REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2021 financial year
Date: 2023-06-28
Institutions: Directorate-General for Budget, European Commission
Subjects: EU budget, EU control, EU expenditure, audit, budgetary control, budgetary discharge, financial year, management audit, multiannual financial framework

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.6.2023  COM(2023) 384 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2021 financial year  
 
 
REPORT ON THE FOLLOW-UP TO THE REQUESTS MADE BY THE EUROPEAN PARLIAMENT IN 
ITS DISCHARGE RESOLUTIONS AND THE COUNCIL IN ITS DISCHARGE RECOMMENDATION 
FOR THE FINANCIAL YEAR 2021 

1.  Introduction 

2021 was the year when restrictions linked to the COVID-19 pandemic were lifted and EU-
wide economic recovery took  place. From a budgetary perspective, it was the  first year in 
the implementation of  the EU’s temporary recovery instrument (and its centerpiece the 
Recovery  and  Resilience  Facility  or  RRF)  and  the  starting  year  of  the  new  multiannual 
financial framework (MFF), with programmes coming into operation even while spending 
programmes  from  the  previous  MFF were still running  and  continuing to respond to  the 
EU’s cross-policy priorities.  

On  10 May 2023,  the  European  Parliament  decided,  taking  account  of  a  recommendation 
from the Council, to grant discharge to the Commission  on its implementation of the EU 
budget  in  2021.  As  part  of  the  2021  discharge  procedure,  the  European  Parliament  in  its 
discharge resolution, and the Council in its discharge recommendation, made several requests 
to the Commission. The Commission shares the main objectives underlying these requests:  

  protecting  the  EU  budget  from  spending  errors,  fraud  or  any  malicious 
interference: the Commission takes all necessary measures to protect the EU budget 
(including, where appropriate, the suspension of payments and financial corrections); 
  putting  performance  at  the  heart  of  budget  implementation:  money  should  be 
spent  in  line  with  the  EU’s  priorities  and  should  deliver  the  expected  results  on  the 
ground,  thus  bringing  about  tangible  results  and  positive  changes  for  the  general 
public and other beneficiaries; 

  striking  the  right  overall  balance:  it  is  important  to  get  the  right  balance  between 
different objectives (e.g. minimising errors; strong protection against misuse of funds; 
swift payments; a high level of transparency; keeping the costs and burden of controls 
for public authorities and beneficiaries to a reasonable level; and making sure that EU 
expenditure adds real value). 

This  report  on  the  follow-up  to  the  2021  discharge  procedure  summarises,  as  part  of  the 
Integrated  Financial  and  Accountability  Reporting  (IFAR),  the  actions  taken  by  the 
Commission in response to the requests expressed in the section  ‘political priorities’ of the 
discharge resolution. The Commission will provide more detailed and updated information in 
response to all specific requests when the 2022 discharge procedure begins later this year. 

2.  Improvements in the control system for EU funds 
a.  Digitalisation of controls and audits 

The  Commission’s  proposal  to  revise  the  Financial  Regulation,  which  is  currently  being 
discussed by the European Parliament and the Council as co-legislators, is an opportunity to 
further  increase  the  protection  of  the  EU  budget  across  management  modes  against 
irregularities, fraud, corruption and conflicts of interest. The proposed legislative changes are 
needed for the implementation of new measures. 

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Under the proposed rules, the Commission  envisages to make the use of an integrated IT 
system for data-mining and risk-scoring compulsory and more efficient in all Member 
States.  This  IT  system  allows  identifying  measures,  contracts  and  recipients  that  are 
vulnerable to irregularities, fraud, corruption, and conflicts of interest. The Commission has 
developed and supplied this IT tool, known as Arachne, to Member States implementing the 
EU  budget  under  shared  management  and  under  the  RRF.  It  is  already  widely  used  in  the 
field of cohesion policy and to a certain extent for agricultural spending. The use of Arachne 
is  currently  voluntary,  but  making  it  compulsory  would  be  an  important  step  forward.  The 
proposed  changes  also  aim  at  further  standardising  the  recording  and  storing  of  data  on 
recipients of all EU funds and the interoperability of the system with other data sources. 

The  Commission  has  also  proposed  to  extend  the  scope  and  effectiveness  of  the  Early 
Detection and Exclusion System (EDES). EDES provides a set of measures to protect the 
EU budget against fraudulent and unreliable economic operators. In particular, EDES enables 
authorising officers to detect, blacklist and possibly exclude from future awards of contracts 
financed by the EU budget for limited time-periods, all economic operators that are found to 
be  unreliable  because  of  their  involvment  in  miscondutcs  including  irregularities  and  fraud 
and therefore pose a risk for the integrity of the  EU budget. The Commission has proposed 
both  to  extend  the  application  of  EDES  to  funds  under  shared  management  and  to  better 
target  funds  under  direct  management,  including  where  funds  are  disbursed  as  financial 
contributions to Member States (for instance under the RRF) so that the Commission would 
be  able  to  act  on  the  most  serious  grounds  for  exclusion.  The  objective  is  also  to  make  it 
mandatory that exclusion decisions taken at the EU level are enforced at the national level in 
cases  of  shared  management.  The  Commission  has  also  proposed  to  make  it  possible  to 
exclude affiliated entities and/or beneficial owners of a primary excluded entity from bidding 
for public contracts and ultimately from obtaining EU funds. 

EDES and Arachne remain two different systems, but the Commission is exploring whether 
the exclusions contained in the EDES database can be inserted into Arachne so as to feed the 
data-mining tool and to provide a single entry point.  

b.  Rule of law and fundamental values 

The Commission makes full use of all available instruments to ensure that breaches and risk 
of breaches of the rule of law principles affecting the sound financial management of the EU 
budget and the financial interests of the EU are addressed.  

An  important  instrument  is  the  Conditionality  Regulation,  which  is  applicable  since 
1 January 2021.  

The first notification from the Commission under the Conditionality Regulation was made to 
Hungary  on  27 April 2022.  This  initiated  a  process  of  assessment  and  exchange  of 
information  with  Hungary  that  lasted  until  mid-September  and  led  to  the  Commission 
submitting a proposal for a Council decision on 18 September 2022. 

the  Council  adopted  an 

On  15 December 2022, 
the 
Conditionality  Regulation  that  suspended  55%  of  the  commitments  for  three  cohesion 
programmes  (the suspended commitments amount to  approximately EUR 6.3 billion under 
the  2021-2027  MFF).  The  Council  also  prohibited  any  new  legal  commitments  with  any 
public  interest  trusts  under  any  programme  directly  or  indirectly  managed  by  the 
Commission.  These  public  interest  trusts  are  organisations  such  as  universities  with  public 
interest objectives, for which there remain conflict of interest issues. 

implementing  decision  under 

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Now  that  budgetary  measures  have  been  adopted  by  the  Council,  pursuant  to  the 
Conditionality  Regulation,  Hungary  can  submit  and  take  further  remedial  measures  to 
address the Commission’s findings and demonstrate to the Commission that the conditions to 
apply budgetary measures are no longer fulfilled. The Conditionality Regulation states that, if 
the Commission considers that the issues have been partly or fully remedied, it must submit 
to the Council a proposal for an implementing decision to adapt or lift the adopted measures, 
by means of a written notification. At the time of preparation of this report (15 June 2023), 
Hungary has not submitted any such written notification.  

Hungary  committed 
the  Commission  every  3  months  until 
31 December 2028  on  the  implementation,  maintenance  and  application  of  all  remedial 
measures. The second of these reports was due on 16 June 2023. 

report 

itself 

to 

to 

The Commission is monitoring the overall state of the rule of law in Hungary – and not 
only  the  issues  covered  by  the  remedial  measures  –  just  like  it  does  for  all  other  Member 
States.  

In addition to the Conditionality Regulation, the RRF Regulation can also, within its scope, 
help address rule of law challenges identified in the country-specific recommendations. 

In addition, in accordance with Article 22 of the RRF Regulation, Member States shall take 
all appropriate measures to protect the EU’s financial interests during the implementation of 
the Facility. As required by the RRF Regulation, the Commission has assessed as part of the 
approval  procedure  of  the  national  recovery  and  resilience  plans  (NRRPs)  whether  the 
Member State’s control systems provided sufficient assurance to protect the RRF funds.  

In  some  cases,  in  order  to  ensure  compliance  with  Article  22  of  the  RRF  Regulation,  the 
Commission  established  measures  agreed  with  the  Member  State  and  contributing  to  the 
protection of the EU’s financial interests regarding the implementation of the Facility in the 
form  of  milestones  that  should  be  satisfactorily  fulfilled  before  any  payment  can  be 
made.  

Following  the  Commission’s  proposals,  the  Council  implementing  decisions  regarding  the 
NRRPs  of  Hungary  and  Poland  establish  several  such  milestones,  including  measures 
aiming at addressing rule of law issues.  

In  2021-2027,  Member  States  also  need  to  conform  with  certain  horizontal  or  thematic 
enabling  conditions.  These  are  prerequisite  conditions  for  the  effective  and  efficient 
achievement of the specific objectives of shared management funds. One horizontal enabling 
condition  relates  to  the  effective  application  and  implementation  of  the  Charter  of 
Fundamental Rights of the European Union. The Member States’ programme submissions 
included  an  assessment  of  whether  the  enabling  conditions  linked  to  the  selected  specific 
objectives  have  been  fulfilled.  The  Commission  has  reviewed  these  assessments  and  found 
that all the Member States except Hungary and Poland were fulfilling the horizontal enabling 
condition on the Charter 1. The Commission is currently working with Hungary and Poland to 
resolve the outstanding issues. 

1 In  the  case  of  Cyprus,  the  horizontal  enabling  condition  for  the  Charter  of  Fundamental  Rights  is  considered  by  the  Commission  not 
fulfilled for the Asylum, Migration and Integration Fund (AMIF) and the Instrument for Financial Support for Border Management and Visa 
Policy only (BMVI). 

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c.  Strengthening integrity measures 

The  Commission  has  both  a  political  commitment  and  a  legal  obligation  to  ensure  that 
organisations  and  projects  involved  in  criminal  practices  or  practices  that  are  incompatible 
with the EU’s values do not receive EU financial support. 

The  swift  suspension  of  funding  in  December  2022  to  the  non-governmental  organisation 
(NGO)  ‘No  Peace  Without  Justice’,  which  was  involved  in  the  ‘Qatargate  scandal’, 
demonstrated  the  concrete  action  that  the  Commission  can  take  under  the  EU’s  financial 
rules.  

All entities applying for EU funding are subject to the same rules, irrespective of their status. 
The Financial Regulation provides the Commission with a range of measures that it can take 
when directly implementing the budget. These include rigorous selection processes based on 
objective  criteria  to  ensure  that  funding  is  in  line  with  EU  values.  During  implementation, 
beneficiaries  of  EU  funding  are  obliged  to  provide  any  information  requested  by  the 
Commission  without  delay  so  that  it  can  verify  the  eligibility  of  the  costs  or  declared 
contributions; proper implementation of the action; and compliance with the other obligations 
under the grant agreement (these may include information on sources of funding from outside 
the  EU  budget  if  this  is  relevant  to  demonstrating  compliance).  As  regards  indirect 
management  of  the  budget,  the  Financial  Regulation  requires  persons  and  entities 
implementing the EU budget to comply with applicable EU law and agreed international 
and EU standards and, therefore, not to fund actions that contradict EU values. 

The Commission  also  ensures through the  implementation of EDES that  EU funds do not 
benefit organisations that go against EU values.  The grounds for  excluding  applicants  from 
participating  in  award  procedures  or  being  selected  to  implement  EU  funds  include  grave 
professional  misconduct,  terrorist  financing,  fraud  and  corruption.  The  exclusion  from 
participation in award procedures may take place not only when the organisation itself is in 
an  exclusion  situation,  but  also  when  any  person  who  is  a  member  of  the  administrative, 
management  or  supervisory  body  of  the  organisation  (or  any  person  having  powers  of 
representation, decision-making or control over the organisation) or its beneficial owners are 
in  an  exclusion  situation  established  by  a  final  court  judgment  or  a  final  administrative 
decision. 

As part of its  ongoing  commitment to improve the system to protect the EU’s financial 
interests,  the  Commission  has  proposed  adding  ‘incitement  to  discrimination,  hatred  or 
violence’ as a new and explicit situation of exclusion and including a definition of NGOs in 
the  Financial  Regulation  recast  proposal  together  with  a  corresponding  obligation  for  grant 
applicants to indicate whether or not they are NGOs.  

Going  beyond  the  specific  objective  of  protecting  the  EU  budget,  the  Commission  also 
adopted  an  anti-corruption  package  on  3 May 2023.  The  package  includes  a  directive  on 
fighting  corruption,  which  would  –  if  adopted  by  the  co-legislators  –  harmonise  national 
provisions  defining  corruption  and  related  offences  and  penalties,  in  order  to  ensure  that 
highly effective, prortionate and dissuasive criminal-law tools are uniformly in place to fight 
the full range of corruption offences, better prevent corruption and improve enforcement. The 
package  also  includes  a  proposal  to  complement  the  Common  Foreign  and  Security  Policy 
(CFSP) toolbox of restrictive measures (sanctions) with a dedicated sanctions regime to fight 
serious acts of corruption worldwide. 

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The Commission has also adopted a proposal for the creation of an interinstitutional Ethics 
Body on 8 June 20232, covering members of EU institutions, as announced at the beginning 
of  the  mandate  by  President  von  der  Leyen,  and  following  informal  consultations  with  the 
other institutions. With the establishment of the Ethics Body there will, for the first time, be 
common  standards  for  ethical  conduct  of  members  of  EU  institutions  and  a  formal 
mechanism  for  coordination  and  exchange  of  views  on  ethical  requirements  among 
institutions. 

Besides  the  Commission,  the  European  Anti-Fraud  Office  (OLAF)  and  the  European 
Public  Prosecutor's  Office  (EPPO),  in  their  respective  capacities,  carry  out  controls  and 
investigations to ensure that the EU budget is spent according to the applicable rules. 

The current MFF is based on stable staffing for all institutions, but the increase in OLAF’s 
workload  led  the  co-legislators,  on  the  basis  of  the  Commission’s  proposals,  to  increase 
OLAF’s staff with 13 full time equivalent (FTE) in the last two years’ budgets (7 FTE in 
the 2022 budget and 6 in the 2023 budget). The Commission has proposed to further increase 
OLAF’s staff with 2 FTE for the draft 2024 budget. The increase is offset elsewhere in the 
Commission. 

Similarly,  the  EPPO’s  staff  more  than  tripled  between  2020  and  2022  while  its  EU 
funding increased fivefold over the same period, commensurate with its entry into operation 
in 2021 and subsequent increase in the number of its investigations and prosecutions. The EU 
budget provides significant funding to the EPPO in line with its key role in the fight against 
fraud. More precisely, the 2022 budget added 118 additional staff to the EPPO and the EU 
contribution increased by EUR 11.2 million to cover the additional salary cost. The EPPO’s 
staff  remains  stable  in  2023  compared  with  2022  but,  at  the  EPPO’s  request,  the  staff 
structure has changed with  the conversion of 20 contract  agent  positions into establishment 
plan  posts.  The  changed  staff  structure  and  corresponding  increase  in  salary  costs  are 
included in the Commission’s proposal for staffing and funding the EPPO in the draft 2024 
budget.  

d.  The RRF control system 

-  Governance structures, internal processes and control strategies  

The RRF provides financial support based on performance. RRF funds are disbursed when 
Member  States  have  fulfilled  key  steps  (known  as  milestones  and  targets)  in  implementing 
the  reforms  and  investments  included  in  the  NRRPs.  For  each  payment  request,  the 
Commission  ensures  that  it  has  reasonable  assurance  that  the  underlying  milestones  and 
targets have been satisfactorily fulfilled.  

In  addition,  Member  States  are  required  to  put  in  place  suitable  control  systems  to  detect 
and prevent fraud, corruption, double-funding and conflicts of interest and to regurlarly 
check the implementation of the plan in accordance with  all relevant national and EU 
legislation.  In  the  event  of  an  individual  case  of  serious  irregularities,  the  Member  State 
concerned is obliged to take corrective action and, if it fails to do so, it is for the Commission 
to recover the  funds from  the Member State. The Commission’s assessment  of the national 
plans  includes  an  assessment  of  the  audit  and  control  frameworks  of  Member  States 
described  in  those  plans.  A  positive  assessment  is  only  possible  if  these  frameworks  were 
found to adequately protect the EU’s financial interests.  

2 Communication from the Commission (C (2023) 311 final) - Proposal for an interinstitutional ethics body 

5 

 
 
                                                           
During implementation and in line with its audit strategy, the Commission carries out system 
audits on the Member States’ control systems in order to ensure that they adequately prevent 
and detect serious irregularities or serious breaches of obligations of the financing agreement. 
In the context  of these system audits, the Commission  also  checks that the Member States’ 
systems provide for and check compliance with EU and national rules, particularly as regards 
public  procurement  procedure.  The  Commission  had  audited  23  national  systems  by  the 
end of April 2023 and intends to audit all the others by the end of 2023. Furthermore, and in 
response to recommendations from the European Court of Auditors (ECA), the Commission 
has  been  regularly  checking  since  the  start  of  2023  that  Member  States  verify  compliance 
with  public  procurement  and  State  aid  rules.  In  the  event  of  systematic  failures  in  the 
system  that  amount  to  a  serious  breach  of  obligations,  the  Commission  can  suspend  and 
recover between 5% and 100% of the funds allocated to the Member State in question. 

The  Commission  also  carries  out  risk-based  audits  on  milestones  and  targets  that  have 
been included in payment requests. These audits verify the accuracy and reliability of the data 
in those payment requests.  

The Commission’s control arrangements are complemented by the audits and investigations 
carried out by the Commission’s Internal Audit Service, the ECA, the EPPO and OLAF.  

-  The  Commission  Communication  outlining  the  framework  for  assessing  the  satisfactory 
fulfilment  of  milestones  and  targets  and  the  methodology  for  the  determination  of 
payment suspension 

The Commission’s communication3, published on 21 February 2023, provides further clarity 
and  transparency  on  the  procedures  that  the  Commission  has  established  for  implementing 
the RRF. 

The framework demonstrates that the Commission's assessment of milestones and targets is 
based  on  objective  and  verifiable  evidence  while  also  allowing  reasonable  flexibility. 
Minimal deviations linked to the amounts, formal requirements, timing or substance can be 
accepted  in  a  limited  number  of  circumstances  and  will  be  set  out  transparently  to  allow 
external  scrutiny  by  the  Economic  and  Financial  Committee,  as  well  as  the  ECA  and  the 
European Parliament.  

The payment suspension methodology  enables the Commission  to  determine the  amount to 
be suspended if a milestone or target is not satisfactorily fulfilled. The Commission does so 
in full respect for the principles of equal treatment and proportionality and in line with 
the RRF’s performance-based nature. The methodology was applied for the first time in May 
2023 as regards a payment made to Lithuania.  

3.  Transparency of the EU budget & reporting 

The Commission and the Member States already make available a wide range of information 
on  recipients  of  EU  funds  (e.g.  through  the  Financial  Transparency  System4  or  through 
national  transparency  websites  for  the  common  agricultural  policy).  The  proposal  to  revise 
the  Financial  Regulation  would,  if  accepted  by  the  co-legislators,  further  enhance  the 

3 Communication from the Commission COM(2023) 99 final, Recovery and Resilience Facility: Two years on - A 
unique instrument at the heart of the EU’s green and digital transformation 
4  The  Financial  Transparency  System  (FTS)  provides  details  on  the  EU  budget  implemented  directly  by  the 
European Commission or implemented indirectly by entrusted entities. 

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Commission’s reporting in this area by ensuring that the list of recipients of EU funds in all 
management modes will be published as from the start of the new programming period. 

Specifically, the proposal to revise the Financial Regulation would require both (i) Member 
States  that  implement  the  EU  budget  under  shared  management  or  that  receive  and 
implement EU funds under direct management; and (ii) persons and entities implementing the 
EU budget under indirect management, to at least once a year transmit for publication, to the 
Commission,  information  on  the  recipients  and  amounts  of  EU  funding.  The  Commission 
would be responsible for consolidating, centralising and publishing the data on recipients of 
EU funding in a single website and database covering all management modes. 

In  addition  to  data  linked  to  the  recipients  of  funds,  the  Commission  also  provides 
information  at  project  and  programme  level  for  various  spending  programmes  under  the 
2021-2027  MFF  (e.g.  through  its  cohesion  open  data  platform  and  its  Kohesio  website, 
which are both dedicated to the use of cohesion policy funds). 

As regards funding under the RRF, the entry into force of the REPowerEU amendments to 
the  RRF  Regulation  on  1 March 2023  has  further  strengthened  transparency  by  requiring 
national authorities to publish information on the 100 final recipients receiving the highest 
amounts  of  RRF  funding  per  Member  State.  The  first  national  portals  were  released  in 
April  2023  and  the  first  data,  as  reported  by  the  Member  States,  was  published  on  the 
recovery and resilience scoreboard on 23 May 2023.  

Furthermore,  the  Commission  recently  released  an  interactive  EU  map  to  provide  easy 
access  to  information  on exemplary  reforms  and  investments  funded by the RRF. The map 
makes  it  possible  to  see investments  by  location  and  provides  specific  information  on  their 
state  of  implementation.  The  map  does  not  contain  an  exhaustive  list  of  all  reforms  and 
investments,  but  it  is  updated  regularly  (taking  account  of  the  increasing  information 
provided  by  Member  States  in  the  context  of  the  assessment  of  payment  requests,  and  the 
information  on  the  100  final  recipients  receiving  the  highest  amount  of  RRF  funding  per 
Member State).  

The  national  portals  and  the  interactive  map  complement  the  recovery  and  resilience 
scoreboard,  which  gives  an  overview  of  how  the  implementation  of  the  NRRPs  is 
progressing. 

The Commission also ensures transparency as regards its contingent liabilities by publishing 
an  annual  report 5  on  the  matter,  including  an  overview  of  contingent  liabilities  relating  to 
RRF loans.  

4.  Performance of the EU budget 

The  Commission  attaches  the  greatest  importance  to  maximising  the  effectiveness  of  EU 
spending.  

For  major  spending  programmes  within  the  new  MFF,  impact  assessments  or  ex  ante 
evaluations  were  carried  out  to  ensure  efficiency  by  design,  including  by  setting  clear 
objectives and focusing on a number of high-quality performance indicators. As part of this 
process,  the  Commission  also  conducted  a  series  of  public  consultations  covering  major 

5 Report from the Commission to the European Parliament and the Council on financial instruments, budgetary 
guarantees, financial assistance and contingent liabilities: situation at 31 December 2021, 
COM(2022) 560 final. 

7 

 
 
 
                                                           
spending areas to gather views from all interested parties. The Regulatory Scrutiny Board 
analyses all impact assessments reports, fitness checks and selected evaluations, and provides 
its quality assurance for the reports it scrutinises.  

The Commission has integrated its cross-policy priorities into the EU budget. Its efforts in 
this area are fully in line with, and even exceed, the timeline and milestones agreed by the co-
legislators  in  the  December  2020  interinstitutional  agreement,  which  envisages  that 
different priorities are to be integrated into the EU budget to a varying extent in accordance 
with political and resource considerations.  

As  regards  the  tracking  of  gender  equality  related  expenditure,  the  Commission  has 
published  (ahead  of  the  schedule  set  out  in  the  interinstitutional  agreement)  a  methodology 
which has been applied on a pilot basis to the entire EU budget (rather than just a selection of 
centrally managed programmes, as foreseen in the interinstitutional agreement).  

The Commission acknowledges that the climate-tracking methodology for 2014-2020 had 
shortcomings  and  recalls  that,  in  setting  its  climate-spending  target  and  monitoring  its 
achievement,  it  was  bound  by  that  methodology  and  its  underlying  assumptions  and 
constraints. The Commission clearly and transparently communicated its methodology. 

For  the  new  programming  period  2021-2027,  the  Commission  has  strengthened  several 
dimensions of its climate-tracking methodology. The relevance for climate of an individual 
measure/intervention  is  now  assessed  on  the  basis  of  its  expected  impact  rather  than  its 
intended  purpose  (i.e.  whether  the  actions  were  designed  specifically  to  contribute  to 
climate actions). This helps ensure that similar actions in different spending programmes are 
assessed in the same way (i.e. they are assigned the same EU climate coefficient). In addition, 
all  EU  spending  programmes  take  the  do-no-harm  principle  into  account  when  pursuing 
their  objectives,  albeit  in  different  ways.  At  an  aggregate  level,  a  climate-adjustment 
mechanism  is  in  place  which  empowers  the  Commission  to  propose  changes  to  individual 
EU spending programmes if the aggregate minimum climate expenditure target for the whole 
EU budget is at risk of being missed. 

The Commission not only calculates the share of expenditure on a given priority but is also 
conducting  three  methodological  exercises  on  a  pilot  basis  in  the  areas  of  climate,  digital 
transition and jobs. These pilots measure concrete results achieved at the level of the EU 
budget.  In  particular,  the  Commission  is  developing  a  methodology  to  quantify  the  overall 
impact of the climate-related interventions funded under the RRF in terms of greenhouse gas 
emissions that have been avoided, taking into account data constraints and limitations. This 
methodology will underpin the first impact report on NextGenerationEU green bonds which 
the Commission plans to issue by the end of 2023. The Commission then intends to apply this 
methodology to the entire EU budget.  

5.  Outstanding budgetary commitments – ‘reste à liquider’ (RAL) and measures to 

speed up the implementation of EU funds 

Outstanding  commitments  (commonly  referred  to  as  ‘the  RAL’  –  reste  à  liquider)  are 
amounts that have been committed but not yet paid. They stood at EUR 452.2 billion at the 
end of 2022 (compared with EUR 341.6 billion at the end of 2021). The main driver of the 
increase  in  the  RAL  during  2022  was  the  implementation  of  the  non-repayable  part  of 
NextGenerationEU – which increased total RAL by EUR 189.1 billion (42% of total RAL) at 
the end of 2022. As expected, the assigned revenue of NextGenerationEU’s programmes will 

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continue  to  increase  the  RAL  in  the  coming  years  because  the  commitments  will  be  made 
until the end of 2023 while payments will be made until 20266.  

As regard measures to make it easier to absorb EU funds: 

-  The  Commission  will  continue  during  the  annual  budgetary  procedures  to  propose 
levels of payment appropriations that adequately meet payment needs. This will 
take into account the implementing rules for specific programmes and funds that have 
been adopted by the co-legislators. 

-  Some  far-reaching  simplifications  were  adopted  in  the  Common  Provisions 
Regulation  (CPR)  and  as  part  of  the  new  legislative  framework  for  the  common 
agricultural  policy  (notably  thanks  to  its  new  delivery  model).  These  include  a 
broader use of simplified cost options. Currently, taking into account the fact that the 
programming of the CPR funds has been completed, the Commission is focused (and 
working  hand  in  hand  with  the  Member  States)  on  the  timely,  smooth  and  high-
quality  implementation  of  the  programmes.  Progress  will  be  closely  monitored  and 
the  Commission  will,  when  necessary,  propose  mitigating  actions  to  the  Member 
States. 

-  The Commission highlights the fact that  several measures are in place to coordinate 
the simultaneous implementation of the RRF and of cohesion policy funds; avoid 
the  risk  of  double-funding;  and  address  national  administration  capacity  issues. 
Investment  that  is  planned  and  implemented  under  the  two  instruments  must  be 
coordinated. Programming documents under both instruments must specify how they 
will  complement  each  other.  To  ensure  good  coordination,  the  operational 
arrangements  signed  with  Member  States  under  the  RRF  also  include  an  annual 
stakeholder  event  to  be  held  in  each  Member  State  to  discuss,  amongst  others,  
complementarity  and  synergies  between  the  RRF  and  other  EU  programmes.  The 
Commission  also  provides  continuous  administrative  support  and  guidance  to 
improve the administrative capacity of the Member States – by technical assistance in 
cohesion  policy,  the  technical  support  instrument  (TSI),  peer-to-peer  exchanges  and 
practitioner networks. For instance, most Member States have received support from 
the  TSI  in  preparing  their  REPowerEU  chapters,  and  in  identifying  reforms  and 
investments to reduce dependence on fossil fuel imports from Russia. 

6.  Looking ahead 

The Commission is committed to delivering results on the priorities highlighted by the 
European Parliament and the Council as a result of the 2021 discharge procedure.  

In  2021,  the  Commission  was  addressing  the  challenges  that  arose  from  the  COVID-19 
pandemic. Since then, the EU was faced by a new reality with  Russia's war of aggression 
against Ukraine, with a surge in energy and food prices, a new macroeconomic environment 

6 Further information on the level of the RAL is included in (i) the EU’s 2022 annual accounts; (ii) Working 
Document V attached to the 2024 Draft Budget: and (iii) the annual report on the long-term forecast on the 
future inflows and outflows of the EU budget 2021-2027, which is part of the IFAR. In addition, the 
Commission provides relevant information to the European Parliament and the Council during dedicated 
interinstitutional meetings on payments that are held three times a year.  

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with a sharp rise in interest rates and inflation as well as a wide array of humanitarian crises 
and environmental disasters. 

The  crises  and  emergencies  that  the  EU  budget  was  called  to  address,  combined  with  the 
continued  need  to  deliver  on  the  EU's  political  priorities,  including  the  green  and  digital 
transition, put the MFF under considerable pressure. The budgetary flexibilities as agreed 
in  2020  for  the  current  MFF  were  already  very  limited  from  the  start.  This  made  it 
challenging to mobilise funds to finance new priorities or address unexpected challenges. 

Against  this  background  and  to  ensure  that  the  EU  could  deliver  on  its  most  urgent 
objectives,  the  Commission  presented  a  mid-term  review  of  the  2021-2027  MFF  in  June 
2023, which takes stock of the implementation so far and proposes solutions to the challenges 
faced by the EU budget. 

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