Communication from the Commission to the European Parliament, the Council and the Court of Auditors – Annual accounts of the European Development Fund for the financial year 2023
Date: 2024-10-10
Institutions: Directorate-General for Budget, European Commission
Subjects: European Development Fund, balance sheet, closing of accounts, consolidated account, general budget (EU), implementation of the budget




C_202405451EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2024/5451


10.10.2024







            COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS
         
Annual accounts of the European Development Fund for the financial year 2023
(C/2024/5451)


CONTENTS






CERTIFICATION OF THE ACCOUNTS
2








IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES
3








FUNDS MANAGED BY THE EUROPEAN COMMISSION
7








FINANCIAL STATEMENTS OF THE EDF
9








FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF
50








FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2023
51








FINANCIAL STATEMENTS OF THE EUTF AFRICA 2023
58








CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS
65








EDF REPORT ON FINANCIAL IMPLEMENTATION
70




CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2023 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



                        19 June 2024
                     





IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

1.   BACKGROUND

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






—


The EU budget;










—


The European Development Fund; and










—


The European Investment Bank.




The EDF is not funded by the EU budget. It was established by an Internal Agreement of the Representatives of the Member States, sitting within the Council, and is 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.
The EDF is made up from individual EDFs. Each EDF is concluded for a period of around five years and is governed by its own Financial Regulation, which requires the preparation of specific financial statements. In addition, these financial statements are aggregated so as to provide a global view of the financial situation of the resources for which the Commission is responsible.
Up until 2021, when the 11th European Development Fund reached its final stage as the sunset clause came into effect on 31 December 2020, the European Development Fund (hereinafter referred to as the ‘EDF’) was 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’). However, from 2021 onwards EU cooperation with ACP countries and OCTs is funded through the EU budget.
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, prepared by the EIB, are included as a separate part of the annual accounts (part II) to provide a full picture of the development aid of the EDF.
2.   HOW IS THE EDF FUNDED?

The Council of 2 December 2013 adopted the Regulation (EU, Euratom) No 1311/2013 (1) 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.
Unlike the EU Budget, the EDF is a fund operating based on multiannuality. Each EDF establishes an overall fund to implement development cooperation during a period of usually five years. As resources are allocated on a multiannual basis, the allocated funds may be used over the period of the EDF. The lack of budget annuality is highlighted in the budgetary reporting, where the budgetary implementation of the EDFs is measured against the total funds.
The EDF resources are ‘ad hoc’ contributions from the EU Member States. Approximately every five years, Member State representatives met at intergovernmental level and decided on an overall amount to be allocated to the fund and to oversee its implementation.
The Commission manages the EDF 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
                        

While the 8th EDF was officially closed in 2021, with the closure of all contracts and financial decisions, this closure was not fully reflected in the 2021 accounts as several recovery orders, including litigations cases, were still outstanding. On 31 December 2022 the EDF had net assets of EUR 180 million. The capital and reserves were used to cover the cumulated losses of the 8th EDF with the remaining balances being transferred to the 9th EDF in accordance with the provisions of Part 3 of the financial regulation (2) applicable to the 9th EDF.
The Commission is currently working towards the closure of the 9th EDF. Currently there are still 10 ongoing contracts that should, in principle, come to an end in 2024. These contracts, funded under the 9th EDF, continue to be active and will reach their conclusion within the specified timeframe, contributing to the finalization of activities and projects associated with the 9th EDF. The full closure of the 9th EDF can only be accomplished once all contracts come to an end and following the completion of their evaluations and audits.
The closure of the 10th EDF is progressing well with 96,1 % of its contracts already closed. However, the operational and financial closure of the remaining ones will take some time. The financial closure requires the launch and completion of all necessary evaluations, audits and recoveries.
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 meaning that as of 2021 no further financing agreements can be signed under the 11th EDF. However, the implementation of the ongoing projects funded by the 11th European Development Fund will continue until their final completion.
In the context of the current Multi-Annual Financial Framework 2021-2027, EU cooperation with ACP countries is integrated in the Neighbourhood, Development and International Cooperation Instrument –Global Europe. Similarly, the cooperation with OCTs is now covered by the Overseas Association Decision (OAD). This means that while up to 2021 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 are subject to the authorisation of the European Parliament and that the transactions have to comply with the EU financial regulations in the same way as other EU funded programmes.
4.   YEAR-END REPORTING

4.1.   ANNUAL ACCOUNTS

In accordance with Article 18(3) of the EDF Financial Regulation, the EDF financial statements are prepared based on accrual-based accounting rules that themselves are based on International Public Sector Accounting Standards (IPSAS). These 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 by the EDF while taking into account the specific nature of its activities.
The preparation of the EDF annual accounts is entrusted to the Commission's Accounting Officer who is the Accounting Officer of the EDF and 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 the 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.
5.   AUDIT AND DISCHARGE

5.1.   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.
5.2.   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.

HIGHLIGHTS OF FINANCIAL IMPLEMENTATION 2023












*


Net amount, only 10th & 11th EDF





Budget implementation

In 2023, individual commitments and net payments of EUR 720 million and EUR 2 053 million, respectively, were made under the 10th and 11th EDF. The total amount of gross payments for the EDF amounted to EUR 2 103,48 million, which represents 105,17 % of the target of EUR 2 000 million communicated to the Member States.
In 2022, the Council unanimously decided to reuse EUR 600 million of de-committed funds from the 10th and 11th EDF to finance actions addressing the food security crisis and economic shock in ACP countries following Russia’s war of aggression against Ukraine. The Commission had already committed this EUR 600 million and disbursed EUR 221 million in 2022, followed by EUR 87 million in 2023.

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 2.2): a decrease of EUR 356 million largely as a result of fewer advances being paid out. This reduction is mainly due to the decline in the number of new contracts signed since 2021. In 2021, new contracts amounted to EUR 2 118 million, which noticeably decreased to EUR 853 million in 2022. In 2023, new contracts remained at this level, being EUR 860 million, as a result of the Council decision to redirect unused funds from the 10th and 11th EDF to aid ACP countries in response to Russia’s war of aggression against Ukraine;










—


Cash and Cash equivalents (see note 2.5): a decrease of EUR 426 million primarly due to the reduction in contributions from donors, which decreased from EUR 2 500 million in 2022 to EUR 1 800 million in 2023;










—


Accrued Charges (see note 2.8): a decrease of EUR 147 million as a result of the decrease in the number of open contracts at the end of the year for which no cost claims were validated by year-end; and










—


Operating expenses (see note 3.4): an overall decrease in operating expenses of EUR 608 million mainly as a result of the decrease in expenses relating to programmeable aid, Intra ACP projects and contributions to the Trust Funds. Despite this, expenses relating to emergency aid increased as decommitted funds from the 10th and 11th EDF were reused to combat the negative effects of the Russian war of aggression against Ukraine in the ACP countries.





FUNDS MANAGED BY THE EUROPEAN COMMISSION


CONTENTS






FINANCIAL STATEMENTS OF THE EDF
9








EDF BALANCE SHEET
10








EDF STATEMENT OF FINANCIAL PERFORMANCE
11








EDF CASHFLOW STATEMENT
11








EDF STATEMENT OF CHANGES IN NET ASSETS
13








BALANCE SHEET BY EDF
13








STATEMENT OF FINANCIAL PERFORMANCE BY EDF
15








STATEMENT OF CHANGES IN NET ASSETS BY EDF
16








NOTES TO THE FINANCIAL STATEMENTS OF THE EDF
19








FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF
50








FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2023
51








BALANCE SHEET
55








STATEMENT OF FINANCIAL PERFORMANCE
56








CASHFLOW STATEMENT
57








FINANCIAL STATEMENTS OF THE EUTF AFRICA 2023
58








BALANCE SHEET
62








STATEMENT OF FINANCIAL PERFORMANCE
63








CASHFLOW STATEMENT
64








CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS
65








CONSOLIDATED BALANCE SHEET
66








CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
67








CONSOLIDATED CASH FLOW STATEMENT
67








CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
69








EDF REPORT ON FINANCIAL IMPLEMENTATION
70




FINANCIAL STATEMENTS OF THE EDF
                      (3)


EDF BALANCE SHEET









EUR million




 


Note


31.12.2023


31.12.2022





NON-CURRENT ASSETS



 


 


 





Financial assets



2.1



87 




67 






Pre-financing



2.2



574 




488 






Trust Fund contributions



2.3



216 




254 






Exchange receivables



2.4



5 




7 





 


 



883 




816 






CURRENT ASSETS



 


 


 





Financial Assets



2.1



3 




3 






Pre-financing



2.2



954 




1 396 






Exchange receivables and non-exchange recoverables



2.4



24 




27 






Cash and cash equivalents



2.5



601 




1 027 





 


 



1 583 




2 454 






TOTAL ASSETS



 



2 466 




3 270 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities



2.6



(5 )




(7 )





 


 



(5 )




(7 )






CURRENT LIABILITIES



 


 


 





Payables



2.7



(391 )




(426 )






Accrued charges



2.8



(984 )




(1 131 )





 


 



(1 375 )




(1 558 )






TOTAL LIABILITIES



 



(1 380 )




(1 565 )






NET ASSETS



 



1 086 




1 705 






FUNDS & RESERVES



 


 


 





Called fund capital - active EDFs



2.9



54 566 




65 100 






Called fund capital from closed EDFs carried forward



2.9



2 252 




2 252 






Economic result carried forward from previous years



 



(53 484 )




(62 834 )






Economic result of the year



 



(2 249 )




(2 813 )






NET ASSETS



 



1 086 




1 705 






EDF STATEMENT OF FINANCIAL PERFORMANCE









EUR million




 


Note


2023


2022





REVENUE



 


 


 





Revenue from non-exchange transactions



 


 


 





Recovery activities



3.1



14 




18 





 


 



14 




18 






Revenue from exchange transactions



 


 


 





Financial revenue



3.2



9 




2 






Other revenue



3.2



43 




77 





 


 



52 




80 






Total Revenue



 



65 




98 






EXPENSES



 


 


 





Implemented by other entities



3.3



(3 )




(1 )






Aid instruments



3.4



(2 181 )




(2 789 )






Co-financing expenses



3.5



(8 )




4 






Finance costs



3.6



(7 )




(6 )






Other expenses



3.7



(116 )




(119 )






Total Expenses



 



(2 315 )




(2 911 )






ECONOMIC RESULT OF THE YEAR



 



(2 249 )




(2 813 )






EDF CASHFLOW STATEMENT









EUR million




 


Note


2023


2022





Economic result of the year



 



(2 249 )




(2 813 )






Operating activities



 


 


 





Capital increase - contributions (net)



 



1 630 




2 458 






(Increase)/decrease in trust funds contributions



 



37 




128 






(Increase)/decrease in pre-financing



 



356 




239 






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



 



4 




5 






Increase/(decrease) in provisions



 



2 




1 






Increase/(decrease) in financial liabilities



 



(3 )




(1 )






Increase/(decrease) in payables



 



(35 )




(75 )






Increase/(decrease) in accrued charges and deferred income



 



(148 )




123 






Other non-cash movements



 


–


–





Investing activities



 


 


 





(Increase)/decrease in non-derivative financial assets at fair value through surplus or deficit*



 



(20 )




(31 )






NET CASHFLOW



 



(426 )




34 






Net increase/(decrease) in cash and cash equivalents



 



(426 )




34 






Cash and cash equivalents at the beginning of the year



2.5



1 027 




994 






Cash and cash equivalents at year-end



2.5



601 




1 027 






EDF STATEMENT OF CHANGES IN NET ASSETS













EUR million




 


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


Fair value reserve (F)


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





BALANCE AS AT 31.12.2021




72 998 




10 355 




62 643 




(62 834 )




2 252 



–



2 061 






Capital increase - contributions




(43 )




(2 500 )




2 457 



–


–


 



2 457 






Economic result of the year



–


–


–



(2 813 )



–


 



(2 813 )






BALANCE AS AT 31.12.2022




72 955 




7 855 




65 100 




(65 647 )




2 252 



–



1 705 






Capital increase - contributions




(185 )




(1 815 )




1 630 



–


–


 



1 630 






Closure of the 8th EDF




(12 164 )



 



(12 164 )




12 164 



–


 



(0 )






Economic result of the year



–


–


–



(2 249 )



–


 



(2 249 )






BALANCE AS AT 31.12.2023




60 607 




6 040 




54 566 




(55 732 )




2 252 



–



1 086 






BALANCE SHEET BY EDF

















EUR million




 


 


31.12.2023


31.12.2022


 




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





NON-CURRENT ASSETS



 


 


 


 


 


 


 


 


 


 


 





Financial assets



2.1


–


–



14 




73 




87 



–


–



(1 )




67 




67 






Pre-financing



2.2


–


–



447 




127 




574 



–


–



221 




267 




488 






Trust Fund contributions



2.3


–



31 




9 




176 




216 



–



31 




9 




213 




254 






Exchange receivables



2.4


–


–


–



5 




5 



–


–


–



7 




7 





 


 


–



31 




470 




381 




883 



–



31 




229 




555 




816 






CURRENT ASSETS



 


 


 


 


 


 


 


 


 


 


 





Financial Assets



2.1


–


–


–



3 




3 



–


–


–



3 




3 






Pre-financing



2.2


–



5 




113 




835 




954 



–



14 




427 




954 




1 396 






Exchange receivables and non-exchange recoverables



2.4


–


–



10 




14 




24 



–


–



10 




16 




27 






Inter-EDF accounts



 


–



(200 )




426 




(226 )



–



180 




(369 )




803 




(612 )



–





Cash and cash equivalents



2.5


–


–


–



601 




601 



–


–


–



1 027 




1 027 





 


 


–



(195 )




549 




1 229 




1 583 




180 




(355 )




1 240 




1 389 




2 454 






TOTAL ASSETS



 


–



(163 )




1 020 




1 610 




2 466 




180 




(324 )




1 469 




1 945 




3 270 







NON-CURRENT LIABILITIES




 


 


 


 


 


 


 


 


 


 


 





Financial liabilities



2.6


–


–


–



(5 )




(5 )



–


–



(0 )




(7 )




(7 )





 


 


–


–


–



(5 )




(5 )



–


–



(0 )




(7 )




(7 )






CURRENT LIABILITIES



 


 


 


 


 


–


 


 


 


 


 





Payables



2.7


–


–



(63 )




(328 )




(391 )



–



(0 )




(34 )




(391 )




(426 )






Accrued charges



2.8


–


–



(129 )




(855 )




(984 )



–



(7 )




(119 )




(1 006 )




(1 131 )





 


 


–


–



(192 )




(1 183 )




(1 375 )



–



(7 )




(153 )




(1 397 )




(1 558 )






TOTAL LIABILITIES



 


–


–



(192 )




(1 188 )




(1 380 )



–



(7 )




(153 )




(1 404 )




(1 565 )






NET ASSETS



 


–



(163 )




827 




422 




1 086 




180 




(331 )




1 315 




541 




1 705 






Called fund capital - active EDFs



2.9


–



10 442 




20 834 




23 290 




54 566 




12 164 




10 450 




20 960 




21 527 




65 100 






Called fund capital from closed EDFs carried forward



2.9


–



2 252 



–


–



2 252 




627 




1 625 



–


–



2 252 






Called fund capital transfers between active EDFs



2.9


–



(509 )




(120 )




628 



–



(2 513 )




2 010 




(38 )




541 



-





Economic result carried forward from previous years



 


–



(12 350 )




(19 607 )




(21 527 )




(53 484 )




(10 098 )




(14 410 )




(19 325 )




(19 001 )




(62 834 )






Economic result of the year



 


–



1 




(280 )




(1 970 )




(2 249 )



–



(6 )




(282 )




(2 526 )




(2 813 )






NET ASSETS



 


–



(163 )




827 




422 




1 086 




180 




(331 )




1 315 




541 




1 705 






STATEMENT OF FINANCIAL PERFORMANCE BY EDF

















EUR million




 


 


2023


2022




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





REVENUE



 


 


 


 


 


 


 


 


 


 


 





Revenue from non-exchange transactions



 


 


 


 


 


 


 


 


 


 


 





Recovery activities



3.1


–


–



2 




12 




14 



–



(1 )




(8 )




28 




18 





 


 


–


–



2 




12 




14 



–



(1 )




(8 )




28 




18 






Revenue from exchange transactions



 


 


 


 


 


 


 


 


 


 


 





Financial revenue



3.2


–


–



(1 )




10 




9 



–


–



2 




1 




2 






Other revenue



3.2


–



2 




4 




37 




43 



–



3 




8 




66 




77 





 


 


–



2 




4 




46 




52 



–



3 




10 




67 




80 






Total revenue



 


–



2 




5 




58 




65 



–



1 




2 




94 




98 






EXPENSES



 


 


 


 


 


 


 


 


 


 


 





Implemented by other entities



3.3


–


–


–



(3 )




(3 )



–


–


–



(1 )




(1 )






Aid instruments



3.4


–



1 




(276 )




(1 906 )




(2 181 )



–



(5 )




(295 )




(2 489 )




(2 789 )






Co-financing expenses



3.5


–


–


–



(8 )




(8 )



–


–



22 




(18 )




4 






Finance costs



3.6


–



1 




(2 )




(6 )




(7 )




1 




2 




(3 )




(5 )




(6 )






Other expenses



3.7


-



(3 )




(8 )




(106 )




(116 )



–



(5 )




(8 )




(107 )




(119 )






Total expenses



 


–



(1 )




(286 )




(2 028 )




(2 315 )




1 




(7 )




(284 )




(2 620 )




(2 911 )






ECONOMIC RESULT OF THE YEAR



 


–



1 




(280 )




(1 970 )




(2 249 )




1 




(6 )




(282 )




(2 526 )




(2 813 )






STATEMENT OF CHANGES IN NET ASSETS BY EDF













EUR million




Eighth EDF


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


Called fund capital transfers between active EDFs (F)


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





BALANCE AS AT 31.12.2021




12 164 



–



12 164 




(10 098 )




627 




(2 512 )




181 






Transfers to/from the 10th EDF



 


 


–


 


 



(1 )




(1 )






BALANCE AS AT 31.12.2022




12 164 



–



12 164 




(10 098 )




627 




(2 513 )




180 






Closure of the 8th EDF




(12 164 )



 



(12 164 )




10 098 




(627 )




2 513 




(180 )






BALANCE AS AT 31.12.2023



–


–


–


–


–


–


–



















EUR million




Ninth EDF


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


Called fund capital transfers between active EDFs (F)


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





BALANCE AS AT 31.12.2021




10 507 




15 




10 492 




(14 410 )




1 625 




2 018 




(274 )






Transfers to/from the 10th EDF



 


–


–


 


 


 


–





Transfers to/from the 10th EDF



 


 


–


 


 



(8 )




(8 )






Refund to Member States




(43 )



 



(43 )



 


 


 



(43 )






Economic result of the year



 


 


–



(6 )



 


 



(6 )






BALANCE AS AT 31.12.2022




10 464 




15 




10 450 




(14 416 )




1 625 




2 010 




(331 )






Capital increase - contributions



 



(15 )




15 



 


 


 



15 






Transfers to/from the 10th and 11th EDF



 


 


–


 


 



(4 )




(4 )






Refund to Member States




(22 )



 



(22 )



 


 


 



(22 )






Closure of the 8th EDF



 


 


 



2 066 




627 




(2 514 )




179 






Economic result of the year



 


 


–



1 



 


–



1 






BALANCE AS AT 31.12.2023




10 442 



–



10 442 




(12 348 )




2 252 




(509 )




(163 )



















EUR million




10th EDF


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


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





BALANCE AS AT 31.12.2021




20 960 



–



20 960 




(19 324 )




101 




1 737 






Transfers to/from the Eighth and Ninth EDF



 


 


–


 



9 




9 






Transfers to/from the 11th EDF



 


 


–


 



(148 )




(148 )






Economic result of the year



 


 


–



(282 )



 



(282 )






BALANCE AS AT 31.12.2022




20 960 



–



20 960 




(19 606 )




(38 )




1 315 






Transfers to/from the Eighth and Ninth EDF



 


 


–


 



6 




6 






Transfers to/from the 11th EDF



 


–


–


 



(87 )




(87 )






Refund to Member States




(126 )



–



(126 )



 


–



(126 )






Economic result of the year



 


–


–



(280 )



–



(280 )






BALANCE AS AT 31.12.2023




20 834 



–



20 834 




(19 886 )




(120 )




827 




















EUR million




11th EDF


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


Called fund capital transfers between active EDFs (F)


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





BALANCE AS AT 31.12.2021




29 367 




10 340 




19 027 




(19 002 )



–



394 




419 






Capital increase - contributions



 



(2 500 )




2 500 



 


 



148 




2 648 






Economic result of the year



 


 


–



(2 526 )



 


–



(2 526 )






BALANCE AS AT 31.12.2022




29 367 




7 840 




21 527 




(21 528 )



–



541 




541 






Capital increase - contributions



 



(1 800 )




1 800 



 


 



87 




1 887 






Refund to Member States




(36 )



 



(36 )



 


 


 



(36 )






Economic result of the year



 


 


–



(1 970 )



 


–



(1 970 )






BALANCE AS AT 31.12.2023




29 331 




6 040 




23 290 




(23 498 )



–



628 




422 






NOTES TO THE FINANCIAL STATEMENTS OF THE EDF
                         (4)

1.   SIGNIFICANT ACCOUNTING POLICIES

1.1.   ACCOUNTING PRINCIPLES

The objective of financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of 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 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


31.12.2023


31.12.2022


Currency


31.12.2023


31.12.2022





BGN




1,9558 



1,9558 



PLN




4,3395 



4,6808 





CZK




24,724 



24,1160 



RON




4,9756 



4,9495 





DKK




7,4529 



7,4365 



SEK




11,096 



11,1218 





GBP




0,86905 



0,88693 



CHF




0,926 



0,9847 





NOK




11,2405 



10,5138 



JPY




156,33 



140,6600 





HUF




382,8 



400,8700 



USD




1,105 



1,0666 




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, financial risk of accounts receivable and the amounts disclosed in the notes concerning financial instruments, impairment allowance for financial assets at amortised cost and for financial guarantee contract liabilities, accrued revenue and charges, provisions, degree of impairment of intangible assets and property, plant and equipment, net realisable value of inventories, contingent assets and liabilities. Actual results could differ from those estimates.
Reasonable estimates are an essential part of the preparation of financial statements and do not undermine their reliability. An estimate may need revision if changes occur in the circumstances on which the estimate was based or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior periods and is not the correction of an error. The effect of a change in accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes known.
1.2.4.   Application of new and revised European Union Accounting Rules (EAR)


New EAR which are effective for annual periods beginning on or after 1 January 2023
                                    

There are no new EAR which became effective for annual periods beginning on or after 1 January 2023.

New EAR adopted but not yet effective at 31 December 2023
                                    

There are no new EAR adopted during 2023.
1.3.   BALANCE SHEET

1.3.1.   Financial assets


Classification at initial recognition

The classification of the financial instruments is determined at initial recognition. Based on the management model and the asset contractual cash-flow characteristics the financial assets can be classified in three categories: Financial assets at amortised cost (‘AC’), financial assets at fair value through net assets/equity (‘FVNA’) or financial assets at fair value through surplus or deficit (‘FVSD’).
(i)   Financial assets at amortised cost

Financial assets at amortised cost are non-derivative financial assets that meet two conditions: (1) The entity holds them in order to collect the contractual cash flows. (2) On specified days, there are contractual cash flows that are solely payments of the principal and interest on the outstanding principal.
This category comprises:






—


Cash and cash equivalents;










—


Loans (including term deposits with original maturity of more than three months);










—


Exchange receivables




Financial assets at amortised cost are included in current assets, except for those with maturity of more than 12 months from the reporting date.
(ii)   Financial assets at fair value through net assets/equity

These non-derivatives financial assets have contractual cash flows that represent only principal and interest on the outstanding principal. In addition, the management model is to hold the financial assets both to collect contractual cash flows and to sell the financial assets.
Assets in this category are classified as current assets, if they are expected to be realised within 12 months from the reporting date.
The entity does not hold such assets at year-end.
(iii)   Financial assets at fair value through surplus or deficit

The entity classifies derivatives and equity investments as FVSD because the contractual cash flows do not represent only principal and interests on the principal.
In addition, the entity classifies the debt securities it holds as FVSD because the portfolios of debt securities are managed and evaluated on a portfolio fair value basis.
Assets in this category are classified as current assets, if they are expected to be realised within 12 months from the reporting date.

Initial recognition and measurement

Purchases of financial assets at fair value through surplus or deficit are recognised on their trade-date – the date on which the entity commits to purchase the asset. Cash equivalents and loans are recognised when cash is deposited in a financial institution or advanced to borrowers.
Financial assets are initially measured at fair value. For all financial assets not carried at fair value through surplus or deficit, the transactions costs are added to the fair value at initial recognition. For financial assets carried at fair value through surplus or deficit the transaction costs are expensed in the statement of financial performance.
The fair value of a financial asset on initial recognition is normally the transaction price unless the transaction is not at arm’s length i.e. at no or at nominal consideration for public policy purposes. In this case, the difference between the fair value of the financial instrument and the transaction price is a non-exchange component which is recognised as an expense in the statement of financial performance. In this case, the fair value of a financial asset is derived from current market transactions for a directly equivalent instrument. If there is no active market for the instrument, the fair value is derived from a valuation technique that uses available data from observable markets.

Subsequent measurement

Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method.
Financial assets at fair value through surplus or deficit are subsequently measured at fair value. Gains and losses from changes in the fair value (including those stemming from foreign exchange translation and any interests earned) are included in the statement of financial performance in the period in which they arise.

Fair value at subsequent measurement

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities and over-the–counter derivatives), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cashflow analysis, option pricing models and other valuation techniques commonly used by market participants.
Investments in venture capital funds which do not have a quoted market price in an active market are valued at the attributable net asset value, which is considered as an equivalent of their fair value.

Impairment of financial assets

The EU recognises and measures an impairment loss for expected credit losses on financial assets that are measured at amortised cost and at fair value through net assets/equity.
The expected credit loss (ECL) is the present value of the difference between the contractual cash flows and the cash flows that the EU expects to receive. The ECL incorporates reasonable and supportable information that is available without undue cost or effort at the reporting date.
For assets at amortised cost, the asset’s carrying amount is reduced by the amount of the impairment loss which is recognised in the statement of financial performance. If, in a subsequent period, the amount of the impairment loss decreases, the previously recognised impairment loss is reversed through the statement of financial performance.
(a)   Receivables

The entity measures the impairment loss at the amount of lifetime ECL, using practical expedients (e.g. provision matrix).
(b)   Cash and cash equivalents

The entity holds cash and cash equivalents in current bank accounts and term deposits of up to 3 months. The cash is held in banks with very high credit ratings, thus having very low default probabilities. Given the short duration and low default probabilities, the expected credit losses from cash and cash equivalents are negligible. As a result, no impairment allowance is recognised for cash equivalents.
(c)   Loans

The ECL is measured with a three stage model that takes into account probability weighted default events during the lifetime of the financial asset and the evolution of credit risk since the origination of the financial asset. For loans, origination is the date of the irrevocable loan commitment
If there is no significant increase in credit risk since origination (‘stage 1’), the impairment loss is the ECL from possible default events in the next 12 months from the reporting date (‘12 months ECL’). If there is a significant increase in credit risk since origination (‘stage 2’) or if there is objective evidence of a credit impairment (‘stage 3’), the impairment loss equals the ECL from possible default events over the whole lifetime of the financial asset (‘lifetime ECL’)

De-recognition

Financial instruments are derecognised when the rights to receive cash flows from the investments have expired or the entity has transferred substantially all risks and rewards of ownership to another party. Sales of financial assets through surplus or deficit are recognised on their trade-date.
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 beneficiaries do not incur eligible expenditure, they have 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 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. The entity classified them as financial assets at amortised cost and measured them accordingly.
Recoverables from non-exchange transactions are carried at fair value as at the date of acquisition less write-down for impairment. A write-down for impairment is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of the recoverables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.
1.3.4.   Cash and cash equivalents

Cash and cash equivalents are financial assets at amortised cost 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.   Financial liabilities

Financial liabilities are classified as financial liabilities carried at amortised cost, financial liabilities at fair value through surplus or deficit, or as financial guarantee contract liabilities.
Financial liabilities at amortised cost are initially recognised at fair value including transaction costs incurred and subsequently carried at amortised cost using the effective interest method. They are derecognised from the statement of financial position if and only if the obligation is discharged, waived, cancelled or expired.
Financial liabilities at fair value through surplus or deficit include derivatives where the fair value is negative. Where the guarantee contract requires the entity to make payments in response to changes in financial instruments prices or foreign exchange rates, the guarantee contract is a derivative. They follow the same accounting treatment as financial assets at fair value through surplus or deficit.
The entity recognises a financial guarantee contract liability when it enters into a contract that requires to make specified payments to reimburse the guarantee holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contract liabilities are initially recognised at fair value.
The subsequent measurement depends on the evolution of the credit risk exposure from the financial guarantee. If there is no significant increase in credit risk (‘stage 1’), financial guarantee liabilities are measured at the higher of the 12 months expected credit losses and the amount initially recognised less, when appropriate, cumulative amortisation. If there is a significant increase in credit risk (‘stage 2’), financial guarantee liabilities are measured at the higher of the lifetime expected credit losses and the amount initially recognised less, when appropriate, cumulative amortisation.
Financial liabilities are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. Financial guarantee contracts are classified as current liabilities except if the entity has an unconditional right to defer the settlement of the liability for at least twelve months after the reporting date.
1.3.7.   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:

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).
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.

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.
(a)   Interest revenue and expense

Interest revenue and expense from financial assets and financial liabilities at amortised cost are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest revenue or interest expense over the relevant period.
(b)   Revenue from dividends

Revenue from dividends and similar distributions is recognised when the right to receive payment is established.
(c)   Revenue and expense from financial assets at fair value through surplus or deficit

This refers to the fair value gains (revenue) and fair value losses (expense) from these financial assets, including those stemming from foreign exchange translation. For interest-bearing financial assets, this also includes interest.
(d)   Revenue from financial guarantee contracts

The revenue from financial guarantee contracts (guarantee premium) is recognised over the time the entity stands ready to compensate the holder of the financial guarantee contract for the credit loss it may incur.
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.
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.
2.   NOTES TO THE BALANCE SHEET


ASSETS

2.1.   FINANCIAL ASSETS

A financial asset is any asset that is:






(a)


Cash;










(b)


An equity instrument of another entity;










(c)


A contractual right: to receive cash or another financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or










(d)


A contract that will or may be settled in the entity’s own equity instruments.




Financial assets are classified in the following categories:'financial assets at amortised costs', ‘financial assets at fair value through surplus or deficit’ and ‘financial assets at fair value through net assets/equity'. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.
The financial assets of the EDF comprise financial assets at FVSD and loans and are as follows:







EUR million




 


31.12.2023


31.12.2022





Non-Current



 


 





Financial assets at fair value through surplus or deficit (FVSD)




70 




61 






Loans




16 




5 





 



87 




67 






Current



 


 





Financial assets at fair value through surplus or deficit (FVSD)




3 




3 





 



3 




3 






Total




89 




69 





The EUR 70 million of financial assets at FVSD relate to equity investments in the following areas:






—


Renewable sustainable energy via Climate Investor One, ElectriFI and GEEREF;










—


Promoting inclusive smallholder and rural SME finance via the ABC FUND;










—


Financial inclusion in Uganda via the aBi Finance; and










—


Creating jobs and sustainable growth in Africa via the Boost Africa intitiative.




The EUR 16 million of non-current loans concern two main areas: sustainable agriculture via the AgriFI and electricity access and generation from sustainable energy sources via ElectriFI investment facility.
EUR 3 million under current financial assets relates entirely to an equity investment under the ElectriFI financial instrument which is aimed at financing early-stage and small-sized projects focusing on electricity access and generation from sustainable energy sources in emerging markets with a particular focus on sub-Saharan Africa.
2.2.   PRE-FINANCING

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












EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Non-current pre-financing



2.2.1


–


–



447 




127 




574 




488 






Current pre-financing



2.2.2


–



5 




113 




836 




954 




1 396 






Total



 


–



5 




560 




963 




1 529 




1 884 





The decrease in total pre-financing by EUR 356 million at 31 December 2023 can be largely explained by the decrease in pre-financing paid out to beneficiaries under the 11th EDF which fell from EUR 1 221 million in 2022 to EUR 963 million in 2023. This is in line with the life cycle of the EDF and is also related to the evolution of the number of open contracts. The 11th EDF reached maturity as the sunset clause came into effect at the end of 2020. This, since 1 January 2021 no further financing agreements could be signed under the 11th EDF, however specific contracts for the exsisting agreements can still be signed. This led to a decrease in new contracts signed from EUR 2 118 million in 2021 to EUR 853 million in 2022 and EUR 860 million in 2023.
Pre-financing from the 10th EDF decreased from EUR 648 million in 2022 to EUR 560 million in 2023, aligning with the normal trend observed in 2021 and consistent with the life cycle of the EDF.
EUR 427 million of non-current pre-financing, relates to the open prefinancing for two contracts under the EU-Africa Infrastructure Trust Fund (AITF). The aim of this Trust Fund is to provide financial support with grants to infrastructure projects alongside long-term financing made available by Project Financiers. The provision of such grant funds leverages the provision of long-term financing by participating finance institutions. At the time of the signature of the contracts, the Trust Fund’s type of actions were considered as adequately covered by the agreement (no template was yet available for financial instruments, nor did the Regulation mention this type of instrument). Consequently, payments made under these agreements were registered as pre-financing and not as a financial instrument component. Due to the long-term nature of the operations implemented by the Trust Fund, the annual clearing of the AITF’s old pre-financing is very limited and spreads out over the years. Therefore, to better reflect the project conditions, the open pre-financing of EUR 427 million were reclassed to long term (see note 3.4).
2.2.1.   Non-current pre-financing by management mode








EUR million




 


31.12.2023


31.12.2022





Direct Management



 


 





Implemented by:



 


 





Commission




15 




11 






EU executive agencies




2 




10 






EU delegations




7 




7 





 



24 




28 






Indirect Management



 


 





Implemented by:



 


 





EIB and EIF




436 




181 






International organisations




74 




221 






Private law bodies with a public service mission




16 




16 






Public law bodies




17 




25 






Third countries




7 




16 






EU bodies and Public Private Partnership



–



1 





 



550 




460 






Total




574 




488 





2.2.2.   Current pre-financing












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Pre-financing (gross)



–



7 




749 




4 150 




4 906 




5 616 






Cleared via cut-off



–



(2 )




(636 )




(3 314 )




(3 952 )




(4 220 )






Total



–



5 




113 




835 




954 




1 396 





2.2.3.   Current pre-financing by management mode








EUR million




 


31.12.2023


31.12.2022





Direct Management



 


 





Implemented by:



 


 





Commission




55 




85 






EU executive agencies




3 




10 






EU delegations




82 




105 





 



140 




200 







Indirect Management




 


 





Implemented by :



 


 





EIB and EIF




87 




209 






International organisations




431 




642 






Private law bodies with a public service mission




78 




96 






Public law bodies




98 




116 






Third countries




119 




131 






EU bodies and Public Private Partnership




1 




2 





 



814 




1 196 






Total




954 




1 396 





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.







EUR million




 


31.12.2023


31.12.2022





Guarantees for pre-financing




32 




37 





The EUR 32 million comprises guarantees intended to secure pre-financing paid under direct management, with the EDF being the beneficiary of the guarantee. However, the majority of pre-financing is paid under the indirect management mode, where 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. In 2023, the total value of such guarantees amounted to EUR 426 million.
2.3.   TRUST FUND CONTRIBUTIONS

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









EUR million




 


Net contribution at 31.12.2022


Contributions paid in 2023


Allocation of TF’s net expenses 2023


Net contribution at 31.12.2023





Africa




243 




231 




(287 )




186 






Bêkou




11 




43 




(24 )




30 






Total




254 




274 




(311 )




216 





The decrease in contributions paid from EUR 330 million in 2022 to EUR 274 million in 2023 stems from the decline in Trust Funds expenses due to the winding down of both Trust Funds. At the end of 2021, the EUTF Africa and EUTF Bêkou had reached the peak of their activities as they reached the end of the contracting period. The winding down of the Trust Funds that started thereafter led to a decrease in the number of open contracts and thus a decrease in expenses.
2.4.   EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES

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.
2.4.1.   Non-current exchange receivables

As at 31 December 2023, EDF has EUR 5 million of long-term exchange receivables comprising mainly of deferred charges arising from several financial instruments.
2.4.2.   Current exchange receivables and non-exchange recoverables









EUR million




 


Note


31.12.2023


31.12.2022





Recoverables from non-exchange transactions



2.4.2.1



13 




15 






Receivables from exchange transactions



2.4.2.2



12 




12 






Total



 



24 




27 





2.4.2.1.   Recoverables from non-exchange transactions












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Customers



–



3 




44 




9 




55 




56 






Public bodies



–



4 




13 




2 




19 




19 






Third states



–



1 




4 




1 




6 




7 






Write down



–



(7 )




(55 )




(6 )




(68 )




(67 )






Total



–



1 




7 




5 




13 




15 





2.4.2.2.   Receivables from exchange transactions












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Accrued income



-


-


-



1 




1 




1 






Inter-EDF accounts



–



(200 )




426 




(225 )



–



1 






Other



–


–



4 




7 




11 




10 






Total



–



(200 )




430 




(218 )




12 




12 





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.
The heading “other” comprises mainly of receivables deriving from financial instruments. Out of the EUR 11 million other receivables, an amount of EUR 4 million relates to a receivable from the Global Energy Efficiency and Renewable Energy Fund (GEEREF) and an amount of EUR 7 million relates to a receivable from Climate Investor One.
2.5.   CASH AND CASH EQUIVALENTS (5)

Cash and cash equivalents are financial instruments at amortised cost and include cash at hand, deposits held at call or at short notice with banks (such as current accounts and savings accounts), and other short-term highly liquid investments with original maturities of three months or less.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Special accounts



 


 


 


 


 


 





Central banks



–


–


–



341 




341 




835 





 


–


–


–



341 




341 




835 






Current accounts



 


 


 


 


 


 





Commercial banks



–


–


–



193 




193 




161 






Cash belonging to financial instruments



–


–


–



67 




67 




31 





 


–


–


–



260 




260 




192 






Total



–


–


–



601 




601 




1 027 





The decrease of EUR 426 million in cash and cash equivalents is mainly driven by the reduction in cash reserves held in central banks. This decline can be attributed to the decrease in called contributions which fell from EUR 2 500 million in 2022 to EUR 1 800 million in 2023. Additionally, Member States received a refund of EUR 43 million from the 9th EDF for the first instalment of 2023, while the UK requested that its contributions for the second and third instalments of 2023 amounting to EUR 154 million be offset from their outstanding share in the 10th and 11th EDF (see note 2.9.1).
As in previous years and in order to limit counterparty risk, more cash is kept in accounts with central banks rather than in the commercial banks (see note 5.1).

LIABILITIES

2.6.   FINANCIAL LIABILITIES

A financial liability is any liability that is:






(a)


A contractual obligation: to deliver cash or another financial asset to another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or










(b)


A contract that will or may be settled in the entity’s own equity instruments.




Financial liabilities are classified in the following categories: “financial liabilities at fair value through surplus or deficit”, “other financial liabilities measured at amortised cost” or financial guarantee contract liabilities.








EUR million




 


Note


31.12.2023


31.12.2022





Non-Current



 


 


 





Financial Provisions



2.6.1



3 




1 






Financial guarantee liability



2.6.2



1 




1 






Other Financial liabilities



2.6.3



1 




2 






Co-financing payables



2.6.4



1 




3 






Total



 



5 




7 





2.6.1.   Financial Provisions

These provisions represent the estimated credit losses that will be incurred in relation to the loans given under different financial instruments.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Financial provisions



–


–


–



3




3 




1 





The amount of EUR 3 million represents the estimated loss in relation to the loans given under the following financial instruments: ElectriFI CW and ElectriFI CW II and AgriFI Regional ACP.
2.6.2.   Financial Guarantees

These provisions represent the estimated losses that will be incurred in relation to the guarantees given under different financial instruments, where entrusted entities are empowered to issue guarantees in their own name but on behalf of, and at the risk of, the EDF. The financial risk of the EDF linked to the guarantees is capped and financial assets are gradually provisioned to cover for the future guarantee calls.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Financial guarantee liability



–


–


–



1 




1 




1 





The amount of EUR 1 million represents the estimated loss in relation to the guarantee given under the Euritz financial instrument of EUR 11 million (see note 3.2.1).
2.6.3.   Other Financial Liabilities












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Financial liabilities at fair value surplus and deficit



–


–


–



1 




1 




2 





The amount of EUR 1 million relates mainly to the payables arising from the financial instrument ABI Finance.
2.6.4.   Co-financing payables

Co-financing payables represent funds received by the EDF in respect to the co-financing agreements. The EDF is required to use these contributions to deliver agreed services to third parties and return the unused funds to the contributors. Timing of the use of the co-financing amounts determines whether it is disclosed as current or non-current.
At the year-end a case-by-case assessment of all co-financing payables is performed and all amounts that are unlikely to be used in the following 12 months are considered non-current. Current amounts are shown under note 2.7.2.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Non-current co-financing payables



–


–


–



1 




1 




3 






Current co-financing payables



–


–



18 




23 




41 




46 






Total



–


–



19 




24 




42 




49 





2.7.   PAYABLES

Payables are liabilities to pay for goods or services that have been received or supplied and - unlike accrued charges - have already been invoiced or formally agreed with the supplier. Payables can relate to both exchange transactions (such as the purchase of goods and services) and non-exchange transactions (e.g. cost claims from beneficiaries of grants, pre-financing or other EU funding).












EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Current payables



2.7.1


–


-



50 




210 




260 




230 






Sundry payables



2.7.2


–



0 




14 




118 




132 




196 






Total



 


–



0 




63 




328 




391 




426 





2.7.1.   Current payables












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Suppliers



–



2 




7 




89 




98 




63 






Third states



–


–



3 




29 




32 




126 






Public bodies



–


–



19 




110 




129 




41 






Other current payables



–



(2 )




20 




(18 )



–


–





Total



–


–



50 




210 




260 




230 





Payables largely comprise cost statements received by the EDF in respect of 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 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 to public bodies and suppliers is due to a higher volume of invoices received that had not yet been paid before year-end. Conversely, payables to third states decreased primarily because an invoice totaling EUR 60 million for budget support to Ethiopia was cancelled in 2023. This invoice had been suspended since November 2020 due to the situation in the country.
2.7.2.   Sundry payables













EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Co-financing payables



2.6.4


–


–



18 




23 




41 




46 






Deferred capital contributions



2.7.2.1


–


–


–



88 




88 




147 






Other sundry payables



 


–


–



(5 )




7 




3 




2 






Total



 


–


–



14 




117 




132 




196 





2.7.2.1.   Deferred capital contributions

An amount of EUR 7,8 million of deferred capital contributions relates to a refund to Member States and the United Kingdom from decommitted or unused funds from projects under the Ninth EDF (see note 2.9.1). The Member States agreed for the refund to be offset against the contributions from the 11th EDF during the first call for contributions in 2024.
In addition to the refund, an amount of EUR 80 million relates to the 1st instalment of 2024 paid in advance by the United Kingdom. Out of this sum, EUR 8 million was deducted from the UK’s remaining share of unused funds from the 10th and 11th EDFs. According to Article 152 of the Withdrawal Agreement, 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 (see note 2.9.1).
2.8.   ACCRUED CHARGES

Accruals are liabilities to pay for goods or services that have been received or supplied but - unlike payables - have not yet been invoiced or formally agreed with the supplier. The calculation of accruals is based on the open amount of budgetary commitments at year-end. The portion of the estimated accrued charges relating to pre-financing paid has been recorded as a reduction of the pre-financing amounts.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Accrued charges



–


–



129 




854 




983 




1 130 






Other accruals and deferrals



–


–


–



1 




1 




2 






Total



–


–



129 




855 




984 




1 131 





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 at the time of preparing the financial statements. It is noted that information from large-scale day-to-day activities, such as contract extensions signed after the reporting date, is not systematically considered, and the potential impact on the accrued charges cannot be reliably estimated. The portion of the estimated accrued charges that relates to pre-financing paid has been recorded as a reduction of the pre-financing amounts (see note 2.2 above).
The decrease in accrued charges of EUR 147 million is explained by the reduction in the number of contracts for which charges had to be estimated and accrued. This decrease is in line with the life cycle of the EDF and the underlying number of open contracts.

NET ASSETS

2.9.   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 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.
2.9.1.   Called fund capital – active EDFs











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





Fund capital




12 164 




10 464 




20 960 




29 367 




72 955 






Uncalled fund capital



–



(15 )



-



(7 840 )




(7 855 )






Called fund capital 31.12.2022




12 164 




10 450 




20 960 




21 527 




65 100 






Fund capital



–



10 442 




20 834 




29 331 




60 607 






Uncalled fund capital



–


–


-



(6 040 )




(6 040 )






Called fund capital 31.12.2023



–



10 442 




20 834 




23 290 




54 566 





The uncalled funds represent amounts not yet called from Member States. The called fund capital represents the contributions which have been called by the EDF and transferred to the treasury accounts by the Member States (see below 2.9.2.).
By means of Council Decision (EU) 2023/2586 (6), the Member States' contributions set out in the Internal Agreements of the Eighth and Ninth EDF were reduced accordingly for an amount of EUR 7,8 million from funds decommitted under the Ninth EDF. Refunds arising from this reduction have been compensated against additional calls for funds under the 11th EDF. In fact, the refund will be used against the first instalment of 2024 (see note 2.7.2.1).
While the United Kingdom remains party to the EDF until the closure of all programmes, in accordance with Article 153 of the Withdrawal Agreement, its share of uncommitted and decommitted funds from the Eighth, Ninth and 10th EDF cannot be reused. In 2023, the UK requested that its second and third instalments for the year be compensated using its outstanding share in the reserve of the 10th and 11th EDFs. In addition, another 8 million was refunded to the UK towards its 1st instalment of 2024 (see note 2.7.2.1). As a result, the fund capital of the 10th and 11th EDF was reduced by EUR 126 million and EUR 36 million respectively.
The closure of the 8th EDF effectively took place in 2021, with the completion of operational activities and closure of all financing decisions. Despite this, the closure of the 8th EDF had not been completely reflected in the 2021 financial statements. The aggregated statement of changes in net assets reflects the closure of the 8th EDF as a 2023 event. In 2023, the net assets of the 8th EDF, totalling EUR 180 million, were transferred to the 9th EDF, thereby concluding the accounting closure of the 8th EDF. Any remaining balances from the called capital and reserves were utilized to cover the economic result from previous years, with the remaining amounts transferred to the 9th EDF according to the provisions of Part 3 of the Financial Regulation applicable to the 9th EDF.
2.9.2.   Called and uncalled fund capital by Member States and the UK










EUR million




Contributions 11th EDF


%


Uncalled capital 31.12.2022


Capital called in 2023


Uncalled capital 31.12.2023





Austria




2,40 




188 




(43 )




145 






Belgium




3,25 




255 




(58 )




196 






Bulgaria




0,22 




17 




(4 )




13 






Croatia




0,23 




18 




(4 )




14 






Cyprus




0,11 




9 




(2 )




7 






Czechia




0,80 




63 




(14 )




48 






Denmark




1,98 




155 




(36 )




120 






Estonia




0,09 




7 




(2 )




5 






Finland




1,51 




118 




(27 )




91 






France




17,81 




1 397 




(321 )




1 076 






Germany




20,58 




1 614 




(370 )




1 243 






Greece




1,51 




118 




(27 )




91 






Hungary




0,61 




48 




(11 )




37 






Ireland




0,94 




74 




(17 )




57 






Italy




12,53 




982 




(226 )




757 






Latvia




0,12 




9 




(2 )




7 






Lithuania




0,18 




14 




(3 )




11 






Luxemburg




0,26 




20 




(5 )




15 






Malta




0,04 




3 




(1 )




2 






Netherlands




4,78 




375 




(86 )




289 






Poland




2,01 




157 




(36 )




121 






Portugal




1,20 




94 




(22 )




72 






Romania




0,72 




56 




(13 )




43 






Slovakia




0,38 




29 




(7 )




23 






Slovenia




0,22 




18 




(4 )




14 






Spain




7,93 




622 




(143 )




479 






Sweden




2,94 




230 




(53 )




178 






United Kingdom




14,68 




1 151 




(264 )




887 






Total




100,00 




7 840 




(1 800 )




6 040 





Since the capital of the Eighth, Ninth and 10th EDF has been called up and received in its entirety in previous years, in 2023, an amount of EUR 1 800 million has been called which relates entirely to the 11th EDF. Called capital decreased from EUR 2 500 million in 2022 to EUR 1 800 million in 2023.
2.9.3.   Called fund capital transfers between active EDFs











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


Total





Balance at 31.12.2021




(2 512 )




2 018 




101 




394 



–





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




(1 )




(8 )




9 



–


–





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



–


–



(148 )




148 



–





Balance at 31.12.2022




(2 513 )




2 010 




(38 )




541 



–





Transfer of amounts to the 8th EDF performance reserve from previous EDFs




2 762 




(2 762 )



 


–


–





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




427 




(432 )




6 



–


–





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




(676 )




676 




(87 )




87 



–





Balance at 31.12.2023



–



(509 )




(120 )




628 



–




This heading includes the resources transferred between the active EDFs.
Since the entry into force of the Cotonou Agreement, all the unspent funds in previous active EDFs are transferred to the most recently opened EDF after decommitment. The resources transferred from other EDFs increase the appropriations of the receiving fund and reduce the appropriations of the fund of origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only under specific conditions set out in the Internal Agreements.
While the 8th EDF was officially closed in 2021, this closure was not reflected in the 2021 accounts. In 2023, any reserves and losses from previous EDFs were transferred to the 9th EDF (see note 2.9.1 above).
3.   NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE


REVENUE









EUR million




 


Note


2023


2022





Revenue from non-exchange transactions



3.1



14 




18 






Revenue from exchange transactions



3.2



52 




80 






Total



 



65 




98 





3.1.   REVENUE FROM NON-EXCHANGE TRANSACTIONS

Revenue from non-exchange transactions relates to transactions where the transferor provides resources to the recipient entity without the recipient entity providing approximately equal value directly in exchange. The heading mainly includes amounts received from the Commission during the year and recoveries of operational expenses.












EUR million




 


Note


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Recovery of expenses



 


–


–



1 




4 




6 




17 






Co-financing revenue



3.1.1


–


–


–



8 




8 




(4 )






Total



 


–


–



2 




12 




14 




18 





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







EUR million




 


2023


2022





Direct Management



 


 





Implemented by:



 


 





Commission



–



1 






EU delegations




5 




(3 )





 



5 




(2 )






Indirect Management



 


 





Implemented by:



 


 





Third countries




6 




13 






Public law bodies



–



(3 )






International organisations




3 




7 






Private law bodies with a public service mission



–



3 





 



9 




20 






Total




14 




18 





3.1.1.   Co-financing revenue

The co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and as such should not affect the statement of financial performance when received. The contributions remain under liabilities (see note 2.6.4 & 2.7.2) until the conditions attached to the donated funds are met, i.e. eligible expenses are incurred (see note 3.5). The corresponding amount is then recognised in the statement of financial performance as non-exchange revenue from co-financing. Consequently, the effect on the economic result of the year is zero.
3.2.   REVENUE FROM EXCHANGE TRANSACTIONS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Financial revenue



–


–



(1 )




10 




9 




3 






Other revenue



–



2 




4 




37 




43 




77 






Total



–



2 




4 




46 




52 




80 





The EUR 9 million under the heading financial revenue mainly consists of accrued interest on unpaid recovery orders, interest on pre-financing and revenue from financial instruments.
Other revenue relates mainly to foreign exchange gains. The corresponding foreign exchange losses are recorded under other expenses (see note 3.7).

EXPENSES

3.3.   EXPENSES IMPLEMENTED BY OTHER ENTITIES












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Technical assistance expenses



–


–


–



3 




3 




1 





The amount of EUR 3 million comprises technical assistance expenses incurred by several financial instruments.
3.4.   AID INSTRUMENTS












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Programmable aid



–


–



33 




808 




841 




1 307 






Macro-economic support



–



7 



–


–



7 




4 






Sectoral policy



–



(1 )



–


–



(1 )



–





Intra ACP projects



–


–



128 




651 




779 




896 






Emergency aid



–



(7 )




113 




124 




230 




118 






Institutional support



–


–


–



12 




12 




6 






Compensation Export Receipts



–


–



2 



–



2 



–





Contributions to Trust Funds



–


–


–



311 




311 




458 






Total



–



(1 )




276 




1 906 




2 181 




2 789 





The EDF operational expenditure covers various aid instruments and takes different forms, depending on how the money is paid out and managed.
In 2023, the decrease in operational expenditure by EUR 608 million was mainly driven by the decrease in expenses under the 11th EDF (EUR 2 489 million in 2022 to EUR 1 906 million in 2023). This decrease can be largely explained by the decrease in expenses relating to programmable aid, Intra ACP projects and the contributions to the Trust Funds (see note 2.3). Despite this, expenses relating to emergency aid increased by EUR 105 million. This increase follows the Council Decision of 12 July 2022 to reuse funds from the 10th and 11th EDF to finance actions addressing food security crisis and economic shock in ACP countries resulting from Russia’s war of aggression against Ukraine.
The decrease in expenses relating to INTRA-ACP projects is explained by the reduction in accrued charges for two projects under the AITF. Since there is no regular implementation for these two projects and in the absence of a report, the open pre-financing has been reclassed to long term and no accrued charges have been calculated for these projects for 2023. However, the expenses related to INTRA-ACP projects have been impacted by the reversal of last year's accruals, which amounted to EUR 130 million (see note 2.2).
The changes in expenses under the 9th and 10th EDF are in line with the lifecycle of the EDF and is also related to the evolution of the number of open contracts. Many contracts were completed and closed under these EDF’s in 2023, which resulted in less expenses incurred under those EDFs.
The negative amount under the 9th EDF relating to the emergency aid programme is due to the reversal of the 2022 accruals for a contract that was decommitted in 2023.
3.5.   CO-FINANCING EXPENSES












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Co-financing



–


–


–



8 




8 




(4 )





Included under this heading are the expenses incurred on co-financing projects in 2023. 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 2023, co-financing expenses increased by EUR 12 million mainly because in 2022, co-financing expenses were unusually low. The decrease of co-financing expenses in 2022 was due to enhancements made in the method of allocating expenses to co-funding donors, which now take into account the recovery of unduly paid amounts.
In line with the accounting rules on co-financing, the incurred amounts did not have any impact on the EDF’s result of the year because they were recognised both in the co-financing expenses and in the co-financing revenue (see also note 3.1.1).

Aid instruments and co-financing expenses by management type








EUR million




 


2023


2022





Direct Management



 


 





Implemented by:



 


 





Commission




50 




70 






EU executive agencies




16 




6 






Trust Funds




290 




431 






EU delegations




235 




1 121 





 



591 




1 628 






Indirect Management



 


 





Implemented by:



 


 





EIB and EIF




(45 )




39 






International organisations




994 




(544 )






Private law bodies with a public service mission




201 




325 






Public law bodies




147 




99 






Third countries




297 




1 234 






EU bodies with Public Private Partnership




3 




4 





 



1 597 




1 157 






Total




2 189 




2 785 





3.6.   FINANCE COSTS












 EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Net impairment losses on loans and receivables



–



(1)




1 




2 




2 




2 






Loss on financial assets or liabilities at FVSD



–


–



1 




2 




3 




2 






Fee Subsidy



–


–


–



1 




1 




1 






Impairment losses from financial guarantees



–


–


–


–


–



1 






Total



-



(1)




1 




5 




7 




6 





Net impairment losses on loans and receivables comprise impairment losses on financial instruments and estimated expenses on irrecoverable amounts arising from ageing recovery orders (over 2 years), bankruptcies and waivers.
The EUR 3 million of financial expenses for financial assets at FVSD relates mainly to exchange differences, interest and fair value changes for several financial instruments.
The amount of EUR 1 million under the heading “fee subsidy” relates to expenses incurred under the Kulima financial instrument.
3.7.   OTHER EXPENSES

Included under this heading are expenses of administrative nature such as external non IT services, operating leasing expenses, communications and publications, training costs etc.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


2023


2022





Administrative and IT expenses



–


-



2 




49 




51 




56 






Provision for risks and charges



–


-


–



2 




1 



–





Realised losses on trade debtors



–


–


–


–


–



4 






Exchange losses



–



2 




5 




55 




62 




60 






Foreign exchange losses on Financial instruments



–


–


–



1 




1 



–





Total



–



3 




7 




106 




116 




119 





The heading Administrative and IT expenses includes amounts that are based on the EDF internal agreement with the Commission to cover the administrative expenditure incurred by both the Headquarters and the Delegations in respect of managing the EDF programmes.
The increase of foreign exchange losses is mostly due to the increase in unrealised losses from the revaluation of balances held in currencies at year-end.
4.   CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

4.1.   CONTINGENT ASSETS

Contingent assets are possible assets that arise from past events, and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events that are not wholly within the control of the entity.











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Prefinancing guarantees



–


–



2 




30 




32 




37 






Performance guarantees



–


–


–


–


–



1 






Total



–


–



2 




30 




32 




38 





Pre-financing guarantees are requested in certain cases from beneficiaries that are not Member States when making advance payments.
Performance guarantees are requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF.
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.   CONTINGENT LIABILITIES

Contingent liabilities are either possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or present obligations arising from past events where the outflow of resources is not probable or the amount cannot be measured reliably.
4.2.1.   Guarantees given












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Guarantees given



–


–


–



28 




28 




25 





The above table shows the extent of the exposure of the EDF to possible future payments linked to guarantees given to the EIB group or other financial institutions. The amounts are presented net of financial provisions or financial liabilities recognised for those programmes.
The amount of EUR 28 million relates to guarantees under the following financial instruments: EUR 11 million under the EURITZ financial instrument, EUR 10 million under the KULIMA FUND and another 7 million under the ZAMBIA agriculture value chain facility.
4.2.2.   Contingent liabilities relating to legal cases












EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Pending legal Cases



–


–


–



7 




7 




18 





At the end of 2023, there were only two pending cases, totalling EUR 7 million. During the year, two legal cases were closed for a total of EUR 11 million.
4.3.   OTHER SIGNIFICANT DISCLOSURES

4.3.1.   Outstanding commitments not yet expensed

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











EUR million




 


Eighth EDF


Ninth EDF


10th EDF


11th EDF


31.12.2023


31.12.2022





Outstanding commitments not yet expensed



–



16 




216 




3 217 




3 449 




4 853 





The decrease in the RAL is largely driven by the decrease in budgetary RAL which totalled EUR 5 116 million (2022: EUR 6 459 million). This is in line with the life cycle of the EDF and is also related to the evolution of the number of open contracts (see note 2.2).
5.   FINANCIAL RISK MANAGEMENT

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

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






(a)


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










(b)


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










(c)


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




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


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














EUR million




 


31.12.2023


31.12.2022




 


USD


EUR


Other


Total


USD


EUR


Other


Total





Financial assets



 


 


 


 


 


 


 


 





Financial assets at amortised cost




7 



7 


3 



17 



–


6 


–



6 






Financial assets at FVSD*



16 


49 


8 



73 



14 


42 


9 



65 






Receivables**




7 




4 



–



11 




6 




4 



–



10 






Cash and cash equivalents




6 




595 



–



601 




7 




1 015 




5 




1 027 





 



36 




655 




11 




704 




27 




1 067 




14 




1 108 






Financial liabilities



 


 


 


 


 


 


 


 





Financial guarantee liability and provisions



–



2 




2 




4 



–



3 



–



3 





 


–



2 




2 




4 



–



3 



–



3 






Total




36 




657 




13 




706 




27 




1 069 



–



1 110 





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

The EDF does not borrow money and consequently it is not exposed to interest rate risk.
Interest is accrued on balances it holds in its different bank accounts. The Commission, on behalf of the EDF, has therefore put in place measures to ensure that interest earned regularly reflects market interest rates as well as their possible fluctuation.
Contributions to the EDF budget are credited by each Member State to a special account opened with the financial institution designed by it. To address the risk of negative remuneration, which existed a couple of years ago, cash management procedures are in place to minimise balances kept on the accounts concerned. In addition, in accordance with Council Regulation (EU) 2016/888 (7), any negative remuneration on these accounts is borne by the relevant Member State.
Overnight balances held in commercial bank accounts are remunerated on a daily basis. The remuneration of balances on such accounts is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts, the interest calculation is linked to a market reference rate and is adjusted to reflect any fluctuations of this rate. As a result, no risk is taken by the EDF that its balances could be remunerated at rates lower than market rates.
5.4.   CREDIT RISK (COUNTERPARTY RISK)


Maximum credit risk exposure

For financial assets, the reported amounts are net carrying amounts and represent the EDFs' exposure to credit risk at the end of the reporting period.







EUR million




 


31.12.2023


31.12.2022





Financial assets



 


 





Loans




16 




6 






Cash and cash equivalents




601 




1 027 






Exchange receivables
 (*1)




11 




11 






Guarantees given



 


–





Financial guarantee contracts




14 




12 






Total at 31.12.2023




642 




1 056 






Financial Instrument Loans: credit quality











EUR million




31.12.2023




 


Stage 1


Stage 2


Stage 3


POCI


Total





Credit rating



 


 


 


 


 





Premium and high grade



–


–


–


–


–





Upper medium grade



–


–


–


–


–





Lower medium grade



–


–


–


–


–





Non-investment grade and default grade




18 




1 



–


–



19 






Gross carrying amount




18 




1 



–


–



19 






Minus loss allowance




2 




1 



–


–


3 





Net carrying amount




16 



–


–


–



16 






Cash and cash equivalents: credit quality








 


 



EUR million





 


31.12.2023


31.12.2022





Credit rating



 


 





Premium and high grade




514 




724 






Upper medium grade




77 




299 






Lower medium grade




11 




4 






Non-investment grade and default grade



–


–





Gross carrying amount




601 




1 027 






Minus loss allowance



-


-





Net carrying amount




601 




1 027 






Receivables: credit quality












EUR million




31.12.2023




 


Not due


Past due


Past due


Past due


Past due


Total




0-30 days


31-90 days


91 days -1 year


> 1 year





Gross carrying amount



11 


–


–


–


–



11 






Minus loss allowance



–


–


–


–


–


–





Net carrying amount




11 



–


–


–


–



11 






Financial assets at FVSD: credit quality

In 2023 the financial assets at FVSD included in these financial statements relate to equity investments that are not subject to credit risk (see note 2.1).
5.5.   LIQUIDITY RISK


Maturity analysis of financial liabilities by remaining contractual maturity

The finance liabilities and payables under this heading are disclosed by the carrying amounts from the Balance Sheet.









EUR million




 


< 1 year


1-5 years


> 5 years


Total





Financial liabilities at 31.12.2023




391 




2 



–



393 






Financial liabilities at 31.12.2022




426 




5 



–



431 





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

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

At the date of signature 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.
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 reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items. The notes to the table provide additional information on the nature of the key reconciling items.







EUR million




 


2023


2022





ECONOMIC RESULT OF THE YEAR




(2 249 )




(2 813 )






Revenue



 


 





Entitlements not affecting the budget result




(11 )




(5 )






Entitlements established in current year but not yet collected




(2 )




(3 )






Entitlements established in previous years and collected in current year




12 




19 






Net effect of pre-financing




36 




37 






Accrued revenue (net)




(54 )




(82 )







Expenses




 


 





Expenses of the current year not yet paid




(55 )




16 






Expenses of previous years paid in the current year




(349 )




(408 )






Net effect of pre-financing




556 




244 






Accrued expenses (net)




59 




607 






BUDGET RESULT OF THE YEAR




(2 056 )




(2 387 )





8.1.   RECONCILING ITEMS - REVENUE

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


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

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF


FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2023
                      (8)


BACKGROUND INFORMATION


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) (9) and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR) (10), the European Commission may establish Union Trust Funds for external actions (‘EU Trust Funds/EUTFs’). 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, which supports 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’.


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 Committee. 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 15th of February of the following year, to the Operational Committee who then transmits them 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.

Operational highlights



Achievements of the year


The EU launched its first ever Trust Fund (EUTF), named Bêkou (meaning hope in the 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 financed 22 programmes and has reached more than half of the country’s population.
In 2023, the security situation in CAR was characterised by an increase in the number of incidents linked to clashes between the Central African Armed Forces (FACA) and the Coalition of Patriots for the Central African Republic (CPC), but the number of deaths associated with armed violence is decreasing. Moreover, the majority of the fighting taking place in the outlying regions of the country shows a considerable reduction in violence against civilians.
Politically, a new Constitution has been adopted in August and progress has been made in the fight against impunity advocated by President TOUADERA. For example, the Special Criminal Court arrested and sentenced for war crimes Abdoulaye HISSENE, a head of war and politician from the Central African Republic.
In 2023, the destabilisation of neighbouring countries increased political and security tensions in the CAR. The conflict in Sudan has led to a massive influx of displaced persons in the VAKAGA prefecture. Finally, the establishment of two new Chadian armed groups in the far north of the CAR increases tensions between the two countries and causes population displacements.
In this persistently volatile context, 3,4 million people were in need of humanitarian assistance in August 2023, representing 56 % of the Central African population. Although worrying, this situation is stable compared to 2022. The sectors with the highest number of people in need in 2023 are water, hygiene and sanitation (WASH), food safety, health and protection. With conflicts moving away from the country’s main urban areas, the number of internally displaced persons (IDPs) in CAR continues to decrease for the third year in a row. It has thus reached its lowest level since 2016, with 489 000 displaced persons on 31 August 2023 (down by 515 700 in 2022).


Key achievements in specific focus areas


Key achievements of 2023 presented below reflect the main specific objectives/areas of intervention of the Trust Fund.

In the area of access to services, Trust Fund Bêkou continued its support to Health and WASH sectors.
In 2023, an additional 44 566 people benefited from improved access to water, hygiene and sanitation services (EHA – indicator 1.1), bringing the total to 1 068 695 beneficiaries since the start of the Fund.
During 2023, 55 289 medical consultations and health interventions were provided (indicator 1.2), a significant decrease compared to previous years due to the closure of projects associated with the third strand of the HEALTH programme at the end of 2022. Medical consultations accounted for 63 % of health interventions provided and psychosocial support 24 %. It should be noted that the number of consultations and interventions related to maternal and child health and vaccinations dropped dramatically in 2023, although they had a constant proportion from one year to the next since the start of the HEALTH projects.

In the area of social cohesion, most of the activities implemented with EUTF Bêkou’s support aimed to empower women and to combat gender-based violence (GBV), as well as to strengthen the media in the country. In 2023, 32 529 girls or women benefited from socio-economic empowerment activities in 13 of the country’s 20 prefectures (indicator 2.1) of which more than half of the beneficiaries (58 %) received economic support, 30 % received socio-economic support and 12 % social support. 4 092 survivors of the GBV were supported by Bêkou (indicator 2.2) with psychosocial support, medical care, legal assistance, delivery of dignity kits, etc.
At national level, technical assistance to the Ministry of Women, Family and Child Protection (MPFFPE) and to the relevant sectoral ministries contributes to formalising, strengthening and harmonising awareness-raising efforts on GBV.

In the area of supporting economic and productive sectors’ recovery, EUTF Bêkou assisted both productive and subsistence-oriented agriculture, supporting agricultural groups and smallholders, fostering job creation (both labour-intensive work, vocational training, development of income-generating activities) and facilitating access to financial services for small businesses and individuals. In 2023, 28 093 people received support for the establishment of an income-generating activity (indicator 3.4), representing 30 % of the total indicator since the start of the Fund. In addition, 5 551 small farmers were supported to increase their production in a sustainable manner (indicator 3.3) by the RELSUDE ACTED and PAPEUR Rural projects in 2023. The PAPEUR Rural project continued to support the 35 cooperatives set up in previous years and in this context reached 5 498 additional co-operators with various types of assistance. 3 469 people benefited during the year from vocational training activities (indicator 3.6), an increase of 40 % compared to the previous year. The gradual finalisation of the rehabilitation activities of the training and train-the-trainers centres under DEVRUR II project, allowed the acceleration of training activities for beneficiaries in 2023.


Budget and budget implementation


By the end of 2023, the contributions to EUTF Bêkou amounted to over EUR 310 million. The Trust Fund finalised the commitments and contracting of all received contributions on 31 December 2021, with the exception of funds reserved for monitoring, evaluation, audit and communication that can still be contracted after this date.
Five new contracts for a total amount of EUR 128 303 were contracted in 2023. These contracts were related to audit and communication activities.
More than EUR 19 million was paid in 2023; total disbursements have reached more than EUR 283 million since the creation of the EUTF Bêkou.


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: decreased by kEUR 7 420 as a result of the winding down of the Trust Fund and the consequent decrease in the number of new contracts: in 2023 only 4 contracts were signed relating to audit, evaluation and communication activities for an amount of kEUR 111;










—


Financial liabilities: increased by kEUR 18 449 mainly due to the fact that the cashed contributions from the donors were higher than the net expenses allocated to donors;










—


Operating expenses: increased by kEUR 4 027 as a result of the increase in the estimated expenses of 3 programmes: Reconstruction Relief and Rehabilitation, Basic Health care and Urban Development.





BALANCE SHEET









EUR ’000




 


 


31.12.2023


31.12.2022





NON-CURRENT ASSETS



 


 


 





Pre-financing



 


–



336 





 


 


–



336 






CURRENT ASSETS



 


 


 





Pre-financing



 



3 745 




10 829 






Exchange receivables and non-exchange recoverables



 



3 462 




3 595 






Cash and cash equivalents



 



28 420 




4 316 





 


 



35 627 




18 740 






TOTAL ASSETS



 



35 627 




19 076 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities



 



(31 001 )




(12 552 )





 


 



(31 001 )




(12 552 )






CURRENT LIABILITIES



 


 


 





Payables



 


–



(4 563 )






Accrued charges



 



(4 626 )




(1 961 )





 


 



(4 626 )




(6 524 )






TOTAL LIABILITIES



 



(35 627 )




(19 076 )






NET ASSETS



 


–


–





STATEMENT OF FINANCIAL PERFORMANCE









EUR ’000




 


 


2023


2022





REVENUE



 


 


 





Revenue from non-exchange transactions



 


 


 





Revenue from donations



 



24 550 




21 504 






Recovery of expenses



 



717 




42 





 


 



25 268 




21 546 






Revenue from exchange transactions



 


 


 





Financial revenue



 



636 




40 





 


 



636 




40 






Total revenue



 



25 904 




21 586 






EXPENSES



 


 


 





Operating expenses



 



(24 278 )




(20 251 )






Finance costs



 


–



(12 )






Other expenses



 



(1 626 )




(1 323 )






Total expenses



 



(25 904 )




(21 586 )






ECONOMIC RESULT OF THE YEAR



 


–


–





CASHFLOW STATEMENT








EUR ’000




 


2023


2022





Economic result of the year



–


–





(Increase)/decrease in pre-financing




7 420 




811 






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




132 




851 






Increase/(decrease) in financial liabilities




18 450 




9 385 






Increase/(decrease) in payables




(4 563 )




1 716 






Increase/(decrease) in accrued charges




2 665 




(12 240 )






NET CASHFLOW




24 104 




524 






Net increase/(decrease) in cash and cash equivalents




24 104 




524 






Cash and cash equivalents at the beginning of the year




4 316 




3 792 






Cash and cash equivalents at year-end




28 420 




4 316 






FINANCIAL STATEMENTS OF THE EUTF AFRICA 2023
                      (11)


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) (12) and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR) (13), the European Commission may establish Union Trust Funds for external actions (‘EU Trust funds/EUTFs’). 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, which supports 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


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 Committee. 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.


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 15th of February of the following year, to the Operational Committee who then transmits them 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 Development Fund.

Operational highlights



Achievements of the year


In line with the end of the contracting period on 31 December 2021, as of January 2022 the EUTF Africa has not funded any new financial commitments or budgetary top-ups. Financial commitments related to administrative activities such as audits, evaluations, monitoring and communication activities are the only ones that can be contracted. The EUTF Africa programmes will continue being implemented up to end 2025.
In the course of 2023, the EUTF Africa further demonstrated that it is a swift and effective implementation tool, facilitating policy dialogue with African partner countries, applying innovative approaches, and producing tangible results across the three regions (Sahel and Lake Chad, Horn of Africa and North of Africa).
In the Horn of Africa (HoA) region, the continued consequences of climate change persisted in 2023. Severe flooding in Somalia, Kenya, Ethiopia, and South Sudan killed dozens of people and caused the displacement of over 2 million people, while the food insecurity crisis deteriorated throughout the region. The economic, social and security challenges are high and unceasing, and the armed conflict erupting in Sudan in April 2023 has impacted the whole region. As a consequence, Sudan is now the country with the largest number of displaced people and the largest child displacement crisis in the world as per UNHCR. Nevertheless, the security situation in Somalia appears to be cautiously improving, while Kenya and Djibouti continue their path towards stability despite the ongoing challenges.
In this difficult context, the EUTF has reported, in the first semester of 2023, the highest semestrial output on nutrition assistance since the beginning of the EUTF in HoA. Indeed, in these first six months, 433 728 people have benefitted from the delivery of nutrition assistance from the EUTF, i.e. 15 % of the total beneficiaries to date (2 833 594 people). This output level was reached notably through distribution of multiple micronutrient powder to children under five and through on-site school feeding in Sudan.
Similarly, the EUTF has reported this semester the largest biannual output of assisted or protected migrants, refugees, returnees and internal displaced persons (mainly for Sudan), 103 436 people out of 198 826 supported to date.
The EUTF has also supported stabilisation and peacebuilding efforts in the region with a total of 65 369 staff from state and non-state actors benefitting from capacity building activities on peace, security and governance related skills, including 2 392 new beneficiaries in the first semester of 2023. This year the outputs come in their majority from the Gambella region of Ethiopia and from South Sudan.
The Sahel and Lake Chad region was confronted with numerous economic and humanitarian challenges in 2023, such as inflation, decelerated economic growth, debt distress, food crisis, displacement, migration, security crisis, and violence.
Investing in human capital was a major approach of the EUTF in supporting job creation in the region. In the first half of 2023, EUTF-funded programmes created or supported 11 087 jobs, most of them in Niger, Guinea and Senegal. Technical and vocational education and training (TVET) and skills development are key to improve labour productivity, and 23 266 people benefitted from TVET and skills development.
Also in the first semester of 2023, EUTF funded activities focused on raising awareness on the risks associated with irregular migration, reaching 2 943 412 people. The EUTF supported 420 voluntary returns and the reintegration of 509 returning migrants. Since EUTF’s launch, 73 215 returning migrants have benefitted from voluntary return assistance and 91 642 from reintegration assistance in the SLC region.
In a very tense situation, with the security crisis in the region intensifying, in the first half of 2023 EUTF-funded programmes trained 11 520 people on governance, conflict prevention, and human rights across the Sahel and Lake Chad region. A notable achievement of the semester was the training of 8 823 people in Mali to support the referendum process which led to the adoption of a new Constitution in June. In addition, 1 397 417 people participated in conflict prevention and human rights activities. Finally, EUTF-funded programmes provided 10 034 pieces of equipment to civilian institutions and security forces, to strengthen governance and security.
While still impacted by the consequences of the Russian war of aggression against Ukraine, 2023 was marked by several unforeseen crises affecting countries in the North of Africa and their neighbours, including Sudan, Niger and most recently the Palestinian territories, leading to continued political and economic downturn in the region as well as further tensions and migratory movements. In 2023, irregular border crossings on the Central Mediterranean route, from Tunisia and Libya to Italy and Malta, have increased by 50 % in 2023 compared to 2022, with a total of 157 951 arrivals. Tunisia remains the top country of departure towards Italy (and the EU) in 2023, followed by Libya. In 2023, Guinea and Tunisia remained the primary nationalities of arrival to Italy, each accounting for over 17 000 arrivals, followed by Cote d’Ivoire and Bangladesh. Similarly, pressure on the Western Mediterranean and Atlantic routes has substantially increased compared to the same period last year, with a total of 56 039 arrivals (+ 95 % compared to 2022).


Budget and budget implementation


In 2023, no new programmes or budgetary top-ups took place in neither of the three regions of the EUTF Africa, in line with the end of the contracting period on 31 December 2021. The total amount committed for operational and administrative expenditure since the beginning of the EUTF Africa amounts to EUR 5 053,27 million. The amount of approved operational programmes since the beginning of the EUTF Africa amounts to EUR 1 810 million for the Horn of Africa region; EUR 2 217,8 million for the Sahel and Lake Chad region and EUR 907,3 million for the North of Africa region.
28 new contracts for a total amount of EUR 5,08 million were contracted in 2023. These contracts were only related to administrative activities (audit, evaluation, communication, monitoring), as operational programmes or activities cannot be funded any longer since 31 December 2021.
The payments in 2023 reached EUR 332,4 million, which was EUR 110 million lower than in 2022 (EUR 442 million). Payments are lower in 2023 due to several projects reaching the end of their implementation period.


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: decreased by kEUR 122 362 as a result of the winding down of the Trust Fund and the consequential decrease in the number of new contracts: in 2023 only 28 contracts were signed relating to administrative activities: audit, evaluation, communication and monitoring for an amount of EUR 5,08 million;










—



Financial liabilities: decreased by kEUR 70 236 mainly due to the fact that contributions cashed in the year were lower than the net expenses allocated to the donors;










—



Operating expenses: decreased by kEUR 203 251 as a result of the winding down of the Trust Fund which led to a decrease in the number of open contracts and thus to a decrease in expenses.





BALANCE SHEET










EUR ’000





 


 


31.12.2023


31.12.2022





NON-CURRENT ASSETS



 


 


 





Financial Assets



 



3 949 




1 943 






Pre-financing



 



18 254 




14 927 





 


 



22 204 




16 870 






CURRENT ASSETS



 


 


 





Pre-financing



 



178 366 




304 055 






Exchange receivables and non-exchange recoverables



 



22 396 




35 914 






Cash and cash equivalents



 



177 553 




157 587 





 


 



378 315 




497 556 






TOTAL ASSETS



 



400 519 




514 426 






NON-CURRENT LIABILITIES



 


 


 





Financial liabilities



 



(264 555 )




(334 791 )





 


 



(264 555 )




(334 791 )






CURRENT LIABILITIES



 


 


 





Payables



 



(14 261 )




(30 975 )






Accrued charges



 



(121 704 )




(148 660 )





 


 



(135 965 )




(179 635 )






TOTAL LIABILITIES



 



(400 519 )




(514 426 )






NET ASSETS



 


–


–





STATEMENT OF FINANCIAL PERFORMANCE










EUR ’000





 


 


2023


2022





REVENUE



 


 


 





Revenue from non-exchange transactions



 


 


 





Revenue from donations



 



408 274 




605 739 






Recovery of expenses



 



179 




754 





 


 



408 453 




606 493 






Revenue from exchange transactions



 


 


 





Financial revenue



 



4 865 




251 






Other exchange revenue



 



13 446 




18 902 





 


 



18 311 




19 152 






Total revenue



 



426 764 




625 645 






EXPENSES



 


 


 





Operating expenses



 



(387 294 )




(590 545 )






Finance cost



 



(434 )




(643 )






Other expenses



 



(39 036 )




(34 457 )






Total expenses



 



(426 764 )




(625 645 )






ECONOMIC RESULT OF THE YEAR



 


–


–





CASHFLOW STATEMENT









EUR ’000





 


2023


2022





Economic result of the year



–


–





Operating activities



 


 





(Increase)/decrease in pre-financing




122 362 




173 980 






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




13 517 




9 425 






Increase/(decrease) in financial liabilities




(70 236 )




(190 739 )






Increase/(decrease) in payables




(16 715 )




(22 168 )






Increase/(decrease) in accrued charges




(26 956 )




9 272 






Investing activities



 


 





Increase/decrease in non-derivative financial assets at fair value through surplus or deficit




(2 007 )




(1 943 )






NET CASHFLOW




19 966 




(22 172 )






Net increase/(decrease) in cash and cash equivalents




19 966 




(22 172 )






Cash and cash equivalents at the beginning of the year




157 587 




179 759 






Cash and cash equivalents at year-end




177 553 




157 587 






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


CONSOLIDATED BALANCE SHEET








EUR million




 


31.12.2023


31.12.2022





NON-CURRENT ASSETS



 


 





Financial assets




91 




69 






Pre-financing




592 




503 






Exchange receivables




5 




7 





 



689 




580 






CURRENT ASSETS



 


 





Financial assets




3 




3 






Pre-financing




1 137 




1 711 






Exchange receivables and non-exchange recoverables




50 




66 






Cash and cash equivalents




807 




1 189 





 



1 997 




2 970 






TOTAL ASSETS




2 686 




3 550 






NON-CURRENT LIABILITIES



 


 





Financial liabilities




(85 )




(101 )





 



(85 )




(101 )






CURRENT LIABILITIES



 


 





Payables




(406 )




(462 )






Accrued charges and deferred income




(1 110 )




(1 282 )





 



(1 516 )




(1 744 )






TOTAL LIABILITIES




(1 600 )




(1 845 )






NET ASSETS




1 086 




1 705 






FUNDS & RESERVES



 


 





Called fund capital - active EDFs




54 566 




65 100 






Called fund capital from closed EDFs carried forward




2 252 




2 252 






Economic result carried forward from previous years




(53 484 )




(62 834 )






Economic result of the year




(2 249 )




(2 813 )






NET ASSETS




1 086 




1 705 






CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE








EUR million




 


2023


2022





REVENUE



 


 





Revenue from non-exchange transactions



 


 





Recovery activities




15 




19 






Revenue from trust funds donations




122 




169 





 



136 




188 






Revenue from exchange transactions



 


 





Financial revenue




14 




3 






Other revenue




56 




96 





 



70 




99 






Total Revenue




207 




287 






EXPENSES



 


 





Aid instruments




(1 870 )




(2 331 )






Expenses implemented by other entities




(3 )




(1 )






Expenses implemented by trust funds




(412 )




(611 )






Co-financing expenses




(8 )




4 






Finance costs




(7 )




(7 )






Other expenses




(157 )




(155 )






Total Expenses




(2 456 )




(3 100 )






ECONOMIC RESULT OF THE YEAR




(2 249 )




(2 813 )






CONSOLIDATED CASH FLOW STATEMENT








EUR million




 


2023


2022





Economic result of the year




(2 249 )




(2 813 )






Operating activities



 


 





Capital increase - contributions




1 630 




2 458 






(Increase)/decrease in trust funds contributions



–


–





(Increase)/decrease in pre-financing




486 




414 






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




18 




16 






Increase/(decrease) in provisions




2 




1 






Increase/(decrease) in financial liabilities




(18 )




(54 )






Increase/(decrease) in payables




(56 )




(96 )






Increase/(decrease) in accrued charges and deferred income




(172 )




120 






Other non-cash movements



–


-





Investing activities



 


 





(Increase)/decrease in available for sale financial assets




(22 )




(33 )






NET CASHFLOW




(382 )




12 





Net increase/(decrease) in cash and cash equivalents


(382 )


12 




Cash and cash equivalents at the beginning of the year


1 189 


1 177 




Cash and cash equivalents at year-end


807 


1 189 





CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS












EUR million




 


Fund capital - active EDFs (A)


Uncalled funds - active EDFs (B)


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


Cumulative Reserves (D)


Called fund capital from closed EDFs carried forward (E)


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





BALANCE AS AT 31.12.2021




72 998 




10 355 




62 643 




(62 834 )




2 252 




2 061 






Capital increase - contributions




(43 )




(2 500 )




2 457 



–


–



2 457 






Economic result of the year



–


–


–



(2 813 )



–



(2 813 )






BALANCE AS AT 31.12.2022




72 955 




7 855 




65 100 




(65 647 )




2 252 




1 705 






Capital increase - contributions




(185 )




(1 815 )




1 630 



 


 



1 630 






Closure of the 8th EDF




(12 164 )



 



(12 164 )




12 164 



 


–





Economic result of the year



 


 


–



(2 249 )



 



(2 249 )






BALANCE AS AT 31.12.2023




60 607 




6 040 




54 566 




(55 733 )




2 252 




1 086 






EDF REPORT ON FINANCIAL IMPLEMENTATION


CONTENTS








1.

BACKGROUND
72










1.1.

Previous EDFs
72










1.2.

10th and 11th EDF
73










2.

FINANCIAL IMPLEMENTATION
74










2.1.

Financial outturn
74










2.2.

Resources
79










2.3.

Operational Expenditure and specific programmes
79










3.

GLOSSARY
90



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. 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 EDF (15). It provides information on the revenue and expenditure operations of the EDF, with the focus on important events that had a significant impact on the financial implementation of the year.
Given that there are no ongoing operations under previous EDFs (16), this report includes figures only for the 10th and 11th EDF.
1.1.   PREVIOUS EDFs

6TH AND 7TH EDF
The 6th EDF was closed in 2006 and the 7th EDF was closed in 2008.
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.
8TH AND 9TH EDF
The year 2021 marked the financial and operational closure of the Eighth EDF for a total amount of expenditure of EUR 10 374 million. The Commission announced the closure of the 8th EDF to the Member States in the Communication that was presented to the Council in October 2021.
All 8th EDF activities have been completed, all checks and controls have been performed, and all contracts and financial decisions are closed in the EDF accounts. All recovery orders, which were still open after the operational closure, were cashed or waived with the exception of 10 recovery orders (including 6 litigation cases followed by the Legal Service). In line with the Commission’s Decision C(2003)19044, these ROs were transferred to the 9th EDF.
The closure of the 9th EDF is progressing well. There are still 10 contracts open, out of which 6 concern actions in Southern Sudan (Council Decision 2011/315/EU (17)). These were decided after the 9th EDF sunset clause and should, in principle, be closed during 2024.
From 2015 to 2023, the Commission carried out five refunds of 8th/9th EDF credits for a total amount of EUR 1 911,1
                         (18) million. A balance of EUR 7,8 million was refunded in January 2024 (19) in the context of the payment of the 1st instalment of MS contributions to the EDF for the year 2024.
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 Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories (OCT) with the European Community (‘Overseas Association Decision’) (20) entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Council Decision 2007/249/EC) (21).
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 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 had an overall budget of EUR 22 682 million. Of this amount:






—


EUR 21 966 million was 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 as follows:






—


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; and










—


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.




2.   FINANCIAL IMPLEMENTATION

2.1.   FINANCIAL OUTTURN


EVOLUTION OF 10th EDF APPROPRIATIONS


10th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2023
                              


ANALYSIS OF CREDITS PER INSTRUMENT












(EUR million)




INSTRUMENT


INITIAL APPROPRIATION


INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31.12.2022


INCREASE OR DECREASE IN RESOURCES IN 2023


Notes


CURRENT LEVEL APPROPRIATION





ACP





Co-financing






0 






202 




 


 




202 








Regular MS Contributions






21 326 






(526 )






(95 )




 




20 705 







SUB TOTAL ACP




21 326 




(324 )




(95 )



 



20 907 






OCT





Regular MS Contributions






0 






240 






(0 )




 




239 







SUB TOTAL OCT




0 




240 




(0 )



 



239 





 



TOTAL 10th EDF




21 326 




(84 )




(96 )



 



21 146 






EVOLUTION OF 11th EDF APPROPRIATIONS


11th EDF


EVOLUTION OF APPROPRIATIONS: 31 December 2023
                              


ANALYSIS OF CREDITS PER INSTRUMENT












(EUR million)





INSTRUMENT




INITIAL APPROPRIATION




INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31.12.2022




INCREASE OR DECREASE IN RESOURCES IN 2023




Notes




CURRENT LEVEL APPROPRIATION






ACP





Co-financing






0 






89 






0 




 




89 








EC Internal SLA






0 






1 




 


 




1 








Regular MS Contributions






30 060 






(822 )






(74 )




 




29 164 







SUB TOTAL ACP




30 060 




(732 )



 


 



29 255 






OCT





Co-financing






0 






0 




 


 




0 








EC Internal SLA






0 






0 




 


 




0 








Regular MS Contributions






0 






355 






(4 )




 




351 







SUB TOTAL OCT




0 




355 



 


 



351 





 



TOTAL 11th EDF



30 060 


(526 )


71 


 


29 605 





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


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2023
                              


CLASS OF AID


ACP + PTOM - 10 th EDF

















(EUR million)




 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2) : (1)


(3)


 


(3) : (2)


(4)


 


(4) : (3)




 



Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




 



Allocations



 


 


 


 


 


 


 


 


 


 





ACP




SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




12 297 




12 288 




(36)




100 




12 264 




(19)




100 




12 199 




37




99 






SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS




1 965 




1 962 




(4)




100 




1 961 




(0)




100 




1 960 




1




100 






SUB TOTAL: FOOD SECURITY




343 




484 



0 



141 




482 




166




100 




306 




74




64 






SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




527 




526 




(0)




100 




526 



0 



100 




522 



 



99 






SUB TOTAL: INTRA-ACP ALLOCATIONS




3 612 




3 596 




(22)




100 




3 572 




23




99 




3 384 




60




95 






SUB TOTAL: REGIONAL ALLOCATIONS




1 948 




1 792 




(18)




92 




1 768 




(10)




99 




1 692 




(2)




96 






Co-financing



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




185 




175 




(3)




95 




175 




(0)




100 




173 




1




99 






SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




5 




5 




(0)




110 




5 




(0)




100 




5 




1




100 






SUB TOTAL: INTRA-ACP ALLOCATIONS




12 




11 



 



91 




11 



 



100 




11 



 



100 






Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: NON-MOBILISABLE RESERVE 08/09TH EDF




14 



 


 


 


 


 


 


 


 


 




 



Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




 



Allocations



 


 


 


 


 


 


 


 


 


 





OCT




SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




186 




186 



0 



100 




182 




(1)




98 




172 




2




95 






SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS




14 




14 



0 



100 




14 



 



100 




14 



 



100 






SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




5 




5 



 



100 




5 



 



100 




5 



 



100 






SUB TOTAL: REGIONAL ALLOCATIONS




34 




34 



0 



100 




34 




(0)




99 




34 




(0)




100 





 



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




21 146 




21 078 




(84)




100 




20 999 




158




100 




20 477 




175




98 






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


EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2023
                              


CLASS OF AID


ACP + PTOM - 11 th EDF

















(EUR million)




 



CREDITS




DECISIONS




ASSIGNED FUNDS




PAYMENTS






AGGREG.




ANNUAL




%




AGGREG.




ANNUAL




%




AGGREG.




ANNUAL




%






(1)




(2)



 



(2) : (1)




(3)



 



(3) : (2)




(4)



 



(4) : (3)





 



Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




 



Allocations



 


 


 


 


 


 


 


 


 


 





ACP




SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




15 369 




15 329 




(92)




100 




14 723 




311




96 




12 124 




1 061 




82 






SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS




1 060 




1 059 




(0)




100 




1 053 




13




99 




1 007 




27




96 






SUB TOTAL: FOOD SECURITY




112 




112 



0



100 




112 




91




100 




41 




37




36 






SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




1 072 




1 066 




(1)




99 




1 062 




(0)




100 




958 




48




90 






SUB TOTAL: INTRA-ACP ALLOCATIONS




4 004 




3 894 




(13)




97 




3 926 




104




101 




3 340 




155




85 






SUB TOTAL: REGIONAL ALLOCATIONS




7 253 




7 227 




(59)




100 




7 090 




44




98 




5 964 




512




84 






Co-financing



 


 


 


 


 


 


 


 


 


 





Allocations



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




46 




45 




(1)




99 




45 



0



100 




40 




14




89 






SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




4 




4 



 



100 




4 



0



100 




4 




3




100 






SUB TOTAL: INTRA-ACP ALLOCATIONS




33 




33 



0



100 




33 




(0)




100 




28 




0




85 






SUB TOTAL: REGIONAL ALLOCATIONS




8 




6 



0



75 




6 



0



100 




6 




2




100 






Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: NON-MOBILISABLE RESERVE 10TH EDF




128 



 


 


 


 


 


 


 


 


 





SUB TOTAL: NON-MOBILISABLE RESERVE 11TH EDF




167 



 


 


 


 


 


 


 


 


 





EC Internal SLA



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




1 




1 



 



52 




1 



 



100 




1 



 



100 





 



Regular MS Contributions



 


 


 


 


 


 


 


 


 


 




 



Allocations



 


 


 


 


 


 


 


 


 


 





OCT




SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS




211 




211 




(0)




100 




194 




0




92 




193 




1




100 






SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS




12 




12 



0



100 




12 



0



100 




12 




0




99 






SUB TOTAL: BRIDGING FACILITY




0 



 


 


 


 


 


 


 


 


 





SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES




8 




7 




(2)




79 




6 




(0)




96 




6 




1




94 






SUB TOTAL: REGIONAL ALLOCATIONS




102 




102 



0



100 




102 



0



100 




69 




17




67 






Non-mobilisable reserve



 


 


 


 


 


 


 


 


 


 





Reserves



 


 


 


 


 


 


 


 


 


 





SUB TOTAL: NON-MOBILISABLE RESERVE 10TH EDF




15 



 


 


 


 


 


 


 


 


 





SUB TOTAL: NON-MOBILISABLE RESERVE 11TH EDF




1 



 


 


 


 


 


 


 


 


 




 



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




29 605 




29 106 




(168)




98 




28 368 




562




97 




23 791 




1 878 




84 





2.2.   RESOURCES


Nature of Resources

The main resources of the EDF are 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 payments to be covered during the year.

Overview of contributions by Member State






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
















 


CREDITS


DECISIONS


ASSIGNED FUNDS


PAYMENTS




AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%


AGGREG.


ANNUAL


%




(1)


(2)


 


(2) : (1)


(3)


 


(3) : (2)


(4)


 


(4) : (3)





IMPLEMENTATION COSTS AND INTERESTS REVENUES 10th + 11th EDF




1 620 




1 612 




(3)




99,5 




1 608 



(1)



99,8 




1 499 




53




93,2 






OPERATIONAL IMPLEMENTATION (A+B) 10th + 11th EDF




50 751 




50 184 




(252)




98,9 




49 367 



720 



98,4 




44 268 




2 053 




89,7 











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














EDF CUMULATIVE ACCOUNTS AT 31.12.2023 BY COUNTRY % APPR




10th + 11th EDF


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




Cumulative 2023


Appropriations


Decisions


% of Appr


Assigned funds


% of Appr


Payments


% of Appr





ACP




General/administrative envelope/interests




1 624 



1 614 


99 


1 615 


99 


1 494 


92 





Reserve/Not distributed by country




2 862 



2 553 


89 


2 553 


89 


2 553 


89 





All ACP countries




4 486 




4 167 




93 




4 168 




93 




4 047 




90 






Angola




346 



346 


100 


344 


99 


300 


87 





Benin




735 



732 


100 


720 


98 


679 


92 





Botswana




129 



127 


98 


126 


97 


126 


97 





Burkina Faso




1 302 



1 302 


100 


1 297 


100 


1 261 


97 





Burundi




569 



567 


100 


564 


99 


541 


95 





Cameroon




521 



520 


100 


519 


100 


482 


93 





Cape Verde




145 



145 


100 


144 


100 


144 


100 





Comoros




78 



77 


99 


76 


98 


72 


92 





Congo (Brazzaville)




163 



163 


100 


159 


98 


139 


85 





Congo (Democratic Republic of)




1 409 



1 407 


100 


1 371 


97 


1 219 


87 





Ivory Coast




705 



705 


100 


701 


100 


676 


96 





Djibouti




181 



181 


100 


178 


98 


156 


86 





Eritrea




215 



215 


100 


215 


100 


75 


35 





Ethiopia




1 604 



1 603 


100 


1 594 


99 


1 400 


87 





Gabon




33 



33 


99 


32 


97 


30 


91 





Gambia




314 



303 


96 


301 


96 


277 


88 





Ghana




787 



786 


100 


782 


99 


726 


92 





Guinea Bissau




186 



186 


100 


185 


100 


175 


94 





Guinea (Conakry)




502 



502 


100 


494 


98 


434 


86 





Mauritius




82 



82 


100 


82 


100 


82 


100 





Kenya




863 



863 


100 


855 


99 


753 


87 





Lesotho




250 



249 


100 


248 


99 


197 


79 





Liberia




488 



487 


100 


443 


91 


436 


89 





Madagascar




782 



782 


100 


730 


93 


591 


76 





Malawi




1 020 



1 020 


100 


970 


95 


883 


87 





Mali




1 423 



1 421 


100 


1 414 


99 


1 230 


86 





Mauritania




344 



344 


100 


341 


99 


321 


93 





Mozambique




1 455 



1 448 


100 


1 391 


96 


1 124 


77 





Namibia




188 



188 


100 


178 


95 


169 


90 





Niger




1 275 



1 275 


100 


1 259 


99 


1 247 


98 





Nigeria




1 101 



1 100 


100 


1 097 


100 


1 025 


93 





Uganda




989 



989 


100 


983 


99 


834 


84 





Central African Republic




610 



610 


100 


609 


100 


584 


96 





Rwanda




840 



840 


100 


831 


99 


816 


97 





Sao Tome and Principe




56 



56 


100 


54 


96 


49 


88 





Senegal




663 



663 


100 


659 


99 


620 


94 





Seychelles




23 



23 


100 


23 


100 


22 


98 





Sierra Leone




662 



659 


99 


646 


98 


597 


90 





Somalia




900 



898 


100 


895 


99 


889 


99 





Sudan




298 



298 


100 


298 


100 


298 


100 





South Sudan




91 



91 


100 


91 


100 


91 


100 





Eswatini (Swaziland)




125 



124 


99 


122 


97 


108 


86 





Tanzania




1 172 



1 171 


100 


1 161 


99 


1 060 


90 





Chad




936 



936 


100 


902 


96 


794 


85 





Togo




377 



377 


100 


375 


99 


355 


94 





Zambia




830 



830 


100 


784 


94 


648 


78 





Zimbabwe




469 



462 


99 


460 


98 


453 


97 





* Total Africa




28 235 



28 185 


100 


27 703 


98 


25 192 


89 





Antigua and Barbuda




15 



15 


100 


15 


100 


15 


95 





Barbados




22 



22 


99 


22 


99 


21 


94 





Belize




42 



42 


100 


41 


96 


35 


83 





Dominica




41 



41 


100 


40 


98 


40 


98 





Grenada




21 



21 


100 


21 


100 


20 


98 





Guyana




79 



79 


100 


77 


97 


77 


97 





Haïti




1 009 



1 002 


99 


876 


87 


773 


77 





Jamaica




236 



236 


100 


233 


99 


222 


94 





Dominican Republic




283 



281 


99 


280 


99 


278 


98 





Saint Lucia




32 



32 


100 


32 


100 


31 


96 





Saint Kitts and Nevis




8 



8 


100 


6 


72 


6 


72 





Saint Vincent and the Grenadines




26 



26 


100 


26 


99 


22 


84 





Suriname




27 



27 


100 


27 


99 


26 


96 





Trinidad and Tobago




29 



28 


99 


28 


99 


24 


85 





* Total Caribbean




1 870 



1 861 


100 


1 724 


92 


1 590 


85 





Fiji




48 



48 


100 


48 


99 


48 


98 





Cook Islands




5 



5 


100 


5 


100 


5 


100 





Solomon Islands




68 



68 


100 


68 


100 


61 


90 





Kiribati




42 



42 


100 


41 


98 


37 


87 





Marshall Island




17 



17 


100 


17 


100 


16 


98 





Micronesia




23 



23 


100 


22 


97 


16 


68 





Nauru




4 



4 


98 


4 


98 


4 


98 





Niue




3 



3 


100 


3 


100 


3 


100 





Palau




5 



5 


100 


4 


70 


4 


68 





Papua New Guinea




239 



239 


100 


233 


97 


202 


84 





Western Samoa




67 



67 


100 


67 


99 


67 


99 





Timor Leste




174 



171 


98 


169 


97 


157 


90 





Tonga




28 



28 


100 


28 


100 


28 


100 





Tuvalu




13 



13 


100 


13 


99 


13 


97 





Vanuatu




55 



55 


100 


54 


99 


49 


90 





* Total Pacific




793 



789 


100 


776 


98 


709 


89 





Intra ACP Allocations




8 097 



7 970 


98 


7 973 


98 


6 988 


86 





PALOP




60 



60 


100 


60 


99 


55 


91 





Southern Africa Region FED 10




137 



135 


99 


135 


99 


132 


96 





Central Africa region




558 



554 


99 


546 


98 


422 


76 





Eastern and Southern Africa region




3 092 



3 066 


99 


2 973 


96 


2 383 


77 





Western Africa Region




1 946 



1 943 


100 


1 917 


99 


1 613 


83 





Caribbean Region




539 



538 


100 


526 


98 


397 


74 





ACP




Pacific Region




323 



321 


99 


299 


93 


224 


69 




 



Reserve/Not distributed by region




0 



0 


0 


0 


0 


0 


0 





OCT




* Total regional cooperation ACP




14 752 



14 587 


99 


14 429 


98 


12 213 


83 





ACP




50 137 



49 589 


99 


48 801 


97 


43 750 


87 




 





Reserve/Not distributed by country/territory




30 



12 


39 


11 


38 


11 


36 





All OCT countries




30 



12 


39 


11 


38 


11 


36 





Anguilla




28 



27 


99 


27 


99 


27 


99 





Falklands Islands




10 



10 


100 


10 


100 


10 


100 





Pitcairn Islands




5 



5 


100 


5 


100 


5 


100 





Turks and Caicos Islands




32 



32 


100 


32 


100 


32 


100 





British Virgin Islands




2 



2 


100 


2 


98 


2 


93 





Montserrat




33 



33 


100 


33 


100 


33 


100 





Saint Helena




38 



38 


100 


38 


100 


38 


100 





* Total British OCT




147 



146 


100 


146 


100 


146 


100 





Netherlands Antilles




40 



40 


100 


23 


56 


20 


51 





Netherlands Antilles - Bonaire




4 



4 


100 


4 


98 


2 


56 





Netherlands Antilles - Saba




3 



3 


100 


3 


100 


3 


100 





Netherlands Antilles - Sint-Eustatius




2 



2 


100 


2 


100 


2 


100 





Aruba




21 



21 


100 


21 


99 


21 


96 





Sint Maarten




14 



14 


100 


8 


55 


5 


33 





* Total Dutch OCT




85 



85 


100 


61 


72 


54 


63 





Wallis and Futuna Islands




39 



39 


100 


37 


95 


29 


75 





Mayotte




29 



29 


100 


29 


100 


29 


100 





New Caledonia




50 



50 


100 


50 


100 


50 


100 





French Polynesia




51 



51 


100 


49 


97 


49 


97 




 



Saint Pierre and Miquelon




47 



47 


100 


47 


100 


47 


100 




 



* Total French OCT




215 



215 


100 


212 


98 


204 


95 





region




137 



137 


100 


136 


99 


103 


75 





* Total regional cooperation OCT




137 



137 


100 


136 


99 


103 


75 





OCT




614 



595 


97 


566 


92 


517 


84 





TOTAL: ACP+OCT



 



50 751 



50 184 


99 


49 367 


97 


44 268 


87 





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)
 (22)









(EUR million)




Sector


Committed


Contracted


Paid





Social infrastructure and services



 


 


 




110-Education


1 192,46 


1 132,83 


995,48 




120-Health


2 131,40 


2 510,72 


2 263,73 




130-Population policies/programmes and reproductive health


352,44 


50,31 


35,95 




140-Water and sanitation


788,50 


848,83 


547,53 




150-Government and civil society


5 826,37 


6 047,02 


5 540,34 




160-Other social infrastructure and services


996,71 


1 385,46 


1 611,09 





Social infrastructure and services TOTAL



11 287,88 


11 975,17 


10 994,13 





Economic infrastructure and services



 


 


 




210-Transport and storage


1 425,48 


2 055,09 


1 083,29 




220-Communications


140,96 


146,96 


114,64 




230-Energy


2 015,13 


1 943,06 


1 220,76 




240-Banking and financial services


82,03 


129,29 


83,97 




250-Business and other services


343,43 


324,93 


223,51 





Economic infrastructure and services TOTAL



4 007,01 


4 599,33 


2 726,17 





Production sectors



 


 


 




310-Agriculture, forestry and fishing


3 344,16 


3 105,92 


2 351,62 




320-Industry, mineral resources and mining, construction


641,59 


492,66 


297,21 




330-Trade and tourism


507,49 


436,11 


272,06 





Production sectors TOTAL



4 493,24 


4 034,69 


2 920,88 





Multisector/Cross-cutting



 


 


 




410-General environmental protection


989,82 


841,85 


658,36 




430-Other multisector


3 886,22 


2 610,66 


1 685,71 





Multisector/Cross-cutting TOTAL



4 876,04 


3 452,51 


2 344,07 





Commodity aid and general programme assistance



 


 


 




510-General budget support


3 116,32 


3 165,05 


2 480,30 




520-Developmental food assistance


617,50 


391,67 


367,06 





Commodity aid and general programme assistance TOTAL



3 733,82 


3 556,73 


2 847,36 




Action relating to debt


 


 


 




600-Action relating to debt


183,00 


183,00 


183,00 





Action relating to debt TOTAL



183,00 


183,00 


183,00 





Humanitarian aid



 


 


 




720-Emergency response


746,19 


452,54 


451,93 




730-Reconstruction relief and rehabilitation


137,83 


65,05 


42,29 




740-Disaster preparedness


72,79 


110,05 


93,41 





Humanitarian aid TOTAL



956,81 


627,64 


587,63 





Administrative costs of donors / Unallocated / Unspecified



 


 


 




910-Administrative costs of donors


995,52 


948,63 


857,45 




998-Unallocated / Unspecified


183,74 


56,05 


38,45 




N/A-Not Available


260,50 


1,64 


1,21 





Administrative costs of donors / Unallocated / Unspecified TOTAL



1 439,76 


1 006,32 


897,11 





GRAND TOTAL OF 11TH EDF




30 977,56 




29 435,38 




23 500,34 






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
















3.   GLOSSARY


Administrative appropriations

Appropriations to cover the running costs of the entities (staff, buildings, office equipment).

Adopted budget

Draft budget becomes the adopted budget as soon as approved by the budgetary authority.

Amending budget

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

Appropriations

Budget funding.
The budget forecasts both commitments (legal pledges to provide finance) and payments (cash or bank transfers to the beneficiaries). Appropriations for commitments and payments often differ — differentiated appropriations — because multiannual programmes and projects are usually fully committed in the year they are decided and are paid over the years as the implementation of the programme and project progresses.

Assigned revenue

Revenue dedicated to finance specific items of expenditure.

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.

Budget implementation

Consumption of the budget through expenditure and revenue operations.

Budget item / Budget line / Budget position

Revenue and expenditure are shown in the budget structure 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 commitment

Operation by which the authorising officer responsible reserves the budget appropriations necessary to cover for subsequent payments to honour legal commitments.

Cancellation of appropriations

Appropriations which have not been used by the end of the financial year and which cannot be carried over, shall be cancelled.

Carryover of appropriations

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

Commitment appropriations

Commitment appropriations cover the total value of legal obligations (contracts, grant agreements or decisions) that could be signed in the current financial year.

De-commitment

Operation whereby the authorising officer responsible cancels wholly or partly the reservation of appropriations previously made by means of a budgetary commitment.

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.

Economic result

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

Entitlements established

Right to collect income from a debtor as recognised through the issuing of a recovery order.

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 currencies at the date of the accounts.

Expenditure

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

Grants

Direct financial contributions from the budget to third-party beneficiaries, engaged in activities that serve Union policies.

Lapsing appropriations

Unused appropriations to be cancelled at the end of the financial year. Lapsing means the cancellation of all or part of the authorisation to make expenditures and/or incur liabilities, as represented by an appropriation.
For joint undertakings (and EIT), as specified in their 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 can be re-activated until financial year ‘N+3’.

Legal basis / basic act

The legal act adopted by the legislative authority (usually the Council and European Parliament) specifying the objective of a Union spending programme, the purpose of the appropriations, the rules for intervention, expiry date and the relevant financial rules to serve as a legal basis for the implementation of the spending programme.

Legal commitment

The act whereby the Authorising Officer enters into an obligation towards third parties which results in a charge for the Union budget.
Common forms of legal commitments are contracts in the case of procurement, grant agreements and grant decisions.

Non-differentiated appropriations

Appropriations which meet annual needs and must therefore be committed during the budget year. Only amounts qualifying for automatic carryover can be disbursed in the following year. Non-differentiated appropriations which have not been used, i.e. committed, by the end of the year, are cancelled (unless, exceptionally, permission is given by a Commission decision for a non-automatic carryover). Non-differentiated appropriations apply to administrative expenditure and commitment appropriations equal payment appropriations.

Operational appropriations

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

Outstanding commitments

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

Payment appropriations

Payment appropriations cover expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years.

RAL (Reste à liquider)

Amount remaining to be paid on a budgetary commitment at a given moment. Cf. Outstanding commitments

Surplus

Positive difference between revenue and expenditure, which has to be returned to the funding authority. Cf. Budget result

Transfer between budget lines

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.

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


EUROPEAN INVESTMENT BANK


BOARD OF DIRECTORS


INVESTMENT FACILITY


FINANCIAL STATEMENTS


AS AT 31 DECEMBER 2023
                        








(1)

Independent auditor’s report











(2)

Statement of financial position











(3)

Statement of profit or loss and other comprehensive income











(4)

Statement of changes in contributors’ resources











(5)

Statement of cash flows











(6)

Notes to the financial statements





STATEMENT OF FINANCIAL POSITION


AS AT 31 DECEMBER 2023
                           









(in EUR’000)




 


Notes


31.12.2023


31.12.2022





ASSETS



 


 


 




Cash and cash equivalents


5 


1 376 824 


1 451 970 




Amounts receivable from contributors


9 /16 


85 321 


85 321 




Treasury financial assets


10 


-


73 003 




Derivative financial instruments


6 


55 765 


75 852 




Loans and advances


7 


1 683 312 


1 849 786 




Shares and other variable yield securities


8 


820 713 


797 341 




Other assets


11 


616 


950 





Total assets



 



4 022 551 




4 334 223 






LIABILITIES AND CONTRIBUTORS’ RESOURCES



 


 


 





LIABILITIES



 


 


 




Deferred income


12 


48 515 


52 417 




Provisions for loan commitments


13 


19 038 


16 583 




Amounts owed to third parties


14 


427 828 


190 927 




Other liabilities


15 


3 338 


2 419 





Total liabilities



 



498 719 




262 346 






Contributors’ resources



16 /17 



3 523 832 




4 071 877 






Total liabilities and contributors’ resources



 



4 022 551 




4 334 223 






STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


FOR THE YEAR ENDED 31 DECEMBER 2023
                           









(in EUR’000)




 


Notes


From 1.1.2023


From 1.1.2022




to 31.12.2023


to 31.12.2022




Interest and similar income (*2)



19 


148 336 


93 786 




Interest and similar expenses


19 


-


-5 479 





Net interest and similar income



 



148 336 




88 307 





Fee and commission income


20 


25 


511 




Fee and commission expenses


20 


-62 


- 761 





Net fee and commission income



 



-37 




- 250 





Fair value change of derivative financial instruments


6 


-20 087 


94 680 




Net result on shares and other variable yield securities


21 


-8 457 


24 432 




Net result on loans and advances measured at FVTPL


7 


-8 932 


-3 080 




Net foreign exchange result


22 


-67 885 


- 140 104 





Net result on financial operations



 



- 105 361 




-24 072 





Change in impairment on loans and advances, net of reversals


7.2


9 055 


8 562 




Change in provisions for loan commitments, net of reversals


13 


-2 470 


20 




General administrative expenses


23 


-29 655 


-33 628 





Profit for the year



 



19 868 




38 939 






Total comprehensive income profit for the year



 



19 868 




38 939 






STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES


FOR THE YEAR ENDED 31 DECEMBER 2023
                           











(in EUR’000)




 


Notes


Contribution called


Contributions paid out


Retained earnings


Total





At 1.1.2023



 



3 701 695 



-



370 182 




4 071 877 





Member States contributions called during the year


16 


20 000 


-


-



20 000 





Member States contributions paid out during the year


17 


-


- 587 913 


-



- 587 913 





Profit for the year 2023


 


-


-


19 868 



19 868 






Changes in contributors’ resources



 



20 000 




- 587 913 




19 868 




- 548 045 






At 31.12.2023



 



3 721 695 




- 587 913 




390 050 




3 523 832 





 


 


Contribution called


Contributions paid out


Retained earnings


Total





At 1.1.2022



 



3 471 695 



-



331 243 




3 802 938 





Member States contribution called during the year


 


230 000 


-


-



230 000 





Profit for the year 2022


 


-


-


38 939 



38 939 






Changes in contributors’ resources



 



230 000 



-



38 939 




268 939 






At 31.12.2022



 



3 701 695 



-



370 182 




4 071 877 






STATEMENT OF CASH FLOWS


FOR THE YEAR ENDED 31 DECEMBER 2023
                           









(in EUR’000)




 


Notes


From 1.1.2023 to 31.12.2023


From 1.1.2022 to 31.12.2022





OPERATING ACTIVITIES



 


 


 





Profit for the year



 



19 868 




38 939 





Adjustments made for:


 


 


 




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


8 


15 142 


-9 271 




Change in impairment on loans and advances, net of reversals


7,2 


-9 055 


-8 562 




Net result on loans and advances measured at FVTPL


7 


8 932 


3 080 




Change in accrued interest and amortised cost on loans and advances


 


708 


2 291 




Net change in provisions for loan commitments, net of reversals


 


2 455 


-19 




Fair value changes on derivatives


 


20 087 


-94 680 




Change in accrued interest and amortised cost on treasury financial assets


10 


- 248 


321 




Change in deferred income


 


-3 902 


3 985 




Effect of exchange rate changes on loans


7,1 


86 765 


-53 747 




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


8 


30 026 


-25 463 




Effect of exchange rate changes on cash held


 


-8 031 


-12 006 





Profit / (Loss) on operating activities before changes in operating assets and liabilities



 



162 747 




- 155 132 





Loan disbursements


7 


- 207 237 


- 260 493 




Repayments of loans


7 


288 155 


458 381 




Change in accrued interest on cash and cash equivalents


5 


4 039 


1 822 




Acquisition of treasury financial assets


10 


- 348 523 


- 920 290 




Maturities of treasury financial assets


10 


421 278 


847 608 




Increase in shares and other variable yield securities


8 


- 101 100 


- 139 935 




Net proceeds from shares and other variable yield securities


 


39 246 


90 219 




Decrease in other assets


 


334 


136 




Increase in other liabilities


 


919 


86 




Increase / (Decrease) in amounts payable to the European Investment Bank


 


33 951 


-58 093 





Net cash flows (used in) / from operating activities



 



293 809 




- 135 691 






FINANCING ACTIVITIES



 


 


 




Contributions received from Member States


 


79 710 


238 450 




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


 


220 290 


61 450 




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


 


-77 050 


-60 619 




Contributions paid out on behalf of Member States


17 


- 587 913 


-





Net cash flows from financing activities



 



- 364 963 




239 281 






Net increase in cash and cash equivalents



 



-71 154 




103 590 






Summary statement of cash flows:



 


 


 





Cash and cash equivalents at the beginning of financial year



 



1 450 589 




1 359 005 






Net cash flows (used in) / from:



 


 


 




Operating activities


 


293 809 


- 135 691 




Financing activities


 


- 364 963 


239 281 




Effects of exchange rate changes on cash and cash equivalents


 


-8 031 


-12 006 





Cash and cash equivalents at the end of financial year



 



1 371 404 




1 450 589 






Cash and cash equivalents are composed of:



 


 


 




Cash in hand


5 


146 494 


328 079 




Term deposits (excluding accrued interest)


5 


625 403 


963 004 




Commercial papers


5 


599 507 


159 506 




 


 



1 371 404 




1 450 589 






Notes to the financial statements as at 31 December 2023
                           

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:






(i)


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’);










(ii)


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’).




On 23 December 2020, the Council decided for the extension of the Investment Facility commitment period by at least six months. Following the extension, the Bank approved operations in line with its Mandate until 30 June 2021 (Council Decision (EU) 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 EDF (23)).
The EU and ACP sides agreed to amend the decision on transitional measures in order to extend the application of the provisions of the ACP-EU Partnership Agreement until 31 December 2023, or until the entry into force of the new Agreement or the provisional application between the Union and the ACP States of the new Agreement, whichever comes first (Decision No 2/2019 of the ACP-EU Committee of Ambassadors to adopt transitional measures pursuant to Article 95(4) of the ACP EU Partnership Agreement which was subsequently amended by the Decision No 3/2021 of the ACP-EU Committee of Ambassadors of 26 November 2021 to amend, the Decision No 970/2022 of the ACP-EU Committee of Ambassadors of 16 June 2022 and the Decision 2/2023 of the ACP-EU Committee of Ambassadors of 25 October 2023).
The financial statements have been prepared on a going concern basis, which assumes that the Facility will be able to meet all monies payables under any operations for the foreseeable future. The duration of the 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 NDICI - Global Europe Regulation, which entered into force on 14 June 2021 (Regulation (EU) 2021/947 of the European Parliament and of the Council (24) of 9 June 2021), provides the primary legal basis for EU assistance outside the EU in 2021-2027, and the governance for the Bank’s new institutional mandate for operations outside the European Union, including the ACP region. This includes the integration of the current extra-budgetary EDF into the EU budget. The NDICI Regulation provides 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.
Going forward, reflows from the 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. On 15 February 2023, a transfer agreement between the EIB and the European Commission was signed (‘Transfer Agreement’). The purpose of this agreement is the transfer of the funds stemming from reflows, under the Facility, as they become available, in accordance with Decision (EU) 2020/2233 (‘ACP IF Reflows’) and Council Decision (EU) 2021/1764 (25) (‘OCT IF Reflows’, and together with ACP IF Reflows, the ‘Reflows’). For more details please refer to the Note 2.4.6 and Note 17.
The present financial statements cover the period from 1 January 2023 to 31 December 2023.
On a proposal from the Management Committee, the Board of Directors adopted the Financial Statements on 21 March 2024 and authorised their submission to the Board of Governors for approval by 26 April 2024.
2.   Material accounting policies

2.1.   
Basis of preparation – Statement of compliance


The Facility’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements as at 31 December 2023 include the statement of financial position, the statement of profit or loss and other comprehensive income, statement of changes in contributors’ resources, the statement of cash flows, and the notes.
2.2.   
Significant accounting judgments, assumptions and estimates


The preparation of financial statements requires to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgment are inherent in the formation of estimates. Actual results in the future could differ from such estimates and the differences may be material to the financial statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions estimates are recognized prospectively.
The most significant use of judgments and estimates is as follows:
—   Fair value of financial instruments

Where the fair values of financial instruments recorded on the balance sheet 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 judgment is required in establishing fair values. The valuations are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as described and disclosed in Notes 2.4.2 and 4.
—   Impairment losses on loans and advances

The expected credit loss (‘ECL’) measurement requires management to apply significant judgments, in particular, the assessment of a significant increase in credit risk since initial recognition, the incorporation of forward looking information and further the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses. These estimates are driven by a number of factors, which can result in significant changes to the timing and amount of allowance for credit loss to be recognised (Note 2.4.2). Relevant assumptions on the effects on impairment resulting from the general context of uncertainty and the turbulence which occurred in 2022 and carried on in 2023 are detailed under Note 2.4.2.2 and Note 3.2.3.7.
—   Valuation of unquoted equity investments

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






—


recent arm’s length market transactions;










—


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










—


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










—


adjusted net assets method; or










—


other valuation models.




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

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


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.

New and amended standards adopted by the Facility

The following new standards and amendments to existing standards, became effective for the Facility’s financial statements as of 1 January 2023:






—


Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies;










—


Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;




The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to materially affect the current or future periods.

New standards, amendments, and interpretations not yet adopted by the Facility

As at 31 December 2023, the following amendments to existing Standards had been issued but were not mandatory for annual reporting periods ending on 31 December 2023:
Amendments to existing Standards endorsed by the EU, and which are effective for annual periods beginning on or after 1 January 2024:
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants.
Amendments to existing Standards not yet endorsed by the EU:






—


Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Supplier Finance Arrangements;










—


Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of exchangeability;










—


Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture.




At the date of authorisation of these financial statements none of the above listed Standards or amendments to existing Standards have been adopted early by the Facility and no Interpretations have been issued that are applicable and need to be taken into consideration by the Facility at either reporting date. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement, and that there will be not any material impact on the Facility’s financial statements.
2.4.   
Summary of material accounting policies


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

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

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

Classification and measurement


Financial assets

On initial recognition, a financial asset is classified as measured at amortised cost (‘AC’) 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).




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 25.

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.
In the context of IBOR reform, the Facility’s assessment of whether a change to an amortised cost financial instrument is substantial, is made after applying the practical expedient introduced by IBOR reform Phase 2. As per the amendments issued by the IASB, the Facility does not derecognise a financial instrument, which contractual cash flows are modified as a direct consequence from the reform and the change is economically equivalent to the previous basis for determining the contractual cash flows (i.e., the basis immediately before the change).

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’.
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.
In the context of IBOR reform, the Facility’s assessment of whether a change to an amortised cost financial instrument is substantial, is made after applying the practical expedient introduced by IBOR reform Phase 2. The Facility updates the effective interest rate, without modifying the carrying amount of the financial instrument if the basis for determining the contractual cash flows of the financial instrument, measured at amortised cost, changes as a direct consequence from the reform and if the change is economically equivalent to the previous basis (i.e., the basis immediately before the change).

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.
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 IFRS9 staging is based on a sequential approach which is using counterparty or instrument specific information consistent to internal guidelines and procedures, notably covering early warning triggers, internal rating (a decrease of 3 notches or more when compared to the historical internal rating for counterparties which current internal rating is below investment grade) and arrears (more than 30 days past due).
The EIB considers that the effects on impairment resulting from the general context of uncertainty and various risks building up as a result of the Russian invasion of Ukraine are 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.
The EIB considers that the existing forward-looking ECL model is deemed sufficiently robust to factor in extreme economic events, which have been directly captured through the macroeconomic projections and the PD terms structures. As disclosed under Note 3.2.3.8, the EIB applies expert judgement when assessing the credit risk of such counterparties.
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. Financial assets that are written-off could still be subject to enforcement activities in order to comply with the Bank's procedures for recovery of amounts due.

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 is mapped 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 because 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, called the PIT PD model, 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 deploying of the multi-country/multi-equation model. The scenarios are derived by shocking the GDP, which is the key measure of economic activity. The shocks to real GDP are calibrated to replicate the observed 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 EIB’s PIT PD and PIT LGD models use the same projected values of the credit cycle as the main input under different macroeconomic scenarios. The credit cycle is calculated from an external rating agency’s downgrade rates and the projections of annual growth rates of real GDP as well as the spread between long and short-term interest rates.
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.
2.4.2.1.   Cash and cash equivalents

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

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

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






—


Loans and advances measured at AC










—


Loans and advances mandatorily measured at FVTPL.




Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. Undisbursed parts of loans are recorded in the off-balance at their nominal value. Loans passing the SPPI test are initially recorded at cost (their net disbursed amounts), which is the fair value of the cash given to originate the loan, including any transaction costs, and are subsequently measured at AC using the effective interest rate method.
Debt securities are recognised in the assets of the Facility when cash is advanced to the issuer and can take the form of a contractually linked or single tranche debt instrument. Undisbursed parts of debt securities are recorded in the off-balance at their nominal value. Debt securities are initially measured at cost, which is the fair value plus any directly attributable transaction cost, and are subsequently measured at AC using the effective interest rate method. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.
The impairment policy on loans and advances is described under Note 2.4.2.
Loans and advances not fulfilling business model or 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.
For the impact of the IBOR reform on remeasurement of loans and advances at amortised cost, please refer to the dedicated paragraphs in Note 2.4.2 – Classification and Measurement / Modification.
2.4.2.4.   Shares and other variable yield securities

There are two types of equity investments at the Facility: (i) direct equity investments and (ii) venture capital funds. The shares and other variable yield securities are initially recognised at fair value plus transactions costs. Subsequently changes in fair value, including foreign currency translation gains and losses, are recognised in the statement of profit or loss and other comprehensive income under the caption net result on shares and other variable yield securities.
The undrawn but committed part of these investments is recorded as consolidated off-balance sheet commitments at their nominal value.

Measurement of fair values of financial instruments

The fair value is determined by applying the aggregated net asset value (‘NAV’) method (thereby assuming that, despite the absence of readily ascertainable market value, NAV is the best estimate of the fair value). 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 attributable NAV is adjusted for events occurring between the date of the latest available NAV and the balance sheet date to the extent that such adjustment is considered to be material by the Management Committee. Material adjustments are amended until the Board of Directors adopt the Financial Statements for the year. In that respect, following the general context of uncertainty, various risks building up as a result of the Russian invasion of Ukraine and the volatility observed in terms of performance, the Bank enhanced its valuation techniques to estimate any adjustment on the fair value of the equity investments for the NAVs not reported by the fund managers at the reporting date of the Facility financial statements.
For specific investments where NAVs cannot readily be determined, other guidelines for example the International Private Equity and Venture Capital Valuation (‘IPEV’) Guidelines, as published by the IPEV Board might be used and more detailed monitoring and review will be required. In accordance with this method, the funds are internally classified into three categories:






—


Category I – funds that have adopted the fair value requirements of IFRS 13 or IPEV Guidelines for which a specific review is performed to ensure that the NAV is a reliable estimate of fair value;










—


Category II – funds that have adopted other valuation guidelines (such as the former 2001 EVCA) or standards that can be considered to be in line with IFRS 13, for which an equivalent NAV can be calculated; and










—


Category III – funds that have not adopted the fair value requirements of IFRS 13 or any other valuation guidelines in line with IFRS 13.





Significant influence assessment

The participations acquired by the Facility typically represent investments in private equity or venture capital funds. According to industry practice, such investments are generally investments jointly subscribed by a number of investors, none of whom is in a position to individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in a governing body of such fund does not in principle entitle such investor to influence the day-to-day operations of the fund. In addition, individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on dividends or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders agreement governing the rights and obligations of the management and all shareholders of the fund. The shareholders’ agreement also generally prevents individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel or obtaining privileged access to essential technical information. The Facility’s investments are executed in line with the above stated industry practice, ensuring that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10 and IAS 28 over any of these investments, including those investments in which the Facility holds over 20 % of the voting rights.
2.4.3.   Financial guarantees

Financial guarantee contracts are contracts that require the Facility to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
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.
2.4.4.   Financial liabilities other than derivatives



Classification and measurement



Financial liabilities

A financial liability is measured at amortised cost except for financial liabilities:






—


are mandatorily measured at fair value through profit or loss (e.g. derivative liabilities); and










—


that are designated as measured at fair value through profit or loss.




The Facility derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.
2.4.5.   Derivative financial instruments

Derivative financial instruments include cross currency swaps, cross currency interest rate swaps and short-term currency swaps (‘FX 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 or loss and other comprehensive income under ‘Fair value change of derivative financial instruments’.
Under IFRS 9, bifurcation requirements regarding embedded derivatives have been eliminated for financial assets or financial liabilities and therefore, the hybrid contract is treated as a whole for classification of financial assets or financial liability accordingly.
2.4.6.   Contributions

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






—


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










—


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










—


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










—


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










—


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




Contributions are classified and measured at AC in the financial statements.
Member States Contributions paid out represent Available Reflows paid out to the EC and the UK. As per the Transfer Agreement, as of year 2023 and until year 2027, not later than 31 March of each year, the EIB shall report, in writing, the amount of available ACP IF Reflows, and the amount of available OCT IF Reflows, accumulated respectively as of 31 December of the preceding year (the ‘Report on Available Reflows’). The Report on Available Reflows shall distinguish between the Reflows that are to be transferred to the Commission (ACP and OCT Reflows), and the Reflows that are to be transferred to the United Kingdom (‘UK’). Available Reflows are recognised in the statement of financial position when corresponding payment request is sent to the Facility.
2.4.7.   Interest and similar income

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

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

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

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

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






—


credit risk – the risk of loss resulting from client or counterparty default and arising on credit exposure in all forms, including settlement risk (26);










—


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 and provides second opinion on all proposals made by the Front Office having risk implications.
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.
Specific transaction-level and counterpart size limits are applicable to non-sovereign operations, as relevant. Counterpart limits are set at consolidated group exposure level, where applicable. Such limits typically reflect, amongst others, 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 including amongst others counterparty or project related securities, guarantees and contractual clauses depending of the nature of the borrower and type of operation.
The Facility does not use any credit derivatives to mitigate credit risk.
3.2.2.   Maximum exposure to credit risk without taking into account any collateral and other credit enhancements

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







(in EUR’000)




Maximum exposure


31.12.2023


31.12.2022





ASSETS



 


 




Cash and cash equivalents


1 376 824 


1 451 970 




Amounts receivable from contributors


85 321 


85 321 




Treasury financial assets


-


73 003 




Derivative financial instruments


55 765 


75 852 




Loans and advances


1 683 312 


1 849 786 




Other assets


616 


950 





Total




3 201 838 




3 536 882 






Provisions for loan commitments




-19 038 




-16 583 






OFF BALANCE SHEET



 


 




Contingent liabilities


 


 










—


Issued Guarantees






985 


-




Commitments


 


 










—


Undisbursed loans






883 092 


1 671 851 










—


Non-issued guarantees






46 764 


49 378 





Total off balance sheet




930 841 




1 721 229 






Total credit exposure




4 113 641 




5 241 528 





3.2.3.   Credit risk on loans and advances

3.2.3.1.   Credit risk measurement for loans and advances

Loans and advances or guarantees undertaken by the Facility benefit 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 25), with the exception of intermediated loans, are subject to the general Mandate Risk Principles as envisaged in the EIB credit and equity risk guidelines. 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; and










—


as an input in risk-pricing decisions.




The following factors enter into the determination of an LG:






i)


The borrower’s creditworthiness: Risk Management independently reviews borrowers and assesses their creditworthiness based on internal methodologies and external data. In line with the Basel 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.










ii)


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










iii)


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










iv)


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










v)


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










vi)


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




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






‘A’


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






‘A0’


comprising loans to or guaranteed by an EU Member State which have an expected loss of 0 %.










‘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.




The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described above.
3.2.3.2.   Analysis of lending credit risk exposure

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










(in EUR’000)




At 31.12.2023


Guaranteed


Other credit enhancements


Not guaranteed


Total


% of Total disbursed




Financial institutions


54 290 


-


952 740 



1 007 030 




60 





Corporates


155 653 


-


293 302 



448 955 




27 





Public authorities


15 138 


-


-



15 138 




1 





States


-


-


212 189 



212 189 




13 






Total disbursed




225 081 



-



1 458 231 




1 683 312 




100 






Undisbursed




43 200 



-



820 854 




864 054 



 





Total disbursed and undisbursed




268 281 



-



2 279 085 




2 547 366 



 

















(in EUR’000)




At 31.12.2022


Guaranteed


Other credit enhancements


Not guaranteed


Total


% of Total disbursed




Financial institutions


64 625 


-


1 095 467 



1 160 092 




63 





Corporates


182 460 


-


285 216 



467 676 




25 





Public authorities


18 902 


-


218 



19 120 




1 





States


-


311 


202 587 



202 898 




11 






Total disbursed




265 987 




311 




1 583 488 




1 849 786 




100 






Undisbursed




149 506 



-



1 505 762 




1 655 268 



 





Total disbursed and undisbursed




415 493 




311 




3 089 250 




3 505 054 



 




Portfolio Management and Monitoring 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, Portfolio Management and Monitoring Directorate reviews if contractual rights are met and, in case of a rating deterioration and/or contractual default, remedy action is taken. Mitigation measures are pursued, whenever necessary in accordance with the credit risk guidelines. Also, in case of renewals of bank guarantees received for its loans, it is ensured that these are replaced or action is taken in a timely manner.
3.2.3.3.   Credit quality analysis per type of borrower

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2023 and 31 December 2022 by the Loan Grading applications, based on the exposure signed (disbursed and undisbursed):













(in EUR’000)




At 31.12.2023


 


High Grade


Standard Grade


Min. Accept. Risk


High Risk


No grading (*3)



Total


% of Total




A to B-


C


D+


D- and below




Borrower


Financial institutions


270 520 


276 133 


268 648 


508 180 


-



1 323 481 




52 





 


Corporates


51 505 


53 


564 


347 992 


194 441 



594 555 




23 





 


Public authorities


-


15 138 


-


-


-



15 138 




1 





 


States


50 858 


2 164 


12 907 


548 263 


-



614 192 




24 






Total



 



372 883 




293 488 




282 119 




1 404 435 




194 441 




2 547 366 




100 





















(in EUR’000)




At 31.12.2022


 


High Grade


Standard Grade


Min. Accept. Risk


High Risk


No grading (*4)



Total


% of Total




A to B-


C


D+


D- and below




Borrower


Financial institutions


293 458 


349 628 


103 133 


1 030 131 


-



1 776 350 




50 





 


Corporates


96 413 


52 092 


-


703 374 


226 750 



1 078 629 




31 





 


Public institutions


-


18 902 


-


-


218 



19 120 




1 





 


States


51 976 


2 771 


8 363 


567 845 


-



630 955 




18 






Total



 



441 847 




423 393 




111 496 




2 301 350 




226 968 




3 505 054 




100 





3.2.3.4.   Risk concentrations of loans and advances

3.2.3.4.1.   
Geographical analysis


Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000):







Country of borrower


31.12.2023


31.12.2022




Egypt


260 529 


309 312 




Kenya


248 823 


338 790 




Nigeria


218 521 


266 294 




Ethiopia


121 126 


107 988 




Regional-ACP


86 505 


69 920 




Mauritius


84 331 


93 509 




Togo


80 267 


-




Barbados


72 036 


82 735 




Rwanda


71 525 


94 247 




Zambia


66 947 


56 729 




Cameroon


48 616 


56 586 




Zimbabwe


35 546 


23 147 




Uganda


33 365 


51 388 




Congo (Democratic Republic)


29 803 


36 772 




Senegal


28 729 


38 153 




New Caledonia


26 425 


31 684 




Tanzania


21 394 


33 431 




Dominican Republic


16 768 


25 879 




Benin


16 742 


2 958 




Jamaica


15 138 


18 902 




Guinea


12 926 


15 242 




Ivory Coast


9 644 


10 976 




Mauritania


9 374 


11 029 




Madagascar


9 287 


-




Mali


8 158 


9 856 




Cayman Islands


6 575 


8 521 




Malawi


6 476 


9 587 




Eswatini


6 453 


1 515 




Cape Verde


6 254 


9 016 




Mozambique


5 142 


7 094 




Saint Lucia


4 565 


4 674 




Burkina Faso


4 389 


4 767 




Ghana


4 074 


8 648 




Micronesia


2 342 


2 811 




Seychelles


2 037 


2 933 




French Polynesia


1 838 


3 118 




Samoa


344 


645 




Vanuatu


177 


525 




Haiti


121 


332 




Congo


-


73 





Total




1 683 312 




1 849 786 





3.2.3.4.2.   
Industry sector analysis


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







(in EUR’000)




Industry sector of borrower


31.12.2023


31.12.2022




Financial Services


1 012 001 


1 160 133 




Public Administration


212 189 


202 898 




Electricity


187 701 


193 597 




Chemicals


91 786 


108 652 




Telecommunications


60 182 


62 862 




Healthcare


36 833 


36 833 




Business Services, IT and Media


33 638 


31 127 




Pharmaceuticals and Medical Equipment


18 526 


12 388 




Air and Maritime Transport Infrastructure


15 138 


18 902 




Metals and Mining


7 236 


8 415 




Investment Goods


4 103 


8 853 




Waste Recuperation and Recycling


3 802 


4 577 




Multi-Utilities


177 


525 




Tertiary and other


-


24 





Total




1 683 312 




1 849 786 





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)




 


 


2023




 


Moody’s equiv. grade


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


FVTPL


Total





Loans and advances at AC



 


 


 


 


 


 




Internal Rating 1 - minimal credit risk


Aaa


-


47 534 


-


-



47 534 





Internal Rating 2 - very low credit risk


Aa1 - Aa3


72 051 


-


-


-



72 051 





Internal Rating 3 - low credit risk


A1 - A3


10 428 


-


-


-



10 428 





Internal Rating 4 - moderate credit risk


Baa1 - Baa3


33 439 


263 036 


3 802 


-



300 277 





Internal Rating 5 - financially weak counterpart


Ba1 - Ba3


75 418 


-


-


-



75 418 





Internal Rating 6 - high credit risk


B1 - B3


533 775 


206 438 


20 349 


-



760 562 





Internal Rating 7 - very high credit risk


below Caa1


77 010 


246 682 


-


-



323 692 





Internal Rating 8 - counterpart in default


below Caa1 but in default


-


-


17 860 


-



17 860 






Loans and advances at FVTPL



 


-


-


-



182 080 




182 080 






Loss allowance and FV adjustment



 



-10 964 




-24 674 




-14 976 




-55 976 




- 106 590 






Carrying amount of loans and advances



 



791 157 




739 016 




27 035 




126 104 




1 683 312 






Loan commitments



 


 


 


 


 


 




Internal Rating 2 - very low credit risk


Aa1 - Aa3


86 796 


-


-


-



86 796 





Internal Rating 3 - low credit risk


A1 - A3


1 687 


-


-


-



1 687 





Internal Rating 4 - moderate credit risk


Baa1 - Baa3


10 000 


-


-


-



10 000 





Internal Rating 5 - financially weak counterpart


Ba1 - Ba3


82 770 


-


-


-



82 770 





Internal Rating 6 - high credit risk


B1 - B3


327 995 


45 990 


-


-



373 985 





Internal Rating 7 - very high credit risk


below Caa1


28 089 


30 537 


-


-



58 626 





Internal Rating 8 - counterpart in default


below Caa1 but in default


-


50 000 


111 000 


-



161 000 





No internal rating (*5)



 


39 940 


-


-


-



39 940 






Loans and advances at FVTPL



 


-


-


-



68 288 




68 288 






Loss allowance and FV adjustment



 



-2 715 




-16 323 



-


-



-19 038 






Carrying amount of loan commitments



 



574 562 




110 204 




111 000 




68 288 




864 054 



















(in EUR’000)




 


 


2022




 


Moody’s equiv. grade


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


FVTPL


Total





Loans and advances at AC



 


 


 


 


 


 




Internal Rating 1 - minimal credit risk


Aaa


-


56 320 


-


-



56 320 





Internal Rating 2 - very low credit risk


Aa1 - Aa3


82 745 


-


-


-



82 745 





Internal Rating 3 - low credit risk


A1 - A3


421 


-


-


-



421 





Internal Rating 4 - moderate credit risk


Baa1 - Baa3


346 538 


-


-


-



346 538 





Internal Rating 5 - financially weak counterpart


Ba1 - Ba3


82 126 


-


-


-



82 126 





Internal Rating 6 - high credit risk


B1 - B3


679 725 


189 519 


-


-



869 244 





Internal Rating 7 - very high credit risk


below Caa1


41 450 


273 167 


-


-



314 617 





Internal Rating 8 - counterpart in default


below Caa1 but in default


-


-


63 474 


-



63 474 






Loans and advances at FVTPL



 


-


-


-



142 263 




142 263 






Loss allowance and FV adjustment



 



-11 370 




-28 817 




-21 303 




-46 472 




- 107 962 






Carrying amount of loans and advances



 



1 221 635 




490 189 




42 171 




95 791 




1 849 786 






Loan commitments



 


 


 


 


 


 




Internal Rating 2 - very low credit risk


Aa1 - Aa3


86 796 


-


-


-



86 796 





Internal Rating 3 - low credit risk


A1 - A3


316 707 


-


-


-



316 707 





Internal Rating 4 - moderate credit risk


Baa1 - Baa3


109 095 


-


-


-



109 095 





Internal Rating 5 - financially weak counterpart


Ba1 - Ba3


175 880 


-


-


-



175 880 





Internal Rating 6 - high credit risk


B1 - B3


538 504 


50 000 


-


-



588 504 





Internal Rating 7 - very high credit risk


below Caa1


62 966 


105 669 


-


-



168 635 





Internal Rating 8 - counterpart in default


below Caa1 but in default


-


-


50 000 


-



50 000 





No internal rating (*6)



 


44 982 


-


-


-



44 982 






Loans and advances at FVTPL



 


-


-


-



131 252 




131 252 






Loss allowance and FV adjustment



 



-4 834 




-11 749 



-


-



-16 583 






Carrying amount of loan commitments



 



1 330 096 




143 920 




50 000 




131 252 




1 655 268 





The EIB continually monitors events affecting its borrowers and guarantors. 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.
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)




 


Loans and advances


Loans and advances




31.12.2023


31.12.2022





Carrying amount




1 683 312 




1 849 786 






Lifetime ECL credit-impaired



 


 




Gross amount


17 860 


63 474 




Impairment-loss allowance


-14 976 


-21 303 





Carrying amount of lifetime ECL credit-impaired




2 884 




42 171 






Past due but not credit-impaired



 


 





Past due comprises



 


 




0-30 days


-


670 




30-90 days


23 


118 




90-180 days


315 


95 




more than 180 days


-


25 





Carrying amount past due but not credit-impaired




338 




908 






Carrying amount neither past due nor credit-impaired




1 680 090 




1 806 707 






Total carrying amount loans and advances




1 683 312 




1 849 786 





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 –7 247 (2022: EUR –9 908) and EUR 6 007 (2022: EUR 8 356) 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)




 


2023




 


Positive


Baseline


Negative




Gross exposure


2 258 365 


2 258 365 


2 258 365 




Loss allowance


45 603 


51 610 


58 857 















(in EUR’000




 


2022




 


Positive


Baseline


Negative




Gross exposure


3 229 247 


3 229 247 


3 229 247 




Loss allowance


43 821 


52 177 


62 085 




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 deterioration of the loans in question would have been detected via the provisions of the Bank’s guidelines and procedures and would have been monitored before renegotiation. Once renegotiated, the EIB would continue to closely monitor these loans. In the case of the financial instrument would be credit-impaired it will be moved to Stage 3. The loan will be monitored regularly in line with the Bank’s framework.
Forbearance measures and practices undertaken by the EIB as part of its restructuring activities 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.
Operations subject to forbearance measures are reported as such in the table below:









(in EUR’000)




 


31.12.2023


31.12.2022




 


Performing


Non-Performing


Performing


Non-Performing




Number of contracts subject to forbearance practices


13 


6 


12 


7 




Carrying values (incl. interest and amounts in arrears)


112 554 


46 432 


144 399 


45 497 




ECL allowance recognised


1 654 


22 151 


16 008 


14 323 




Interest income in respect of forborne contracts


8 594 


1 776 


7 745 


2 280 



















(in EUR’000)




 


 


 


Forbearance measures


 


 


 




 


31.12.2022


Extension of maturities


Deferral of capital and interest


Breach of material financial covenants


Other


Contractual repayment, termination and/or write off


31.12.2023




Financial institutions


85 751 


-


-


12 275 


-


-29 671 


68 355 




Corporates


104 145 


-


-


-


-


-13 514 


90 631 





Total




189 896 



-


-



12 275 



-



-43 185 




158 986 





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 2023, and 31 December 2022, 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 S. A. where the Facility has its operational cash accounts. The short-term credit limit for Societe Generale S. A. as at 31 December 2023 and 31 December 2022 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 2023 and as at 31 December 2022 all term deposits, commercial papers and cash in hand held by the treasury portfolio of the Facility had a minimum rating of at least P-2 (Moody’s equivalent) at settlement day.
The following table shows the situation of cash and cash equivalents including accrued interest:










(in EUR’000)




Minimum short-term rating


Minimum long-term rating


31.12.2023


31.12.2022




(Moody’s term)


(Moody’s term)




P-1


Aaa


140 592 


10  %


200 167 


14  %




P-1


Aa2


29 951 


2  %


24 955 


2  %




P-1


Aa3


89 682 


7  %


4 992 


0  %




P-1


A1


360 831 


26  %


300 627 


21  %




P-1


A2


204 179 


15  %


340 252 


23  %




P-1


A3


346 275 


25  %


491 224 


34  %




P-2


A3


205 314 


15  %


29 956 


2  %




P-2


Baa1


-


0  %


59 797 


4  %





Total



 



1 376 824 




100  %




1 451 970 




100  %





3.2.5.   Credit risk on derivatives

3.2.5.1.   Credit risk policy of derivatives

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

All the swaps executed by the EIB that are related to the Facility are treated within the same contractual framework and methodologies applied for the derivatives negotiated by the EIB for its own purposes. In particular, eligibility of swap counterparts is determined by the EIB based on the same eligibility conditions applied for its general swap purposes.
The EIB measures the credit risk exposure related to swaps and derivatives transactions using the Current Unsecured Exposure and Potential Future Exposure approach for reporting and limit monitoring. These metrics 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 1 640,0 million as at 31 December 2023 against EUR 1 790,0 million as at 31 December 2022. The fair value of FX swaps amounts to EUR 45,8 million as at 31 December 2023 against EUR 71,1 million as at 31 December 2022.
The Facility enters into cross currency swaps contracts in order to hedge currency risk on loan disbursements in currencies other than EUR. Cross currency swaps have a long-term maturity. The notional amount of FX swaps stood at EUR 43,3 million as at 31 December 2023 against EUR 47,0 million as at 31 December 2022. The fair value of FX swaps amounts to EUR 10,0 million as at 31 December 2023 against EUR 4,8 million as at 31 December 2022.
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 original maturity of more than 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 depending on liquidity requirements:










(in EUR ‘000)




Minimum short-term rating


Minimum long-term rating


31.12.2023


31.12.2022




(Moody’s term)


(Moody’s term)





P-1



Aa2


-


0  %


32 974 


45  %





P-1



Aa3


-


0  %


4 


0  %





P-1



A3


-


0  %


39 843 


55  %





P-2



A3


-


0  %


182 


0  %





Total



 


-



0  %




73 003 




100  %





3.3.   
Liquidity risk


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

The Facility is primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s operations. The Facility manages its funding liquidity risk primarily by planning its net liquidity needs and the required Member States annual contributions.
In order to calculate Member States’ annual contributions, disbursement patterns of the existing and pipelined portfolio is analysed and followed up throughout the year. Special events, such as early reimbursements, sales of shares or default cases are taken into account to correct annual liquidity requirements.
To further 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 line with the Decision (EU) 2020/2233, reflows from the ACP IF shall be deployed within the NDICI framework. However, the availability of those reflows to be transferred is conditional to sustaining an adequate level of liquidity under the IF.
It is worth highlighting that capital is managed solely from a liquidity perspective, as described above.
In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the investment of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore, the authorisation of counterparts and limits for treasury investments, as well as the monitoring of such limits, are the responsibility of the Bank’s Risk Management Directorate.
3.3.2.   Liquidity risk measurement

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the balance sheet date and the contractual maturity date (based on undiscounted cash flows).
In terms of non-derivative financial liabilities, the Facility holds commitments in form of undisbursed portions of the credit under signed loan agreements, of undisbursed portions of signed capital subscription/investment agreements, of loan guarantees granted, or of committed interest subsidies and TA.
Loans under the IF have a disbursement deadline. However, disbursements are made at times and in amounts reflecting the progress of underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence their disbursement schedule is subject to a significant degree of uncertainty.
Capital investments become due when and as soon as equity fund managers issue valid calls for capital, reflecting the progress in their investment activities. The drawdown period is usually of 3 years, with frequent prolongation by one or two years. Some disbursement commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s liquidity may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.
Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding is reduced alongside the repayment schedule of guaranteed loans.
Committed interest subsidies’ cash outflows occur in the case of 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.











(in EUR’000)




Maturity profile of non-derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Maturity Undefined


Gross nominal outflow




as at 31.12.2023




Outflows for committed but undisbursed loans


49 019 


6 000 


-


-


828 073 


883 092 




Outflows for committed investment funds and share subscription


-


-


-


-


297 534 


297 534 




Others (signed non-issued guarantees, issued guarantees)


-


-


-


-


47 749 


47 749 




Outflows for committed interest subsidies


4 235 


-


-


-


343 282 


347 517 




Outflows for committed TA


849 


-


-


-


25 343 


26 192 





Total




54 103 




6 000 



-


-



1 541 981 




1 602 084 



















(in EUR’000)




Maturity profile of non-derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Maturity Undefined


Gross nominal outflow




as at 31.12.2022




Outflows for committed but undisbursed loans


87 210 


21 208 


-


-


1 563 433 


1 671 851 




Outflows for committed investment funds and share subscription


4 676 


-


-


-


406 496 


411 172 




Others (signed non-issued guarantees, issued guarantees)


-


-


-


-


49 378 


49 378 




Outflows for committed interest subsidies


-


-


-


-


350 282 


350 282 




Outflows for committed TA


924 


-


-


-


32 149 


33 073 





Total




92 810 




21 208 



-


-



2 401 738 




2 515 756 


















(in EUR ‘000)




Maturity profile of derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Gross nominal inflow/outflow




as at 31.12.2023




CCS – Inflows


192 


10 909 


32 186 


1 706 


44 993 




CCS – Outflows


-90 


-10 212 


-23 783 


-1 828 


-35 913 




Short-term currency swaps – Inflows


1 640 000 


-


-


-


1 640 000 




Short-term currency swaps – Outflows


-1 597 068 


-


-


-


-1 597 068 





Total




43 034 




697 




8 403 




- 122 




52 012 


















(in EUR ‘000)




Maturity profile of derivative financial liabilities


3 months or less


More than 3 months to 1 year


More than 1 year to 5 years


More than 5 years


Gross nominal inflow/outflow




as at 31.12.2022




CCS and CCIRS – Inflows


88 


9 474 


38 431 


147 


48 140 




CCS and CCIRS – Outflows


- 108 


-11 965 


-30 450 


- 146 


-42 669 




Short-term currency swaps – Inflows


1 790 000 


-


-


-


1 790 000 




Short-term currency swaps – Outflows


-1 724 227 


-


-


-


-1 724 227 





Total




65 753 




-2 491 




7 981 




1 




71 244 





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)




 


31.12.2023


31.12.2022





Financial assets:



 


 




Loans and advances


1 755 831 


1 922 784 




Shares and other variable yield securities


820 713 


797 341 





Total




2 576 544 




2 720 125 






Financial liabilities:



 


 




Amount owed to third parties (*7)



389 116 


136 867 




Provisions for loan commitments


19 038 


16 583 





Total




408 154 




153 450 





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 EUR 3 month swap curve. The NPV of the loans’ cash flows denominated in non-EUR currencies is determined by using the EUR 3 month swap plus the cross currency swap basis. For those non-EUR currencies for which a reliable and sufficiently complete discount curve is not available, either the EUR or USD discount curve is used instead.
To calculate the net present value of the micro hedging swaps, the Facility uses the EUR swap curve for cash flows denominated in EUR and the USD swap curve for cash flows denominated in USD.
As shown in the following table the net present value of the loan portfolio including related micro-hedging swaps as at 31 December 2023 would decrease by EUR 491k (as at 31 December 2022: decrease by EUR 500k) if all relevant interest rates curves are simultaneously shifted upwards in parallel by 1 basis point.












(in EUR ‘000)




Basis point value


Money
Market


Very Short


Short


Medium


Long


Extra Long


Total




As at 31.12.2023


1 year


2 to 3 years


4 to 6 years


7 to 11 years


12 to 20 years


More than 20 years




Total sensitivity of loans and micro hedging swaps


-39 


-97 


- 153 


- 153 


-47 


-2 



- 491 




















(in EUR ‘000)




Basis point value


Money
Market


Very Short


Short


Medium


Long


Extra Long


Total




As at 31.12.2022


1 year


2 to 3 years


4 to 6 years


7 to 11 years


12 to 20 years


More than 20 years




Total sensitivity of loans and micro hedging swaps


-34 


-98 


- 154 


- 162 


-50 


-2 



- 500 





3.4.2.   Foreign exchange risk

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

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

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


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


IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with the same financial profile as the underlying Loan, provided that a swap market is operational.
IF has operations denominated in currencies for which hedging possibilities are either not efficiently available or available at a high cost. These operations are denominated in local currencies (‘LCs’) but settled in EUR or USD. IF’s financial risk framework, which was approved by the IF Committee on 22 January 2015, offers the possibility to hedge the FX exposure in LCs that exhibit a significant positive correlation with the USD synthetically via USD-denominated derivatives. The LCs hedged synthetically with USD denominated derivatives are reported in the table in section 3.4.2.2.3 below under item ‘Local currencies (under synthetic hedge)’, while the LCs not hedged synthetically with the USD are reported in the same table under item ‘Local currencies (not under synthetic hedge)’.
In addition, for loans denominated in currencies other than EUR, USD or currencies for which hedging through cross-currency swap contracts is not possible, the IF charges an additional interest component called ‘FX premium’ to mitigate the risk of potential local currency depreciation.
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 31.12.2023


Assets and liabilities


Commitments and contingent liabilities




Currencies


FX position as per Risk Policies


FX position excluded from Risk Policies


Balance sheet FX position


 





USD



- 194 166 


-16 111 


- 210 277 


306 161 





Local currencies


(under synthetic hedge)
 (*8)



 


 


 


 





KES



87 829 


-4 832 


82 997 


-





TZS



1 071 


19 


1 090 


-





DOP



16 663 


122 


16 785 


-





UGX



20 283 


221 


20 504 


-





RWF



55 837 


367 


56 204 


-





Local currencies


(not under synthetic hedge)
 (*8)



 


 


 


 





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



67 992 


-1 136 


66 856 


-





Total non-EUR currencies




55 509 




-21 350 




34 159 




306 161 






EUR



-



3 489 673 




3 489 673 




1 344 972 






Total EUR and non-EUR




55 509 




3 468 323 




3 523 832 




1 651 133 

















As at 31.12.2022


Assets and liabilities


Commitments and contingent liabilities




Currencies


FX position as per Risk Policies


FX position excluded from Risk Policies


Balance sheet FX position


 





USD



- 318 423 


-11 114 


- 329 537 


844 247 





Local currencies


(under synthetic hedge)
 (*9)



 


 


 


 





KES



129 513 


36 883 


166 396 


-





TZS



7 355 


123 


7 478 


-





DOP



24 533 


301 


24 834 


-





UGX



32 632 


489 


33 121 


-





RWF



75 037 


698 


75 735 


-




Local currencies
(not under synthetic hedge)*


 


 


 


 





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



86 929 


- 479 


86 450 


-





Total non-EUR currencies




37 576 




26 901 




64 477 




844 247 






EUR



-


4 009 151 


4 009 151 


1 726 301 





Total EUR and non-EUR




37 576 




4 036 052 




4 073 628 




2 570 548 





3.4.2.3   Foreign exchange sensitivity analysis

As at 31 December 2023 a 10 percent depreciation of EUR versus all non-EUR currencies would result in an increase of the contributors’ resources and profit amounting to EUR 2,9 million (31 December 2022: EUR 7,2 million). A 10 percent appreciation of the EUR versus all non-EUR currencies would result in a decrease of the contributors’ resources and profit amounting to EUR –2,4 million (31 December 2022: EUR –5,9 million).
3.4.2.4.   Conversion rates

The following conversion rates were used for establishing the balance sheet at 31 December 2023 and 31 December 2022:







 


31.12.2023


31.12.2022





Non-EU currencies



 


 




Botswana Pula (BWP)


14,78 


13,59 




Dominican Republic Pesos (DOP)


64,08 


59,84 




Fiji Dollars (FJD)


2,39 


2,32 




Haitian Gourde (HTG)


143,68 


154,37 




Jamaican Dollar (JMD)


168,22 


161,59 




Kenya Shillings (KES)


173,20 


131,68 




Mauritania Ouguiyas (MRU)


43,35 


39,04 




Mauritius Rupees (MUR)


48,56 


46,83 




Mozambican Metical (MZN)


69,98 


67,54 




Nigerian Naira (NGN)


975,04 


478,02 




Rwanda Francs (RWF)


1 385,07 


1 132,20 




Tanzania Shillings (TZS)


2 772,53 


2 487,37 




Uganda Shillings (UGX)


4 178,00 


3 965,00 




United States Dollars (USD)


1,11 


1,07 




Franc CFA Francs (XAF/XOF)


655,96 


655,96 




South Africa Rand (ZAR)


20,35 


18,10 




Zambia Kvacha (ZMW)


28,45 


19,28 




3.4.3.   Equity price risk

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity prices and/or the value of equity investments.
The IF is exposed to equity price risk via its investments in direct equity and venture capital funds.
The value of non-listed equity positions is not readily available for the purpose of monitoring and control on a continuous basis. For such positions, the best indications available include prices derived from any relevant valuation techniques.
The effect on the Facility’s contributors’ resources (as a result of a change in the fair value of the equity instruments portfolio) due to a +/-10 % change in the value of individual direct equity and venture capital investments, with all other variables held constant, is EUR 82,1 million and EUR –82,1 million respectively as at 31 December 2023 (EUR 79,7 million and EUR –79,7 million respectively as at 31 December 2022).
4.   Fair values of financial instruments

4.1.   
Accounting classifications and fair values


The following tables 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 measured at AC as the carrying amount is a reasonable approximation of fair value.















(in EUR’000)




At 31.12.2023


Carrying amount


Fair value




 


Derivative financial instruments


Shares and other variable yield securities


Cash, loans and advances


Treasury financial assets


Other financial assets/liabilities


Total


Level 1


Level 2


Level 3


Total





Financial assets mandatorily measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


55 765 


-


-


-


-



55 765 



-


55 765 


-



55 765 





Venture Capital Fund


-


693 042 


-


-


-



693 042 



-


-


693 042 



693 042 





Direct Equity Investments


-


127 671 


-


-


-



127 671 



-


-


127 671 



127 671 





Loans and advances


-


-


124 323 


-


-



124 323 



-


-


124 323 



124 323 






Total financial assets mandatorily measured at FVTPL




55 765 




820 713 




124 323 



-


-



1 000 801 



-



55 765 




945 036 




1 000 801 






Financial assets measured at AC



 


 


 


 


 


 


 


 


 


 




Cash and cash equivalents


-


-


1 376 824 


-


-



1 376 824 



 


 


 


 




Loans and advances


-


-


1 558 989 


-


-



1 558 989 



 


 


 


 




Amounts receivable from contributors


-


-


85 321 


-


-



85 321 



 


 


 


 




Treasury financial assets


-


-


-


-


-


-


 


 


 


 




Other assets


-


-


-


-


616 



616 



 


 


 


 





Total financial assets measured at AC



-


-



3 021 134 



-



616 




3 021 750 



 


 


 


 





Total financial assets




55 765 




820 713 




3 145 457 



-



616 




4 022 551 



 


 


 


 





Financial liabilities at AC



 


 


 


 


 


 


 


 


 


 




Provisions for loan commitments


-


-


-


-


-19 038 



-19 038 



 


 


 


 




Amounts owed to third parties


-


-


-


-


- 427 828 



- 427 828 



 


 


 


 




Other liabilities


-


-


-


-


-3 338 



-3 338 



 


 


 


 





Total financial liabilities measured at AC



-


-


-


-



- 450 204 




- 450 204 



 


 


 


 





Total financial liabilities



-


-


-


-



- 450 204 




- 450 204 



 


 


 


 






















(in EUR ‘000)




As at 31.12.2022


Carrying amount


Fair value




 


Derivative financial instruments


Shares and other variable yield securities


Cash, loans and advances


Treasury financial assets


Other financial assets/liabilities


Total


Level 1


Level 2


Level 3


Total





Financial assets mandatorily measured at FVTPL



 


 


 


 


 


 


 


 


 


 




Derivative financial instruments


75 852 


-


-


-


-



75 852 



-


75 852 


-



75 852 





Venture Capital Fund


-


684 564 


-


-


-



684 564 



-


-


684 564 



684 564 





Direct Equity Investment


-


112 777 


-


-


-



112 777 



-


-


112 777 



112 777 





Loans and advances


-


-


95 604 


-


-



95 604 



-


-


95 604 



95 604 






Total financial assets mandatorily measured at FVTPL




75 852 




797 341 




95 604 



-


-



968 797 



-



75 852 




892 945 




968 797 






Financial assets at AC



 


 


 


 


 


 


 


 


 


 




Cash and cash equivalents


-


-


1 451 970 


-


-



1 451 970 



 


 


 


 




Loans and advances


-


-


1 754 182 


-


-



1 754 182 



 


 


 


 




Amounts receivable from contributors


-


-


85 321 


-


-



85 321 



 


 


 


 




Treasury financial assets


-


-


-


73 003 


-



73 003 



 


 


 


 




Other assets


-


-


-


-


950 



950 



 


 


 


 





Total financial assets measured at AC



-


-



3 291 473 




73 003 




950 




3 365 426 



 


 


 


 





Total financial assets




75 852 




797 341 




3 387 077 




73 003 




950 




4 334 223 



 


 


 


 





Financial liabilities at AC



 


 


 


 


 


 


 


 


 


 




Provisions for loan commitments


-


-


-


-


-16 583 



-16 583 



 


 


 


 




Amounts owed to third parties


-


-


-


-


- 190 927 



- 190 927 



 


 


 


 




Other liabilities


-


-


-


-


-2 419 



-2 419 



 


 


 


 





Total financial liabilities measured at AC



-


-


-


-



- 209 929 




- 209 929 



 


 


 


 





Total financial liabilities



-


-


-


-



- 209 929 




- 209 929 



 


 


 


 




4.2.   
Measurement of fair values


4.2.1.   Valuation techniques and significant unobservable inputs

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








 


Valuation technique


Significant unobservable inputs


Relationship of unobservable inputs to fair value measurement





Financial instruments carried at fair value



 


 




Derivative financial instruments


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


Curves used in estimation and discounting of cashflows are calibrated to market data, and the swaps in the portfolio have maturities that do not exceed the longest tenor available in the inputs. Therefore, there are no unobservable inputs.


Not applicable.




Venture Capital Fund (VCF)


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


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


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




Direct Equity Investment


Adjusted net assets.


Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control.


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




 


 


Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30 %.


 




Loans at fair
value (IFE)


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


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


The higher the discount rate the lower the fair value















 


Valuation technique


Significant unobservable inputs


Relationship of unobservable inputs to fair value measurement





Financial instruments not carried at fair value



 


 




Loans and advances


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


Not applicable.


Not applicable.




Treasury financial assets


Discounted cash flows.


Not applicable.


Not applicable.




With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives as at 31 December 2023 and 2022, namely:






—


Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR –6,1k as at 31 December 2023 and to EUR –6,1k as at 31 December 2022.










—


Debit valuation adjustments (DVA), reflecting own credit risk on derivative transactions, amounting to EUR +7,2k as at 31 December 2023 and EUR +7,2k as at 31 December 2022.




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 2023 and 2022 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 (27) for the year ended 31 December 2023 and 31 December 2022:






(in EUR’000)




 


Shares and other variable yield securities





Balance as at 1.1.2023




797 341 






Gains or losses included in profit or loss:



 




Derecognition of fair value adjustment due to sales


-




Net fair value change on shares and other variable yield securities


-15 142 





Total




-15 142 





Disbursements


101 100 




Repayments


-32 560 




Foreign exchange rates differences


-30 026 





Balance as at 31.12.2023




820 713 














(in EUR’000)




 


Shares and other variable yield securities





Balance as at 1.1.2022




697 631 






Gains or losses included in profit or loss:



 




Derecognition of fair value adjustment due to sales


99 




Net fair value change on shares and other variable yield securities


9 172 





Total




9 271 





Disbursements


139 935 




Repayments


-74 959 




Foreign exchange rates differences


25 463 





Balance as at 31.12.2022




797 341 





In 2023 and 2022 the Facility did not make transfers out or to Level 3 of the fair value hierarchy.

Sensitivity analysis

The effects on the Facility’s contributors’ resources, and statement of profit or loss and other comprehensive income due to a +/- 10 % change in the value of direct equity and venture capital investments, with all other variables held constant is EUR 82,1 million and EUR –82,1 million, respectively as at 31 December 2023 (EUR 79,7 million and EUR –79,7 million, respectively as at 31 December 2022).
5.   Cash and cash equivalents

The cash and cash equivalents are composed of:







(in EUR ’000)




 


31.12.2023


31.12.2022




Cash in hand


146 494 


328 079 




Term deposits


625 403 


963 004 




Commercial papers


599 507 


159 506 





Cash and cash equivalents in the cash flow statement




1 371 404 




1 450 589 





Accrued interest


5 420 


1 381 





Cash and cash equivalents in the statement of financial position




1 376 824 




1 451 970 





6.   Derivative financial instruments

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








(in EUR ’000)




As at 31.12.2023


Fair Value


Notional amount




 


Assets


Liabilities




Cross currency swaps


9 983 


-


43 250 




FX swaps


45 782 


-


1 640 000 





Total derivative financial instruments




55 765 



-



1 683 250 
















(in EUR ’000)




As at 31.12.2022


Fair Value


Notional amount




 


Assets


Liabilities




Cross currency interest rate swaps


4 778 


-


47 033 




FX swaps


71 074 


-


1 790 000 





Total derivative financial instruments




75 852 



-



1 837 033 





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)




 


Global loans (*10)



Senior loans


Subordinated loans


Total





Nominal of loans at AC as at 1.1.2023




1 236 887 




563 277 



-



1 800 164 





Disbursements


154 587 


11 986 


-



166 573 





Write offs


-


-


-


-




Repayments


- 219 739 


-67 902 


-



- 287 641 





Interest capitalised


-


-


-


-




Foreign exchange rates differences


-73 614 


-12 024 


-



-85 638 






Nominal of loans at AC as at 31.12.2023




1 098 121 




495 337 



-



1 593 458 






Impairment - loss allowance as at 1.1.2023




-37 604 




-22 798 



-



-60 402 





Net changes of the 12 month ECL


- 287 


-92 


-



- 379 





Net changes of lifetime ECL not credit-impaired


-1 060 


4 887 


-



3 827 





Lifetime ECL credit-impaired


-


-


-


-




Reversal of lifetime ECL credit-impaired


5 205 


402 


-



5 607 





Foreign exchange rates differences


1 348 


402 


-



1 750 






Impairment - loss allowance as at 31.12.2023




-32 398 




-17 199 



-



-49 597 






Loans and advances at AC as at 31.12.2023




1 065 723 




478 138 



-



1 543 861 






Nominal of loans at FVTPL as at 1.1.2023




1 080 




72 923 




66 833 




140 836 





Disbursements


-


37 092 


3 572 



40 664 





Repayments


-


- 514 


-



- 514 





Foreign exchange rates differences


-


-2 925 


48 



-2 877 






Nominal of loans at FVTPL as at 31.12.2023




1 080 




106 576 




70 453 




178 109 






Fair value adjustment as at 1.1.2023




-1 080 




-26 420 




-17 732 




-45 232 





Net FV change


-


-8 941 


9 



-8 932 





Foreign exchange rates differences


-


378 


-



378 






Fair value adjustment as at 31.12.2023




-1 080 




-34 983 




-17 723 




-53 786 






Loans and advances at FVTPL as at 31.12.2023



-



71 593 




52 730 




124 323 





Amortised Cost


-3 518 


-4 040 


-



-7 558 





Interest


11 560 


10 876 


250 



22 686 






Loans and advances as at 31.12.2023




1 073 765 




556 567 




52 980 




1 683 312 


















(In EUR ’000)





 


Global loans (*11)



Senior loans


Subordinated loans


Total





Nominal of loans at AC as at 1.1.2022




1 260 960 




549 115 



-



1 810 075 





Disbursements


186 211 


68 638 


-



254 849 





Repayments


- 246 403 


-74 267 


-



- 320 670 





Foreign exchange rates differences


36 119 


19 791 


-



55 910 






Nominal of loans at AC as at 31.12.2022




1 236 887 




563 277 



-



1 800 164 






Impairment - loss allowance as at 1.1.2022




-43 723 




-22 191 



-



-65 914 





Net changes of the 12 month ECL


-7 009 


- 750 


-


-7 759 




Net changes of lifetime ECL not credit-impaired


4 305 


1 176 


-


5 481 




Lifetime ECL credit-impaired


-


- 393 


-


- 393 




Reversal of lifetime ECL credit-impaired


11 082 


151 


-


11 233 




Foreign exchange rates differences


-2 259 


- 791 


-


-3 050 





Impairment - loss allowance as at 31.12.2022




-37 604 




-22 798 



-



-60 402 






Loans and advances at AC as at 31.12.2022




1 199 283 




540 479 



-



1 739 762 






Nominal of loans at FVTPL as at 1.1.2022




1 080 




70 936 




200 000 




272 016 





Disbursements


-


5 644 


-



5 644 





Repayments


-


-4 544 


- 133 167 



- 137 711 





Foreign exchange rates differences


-


887 


-



887 






Nominal of loans at FVTPL as at 31.12.2022




1 080 




72 923 




66 833 




140 836 






Fair value adjustment as at 1.1.2022




-1 080 




-24 613 




-16 332 




-42 025 





Net FV change


-


-1 680 


-1 400 



-3 080 





Foreign exchange rates differences


-


- 127 


-



- 127 






Fair value adjustment as at 31.12.2022




-1 080 




-26 420 




-17 732 




-45 232 






Loans and advances at FVTPL as at 31.12.2022



-



46 503 




49 101 




95 604 





Amortised Cost


-3 450 


-3 718 


-



-7 168 





Interest


11 809 


9 741 


38 



21 588 






Loans and advances as at 31.12.2022




1 207 642 




593 005 




49 139 




1 849 786 





7.2.   
Impairment on loans and advances – Loss allowances











(in EUR ’000)




 


2023




 


Lifetime ECL




 


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loans and advances at AC



 


 


 


 





Balance as at 1.1.2023




11 370 




28 817 




20 215 




60 402 





Transfer to 12-month ECL


869 


-4 217 


-



-3 348 





Transfer to lifetime ECL not credit-impaired


- 927 


3 593 


-



2 666 





Net measurement of loss allowance


- 993 


-4 333 


-2 873 



-8 199 





New financial assets originated or purchased


1 470 


1 188 


-



2 658 





Financial assets that have been derecognised


-41 


-57 


-2 734 



-2 832 





Foreign exchange rates differences (*12)



- 784 


- 317 


- 649 



-1 750 






Balance as at 31.12.2023




10 964 




24 674 




13 959 




49 597 






(in EUR ’000)





 


2022




 


 


Lifetime ECL


 




 


12 -month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loans and advances at AC



 


 


 


 





Balance as at 1.1.2022




3 565 




33 268 




29 081 




65 914 





Transfer to 12-month ECL


2 293 


-7 061 


-



-4 768 





Transfer to lifetime ECL not credit-impaired


- 489 


3 160 


-



2 671 





Transfer to lifetime ECL credit-impaired


-


- 617 


393 



- 224 





Net measurement of loss allowance


4 101 


-2 472 


-6 045 



-4 416 





New financial assets originated or purchased


1 878 


1 670 


-



3 548 





Financial assets that have been derecognised


-24 


- 160 


-5 189 



-5 373 





Foreign exchange rates differences (*12)



46 


1 029 


1 975 



3 050 






Balance as at 31.12.2022




11 370 




28 817 




20 215 




60 402 





8.   Shares and other variable yield securities

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








(in EUR ’000)




 


Venture Capital Funds


Direct Equity Investments


Total





Cost as at 1.1.2023




580 534 




81 711 




662 245 





Disbursements


101 100 


-



101 100 





Repayments / sales


-32 560 


-



-32 560 





Foreign exchange rates differences


-15 727 


-8 256 



-23 983 






Cost as at 31.12.2023




633 347 




73 455 




706 802 






Unrealised gains and losses as at 1.1.2023




104 030 




31 066 




135 096 





Net change in unrealised gains and losses


-43 652 


28 510 



-15 142 





Derecognition of fair value adjustment due to equity swap


-


-


-




Foreign exchange rates differences


- 683 


-5 360 



-6 043 






Unrealised gains and losses as at 31.12.2023




59 695 




54 216 




113 911 






Shares and other variable yield securities as at 31.12.2023




693 042 




127 671 




820 713 
















(in EUR ’000)




 


Venture Capital Funds


Direct Equity Investments


Total





Cost as at 1.1.2022




493 161 




77 478 




570 639 





Disbursements


139 935 


-



139 935 





Repayments / sales


-74 959 


-



-74 959 





Equity swap


-


3 598 



3 598 





Foreign exchange rates differences


22 397 


635 



23 032 






Cost as at 31.12.2022




580 534 




81 711 




662 245 






Unrealised gains and losses as at 1.1.2022




97 409 




29 583 




126 992 





Net change in unrealised gains and losses


4 149 


5 023 



9 172 





Derecognition of fair value adjustment due to sales


-


-3 499 



-3 499 





Foreign exchange rates differences


2 472 


-41 



2 431 






Unrealised gains and losses as at 31.12.2022




104 030 




31 066 




135 096 






Shares and other variable yield securities as at 31.12.2022




684 564 




112 777 




797 341 





9.   Amounts receivable from contributors

The amounts of EUR 85,3 million (2022: EUR 85,3 million) receivable from contributors are entirely composed of Member States contributions 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 1.1.2023




73 003 





Acquisitions


348 523 




Maturities


- 421 278 




Change in amortisation of premium/discount


- 248 




Change in accrued interest


-





Balance as at 31.12.2023



-













(in EUR ’000)





Balance as at 1.1.2022



-




Acquisitions


920 290 




Maturities


- 847 608 




Change in amortisation of premium/discount


247 




Change in accrued interest


74 





Balance as at 31.12.2022




73 003 





11.   Other assets

The main components of other assets are as follows:







(in EUR ’000)




 


31.12.2023


31.12.2022




Amount receivable from the EIB


616 


940 




Financial guarantees


-


10 





Total other assets




616 




950 





12.   Deferred income

The main components of deferred income are as follows:







(in EUR ’000)




 


31.12.2023


31.12.2022




Deferred interest subsidies


47 313 


51 498 




Deferred commissions on loans and advances


1 202 


919 





Total deferred income




48 515 




52 417 





13.   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)




 


2023




 


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loan commitments



 


 


 


 





Balance as at 1 January




4 825 




11 758 



-



16 583 





Transfer to lifetime ECL not credit-impaired


- 163 


1 955 


-



1 792 





Net measurement of loss allowance


466 


8 206 


-



8 672 





New financial assets originated or purchased


-1 295 


-1 461 


-



-2 756 





Financial assets that have been derecognised


-1 120 


-4 118 


-



-5 238 





Foreign exchange rates differences


2 


-17 


-



-15 






Balance as at 31 December




2 715 




16 323 



-



19 038 

















(in EUR ’000)




 


2022




 


12-month ECL


Lifetime ECL not credit-impaired


Lifetime ECL credit-impaired


Total





Loan commitments



 


 


 


 





Balance as at 1 January




1 693 




14 909 



-



16 602 





Transfer to lifetime ECL not credit-impaired


- 302 


4 687 


-



4 385 





Net measurement of loss allowance


3 147 


-6 797 


-



-3 650 





New financial assets originated or purchased


428 


354 


-



782 





Financial assets that have been derecognised


- 142 


-1 395 


-



-1 537 





Foreign exchange rates differences


1 


-


-



1 






Balance as at 31 December




4 825 




11 758 



-



16 583 





14.   Amounts owed to third parties

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







(in EUR ’000)




 


31.12.2023


31.12.2022




Net general administrative expenses payable to the EIB


29 655 


33 628 




Other amounts payable to the EIB


39 384 


1 460 




Interest subsidies and TA not yet disbursed owed to Member States


358 789 


155 839 





Total amounts owed to third parties




427 828 




190 927 





15.   Other liabilities

The main components of other liabilities are as follows:







(in EUR ’000)




 


31.12.2023


31.12.2022




Loan repayments received in advance


2 727 


1 790 




Deferred income from interest subsidies


611 


629 





Total other liabilities




3 338 




2 419 





16.   Member States Contribution called (in EUR’000)










Member States


Contribution to the Facility


Contribution to interest subsidies and technical assistance


Total Contributed


Called and not paid (*13)





Austria


94 677 


20 161 


114 838 


2 398 




Belgium


138 169 


28 441 


166 610 


3 249 




Bulgaria


2 660 


1 361 


4 021 


219 




Croatia


1 126 


969 


2 095 


225 




Cyprus


1 566 


750 


2 316 


112 




Czechia


9 697 


4 961 


14 658 


797 




Denmark


77 279 


16 633 


93 912 


1 980 




Estonia


992 


521 


1 513 


86 




Finland


55 115 


12 364 


67 479 


1 509 




France


818 754 


159 285 


978 039 


17 813 




Germany


823 467 


173 107 


996 574 


20 580 




Greece


50 271 


12 130 


62 401 


1 507 




Hungary


9 230 


4 295 


13 525 


615 




Ireland


27 921 


7 387 


35 308 


940 




Italy


470 233 


104 875 


575 108 


12 530 




Latvia


1 364 


709 


2 073 


116 




Lithuania


2 248 


1 138 


3 386 


181 




Luxembourg


10 395 


2 194 


12 589 


255 




Malta


526 


253 


779 


38 




Netherlands


187 913 


40 256 


228 169 


4 777 




Poland


24 591 


12 537 


37 128 


2 007 




Portugal


39 250 


9 557 


48 807 


1 197 




Romania


7 734 


4 200 


11 934 


718 




Slovakia


4 231 


2 248 


6 479 


376 




Slovenia


3 137 


1 507 


4 644 


225 




Spain


250 314 


63 448 


313 762 


7 932 




Sweden


102 760 


23 561 


126 321 


2 939 




United Kingdom


506 075 


120 148 


626 223 


-





Total as at 31.12.2023




3 721 695 




828 996 




4 550 691 




85 321 






Total as at 31.12.2022




3 701 695 




548 996 




4 250 691 




85 321 





17.   Member States Contributions paid out











(in EUR ’000)




 


European Commission


UK


Total




ACP


OCT


Total





Member States Contributions paid out


as at 1.1.2023



-


-


-


-


-




Reflows in relation to year 2021


251 000 


7 000 



258 000 



44 386 



302 386 





Reflows in relation to year 2022


236 883 


6 732 



243 615 



41 912 



285 527 






Member States Contributions paid out


as at 31.12.2023




487 883 




13 732 




501 615 




86 298 




587 913 





As per the Transfer Agreement, as of year 2023 and until 31 December 2027, the Facility shall transfer annually to the EC the amount of available ACP IF Reflows and OCT IF Reflows. The indicative amount of the available ACP IF Reflows and OCT IF Reflows amounts to EUR 1 000 million and EUR 35 million respectively. In addition, the Facility shall transfer to the UK the amounts corresponding to the UK’s share of these available Reflows. The above table presents the Reflows already disbursed.
18.   Commitments and contingent liabilities








(in EUR ’000)




 


31.12.2023


31.12.2022






Commitments




 


 




Undisbursed loans


883 092 


1 671 851 




Undisbursed commitment in respect of shares and other variable yield securities


297 534 


411 172 




Issued guarantees


985 


-




Interest subsidies and technical assistance


422 758 


441 630 






Contingent liabilities




 


 




Signed non-issued guarantees


46 764 


49 378 





Total commitments and contingent liabilities




1 651 133 




2 574 031 





19.   Interest and similar income and expenses

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







(in EUR ’000)




 


From 1.1.2023


From 1.1.2022




to 31.12.2023


to 31.12.2022




Cash and cash equivalents


36 668 


1 999 




Loans and advances


95 137 


82 162 




Interest subsidies


10 029 


9 625 




Treasury financial assets


3 584 


-




Derivative financial instruments


2 918 


-





Total interest and similar income




148 336 




93 786 





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







(in EUR ’000)




 


From 1.1.20231. 2023


From 1.1.20221. 2022




to 31.12.2023


to 31.12.2022




Derivative financial instruments


-


-5 080 




Treasury financial assets


-


- 399 





Total interest and similar expenses



-



-5 479 





20.   Fee and commission income and expenses

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







(in EUR ’000)




 


From 1.1.2023


From 1.1.2022




to 31.12.2023


to 31.12.2022




Fee and commission on loans and advances


1 


42 




Fee and commission on financial guarantees


24 


469 





Total fee and commission income




25 




511 





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







(in EUR ’000)




 


From 1.1.2023


From 1.1.2022




to 31.12.2023


to 31.12.2022




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


-62 


- 761 





Total fee and commission expenses




-62 




- 761 





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)




 


From 1.1.2023


From 1.1.2022




to 31.12.2023


to 31.12.2022




Net proceeds


130 


35 




Dividend income


6 555 


15 225 




Net fair value change


-15 142 


9 172 





Net result on shares and other variable yield securities




-8 457 




24 432 





22.   Net foreign exchange results

The main components of the net foreign exchange results are as follows:







(in EUR ’000)




 


From 1.1.2023 to 31.12.2023


From 1.1.2022 to 31.12.2022





FX positions revaluation



 


 




Cash and cash equivalents


- 123 


6 687 




Derivative financial instruments


86 071 


- 194 033 




Loans and advances


-89 458 


50 951 




Shares and other variable yield securities


-30 026 


25 464 




Other


3 479 


- 934 





Total FX positions revaluation




-30 057 




- 111 865 






Realised results on FX swaps (cost of hedging)




-37 828 




-28 239 






Net foreign exchange result




-67 885 




- 140 104 





23.   General administrative expenses

General administrative expenses represent the actual costs incurred by the EIB for managing the Facility less income generated from standard appraisal fees directly charged by the EIB to clients of the Facility.
As at 31 December 2023 total general administrative expense amounted to EUR –29,7 million (31 December 2022: EUR –33,6 million).
24.   Involvement with unconsolidated structured entities (in EUR ’000)


Definition of a structured entity

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






—


Restricted activities;










—


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










—


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










—


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





Unconsolidated structured entities

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

Definition of Interests in structured entities:

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







Type of structured entity


Nature and purpose


Interest held by the Facility




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


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


Net disbursed amounts;
Interest income.




Venture capital operations


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


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




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










 


 


31.12.2023


31.12.2022




Type of structured entity


Caption


Carrying amount


Maximum exposure to loss


Carrying amount


Maximum exposure to loss




Venture capital funds


Shares and other variable yield securities


693 042 


725 781 


684 564 


1 091 122 





Total



 



693 042 




725 781 




684 564 




1 091 122 





No support is provided to structured entities by the Facility beyond the respective financing.
25.   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 800 million 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.
The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset:












Type of IFE investment


Caption


Measurement


Gross carrying amount as at 31.12.2023


Loss allowance / FV adj. amount as at 31.12.2023


Carrying amount as at 31.12.2023


Undisbursed amount as at 31.12.2023


OFF BS ECL adj. amount as at 31.12.2023




Loans to financial intermediaries


Loans and advances


AC


73 423 


-1 522 


71 901 


7 749 


- 334 




Direct loan operations


Loans and advances


FVTPL


152 155 


-58 759 


93 396 


68 288 


-




Social impact equity funds


Shares and other variable yield securities


FVTPL


110 572 


9 936 


120 508 


58 572 


-




Direct equity participations


Shares and other variable yield securities


FVTPL


58 889 


41 490 


100 379 


14 


-




Risk sharing facilitating instruments


Issued guarantees


higher of approach (*14)



-


-


-


44 264 


-





Total



 


 



395 039 




-8 855 




386 184 




178 887 




- 334 




















Type of IFE investment


Caption


Measurement


Gross carrying amount as at 31.12.2022


Loss allowance/FV adj. amount as at 31.12.2022


Carrying amount as at 31.12.2022


Undisbursed amount as at 31.12.2022


OFF BS ECL adj. amount as at 31.12.2022




Loans to financial intermediaries


Loans and advances


AC


79 778 


-3 454 


76 324 


64 345 


- 632 




Direct loan operations


Loans and advances


FVTPL


104 709 


-45 224 


59 485 


67 215 


-




Social impact equity funds


Shares and other variable yield securities


FVTPL


94 385 


23 802 


118 187 


79 393 


-




Direct equity participations


Shares and other variable yield securities


FVTPL


59 429 


26 939 


86 368 


14 


-




Risk sharing facilitating instruments


Issued guarantees


higher of approach (*15)



-


-


-


46 878 


-





Total



 


 



338 301 




2 063 




340 364 




257 845 




- 632 





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.
26.   Related party disclosures

The Facility has identified EIB as a related party in the context of IAS 24, as EIB has been mandated by the EU Member States to manage the Facility in accordance with the provisions of the applicable legal framework, including the monitoring of its operations until full reimbursement and provides key management personnel services (EIB Management Committee and EIB Audit Committee). In this regard, EIB is entitled to recover its actual costs incurred for managing the Facility less income generated from standard appraisal fees directly charged by the EIB to clients of the Facility. For more details on the remuneration please refer to the Note 23.
27.   Subsequent events

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 2023.
In the context of the Russian invasion of Ukraine and its broader economic consequences, the Bank continues to monitor the situation closely notably as part of the subsequent event review.


(1)  Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020 (OJ L 347, 20.12.2013, p. 884, ELI: http://data.europa.eu/eli/reg/2013/1311/oj).

(2)  
            OJ L 83, 1.4.2003, p. 27.

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

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

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

(6)  Council Decision (EU) 2023/2586 of 13 November 2023 on the financial contributions to be paid by the parties to the European Development Fund to finance that fund, specifying the ceiling for 2025, the annual amount for 2024, the amount of the first instalment for 2024 and an indicative, non-binding forecast for the expected annual amounts of contributions for the years 2026 and 2027 (OJ L, 2023/2586, 15.11.2023, ELI: http://data.europa.eu/eli/dec/2023/2586/oj).

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

(*1)  
            Excluding deferred charges


(8)  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.

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

(10)  Council Regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU) 2015/323 (OJ L 307, 3.12.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/1877/oj).

(11)  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.

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

(13)  Regulation (EU) 2018/1877.

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

(15)  Regulation (EU) 2018/1877.

(16)  Except for operations in South-Sudan.

(17)  Council Decision 2011/315/EU of 23 May 2011 concerning the allocation of funds decommitted from projects under the ninth and previous European Development Funds for development cooperation in Southern Sudan (OJ L 142, 28.5.2011, p. 61, ELI: http://data.europa.eu/eli/dec/2011/315/oj).

(18)  
            1 402,57 million Bridging facility (Council Decision 2015/0246), 200 million (Council Decision (EU) 2017/1206), 223 million (Council Decision (EU) 2020/1708), 43 million (Council Decision (EU) 2021/1941) and 42,5 million (Council Decision (EU) 2022/2242).

(19)  Decision (EU) 2023/2586.

(20)  
            OJ L 314, 30.11.2001, p. 1, ELI: http://data.europa.eu/eli/dec/2001/822(1)/oj.

(21)  
            OJ L 109, 26.4.2007, p. 33, ELI: http://data.europa.eu/eli/dec/2007/249/oj.

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

(*2)  For the year ended 31.12.2023, Interest and similar income includes EUR 118,5 million (2022: EUR 85,8 million) calculated on assets held at amortised cost based on the effective interest method.

(23)  
            OJ L 437, 28.12.2020, p. 188, ELI: http://data.europa.eu/eli/dec/2020/2233/oj.

(24)  Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council Regulation (EC, Euratom) No 480/2009 (OJ L 209, 14.6.2021, p. 1, ELI: http://data.europa.eu/eli/reg/2021/947/oj).

(25)  Council Decision (EU) 2021/1764 of 5 October 2021 on the association of the Overseas Countries and Territories with the European Union including relations between the European Union on the one hand, and Greenland and the Kingdom of Denmark on the other (Decision on the Overseas Association, including Greenland) (OJ L 355, 7.10.2021, p. 6, ELI: http://data.europa.eu/eli/dec/2021/1764/oj).

(26)  Settlement risk is defined as the risk of potential losses due to transactions which remain unsettled after their due delivery date and/or due to transactions that are settled later than the applicable market standard. Due to the nature of the Facility’s operations, the most relevant instruments affected by settlement risk are those derivatives entered into by the Bank which imply an exchange of foreign currencies. Settlement risk management is covered in the Financial Risk Guidelines.

(*3)  Loan operations measured at FVTPL.

(*4)  Loan operations measured at FVTPL.

(*5)  Agency agreements for which there are no underlying counterparts at reporting date.

(*6)  Agency agreements for which there are no underlying counterparts at reporting date.

(*7)  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.

(*8)  See section 3.4.2.2.2 for explanations on synthetic hedge.

(*9)  See section 3.4.2.2.2 for explanations on synthetic hedge.

(27)  Loans measured at FVTPL are presented in Note 7.

(*10)  Including agency agreements

(*11)  Including agency agreements

(*12)  Foreign exchange movements are excluded from the amounts reported in the Statement of Profit or Loss and Other Comprehensive Income as well as the Statement of Changes in Contributors' Resources.

(*13)  On 15.11.2023, the Council fixed the amount of financial contributions to be paid by each Member State as of 21.1.2024. As at 31.12.2023 EUR 85,3 million were not yet paid in.

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

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


ELI: http://data.europa.eu/eli/C/2024/5451/oj
ISSN 1977-091X (electronic edition)