3,187,036 

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STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 31 DECEMBER 2020 
(in EUR’000) 

OPERATING ACTIVITIES 
(Loss) / Profit for the year 
Adjustments made for  
Net result in fair value on shares and other variable yield securities 
Change in impairment on loans and advances, net of reversals 
Net result on loans and advances measured at FVTPL 
Change in accrued interest and amortised cost on loans and advances 
Net change in provisions for guarantees issued, net of reversals 
Net change in provisions for loan commitments, net of reversals 
Fair value changes on derivatives  
Change in accrued interest and amortised cost on treasury financial assets 
Change in deferred income 
Effect of exchange rate changes on loans   
Effect of exchange rate changes on shares and other variable yield securities 
Effect of exchange rate changes on cash held  
Profit / (Loss) on operating activities before changes in operating assets and liabilities   
Loan disbursements 
Repayments of loans 
Sale of loans and proceeds from recovery actions 
Change in accrued interest on cash and cash equivalents 
(Increase) in treasury financial assets 
Maturities of treasury financial assets 
Decrease in shares and other variable yield securities 
Net proceeds from shares and other variable yield securities 
Increase / (Decrease) in other assets 
(Increase) / Decrease in other liabilities 
Increase in amounts payable to the European Investment Bank 
Net cash flows used in operating activities 

FINANCING ACTIVITIES 
Contribution received from Member States  
Amounts received from Member States with regard to interest subsidies and technical 
assistance 
Amounts paid on behalf of Member States with regard to interest subsidies and technical 
assistance 
Net cash flows from financing activities 
Net increase in cash and cash equivalents 
Summary statement of cash flows: 
Cash and cash equivalents at the beginning of financial year 
Net cash flows (used in) / from : 
Operating activities 
Financing activities 
Effects of exchange rate changes on cash and cash equivalents 
Cash and cash equivalents at the end of financial year 
Cash and cash equivalents are composed of: 
Cash in hand  
Term deposits (excluding accrued interest) 
Commercial papers 

Notes 

From 
01.01.2020 to 
31.12.2020 

From 
01.01.2019 to 
31.12.2019 

-83,263 

3,039 

8 
7 

7 
13 

10 

7 
8 

7 
7 

5 
10 
10 
8 

5 
5 
5 

47,909 
4,312 
29,621 
-5,202 
228 
-4,117 
-18,949 
1,067 
-2,834 
90,878 
33,616 
9,233 
102,499 
-560,291 
276,101 
2,362 
66 
-2,710,009 
2,689,790 
-85,305 
85,477 
109 
-1,093 
8,543 
-191,751 

-8,629 
-17,243 
8,331 
-5,087 
-107 
13,447 
-12,611 
331 
-1,198 
-17,752 
-6,812 
2,369 
-41,922 
-311,185 
355,078 
2,194 
-93 
-2,948,021 
2,952,905 
-106,943 
71,024 
-171 
140 
2,187 
-24,807 

227,035 

284,820 

60,387 

30,000 

-18,807 

268,615 
76,864 

-28,220 

286,600 
261,793 

837,980 

573,818 

-191,751 
268,615 
9,233 
924,077 

398,991 
380,000 
145,086 
924,077 

-24,937 
286,730 
2,369 
837,980 

72,166 
622,991 
142,823 
837,980 

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Notes to the financial statements as at 31 December 2020 

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: 

(1) 

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”). 

The EU and ACP sides have agreed transitional arrangements that would allow the EIB to carry on signing operations in ACP region 
until the end of November 2021, or until the  entry into force of a new ACP-EU Agreement, or the provisional application between the 
Union  and  the  ACP  States  of  the  new  Agreement,  whichever  comes  first  (Decision  No  2/2020  of  the  ACP-EU  Committee  of 
Ambassadors  of  4  December  2020  to  amend  Decision  No  3/2019  of  the  ACP-EU  Committee  of  Ambassadors  to  adopt  transitional 
measures pursuant to Article 95(4) of the ACP-EU Partnership Agreement - OJ L 420, 14.12.2020, p. 32).  

Agreement  was  reached  on  15  December  2020  on  the  Neighbourhood,  Development  and  International  Cooperation  Instrument 
(“NDICI”), covering external action of the EU for the period 2021-2027. This includes 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. The NDICI legal text is expected to be formally adopted in the spring of 2021. 

On 23 December 2020, the Council decided to extend the current ACP Investment Facility commitment period by at least six months. 
Going  forward,  reflows  from  the  ACP  IF  shall  be  deployed  within  the  NDICI  framework  through  a  combination  of  a  dedicated  ACP 
private sector window under the European Fund for Sustainable Development (EFSD+) and a Trust Fund, both to be implemented by 
the EIB.  

Following,  the  extension  of  the  Investment  Facility  commitment  period,  the  Bank  will  continue  approving  operations  in  line  with  its 
Mandate until 30 June 2021, or until the entry into force of a regulation establishing the external financing instrument, whichever is the 
later, and in any case no later than 30 November 2021 (Council Decision 2020/2233 of 23 December 2020 concerning the commitment 
of  the  funds  stemming  from  reflows  under  the  ACP  Investment  Facility  from  operations  under  the  9th,  10th  and  11th  European 
Development Funds - L 437/188, 28.12.2020). 

The financial statements have been prepared on a going concern basis, which assumes that the Investment Facility will be able to meet 
all monies payables under any operations. The duration of the Investment Facility is not determined. The 11th EDF Internal Agreement 
remains in force (pursuant to Article 14(3) thereof) so long as is necessary for all the operations financed under the ACP-EU Partnership 
Agreement, the Overseas Association Decision and the multi-annual financial framework to be fully executed. 

The present financial statements cover the period from 1 January 2020 to 31 December 2020. 

On  a  proposal  from  the  EIB  Management  Committee  and  the  EIB  Board  of  Directors  adopted  the  Financial  Statements  on  11 
March 2021, and authorised their submission to the EIB Board of Governors for approval by 23 April 2021. 

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2  Significant accounting policies 

1.1  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.  

a.  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: 

(d)  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. 

(e)  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, which can result in significant changes to the timing and amount of allowance for credit loss to be recognized (Note 
2.4.2). Relevant assumptions on the effects on impairment resulting from COVID–19 are detailed under Note 2.4.2 and Note 3.2.3.7. 

(f)  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. 

(g)  Consolidation of entities in which the Facility holds interest  

The EIB 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. 

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b.  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 2020: 

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  must  be  applied  retrospectively.  However,  any  hedge  relationships  that  have  previously  been  de-
designated cannot be reinstated upon application, nor can any hedge relationships be designated with the benefit of hindsight. 

The adoption of the amendments had no material impacts on the Facility’s financial statements. 

Definition  of  Material  -  Amendments  to  IAS  1  'Presentation  of  financial  statements'  and  lAS  8    'Accounting  policies,  changes  in 

accounting estimates and errors'. 

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 did not have a significant impact on the Facility’s financial statements. 

Amendments to References to Conceptual Framework in IFRS 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.  

The  Facility  adopted  the  revised  Conceptual  Framework  from  1  January  2020.  The  revised  Conceptual  Framework  did  not  have  a 

significant impact on the Facility’s financial statements. 

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Standards issued but not yet adopted 

Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 

On 27 August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 

and IFRS 16. With publication of the phase two amendments, the IASB has completed its work in response to IBOR reform. 

The  amendments  provide  temporary  reliefs  which  address  the  financial  reporting  effects  when  an  interbank  offered  rate  (IBOR)  is 

replaced with an alternative nearly risk-free interest rate (RFR). 

The amendments are effective for annual periods beginning on or after 1 January 2021. The Facility did not adopt these amendments 

early and a cross services IBOR working group is in place to assess the impact and manage its transition. 

c.  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. 

i. 

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. 

ii. 

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  amortized  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. 

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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 described and disclosed in 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”. 

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A contractual modification is deemed substantial if the discounted present value of the cash flows under the revised terms (discounted 
using the original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the 
original financial asset. Qualitative factors such as a change in the currency on which the financial asset is denominated and conversion 
features are also considered. 

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 Bank 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 Bank uses its 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 is based on a forward-looking expected credit loss (“ECL”) model. The EIB has established a framework to calculate “expected 
credit  loss” conditional  on  the state  of  the macro-economy.  It  involves  the  construction  of  point-in-time  (“PIT””)  credit  risk  parameters 
(Probability of default – “PD” and Loss given default – “ LGD”) based on a systematic factor (credit cycle) that is driven by the macro-
economy and projected via macroeconomic forecasts or scenarios. The final ECL is a probability weighted average of the respective 
macro-economic  scenario  ECLs.  This  forward-looking  impairment  model  is  applied  to  financial  assets  measured  at  AC,  to  financial 
guarantee contracts, as well as to off-balance sheet commitments.  

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Under IFRS 9, loss allowances are  measured on either of the following bases: 

- 

- 

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

Lifetime ECL’s: 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 Bank’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  (“FMGPs”),  notably  covering  early  warning  triggers,  Watch  List  (“WL”),  internal 
rating and arrears. 

In line with guidance issued by standard setters and market practises, the EIB considers that the application of COVID-19 short-term 
forbearance  measures  to  performing  counterparties,  aimed  at  addressing  the  adverse  systemic  economic  impact  of  the  COVID-19 
pandemic, should  not  be considered  by  themselves  as  an  automatic trigger  to  conclude that  SICR  has  occurred.  As  disclosed  under 
Note 3.2.3.8, the EIB applies expert judgement when assessing the credit risk of such counterparties. 

The  EIB  considers  that  the  COVID-19  pandemic  effect  is  reflected  within  the  existing  forward-looking  ECL  model  which  is  deemed 
sufficiently  robust  to  factor  in  such  extreme  events.  Notably,  the  respective  impacts  have  been  directly  captured  through  the 
macroeconomic projections and the PD terms structures. 

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  Bank  determines  whether  or  not  there  is  objective  evidence  of  a  non-performing  exposure.  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. 

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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: 

- 
- 
- 

Credit rating and PIT Probability of default (“PD”), 

PIT Loss Given default (“LGD”), 

Exposure at default (“EAD”). 

The  credit  rating  of  a  counterpart  is  determined  at  a  certain  date,  using  score-sheet  models  tailored  to  the  various  categories  of 
counterparties and exposures. 

Each credit rating maps to a specific PD that 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. Hence, ratings are primary input into the determination of the PIT 
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 and given specific macro-economic scenarios.  

The LGD 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. LGD 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  EIB  incorporates  PIT  and  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. 

For the measurement of ECL, the EIB has developed a conditional modelling approach for calculating PD term structures involving: 

- 
- 

the definition of an economically reasonable link function between the credit cycle and macroeconomic variables, and 

a  set  of  three macro-economic scenarios  (one  baseline  and  two  scenarios  reflecting  downturn  and  upturn  in  the  economy) 
with multi-year potential realisation for the GDP and their associated likelihoods. 

To  generate  macroeconomic  scenarios,  the  EIB  uses  a  macro  semi-structural  multi-country  and  multi-equation  model  of  the  global 
economy  with  country  specific  blocks.  The  central  /  baseline  scenario  is  designed  to  be  consistent  with  the  most  recent  European 
Commission forecasts. The positive and negative scenarios are designed around the central scenario by the deployment of the multi-
country/multi-equation model. The scenarios are derived shocking GDP, which is the key measure of economic activity. The shocks to 
real GDP are calibrated to replicate the past volatility of the variable. Also expert judgment is applied, when appropriate,  to refine the 
size and persistency of GDP shocks. As a result, shocks are determined together with a decay function to determine the impact of the 
shocks  over  time.  Probabilities  attached  to  each  scenario  are  defined  reflecting market  (volatility)  indicators  and  internally  developed 
indicators/trackers deployed in a consistent manner over time to capture uncertainty. 

The  EAD  represents  the  expected  exposure  in  the  event  of  a  default  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. 

In 2020, and in line with its ongoing model review and maintenance, the EIB has updated its PIT, PD and LGD models used to calculate 
the  estimates  of  ECL.  The  nature  of  the  update  relates  mostly  to  a  change  in  data  input  sources,  more  specifically,  credit  and 
macroeconomic data used for credit cycle modelling to support the calculation of PIT ECL (lifetime and 12M). The credit cycle is now 
constructed from an external rating agency’s downgrade and default rates data and projected via annual growth rates of real GDP and 
spread between long and short-term interest rates, namely interest rate term premium, while the previous model version extracted the 
credit cycle from PIT PD measures provided by external data provider and included one single macroeconomic variable only, namely 
quarterly growth rates of real GDP. 

The model update brings several upgrades, namely, the new  credit cycle definition which comes with increased discrimination power 
across industry and region segments, the link to the macro-economic variables is stronger and allows for the incorporation of a second 
external explanatory variable (term premium). The model upgrade impact is disclosed in Notes 7.2 and 14. 

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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.  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. 

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. 

The impairment policy on loans and advances is described under 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 or liquidation value. 

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. 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iii. 

 Financial guarantees 

Annual accounts of the European Development Fund 2020 

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. 

iv. 

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.  

v. 

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. 

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vi. 

Contributions 

Annual accounts of the European Development Fund 2020 

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. 

vii. 

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. 

Interest  subsidies  received  for  the  Facility’s  resources  are  deferred  and  recognised  as  an  adjustment  to  the  effective  yield,  being 
recorded under “Interest and similar income” in the income statement over the period from disbursement to repayment of the subsidised 
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. 

viii. 

Interest subsidies and technical assistance 

As part of its activity, the Facility manages interest subsidies and technical assistance (“TA”)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. 

ix. 

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. 

x. 

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. 

xi. 

Taxation 

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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 the 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 is independent of the Front Office.  

At EIB level, the Group Chief Risk Officer (“GCRO”) reports on Group Risks to the EIB Management Committee under the oversight of 
the MC member in charge of risk. The GCRO has direct access to the Risk Policy Committee and can write directly to and communicate 
with the EIB Board of Directors on any matter of his/her field of attribution. 

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, the EIB assesses the credit risk and expected loss with a view to quantify and 
price  the  risk.  The  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, Financial Institutions, etc.). Taking into consideration both, Best Banking Practice applicable to the EIB 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 PD following an in-depth analysis of the counterpart’s business and financial risk profile and its country risk 
operating context. Expert adjustments are made when necessary under the consideration of the legal entities’ parental or government 
support, and the final rating allows for overrides to reflect information (e.g. market pricing) not considered in the scoring sheet. 

The credit assessment of project finance and other structured limited recourse operations uses 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. Finally, Non-EU sovereigns are rated by the Economics Department based on a statistical model. 

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. 

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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. 

Maximum exposure (in EUR’000) 

ASSETS 

Cash and cash equivalents 

Amounts receivable from contributors 

Treasury financial assets 

Derivative financial instruments 

Loans and advances 

Other assets 

Total 

Provisions for loan commitments 

OFF BALANCE SHEET 

Contingent liabilities 

- Issued Guarantees 

Commitments 

- Undisbursed loans 

- Non-issued guarantees 

Total off balance sheet 

Total credit exposure 

31.12.2020 

31.12.2019 

923,940 

68,908 

351,873 

33,584 

837,777 

86,330 

330,587 

14,184 

1,673,445 

1,518,675 

109 

-  

3,051,859 

2,787,553 

-33,152 

-37,269 

998,560 

200,013 

1,722,618 

554,686 

3,275,864 

1,357,320 

1,359,818 

2,917,151 

6,294,571 

5,667,435 

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 PD of the main obligors, the EAD 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 an indicator of credit risk variations for the purposes of prioritising monitoring efforts; 

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

as a benchmark for calculating the annual additions to the General loan reserve; and 

as an input in risk-pricing decisions. 

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The following factors enter into the determination of an LG: 

i) 

ii) 

iii) 

iv) 

v) 

vi) 

The  borrower’s  creditworthiness:  Risk  Management 
their 
creditworthiness  based  on  internal  methodologies  and  external  data.  In  line  with  the  Basel  III  Internal  Ratings  Based 
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. 

reviews  borrowers  and  assesses 

independently 

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. 

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. 

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 

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

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%.  

“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  internal  loan  grading  based  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 below the one at approval. 

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. 

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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) nature of borrower taking into account guarantees provided by guarantors: 

At 31.12.2020 

In EUR’000 

Financial institutions 

Corporates 

Public institutions 

States 

Total disbursed 

Undisbursed 

Total disbursed and 
undisbursed 

At 31.12.2019 

In EUR’000 

Financial institutions 

Corporates 

Public institutions 

States 

Total disbursed 

Undisbursed 

Total disbursed and 
undisbursed 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 
disbursed 

87,269 

203,772 

21,866 

- 

312,907 

196,692 

509,599 

- 

27,026 

- 

1,506 

28,532 

- 

963,366 

177,321 

1,057 

190,262 

1,332,006 

1,492,774 

1,050,635 

408,119 

22,923 

191,768 

1,673,445 

1,689,466 

28,532 

2,824,780 

3,362,911 

64% 

24% 

1% 

11% 

100% 

- 

- 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 
disbursed 

111,806 

190,006 

26,908 

- 

328,720 

191,191 

519,911 

- 

36,704 

- 

2,085 

38,789 

- 

803,861 

172,082 

1,686 

173,537 

1,151,166 

1,128,860 

915,667 

398,792 

28,594 

175,622 

1,518,675 

1,320,051 

38,789 

2,280,026 

2,838,726 

60% 

26% 

2% 

12% 

100% 

- 

- 

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. 

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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 2020 and 31 December 2019 by the 
Loan Grading applications, based on the exposure signed (disbursed and undisbursed): 

At 31.12.2020  

in EUR’000 

High Grade  

Standard 
Grade  

Min. 
Accept. 
Risk 

High Risk  No grading* 

Total   % of Total 

A to B-  

C  

D+  

D- and 
below 

Borrower 

Financial institutions 

290,565 

90,445 

475,331 

815,120 

- 

1,671,461 

Corporates 

118,990 

Public institutions 

States 

- 

- 

46,861 

21,866 

4,865 

14,433 

512,142 

313,762 

1,006,188 

- 

- 

1,057 

22,923 

3,926 

653,548 

- 

662,339 

50% 

30% 

1% 

19% 

Total 

409,555 

164,037 

493,690 

1,980,810 

314,819 

3,362,911 

100% 

*Loan operations measured at FVTPL. 

At 31.12.2019  

in EUR’000 

High Grade  

Standard 
Grade  

Min. 
Accept. 
Risk 

High Risk  No grading* 

Total   % of Total 

A to B-  

C  

D+  

D- and 
below 

Borrower 

Financial institutions 

234,072 

219,467 

335,841 

817,894 

- 

1,607,274 

Corporates 

100,115 

Public institutions 

States 

- 

- 

49,458 

26,908 

6,285 

- 

- 

524,532 

95,925 

770,030 

- 

1,686 

28,594 

4,486 

422,057 

- 

432,828 

57% 

27% 

1% 

15% 

Total 

334,187 

302,118 

340,327 

1,764,483 

97,611 

2,838,726 

100% 

*Loan operations measured at FVTPL. 

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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 

Egypt 
Nigeria 
Kenya 
Ethiopia 
Mauritius 
Barbados 
Uganda 
Tanzania 
Rwanda 
Congo (Democratic Republic) 
Zambia 
New Caledonia 
Mauritania 
Regional-ACP 
Cameroon 
Senegal 
Dominican Republic 
Jamaica 
Ghana 
Guinea 
Malawi 
Cape Verde 
Angola 
Mali 
Mozambique 
Togo 
French Polynesia 
Cayman Islands 
Benin 
Seychelles 
Micronesia 
Haiti 
Niger 
Samoa 
Burkina Faso 
Vanuatu 
Palau 
Botswana 

Total 

31.12.2020 

31.12.2019 

319,040 
236,149 
195,917 
92,346 
76,419 
75,037 
61,869 
60,058 
59,114 
56,527 
42,553 
41,224 
38,131 
37,497 
36,749 
32,850 
30,741 
23,411 
21,249 
18,534 
17,349 
14,952 
14,654 
12,918 
10,775 
10,625 
8,783 
8,027 
3,932 
3,359 
3,073 
2,617 
2,243 
1,898 
1,267 
1,200 
358 
- 

101,316 
179,499 
230,837 
62,005 
96,014 
75,342 
64,882 
96,640 
48,839 
66,754 
43,036 
43,980 
49,139 
14,674 
32,238 
42,750 
45,393 
33,436 
31,635 
20,399 
21,800 
17,226 
19,269 
4,234 
12,709 
18,022 
12,556 
12,203 
59 
4,201 
648 
3,345 
5,399 
3,036 
1,861 
1,527 
768 
1,004 

1,673,445 

1,518,675 

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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 

Tertiary and other 

Electricity, coal and others 

Urban development, renovation and transport 

Chemicals, plastics and pharmaceuticals 

Basic material and mining 

Airports and air traffic management systems 

Telecommunications 

Investment goods, Consumer durables 

Waste recuperation 

Food chain 

Total 

31.12.2020 

31.12.2019 

1,079,088 

207,940 

206,201 

89,495 

34,292 

21,866 

14,964 

11,531 

6,063 

2,005 

932,901 

226,314 

195,042 

51,865 

44,746 

26,908 

21,546 

4,186 

6,812 

8,355 

1,673,445 

1,518,675 

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Annual accounts of the European Development Fund 2020 

3.2.3.5  Credit risk exposure for each internal risk rating 

The  EIB  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 

Loans and advances at AC 

Moody’s 
equiv. 
grade 

12-month 
ECL 

Lifetime 
ECL not 
credit-
impaired 

Lifetime 
ECL 
credit-
impaired 

2020 

POCI 

FVTPL 

Total 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Internal Rating 1 -  minimal credit risk 

Aaa 

- 

73,545 

Internal Rating  2 - very low credit risk 

Aa1 - Aa3 

75,048 

Internal Rating  3 - low credit risk 

Internal Rating  4 - moderate credit risk 

A1 - A3 
Baa1 - 
Baa3 

- 

- 

2,087 

54,412 

6,087 

Internal Rating  5 - financially weak counterpart  Ba1 - Ba3 

392,787 

19,761 

Internal Rating  6 - high credit risk 

Internal Rating  7 - very high credit risk 

Internal Rating  8 - counterpart in default 

Loans and advances at FVTPL 

B1 - B3 
below 
Caa1 
below 
Caa1 but 
in default 

581,607 

193,877 

32,032 

70,495 

177,919 

1,493 

- 

- 

5,693 

45,000 

- 

- 

Loss allowance and FV adjustment 

-16,389 

-43,976 

-44,538 

Carrying amount of loans and advances 

1,160,047 

432,906 

33,987 

Loan commitments 
Internal Rating  1 -  minimal credit risk 

Aaa 

- 

Internal Rating  2 - very low credit risk 

Aa1 - Aa3 

95,067 

Internal Rating  3 - low credit risk 

Internal Rating  4 - moderate credit risk 

A1 - A3 
Baa1 - 
Baa3 

87,000 

57,282 

Internal Rating  5 - financially weak counterpart  Ba1 - Ba3 

152,264 

- 

- 

- 

- 

- 

Internal Rating  6 - high credit risk 

Internal Rating  7 - very high credit risk 

Internal Rating  8 - counterpart in default 

B1 - B3 
below 
Caa1 
below 
Caa1 but 
in default 

675,365 

8,964 

72,500 

110,331 

- 

- 

38,497 

No internal rating* 

Loans and advances at FVTPL 

129,669 

27,365 

- 

- 

Loss allowance and FV adjustment 

-6,817 

-26,335 

- 

- 

- 

Carrying amount of loan commitments 

1,262,330 

120,325 

38,497 

* Agency agreements for which there are no underlying counterparts at reporting date 

115 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

73,545 

75,048 

2,087 

60,499 

412,548 

807,516 

249,907 

50,693 

92,436 

92,436 

-45,931 

-150,834 

46,505  1,673,445 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

95,067 

87,000 

57,282 

152,264 

684,329 

182,831 

38,497 

157,034 

268,314 

268,314 

- 

-33,152 

268,314  1,689,466 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.2.3.5  Credit risk exposure for each internal risk rating (continued) 

in EUR’000 

Moody’s 
equiv. 
grade 

12-month 
ECL 

Lifetime 
ECL not 
credit-
impaired 

Lifetime 
ECL 
credit-
impaired 

2019 

POCI 

FVTPL 

Total 

Loans and advances at AC 
Internal Rating 1 -  minimal credit risk 

Internal Rating  2 - very low credit risk 

Internal Rating  3 - low credit risk 

Internal Rating  4 - moderate credit risk 

Internal Rating  5 - financially weak counterpart 

Internal Rating  6 - high credit risk 

Internal Rating  7 - very high credit risk 

Internal Rating  8 - counterpart in default 

Loans and advances at FVTPL 

Aaa 
Aa1 - 
Aa3 
A1 - A3 
Baa1 - 
Baa3 
Ba1 - 
Ba3 
B1 - B3 
below 
Caa1 
below 
Caa1 but 
in default 

- 

82,211 

75,352 

5,399 

- 

- 

60,385 

16,449 

192,201 

6,199 

708,162  159,858 

79,411  145,176 

- 

- 

- 

- 

- 

- 

- 

- 

- 

-  136,749 

- 

- 

Loss allowance and FV adjustment 

-17,191 

-38,509 

-
114,307 

Carrying amount of loans and advances 

1,103,719  371,384 

22,442 

Loan commitments 

Internal Rating  2 - very low credit risk 

Internal Rating  3 - low credit risk 

Internal Rating  4 - moderate credit risk 

Internal Rating  5 - financially weak counterpart 

Internal Rating  6 - high credit risk 

Internal Rating  7 - very high credit risk 

Internal Rating  8 - counterpart in default 

No internal rating* 

Loans and advances at FVTPL 

Aa1 - 
Aa3 
A1 - A3 
Baa1 - 
Baa3 
Ba1 - 
Ba3 

B1 - B3 
below 
Caa1 
below 
Caa1 but 
in default 

102,092 

12,000 

61,461 

323,080 

- 

- 

- 

- 

405,773  126,076 

14,883  104,328 

- 

79,669 

- 

- 

- 

- 

Loss allowance and FV adjustment 

-3,943 

-33,326 

- 

- 

- 

- 

- 

- 

51,377 

- 

- 

- 

Carrying amount of loan commitments 
* Agency agreements for which there are no underlying counterparts at reporting date  

995,015  197,078 

51,377 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

37,366 

-16,236 

21,130 

- 

- 

- 

- 

- 

- 

- 

- 

76,581 

- 

- 

76,581 

82,211   
75,352   
5,399   
76,834   
198,400   
868,020   
224,587   

136,749 

37,366   

-186,243   

1,518,675   

102,092   
12,000   
61,461   

323,080   
531,849   
119,211   

51,377 

79,669   
76,581   

-37,269   
1,320,051   

The EIB continually monitors events affecting its borrowers and guarantors, especially banks. In particular, the EIB 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. 

116 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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  the 
Facility management is provided on the overall status. 

The arrears and impairments on loans and advances can be analysed as follows (in EUR’000): 

Carrying amount 

Lifetime ECL credit- impaired 

Gross amount 

Impairment- loss allowance 

Carrying amount of lifetime ECL credit-impaired 

Past due but not credit- impaired 

Past due comprises 

0-30 days 

30-60 days 

60-90 days 

90-180 days 

more 180 days 

Carrying amount past due but not credit- impaired 

Loans and advances 

Loans and advances 

31.12.2020 

1,673,445 

31.12.2019 

1,518,675 

45,000 

-44,538 

462 

2,008 

- 

- 

174 

- 

2,182 

136,749 

-114,307 

22,442 

61 

924 

- 

135 

26 

1,146 

Carrying amount neither past due nor credit- impaired 

1,670,801 

1,495,087 

Total carrying amount loans and advances 

1,673,445 

1,518,675 

117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.2.3.7 

Sensitivity on ECL to future economic conditions (in EUR’000) 

The  ECL  is  sensitive  to  judgments  and  assumptions  made  regarding  formulation  of  forward-looking  scenarios.  The  EIB  performs  a 
sensitivity analysis on the ECL recognised on material classes of its assets. 

The forecasts of future economic conditions (via macroeconomic scenarios) are inputs to forecasting model producing conditional risk 
parameters, which are an input to loss allowance calculation. 

The scenarios are derived shocking GDP, which is the key measurement of economic activity. The shocks to real GDP are calibrated to 
replicate the past volatility of the variable. In addition, expert judgment is applied, when appropriate, to refine the size and persistency of 
GDP  shocks.  As  a  result,  shocks  are  determined  together  with  a  decay  function  to  determine  the  impact  of  the  shocks  over  time. 
Probabilities  attached to  each scenario  are  defined  reflecting market  (volatility)  indicators  and  internally  developed  indicators/trackers 
consistently deployed over time to capture uncertainty. The weighting of positive and negative shocks depends on the balance of risks 
in the economy, on average negative and positive shocks EUR -20,533 (2019: EUR -2,670) and EUR 17,658 (2019: EUR 2,396) were 
respectively applied on quarterly projections in the past exercise. 

The table below shows the loss allowance on loans and advances under Stage 1 and 2. Each forward-looking scenario (e.g. baseline, 
positive and negative) was weighted 100% instead of applying scenario probability weights across the three scenarios. 

(in EUR’000) 

Gross exposure 

Loss allowance 

(in EUR’000) 

Gross exposure 

Loss allowance 

2020 

Positive 

Baseline   

Negative   

3,063,652 

3,063,652 

3,063,652 

70,645 

88,303 

108,836 

2019 

Positive 

Baseline   

Negative   

2,748,523 

2,748,523 

2,748,523 

89,255 

91,651 

94,321 

3.2.3.8  Loan renegotiation and forbearance 

The  EIB  considers  loans  to  be  forborne  loans  (i.e.  loans,  debt  securities  and  loan  commitments)  in  respect  of  which  forbearance 
measures have been extended. Forbearance measures consist of “concessions” that the EIB decides to make towards an obligor who is 
considered unable to comply with the contractual debt service terms and conditions due to its financial difficulties, in order to enable the 
obligor to service the debt or to refinance, totally or partially, the contract. Exposures shall be treated as forborne if a  concession has 
been made, irrespective of whether any amount is past-due, or the exposure is classified as defaulted. Exposures shall not be treated 
as forborne when the obligor is not in financial difficulties. 

In the normal course of business, the LG of the loans in question would have deteriorated, the loans would have been included in the 
Watch  List  before  renegotiation  and  the  financial  instrument  would  move  from  Stage  1  to  Stage  2  in  the  three-stage  model  for 
impairment.  Once  renegotiated,  the  EIB  would  continue  to  closely  monitor  these  loans  and  the  financial  instrument  would  be  credit 
impaired and moved to Stage 3. If subsequently the LG of a loan improves sufficiently, the loan would be removed from the Watch List 
in line with the EIB’s procedures. 

As  part  of  its  response  to  the  economic  effects  of  the  COVID-19  pandemic,  the  Bank  has  decided  to  make  a  number  of  supportive 
measures  available  to  its  clients  in  certain  circumstances,  which  include,  among  other  things,  (i)  the  temporary  easing  (including 
waivers)  of  financial  covenants  and  other  key  clauses,  (ii)  the  re-profiling  of  cash  flows  by  setting  new  repayment  schedules  or  the 
temporary  standstill  of  repayment  obligations  and  (iii)  certain  other  complementary  supportive  measures,  such  as  the  signing  of  new 
contracts,  accelerating  loan  disbursements  and  increasing  amounts  lent  to  borrowers.  The  Bank  is  assessing  requests  for  such 
measures  on  a  case-by-case  basis  within  the  limits  of  certain  specific  conditions.  These  measures  are  intended  to  be  extended  to 
clients  who  are  temporarily  affected  by  the  economic  effects  of the  COVID-19  pandemic  but  who  are  not  experiencing  any  structural 
financial difficulties or solvency issues and are considered to be a going concern at the time of granting such measures. If, as a result of 
the assessment, a client does not meet these requirements or the Facility identifies risks for the long-term sustainability of the client’s 
business model, it will consider any other appropriate measures and, if necessary, follow the EIB’s standard restructuring processes. 

Forbearance  measures  and  practices  undertaken  by  the  EIB  during  the  reporting  period  include,  but  are  not  limited  to,  extension  of 
maturities, deferral of capital only, deferral of capital and interest, breach of material covenants and capitalisation of arrears. 

118 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.2.3.8 

Loan renegotiation and forbearance (continued) 

Operations subject to forbearance measures are reported as such in the table below: 

in EUR’000 

31.12.2020 

31.12.2019 

Number of contracts subject to forbearance practices 

Non-

Performing 

Performing  Performing 

12 

14 

19 

Carrying values (incl. interest and amounts in arrears) 

169,274 

58,748 

182,619 

ECL allowance recognised 

Interest income in respect of forborne contracts 

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

19,311 

7,729 

28,934 

5,099 

7,916 

8,130 

- 

49,472 

- 

Non-
Performing 

9 

62,915 

57,321 

854 

280 

Forbearance measures 

in EUR’000 

31.12.2019 

Extension of 
maturities 

Deferral of 
capital and 
interest 

Financial 
institutions 

Corporates 

Total 
* 

51,468 

194,066 

245,534 

-1,995 

-1,074 

-3,069 

11,989 

- 

11,989 

Breach of 
material 
financial 
covenants 

43,746 

-3,515 

40,231 

Other 

Contractual 
repayment, 
termination 
and/or  
write off* 

31.12.2020 

- 

- 

- 

-14,683 

90,525 

-51,980 

137,497 

-66,663 

228,022 

Decreases  are  explained  by  repayments  of  capital  occurred  during  the  year  on  operations  already  considered  as  forborne  as  of  

31 December 2020 and by termination of forborne measures during the year.

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 
2020, and 31 December 2019, investments were in the form of bank deposits, certificates of deposit and commercial papers.  

The authorized 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 authorized 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  2020  and 
31 December 2019 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 2020 and as at 31 December 2019 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 

(Moody’s term) 

(Moody’s term) 

31.12.2020 

31.12.2019 

P-1 

P-1 

P-1 

P-1 

P-1 

P-1 

P-2 

Total 

Aaa 

Aa2 

Aa3 

A1 

A2 

A3 

A3 

3.2.5 

Credit risk on derivatives 

49,988 

25,022 

130,024 

99,969 

119,972 

498,965 

- 

5% 

3% 

14% 

11% 

13% 

54% 

- 

923,940 

100% 

98,945 

67,799 

89,983 

213,914 

212,199 

104,944 

49,993 

837,777 

12% 

8% 

11% 

26% 

25% 

12% 

6% 

100% 

119 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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  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  1,480.0 million as at 31 December 2020 against EUR 1,545.0 million as at 31 December 
2019.  The  fair  value  of  FX  swaps  amounts  to  EUR  33.6  million  as  at  31 December  2020  against  EUR 14.1  million  as  at 
31 December 2019. 

The Facility enters into interest rate swap contracts in order to hedge the interest rate risk on loans disbursed. As at 31 December 2020, 
there are two interest rate swaps outstanding with a notional amount of EUR 17.7 million (2019: EUR 24.2 million) and a fair value of  
EUR -0.6 million (2019: EUR -0.1 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 authorized 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: 

1 

7 

In EUR ‘000 

2 

3 

 4 

5 

  6 

Minimum 
term rating 

short-

8 

Minimum 
term rating 

long-

9 

31.12.2020 10 

11 

31.12.2019  12 

13 

(Moody’s term) 

14 

(Moody’s term) 

15 

16 

17 

18 

19  P-1 

25  P-1 

31  P-1 

37  P-1 

43  P-1 

49  P-1 

55  P-2 

61  P-2 

67  P-2 

20  Aa1 

26  Aa2 

32  Aa3 

38  Aaa 

44  A1 

50  A2 

56  A3 

62  Baa1 

68  Baa3 

21 

27 

33 

39 

50,006 

50,040 

50,016 

51,705 

45 

- 

22 

28 

34 

40 

14% 

14% 

14% 

15% 

23 

29 

35 

50,046 

19,997 

50,025 

41 

- 

24 

15% 

30 

6% 

36 

15% 

42 

0% 

46 

0% 

47 

55,050 

48 

17% 

51 

50,058 

52 

15% 

57 

- 

50,035 

50,013 

63 

69 

58 

0% 

64 

70 

14% 

14% 

53 

- 

85,027 

30,433 

40,009 

59 

65 

71 

54 

0% 

60 

26% 

66 

9% 

72 

12% 

73 

Total 

74 

75 

351,873 

76 

100% 

77 

330,587 

78 

100% 

120 

 
 
 
 
 
 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
   
Annual accounts of the European Development Fund 2020 

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. 

3.3.1.1 

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  minimize  the  liquidity  risk,  the  Facility  maintains  a  liquidity  reserve  sufficient  to  cover  at  any  PIT  forecasted  cash 
disbursements,  as communicated  periodically  by  the  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.  

3.3.1.2 

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 subsidized  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. 

3.3.2 Liquidity risk measurement (continued) 

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 

in EUR’000 as at 31.12.2020 

Outflows for committed but 
undisbursed loans 
Outflows for committed investment 
funds and share subscription 
Others (signed non-issued 
guarantees, issued guarantees) 
Outflows for committed interest 
subsidies 
Outflows for committed TA  

Total  

199,006 

1,043 

- 

18,494 

2,504 

221,047 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,523,612 

1,722,618 

377,303 

378,347 

1,553,246 

1,553,246 

356,391 

43,029 

374,885 

45,533 

3,853,581 

4,074,629 

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 

in EUR’000 as at 31.12.2019 

Outflows for committed but 
undisbursed loans 
Outflows for committed investment 
funds and share subscription 
Others (signed non-issued 
guarantees, issued guarantees) 
Outflows for committed interest 
subsidies 
Outflows for committed TA  
Total  

33,038 

369 

- 

- 

3,898 
37,305 

Maturity profile of derivative financial liabilities 

in EUR’000 as at 31.12.2020 

Short-term currency swaps – Inflows 
Short-term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

Maturity profile of derivative financial liabilities 

in EUR’000 as at 31.12.2019 

Short-term currency swaps – Inflows 
Short-term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

- 

- 

- 

- 

- 
- 

- 

- 

- 

- 

- 
- 

- 

- 

- 

- 

- 
- 

1,324,282 

1,357,320 

405,551 

405,920 

1,559,831 

1,559,831 

350,678 

350,678 

21,166 
3,661,508 

25,064 
3,698,813 

 3 months 
or less 

More than  
3 months  
to 1 year 

More than  
1 year to  
5 years 

Gross nominal 
inflow/outflow 

1,480,000 
-1,448,077 
147 
- 

32,070 

- 
- 
394 
-815 

-421 

- 
- 
775 
-1,142 

367 

1,480,000 
-1,448,077 
1,317 
-1,957 

31,283 

 3 months 
or less 

More than 
 3 months  
to 1 year 

More than  
1 year to  
5 years 

Gross nominal 
inflow/outflow 

1,545,000 
-1,535,571 
310 
- 

9,739 

- 
- 
820 
-1,128 

-308 

- 
- 
2,045 
-2,138 

-93 

1,545,000 
-1,535,571 
3,175 
-3,266 

9,338 

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.3.3  

Long term financial assets and liabilities 

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

in EUR’000 

Financial assets: 

Loans and advances 

Shares and other variable yield securities 

Other assets 

Total  

Financial liabilities: 

Provisions for guarantees issued 

Amount owed to third parties* 

Provisions for loan commitments 

31.12.2020 

31.12.2019 

1,812,807 

526,810 

109 

1,636,520 

619,928 

- 

2,339,726 

2,256,448 

851 

81,371 

33,152 

628 

93,531 

37,269 

Total  
* 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. 

115,374 

131,428 

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 the 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 the 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. 

123 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

As shown in the following table the net present value of the loan  portfolio including related micro-hedging swaps as at 31 December 
2020  would  decrease  by  EUR  697k  (as  at  31  December  2019:  decrease  by  EUR  533k)  if  all  relevant  interest  rates  curves  are 
simultaneously shifted upwards in parallel by 1 basis point. 

Basis point value 

Money 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

in EUR’000 

Market 

As at 31.12.2020 

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 

-45 

-113 

-313 

-215 

-11 

- 

-697 

Basis point value 

in EUR’000 

Money 

Market 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

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 

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 authorized 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. 

124 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 2020 

Assets and liabilities 

Commitments and 
contingent liabilities 

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

-117,144 

-51,893 

-169,037 

479,103 

Currencies 

USD 

Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 

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

23,439 

27,302 

14,538 

44,997 

44,523 

-960 

272 

320 

572 

-872 

98,509 

-1,512 

22,479 

27,574 

14,858 

45,569 

43,651 

96,997 

82,091 

- 

- 

- 

- 

- 

- 

- 

479,103 

Total non-EUR currencies 

136,164 

-54,073 

EUR 

- 

3,276,377 

3,276,377 

1,661,939 

Total EUR and non-EUR 

136,164 

3,222,304 

3,358,468 

2,141,042 

* See section 3.4.2.2.2 for explanations on synthetic hedge. 

125 

 
 
 
         
  
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
 
   
Annual accounts of the European Development Fund 2020 

As at 31 December 2019 

Assets and liabilities 

Commitments and 
contingent liabilities 

Currencies 

USD 
Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 

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

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

-103,746 

-56,632 

-160,378 

637,693 

29,472 

48,092 

25,383 

37,132 

30,766 

464 

354 

602 

574 

47 

29,936 

48,446 

25,985 

37,706 

30,813 

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 

* See section 3.4.2.2.2 for explanations on synthetic hedge. 

3.4.2.2.3 

Foreign exchange position (in EUR’000) (continued) 

3.4.2.3 

Foreign exchange sensitivity analysis 

As  at  31  December  2020,  a  10  percent  depreciation  of  EUR  versus    all  non  EUR  currencies    would  result  in  an    increase    of  the 
contributors’ resources amounting to EUR 9.1million (31 December 2019: EUR 14.0million). A 10 percent appreciation of the 
EUR versus all non EUR currencies would result in a decrease of the contributors’ resources amounting to EUR -7.5 million 
(31 December 2019: EUR 11.4 million). 

126 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

3.4.2.4 

Conversion rates 

The following conversion rates were used for establishing the balance sheet at 31 December 2020 and 31 December 2019: 

31 December 2020 

31 December 2019 

Non-EU currencies 

Botswana Pula (BWP) 

Dominican Republic Pesos (DOP) 

Fiji Dollars (FJD) 

Haitian Gourde (HTG) 

Jamaican Dollar (JMD) 

Kenya Shillings (KES) 

Mauritania Ouguiyas (MRU) 

Mauritius Rupees (MUR) 

Mozambican Metical (MZN) 

Nigerian Naira (NGN) 

Rwanda Francs (RWF) 

Tanzania Shillings (TZS) 

Uganda Shillings (UGX) 

United States Dollars (USD) 

Franc CFA Francs (XAF/XOF) 

South Africa Rand (ZAR) 

Zambia Kvacha (ZMW) 

3.4.3 Equity price risk 

13.2045 

71.2661 

2.4584 

87.33 

172.0954 

133.8 

44.1396 

48.52 

91.02 

466.78 

1210.77 

2838.58 

4474 

1.2271 

655.957 

18.0219 

25.9324 

11.8376 

59.3644 

2.4045 

100.99 

147.6966 

113.63 

42.2135 

40.63 

68.64 

343.45 

1051.12 

2573.66 

4108 

1.1234 

655.957 

15.7773 

15.7894 

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 52.7 million and EUR -52.7 million respectively as at 31 December 2020 (EUR 62.0 million and EUR -62.0 million respectively as 
at 31  December 2019). 

127 

 
 
 
 
 
 
 
 
 
 
 
 
4 

Fair values of financial instruments 

4.1  Accounting classifications and fair values 

Annual accounts of the European Development Fund 2020 

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. 

At 31 December 2020 

Carrying amount 

Fair value 

In EUR’000 

Derivative 
financial 
instruments 

Shares and 
other 
variable 
yield 
securities 

Cash, 
loans and 
advances 

Treasury 
financial 
assets 

Other 
financial 
assets/liabi
lities 

Total 

Level 1 

Level 2 

Level 3 

Total 

Financial assets mandatorily measured at 
FVTPL 

Derivative financial instruments  

33,584 

- 

Venture Capital Fund  

Direct Equity Investments 

Loans and advances 

Total financial assets mandatorily measured 
at FVTPL 
Financial assets measured at AC 

Cash and cash equivalents 

Loans and advances 

Amounts receivable from contributors 

Treasury financial assets 

Other assets 

Total financial assets measured at AC 

437,142 

89,668 

- 

- 

- 

- 

47,309 

- 

- 

- 

33,584 

526,810 

47,309 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

923,940 

1,626,136 

68,908 

- 

- 

351,873 

- 

2,618,984 

351,873 

- 

- 

- 

- 

- 

- 

- 

- 

33,584 

437,142 

89,668 

47,309 

607,703 

923,940 

1,626,136 

68,908 

- 

- 

- 

- 

- 

- 

- 

- 

- 

109 

109 

109 

- 

- 

- 

- 

- 

- 

33,584 

- 

33,584 

- 

- 

- 

437,142 

437,142 

89,668 

89,668 

47,309 

47,309 

33,584 

574,119 

607,703 

- 

- 

- 

-  1,757,593 

- 

- 

351,873 

300,174 

50,032 

109 

- 

- 

-  1,757,593 

- 

- 

- 

- 

350,206 

- 

2,970,966 

300,174  1,807,625 

-  2,107,799 

3,578,669 

Total financial assets  

33,584 

526,810 

2,666,293 

351,873 

Financial liabilities measured at FVTPL 

Derivative financial instruments 

Total financial liabilities measured at FVTPL 

Financial liabilities at AC 

Provisions for guarantees issued 

Provisions for loan commitments 

Amounts owed to third parties 

Other liabilities 

-642 

-642 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

-642 

-642 

- 

- 

-642 

-642 

- 

- 

-642 

-642 

-851 

-851 

-33,152 

-33,152 

-152,378 

-152,378 

-3,446 

-3,446 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

128 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Annual accounts of the European Development Fund 2020 

Total financial liabilities measured at AC 

Total financial liabilities 

- 

-642 

- 

- 

- 

- 

- 

- 

-189,827 

-189,827 

-189,827 

-190,469 

4 

Fair values of financial instruments (continued) 

4.1  Accounting classifications and fair values (continued) 

As at 31 December 2019 

Carrying amount 

Fair value 

Cash, 
loans and 
advances 

Treasury 
financial 
assets 

Other 
financial 
liabilities 

Total 

Level 1 

Level 2 

Level 3 

Total 

in EUR’000 

Financial assets mandatorily measured at 
FVTPL 
Derivative financial instruments  

Venture Capital Fund  

Direct Equity Investment 

Loans and advances 

Derivative 
financial 
instruments 

Shares and 
other 
variable 
yield 
securities 

14,184 

- 

504,694 

115,234 

- 

- 

- 

- 

21,702 

- 

- 

- 

Total financial assets mandatorily measured 
at FVTPL 

14,184 

619,928 

21,702 

Financial assets at AC 

Cash and cash equivalents 

Loans and advances 

Amounts receivable from contributors 

Treasury financial assets 

Other assets 

Total financial assets measured at AC 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

837,777 

1,496,973 

86,330 

- 

- 

330,587 

- 

2,421,080 

330,587 

Total financial assets 

14,184 

619,928 

2,442,782 

330,587 

Financial liabilities mandatorily measured at 
FVTPL 

Derivative financial instruments 

Total financial liabilities measured at FVTPL 

Financial liabilities at AC 

Provisions for guarantees issued 

Provisions for loan commitments 

Amounts owed to third parties 

-191 

-191 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

129 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

14,184 

504,694 

115,234 

21 702 

- 

14,184 

- 

14,184 

362 

15,255 

- 

- 

- 

- 

504,332 

504,694 

99,979 

115,234 

21,702 

21,702 

655,814 

15,617 

14,184 

626,013 

655,814 

- 

- 

- 

- 

837,777 

1,496,973 

86,330 

-  1,699,057 

- 

- 

330,587 

144,097 

186,083 

- 

- 

- 

-  1,699,057 

- 

- 

- 

- 

330,180 

- 

2,751,667 

144,097  1,885,140 

-  2,029,237 

3,407,481 

-191 

-191 

- 

- 

-191 

-191 

- 

- 

-191 

-191 

-628 

-628 

-37,269 

-37,269 

-147,438 

-147,438 

 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Other liabilities 

Total financial liabilities measured at AC 

Total financial liabilities 

- 

- 

-191 

- 

- 

- 

- 

- 

- 

- 

- 

- 

-2,353 

-2,353 

-187,688 

-187,688 

-187,688 

-187,879 

Annual accounts of the European Development Fund 2020 

130 

 
 
  
 
 
 
  
 
 
 
  
 
 
 
Annual accounts of the European Development Fund 2020 

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 

Venture 
Capital Fund 
(VCF) 

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 
rates, 
discounted at a rate that reflects the credit risk of 
various counterparties. 

forward/interest 

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 
review 
reporting,  a  subsequent  event 
procedure  is  performed  and  if  necessary  the 
reported NAV is adjusted. 

Direct Equity 
Investment 

Adjusted net assets. 

Loans at fair 
value (IFE) 

For  going  concern  borrowers:  Discounted  cash 
flow using contractual/expected future cash flows 
discounted  with 
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. 

appropriate 

For  borrowers  not  going  concern:  Net  assets 
approach (liquidation value approach). 

Not applicable. 

Not applicable. 

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

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, 
increase, 
capital 
sale/change of control. 

for 

lack  of  marketability 
Discount 
(liquidity)  determined  by  reference  to 
previous transaction prices for similar 
equities 
country/region, 
the 
in 
ranging from 5 to 30%. 
Components  of  the  discount  rate  to 
reflect  the  credit  risk  of  borrower 
compared  to  the  risk-free  market 
rates. 

longer 

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

for 

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

The  higher  the  discount 
rate 
fair 
lower 
value 

the 

the 

131 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

4.2.1 

Valuation techniques and significant unobservable inputs (continued) 

Valuation technique 

Significant unobservable inputs 

Relationship of 
unobservable inputs 
to fair value 
measurement 

Financial instruments not carried at fair value 

Loans and 
advances 

Treasury 
financial 
assets 

Not applicable. 

Not applicable. 

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. 

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 2020 and 2019, 
namely: 

- 

- 

Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR -34.3k as 
at 31 December 2020 and to EUR -32.8k as at 31 December 2019.  

Debit  valuation  adjustments  (DVA),  reflecting  own  credit  risk  on  derivative  transactions,  amounting  to  EUR  +21.8k  as  at  
31 December 2020 and EUR +28.7k as at 31 December 2019.  

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 2020 and 2019 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 2020 and 31 December 2019: 

in EUR'000 

Balance as at 1 January 2020 

Gains or losses included in profit or loss: 

Realised fair value adjustment on sales 

Net fair value change on shares and other variable yield securities  

Total 

Disbursements 

Repayments 

Foreign exchange rates differences 

Balance as at 31 December 2020 

Reconciliation of Level 3 fair values (continued) 

in EUR'000 

132 

Shares and other 
variable yield 
securities 

604,311 

-15,632 

-47,909 

-63,541 

85,305 

-65,649 

-33,616 

526,810 

Shares and other 
variable yield 
securities 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

Balance as at 1 January 2019 

Gains or losses included in profit or loss: 

Foreign exchange rates differences  

Net fair value change on shares and other variable yield securities 

Total 

Disbursements 

Repayments 

Foreign exchange rates differences 

Balance as at 31 December 2019 

In 2020 and 2019 the Facility did not make transfers out or to Level 3 of the fair value hierarchy. 

550,617 

1,708 

17,666 

19,374 

106,943 

-79,435 

6,812 

604,311 

5  Cash and cash equivalents 

The cash and cash equivalents are composed of: 

in EUR'000 
Cash in hand 

Term deposits 

Commercial papers 

Cash and cash equivalents in the cash flow statement 

Accrued interest  

Cash and cash equivalents in the statement of financial position 

6  Derivative financial instruments  

31.12.2020 

31.12.2019 

398,991 

380,000 

145,086 

924,077 

-137 

923,940 

72,166 

622,991 

142,823 

837,980 

-203 

837,777 

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

As at 31 December 2020 

in EUR'000 
Interest rate swaps 

FX swaps 

Total derivative financial instruments 

As at 31 December 2019 

In EUR'000 
Interest rate swaps 

FX swaps 

Total derivative financial instruments 

Fair Value 

Notional amount 

Assets 

Liabilities 

- 

33,584 

33,584 

-642 

- 

-642 

17,710 

1,480,000 

1,497,710 

Fair Value 

Notional amount 

Assets 

99 

14,085 

14,184 

Liabilities 

-191 

- 

-191 

24,181 

1,545,000 

1,569,181 

133 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
POCI 

Total 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,646,634 

501,228 

-45,343 

-274,589 

-103,668 

1,724,262 

-160,530 

-3,875 

-9,516 

-12,373 

21,452 

45,343 

15,706 

-103,793 

- 

1,620,469 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

37,938 

59,063 

-1,512 

-2,916 

92,573 

-16,236 

-29,621 

593 

-45,264 

47,309 

-8,678 

14,345 

1,673,445 

Annual accounts of the European Development Fund 2020 

7 

Loans and advances 

7.1  Loans and advances 
The following table shows the reconciliation from the opening to the closing balance of loans and advances: 

in EUR'000 
Nominal of loans at AC as at 1 January 2020 

Disbursements 

Write offs 

Repayments 

Foreign exchange rates differences 

Global 
loans* 

Senior 
loans 

Subordinated 
loans 

1,021,556 

597,364 

27,714 

433,466 

-15,170 

-214,018 

-74,436 

67,762 

-2,268 

-60,571 

-29,423 

- 

-27,905 

- 

191 

- 

Nominal of loans at AC as at 31 December 2020 

1,151,398 

572,864 

Impairment - loss allowance as at 1 January 2020 

-96,166 

-36,650 

-27,714 

Net changes of the 12 month ECL  

Net changes of lifetime ECL not credit-impaired 

Lifetime ECL credit-impaired 

Reversal of lifetime ECL credit-impaired  

Write offs 

Foreign exchange rates differences 

-1,344 

-5,888 

-12,373 

19,565 

15,170 

12,793 

-2,531 

-3,628 

- 

1,887 

2,268 

3,104 

Impairment - loss allowance as at 31 December 2020 

-68,243 

-35,550 

Loans and advances at AC as at 31 December 2020 

1,083,155 

537,314 

Nominal of loans at FVTPL as at 1 January 2020 

1,080 

Disbursements 

Repayments 

Foreign exchange rates differences 

- 

- 

- 

Nominal of loans at FVTPL as at 31 December 2020 

1,080 

36,858 

29,063 

-1,512 

-2,916 

61,493 

- 

- 

- 

- 

27,905 

-191 

- 

- 

- 

30,000 

- 

- 

30,000 

Fair value adjustment as at 1 January 2020 

-1,080 

-15,156 

- 

Net FV change 

Foreign exchange rates differences 

- 

- 

-11,330 

-18,291 

593 

- 

Fair value adjustment as at 31 December 2020 

-1,080 

-25,893 

-18,291 

Loans and advances at FVTPL as at 31 December 2020 

- 

35,600 

11,709 

Amortised Cost 

Interest 

-3,578 

7,325 

-5,100 

7,020 

- 

- 

Loans and advances as at 31 December 2020 

1,086,902 

574,834 

11,709 

* Including agency agreements 

134 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

7  Loans and advances (continued) 
7.1  Loans and advances (continued) 

in EUR'000 

Global 
loans* 

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 

Write offs 

Repayments 

Sale of loans 

Business model change (IFE**) 

Foreign exchange rates differences 

164,308 

123,416 

-2 

-278 

- 

- 

-206,517 

-113,100 

-34,496 

-2,591 

- 

- 

-10,062 

15,041 

4,064 

- 

- 

1,493 

27,714 

- 

- 

- 

- 

287,724 

-280 

-354,113 

-2,591 

-3,588 

-13,650 

- 

- 

20,598 

1,646,634 

Nominal of loans at AC as at 31 December 2019 

1,021,556 

597,364 

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  

Net changes of lifetime ECL not credit-impaired 

Lifetime ECL credit-impaired 

Reversal of lifetime ECL credit-impaired  

Sale of loans 

Business model change (IFE**) 

Write offs 

Foreign exchange rates differences 

5,164 

-15,558 

-4,397 

21,811 

2,591 

- 

2 

-1,911 

-86 

2,559 

-47 

5,592 

- 

5,031 

278 

-368 

- 

2,205 

- 

- 

- 

- 

- 

-559 

Impairment - loss allowance as at 31 December 2019 

-96,166 

-36,650 

-27,714 

Loans and advances at AC as at 31 December 2019 

925,390 

560,714 

Nominal of loans at FVTPL as at 1 January 2019 

Disbursements 

Business model change (IFE**) 

Repayments 

Foreign exchange rates differences 

1,800 

- 

- 

-720 

- 

- 

23,461 

13,650 

-245 

-8 

Nominal of loans at FVTPL as at 31 December 2019 

1,080 

36,858 

Fair value adjustment as at 1 January 2019 

Net FV change 

Business model change (IFE**) 

-1,080 

- 

- 

- 

-8,331 

-6,825 

Fair value adjustment as at 31 December 2019 

-1,080 

-15,156 

Loans and advances at FVTPL as at 31 December 2019 

Amortised Cost 

Interest 

- 

-3,545 

10,451 

21,702 

-4,950 

8,903 

Loans and advances as at 31 December 2019 

932,296 

-586,369 

* Including agency agreements 

** For details, please refer to Note 24. 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

10 

- 

10 

- 

- 

- 

- 

- 

1,794 

- 

- 

- 

5,078 

-10,794 

-4,444 

27,403 

2,591 

6,825 

280 

-2,838 

-160,530 

- 

1,486,104 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,800 

23,461 

13,650 

-965 

-8 

37,938 

-1,080 

-8,331 

-6,825 

-16,236 

21,702 

-8,485 

19,354 

1,518,675 

135 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

7.2  Impairment on loans and advances – Loss allowances 

in EUR'000 

Loans and advances at AC 

Balance as at 1 January 2020* 

Transfer to 12-month ECL 

Transfer to lifetime ECL not credit-impaired 

Transfer to lifetime ECL credit-impaired 

Net measurement of loss allowance 

Financial assets that have been derecognised 

Write-offs 

Foreign exchange rates differences  

2020 

Lifetime ECL 

12-month ECL 

Lifetime ECL 
not credit-
impaired 

Lifetime ECL 
credit-impaired 

POCI 

Total 

17,191 

38,509 

104,830 

96 

-732 

-127 

5,440 

-802 

- 

-4,677 

-167 

6,380 

-54 

3,010 

347 

- 

-4,049 

- 

-6,080 

8,522 

-6,554 

-4,967 

-45,343 

-6,980 

- 

- 

- 

- 

- 

- 

- 

- 

160,530 

-71 

-432 

8,341 

1,896 

-5,422 

-45,343 

-15,706 

Balance as at 31 December 2020 
103,793 
*  Following  the  updated model  versions  referred  in  Note  2.4.2  opening  balances for  12-month  and Lifetime  non-credit  impaired ECL 
would be higher for EUR 0.3m and EUR 1.5m, respectively. 

16,389 

43,976 

43,428 

- 

in EUR'000 

Loans and advances at AC 

Balance as at 1 January 2019 

Transfer to 12-month ECL 

Transfer to lifetime ECL not credit-impaired 

Transfer to lifetime ECL credit-impaired 

Net measurement of loss allowance 

Sale of loans 

Business model change (IFE*) 

Financial assets that have been derecognised 

Write-offs 

Foreign exchange rates differences  
Balance as at 31 December 2019 

* For details, please refer to Note 24. 

2019 

Lifetime ECL 

12-month ECL 

Lifetime ECL 
not credit-
impaired 

Lifetime ECL 
credit-impaired 

POCI 

Total 

22,023 

3,952 

-4,005 

- 

-4,897 

- 

- 

-129 

- 

247 

27,342 

133,472 

1,794 

184,631 

- 

25,150 

-46 

-4,249 

- 

-10 

-10,049 

- 

371 

- 

- 

- 

-22,961 

-2,591 

-5,031 

- 

-280 

2,221 

- 

- 

- 

- 

- 

-1,794 

- 

- 

- 

- 

3,952 

21,145 

-46 

-32,107 

-2,591 

-6,835 

-10,178 

-280 

2,839 

160,530 

17,191 

38,509 

104,830 

136 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 

Cost as at 1 January 2020 

Disbursements 

Repayments / sales 

Foreign exchange rates differences  

Cost as at 31 December 2020 

Unrealised gains and losses as at 1 January 2020 

Net change in unrealised gains and losses 

Realised fair value adjustment on sales 

Foreign exchange rates differences 

Unrealised gains and losses as at 31 December 2020 

Venture Capital 
Funds 

Direct Equity 
Investments 

462,304 

85,305 

-66,011 

-29,437 

452,161 

42,390 

-45,079 

-15,632 

3,302 

-15,019 

101,424 

- 

-18,274 

-6,892 

76,258 

13,810 

-2,830 

3,019 

-589 

13,410 

Total 

563,728 

85,305 

-84,285 

-36,329 

528,419 

56,200 

-47,909 

-12,613 

2,713 

-1,609 

Shares and other variable yield securities as at 31 December 2020 

437,142 

89,668 

526,810 

in EUR'000 

Cost as at 1 January 2019 

Disbursements 

Repayments / sales 

Foreign exchange rates differences  

Cost as at 31 December 2019 

Unrealised gains and losses as at 1 January 2019 

Net change in unrealised gains and losses 

Realised fair value adjustment on sales 

Foreign exchange rates differences 

Unrealised gains and losses as at 31 December 2019 

Venture Capital 
Funds 

Direct Equity 
Investments 

421,593 

90,972 

-56,387 

6,126 

462,304 

45,559 

-3,488 

- 

319 

42,390 

93,214 

15,971 

-8,042 

281 

101,424 

6,926 

12,117 

-5,319 

86 

13,810 

Total 

514,807 

106,943 

-64,429 

6,407 

563,728 

52,485 

8,629 

-5,319 

405 

56,200 

Shares and other variable yield securities as at 31 December 2019 

504,694 

115,234 

619,928 

137 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

9  Amounts receivable from contributors 

The  amounts  of  EUR  68.9m  (2019:  EUR  86.3m)  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 2020 

Acquisitions 

Maturities 

Change in amortisation of premium/discount 

Change in accrued interest  

Balance as at 31 December 2020 

in EUR'000 
Balance as at 1 January 2019 

Acquisitions 

Maturities  

Change in amortisation of premium/discount 

Change in accrued interest  

Balance as at 31 December 2019 

11  Other assets 

The main components of other assets are as follows: 

in EUR'000 

Financial guarantees 

Total other assets 

12  Deferred income 

The main components of deferred income are as follows: 

in EUR'000 

Deferred interest subsidies 

Deferred commissions on loans and advances 

Total deferred income 

330,587 

2,710,009 

-2,689,790 

-208 

1,275 

351,873 

335,140 

2,948,021 

-2,952,905 

-93 

424 

330,587 

31.12.2020 

31.12.2019 

109 

109 

- 

- 

31.12.2020 

31.12.2019 

28,788 

944 

29,732 

32,085 

481 

32,566 

138 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

13  Provisions for guarantees issued, net of reversals 

The following tables show the reconciliation from the opening to the closing balance of the provision for financial guarantees. 

in EUR'000 

12-month ECL 

2020 

Lifetime ECL 
not credit-
impaired 

Lifetime ECL 
credit-impaired 

Guarantees issued  

Balance as at 1 January 

Transfer to 12-month ECL 

Guarantees that have been derecognised 

Net measurement of loss allowance 

Guarantee calls 

Amortisation of upfront fees 

Foreign exchange rates differences 

Balance as at 31 December  

628 

- 

- 

228 

- 

- 

-5 

851 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

in EUR'000 

12-month ECL 

2019 

Lifetime ECL 
not credit-
impaired 

Lifetime ECL 
credit-impaired 

Guarantees issued  

Balance as at 1 January 

Transfer to 12-month ECL 

Guarantees that have been derecognised 

Guarantee calls 

Amortisation of upfront fees 

Foreign exchange rates differences 

Balance as at 31 December 

94 

534 

- 

- 

- 

- 

628 

699 

- 

-588 

-53 

-71 

13 

- 

- 

- 

- 

- 

- 

- 

- 

Total 

628 

- 

- 

228 

- 

- 

-5 

851 

Total 

793 

534 

-588 

-53 

-71 

13 

628 

139 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

14  Provisions for loan commitments 

The following tables show the reconciliation from the opening to the closing balance of the loss allowance for undisbursed loans (loan 
commitments): 

in EUR'000 

Loans commitments 

Balance as at 1 January* 

Transfer to 12-month ECL 

Transfer to lifetime ECL not credit-impaired 

Net measurement of loss allowance 

Financial assets that have been derecognised 

Foreign exchange rates differences  

12-month ECL 

Lifetime ECL not 
credit-impaired 

Lifetime ECL 
credit-impaired 

2020 

3,943 

4,067 

- 

388 

-1,158 

-423 

33,326 

- 

2,773 

-5,932 

-3,853 

21 

- 

- 

- 

- 

- 

- 

Total 

37,269 

4,067 

2,773 

-5,544 

-5,011 

-402 

Balance as at 31 December 
33,152 
*  Following  the  updated model  versions  referred  in  Note  2.4.2  opening  balances for  12-month  and Lifetime  non-credit  impaired ECL 
would be lower for EUR -0.2m and higher for EUR 1.1m, respectively.   

26,335 

6,817 

- 

in EUR'000 

Loans commitments 

Balance as at 1 January 

Transfer to 12-month ECL 

Transfer to lifetime ECL not credit-impaired 

Net measurement of loss allowance 

Business model change (IFE)* 

Financial assets that have been derecognised 

Foreign exchange rates differences  

Balance as at 31 December 

* For details, please refer to Note 24. 

15  Amounts owed to third parties  

12-month ECL 

Lifetime ECL not 
credit-impaired 

Lifetime ECL 
credit-impaired 

2019 

7,225 

1,669 

-836 

696 

-2,974 

-1,960 

123 

3,943 

16,597 

9,983 

15,138 

773 

-1,387 

-7,858 

80 

33,326 

- 

- 

- 

- 

- 

- 

- 

- 

Total 

23,822 

11,652 

14,302 

1,469 

-4,361 

-9,818 

203 

37,269 

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

in EUR'000 

Net general administrative expenses payable to the EIB 

Other amounts payable to the EIB 

Interest subsidies and TA not yet disbursed owed to Member States 

Total amounts owed to third parties 

31.12.2020 

31.12.2019 

58,527 

56 

93,795 

152,378 

50,009 

31 

97,398 

147,438 

140 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

16  Other liabilities 

The main components of other liabilities are as follows: 

in EUR'000 

Loan repayments received in advance  

Deferred income from interest subsidies 

Financial guarantee calls 

Total other liabilities 

17  Member States Contribution called (in EUR’000) 

31.12.2020 

31.12.2019 

3,166 

280 

- 

3,446 

1,961 

339 

53 

2,353 

Member States 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

United Kingdom 

Contribution to 
the Facility** 

Contribution to 
interest subsidies 
and technical 
assistance** 

Total Contributed 

Called and not 
paid* 

82,689 

121,923 

1,567 

1,008 

5,710 

67,377 

560 

47,569 

729,689 

720,567 

42,735 

6,158 

23,221 

407,583 

784 

1,344 

9,119 

336 

164,029 

14,555 

33,266 

4,143 

2,351 

2,015 

210,652 

88,064 

432,681 

9,852 

14,470 

421 

270 

1,532 

8,118 

150 

5,876 

82,689 

84,614 

5,648 

1,652 

3,345 

50,996 

210 

360 

1,097 

90 

19,716 

3,905 

4,411 

1,111 

631 

541 

29,338 

10,923 

57,030 

92,541 

136,393 

1,988 

1,278 

7,242 

75,495 

710 

53,445 

812,379 

805,181 

48,383 

7,810 

26,566 

458,579 

994 

1,704 

10,216 

426 

183,745 

18,460 

37,677 

5,254 

2,982 

2,556 

239,990 

98,987 

489,711 

1,687 

2,471 

98 

- 

357 

1,400 

35 

- 

13,685 

14,350 

1,029 

385 

637 

9,002 

49 

84 

189 

21 

3,395 

910 

805 

259 

147 

126 

5,495 

1,918 

10,374 

68,908 

Total as at 31 December 2020 

3,221,695 

398,996 

3,620,692 

Total as at 31 December 2019 
86,330 
2,967,000 
* On 10 November 2020, the Council fixed the amount of financial contributions to be paid by each Member State by 21 January 2021. 
As at 31 December 2020 EUR 68.9m were not paid in.  
** On 14 July 2020, 9th EDF EUR 45.1m unused commitments for interest rate subsidies and technical assistance were reallocated to 
the Contributors' Resources as per allocation key for 9th EDF contributions. 

3,350,691 

383,691 

141 

 
 
 
 
  
Annual accounts of the European Development Fund 2020 

18  Commitments and contingent liabilities  

in EUR'000 

Commitments 

Undisbursed loans 

Undisbursed commitment in respect of shares and other variable yield securities 

Issued guarantees 

Interest subsidies and technical assistance 

Contingent liabilities 

Signed non-issued guarantees 

31.12.2020 

31.12.2019 

1,722,618 

1,357,320 

378,347 

998,560 

483,897 

405,920 

200,013 

455,671 

554,686 

1,359,818 

Total commitments and contingent liabilities 

4,138,108 

3,778,742 

19 

Interest and similar income and expenses 

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

in EUR'000 

Loans and advances 

Interest subsidies 

Total interest and similar income 

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

in EUR'000 

Derivative financial instruments 

Cash and cash equivalents 

Treasury financial assets 

Total interest and similar expense 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

80,252 

4,531 

84,783 

89,244 

4,679 

93,923 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

-541 

-2,961 

-1,748 

-5,250 

-261 

-722 

-1,965 

-2,948 

142 

 
 
  
 
 
 
  
  
 
  
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

20  Fee and commission income and expenses  

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

in EUR'000 

Fee and commission on loans and advances 

Fee and commission on financial guarantees 

Other 

Total fee and commission income 

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

in EUR'000 

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

Total fee and commission expenses 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

141 

211 

1 

353 

4,399 

39 

- 

4,438 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

-225 

-225 

-721 

-721 

21   Net result on shares and other variable yield securities 

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

in EUR'000 

Net realised result due to sales and exits 

Dividend income 

Net fair value change 

Net result on shares and other variable yield securities 

22  General administrative expenses 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

-3,069 

4,261 

-47,909 

-46,717 

-133 

1,408 

8,629 

9,904 

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 

Actual cost incurred by the EIB 

Income from appraisal fees directly charged to clients of the Facility 

Total general administrative expenses 

From 01.01.2020  From 01.01.2019 

to 31.12.2020 

to 31.12.2019 

-61,470 

2,943 

-58,527 

-52,982 

2,973 

-50,009 

143 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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 

Project  Finance  - 
lending  to  Special 
Purposes Vehicles 
(“SPV”) 

Nature and purpose 

Interest held by the Facility 

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 
operations 

capital 

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 
income. 

received  as  dividend 

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 

Venture capital funds 

Total 

Shares and other variable 
yield securities 

Carrying 
amount at 
31.12.2020 

Carrying 
amount at 
31.12.2019 

Maximum 
exposure to 
loss at 
31.12.2020 

Maximum 
exposure to 
loss at 
31.12.2019 

437,142 

504,332 

437,142 

834,955 

437,142 

504,332 

437,142 

834,955 

No support is provided to structured entities by the Facility beyond the respective financing. 

144 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2020 

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  presents  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.  In  2016,  the  IFE  financing  capacity  was  increased  to  EUR  800m  by  making  the  IFE 
partially revolving. 

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.

145 

 
 
 
 
 
 
 
 
 
 
24 

Impact financing envelope (in EUR’000) (continued) 

The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset: 

Annual accounts of the European Development Fund 2020 

Type of IFE investment 

Caption 

Measurement 

Loans to financial 
intermediaries 

Loans and advances  

AC 

Direct loan operations 

Loans and advances  

FVTPL 

Social impact equity funds 

Direct equity participations 

Risk sharing facilitating 
instruments 

Total 

Shares and other variable 
yield securities 

Shares and other variable 
yield securities 

FVTPL 

FVTPL 

Issued guarantees 

higher of approach* 

*For details, please refer to section subsequent measurement of Note 2.4.3.  

Type of IFE investment 

Caption 

Measurement 

Loans to financial 
intermediaries 

Loans and advances  

AC 

Direct loan operations 

Loans and advances  

Shares and other variable 
yield securities 
Shares and other variable 
yield securities 

FVTPL 

FVTPL 

FVTPL 

Issued guarantees 

higher of approach* 

Social impact equity funds 

Direct equity participations 

Risk sharing facilitating 
instruments 

Total 

Gross carrying 
amount as at 
31.12.2020 

Loss allowance / 
FV adj. amount as 
at 31.12.2020 

Carrying 
amount as at 
31.12.2020 

Undisbursed 
amount as at 
31.12.2020 

OFF BS ECL adj. 
amount as at 
31.12.2020 

49,522 

91,186 

41,885 

57,395 

- 

-1,839 

47,683 

26,954 

-199 

-44,681 

46,505 

98,314 

-4,778 

37,107 

73,362 

9,195 

66,590 

14 

- 

- 

40,746 

- 

- 

- 

- 

239,988 

-42,103 

197,885 

239,390 

-199 

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 

22,347 

37,136 

33,417 

58,643 

- 

151,543 

-354 

-15,156 

-3,175 

19,626 

- 

941 

21,993 

21,980 

30,242 

78,269 

42,400 

75,700 

66,840 

14 

- 

47,331 

152,484 

232,285 

-1,251 

- 

- 

- 

-50 

-1,301 

*For details, please refer to section subsequent measurement of Note 2.4.3.  

The EIB is applying 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 methodology, the Bank performs a Qualitative 
Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations.  

146 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25  Subsequent events 

In  the  context  of  the  COVID-19  pandemic,  the  IF  continues  to  monitor  the  situation  closely  notably  as  part  of  the  subsequent  event 
review.  It  is  considered  that  there  have  been  no  material  events  after  the  balance  sheet  date  that  would  require  adjustment  of,  or 
disclosure in the financial statements as at 31 December 2020. 

147