REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the common provisioning fund in 2024
Date: 2025-06-06
Institutions: Directorate-General for Budget, European Commission
Subjects: EU budget, budgetary reserve (EU), financial management, fund (EU), investment, multiannual financial framework, provision, reserves

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 6.6.2025  COM(2025) 400 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the common provisioning fund in 2024 {SWD(2025) 100 final}  
 
 
TABLE OF CONTENTS 

INTRODUCTION ........................................................................................................................................................ 2 

Part 1: Key milestones in 2024 ....................................................................................................................... 4 

1.1. General overview ................................................................................................................................ 4 

1.2. Compartment structure ................................................................................................................... 5 

1.3. Guarantee calls and payment claims ....................................................................................... 7 

1.4. Effective provisioning rate .......................................................................................................... 10 

Part 2: Investment strategy, portfolio composition and performance ..................................... 10 

2.1. Composition and characteristics of the portfolio ............................................................ 11 

2.2. Environmental, social and governance (ESG) footprint ................................................ 12 

2.3. CPF performance in 2024 ........................................................................................................... 12 

CONCLUSIONS ....................................................................................................................................................... 14 

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INTRODUCTION 

This is the fourth annual report on the common provisioning fund (CPF) (1) covering the period 
from 1 January 2024 to 31 December 2024. It outlines the key developments related to the 
functioning of the CPF in 2024, and presents the main financial and risk parameters and the 
fund’s  annual  performance.  It  also  presents  the  results  of  the  Commission's  actions  to 
enhance  the  fund’s  longer-term  performance  by  introducing  a  diversified  investment 
universe. 

The  CPF,  established  under  Article  212  of  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, holds all provisions set aside by the EU budget or contributed 
by participating Member States to cover the risk of losses on operations guaranteed by the 
internal (2) and external (3) guarantees implemented by the European Union. In addition to 
budgetary  guarantees,  provisions  are  held  in  the  CPF  in  respect  of  most  of  the  macro-
financial assistance (MFA) loans to third counties (4). The provisions held in the CPF constitute 
the  capital  reserve  from  which  funds  are  drawn  to  meet  guarantee  calls  on  supported 
operations and other outflows. 

The CPF became operational in January 2021. At the end of 2024 its net assets value stood 
at  EUR 23.18  billion,  making  it  the  largest  investment  portfolio  directly  managed  by  the 
Commission. 

The  CPF  successfully  navigated  market  volatility  in  2024,  with  a  balanced  exposure  to 
multiple  asset  classes.  The  CPF’s  diversification  into  equities  further  enhanced  its  overall 
performance. The portfolio achieved an absolute return (5) of 3.57%. Combined with the 2023 
result (+5.21%), this has almost fully offset the losses incurred in 2022, a year marked by 
the steepest global bond sell-off seen in half a century.. The results have restored the CPF’s  
capacity to absorb losses over the lifetime of the budgetary guarantee programmes. Looking 
ahead, the current elevated interest-rate environment provides a prudent basis for medium-

(1) Pursuant to Article 214 of the Financial Regulation (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,  the 
Commission must report annually to the European Parliament and to the Council on the common provisioning 
fund.  The  Asset  Management  Guidelines  of  the  CPF  (Commission  Decision  of  25.3.2020  on  the  Asset 
Management Guidelines of the common provisioning fund (C(2020) 1896 final, OJ C 131, 22.4.2020, p. 3-
11) provide further guidance on the contents of this report. 

(2) European Fund for Strategic Investments (EFSI) and InvestEU. 

(3) External lending mandate (ELM), European Fund for Sustainable Development (EFSD) and European Fund for 

Sustainable Development Plus (EFSD+). 

(4) Except MFA+ loans granted to Ukraine in 2023. 

(5) Absolute return refers to the return on an investment or portfolio over a specified period of time, without 
any reference to a benchmark or market index.It represents the portfolio’s time-weighted percentage 
growth, measured so that cash inflows and outflows have no effect on the result. 

2 

 
 
 
 
 
 
term performance, subject to the heightened uncertainty linked to geopolitical developments 
that could have a strong bearing on market conditions,. 

This report focuses on issues related to the management of CPF assets. The evolution of 
contingent liabilities arising from budgetary guarantees and EU lending, against which CPF 
assets  are  held  as  provisions,  is  discussed  in  a  separate  report  under  Article 256  of  the 
Financial Regulation. 

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PART 1: KEY MILESTONES IN 2024 

1.1. General overview 

As in previous years, the fund was managed in line with the procedures under its established 
governance structure (6), and with no operational incidents. 

As at 31 December 2024, the value of net assets (7) was EUR 23.2 billion, representing an 
increase of EUR 4.5 billion on end-2023 (a 24% increase over the year). In 2024 the CPF 
received  EUR 3.6  billion  in  net  contributions  from  the  EU  budget  or  contributions  from 
participating Member States and EFTA countries. The remainder of the increase in portfolio 
value (EUR 840 million) results from the increased market value of existing assets. 

Figure 1: Evolution of the CPF’s net asset value (EUR billion) 

More  information  on  the  financial  statements  is  available  in  the  staff  working  document 
accompanying this report. 

(6)  The governance structure was presented in the CPF annual report for 2021, EUR-Lex - 52022DC0213 - EN 

- EUR-Lex (europa.eu). 

(7) The net asset value (NAV) of the CPF is determined by the value of the total assets, less the liabilities,  on 

the respective NAV calculation date. 

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1.2. Compartment structure 

While the assets of the CPF are managed in accordance with a common investment policy, 
they are held in different compartments linked to the individual budgetary guarantees and 
financial  assistance  programmes  or  to  the  individual  Member  State  compartments  for 
InvestEU. 

The provisioning held by the CPF is earmarked per budgetary guarantee/financial assistance 
programme  (or  for  the  Member  States  that  contribute  the  provisioning  for  their  InvestEU 
compartment)  in  line  with  their  respective  legal  frameworks (8).  The  amounts  assigned  to 
each budgetary guarantee are booked in distinct compartments to allow provisoning levels 
to  be  tracked  relative  to  the  levels  set  by  the  legal  basis  establishing  the  guarantee.  If 
provisions fall below certain levels, replenishments can be funded from the envelopes of the 
respective programmes.  

In 2024, one new  InvestEU  Member  State  compartment (9) and one compartment for  the 
Ukraine Facility Guarantee (10) were added.  

On 31 December 2024 the CPF was composed of 18 compartments, with 15 of them being 
fully  operational  and  containing  funds.  The  remaining  compartments  will  be  activated  on 
receipt of the corresponding first inflows. 

(8) In line with e.g. Articles 212.2, 212.4, 213.1 and 213.4 of the Financial Regulation. 

(9) For Spain. 

(10)  Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing 

the Ukraine Facility, OJ L, 2024/792, 29.2.2024.   

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Table 1: CPF compartments as at 31.12.2024 

Compartment 

Market value in EUR as at 31.12.2024 

Compartments opened in 2021 

EFSI 

GFEA (11) 

EFSD (12) 

InvestEU (13) 

Compartments opened in 2022 

EFSD+ 

Post-2020 MFA 

Exceptional MFA Ukraine (14) 

Post-2020 Euratom loans 

Repurposed ELM loans Ukraine 

InvestEU Guarantee Romania 

InvestEU Guarantee Czech Republic 

InvestEU Guarantee Finland 

InvestEU Guarantee Greece 

InvestEU Blending Operations 

Compartments opened in 2023 

InvestEU Guarantee Bulgaria 

InvestEU Guarantee Malta 

Compartments opened in 2024 

Ukraine Guarantee 

InvestEU Guarantee Spain 

TOTAL 

8 880 303 795.93 

3 225 691 235.78 

761 545 053.25 

5 530 142 834.06 

2 942 175 754.77 

128 662 217.57 

240 575 443.20 

- 

- 

187 974 119.28 

44 099 186.75 

30 657 774.29 

252 204 112.19 

667 045 123.03 

79 674 706.38 

7 939 418.22 

201 878 310.31 

- 

23 180 569 085.02 

(11) Guarantee Fund for external actions (GFEA), holding the provisions for the external lending mandate (ELM), 

legacy (macro-financial assistance - MFA) and Euratom programmes. 

(12) European Fund for Sustainable Development. 

(13)  EU Compartment. 

(14)  Under  Decision  (EU)  2022/12018  and  Decision  (EU)  2022/1628  providing  exceptional  macro-financial 

assistance to Ukraine. 

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Figure 2: Size of CPF compartments as at 31.12.2024 

1.3. Guarantee calls and payment claims 

The liquidity management of guarantee calls and the payment of claims is facilitated by a 
liquidity  buffer,  as  provided  for  in  the  CPF  Asset  Management  Guidelines  (AMGs) (15).  The 
liquidity  buffer  is  made  up  of  limited  reserves  of  cash  held  at  the  Commission’s  Central 
Treasury to cover the cash outflows expected to materialise over a three-month period based 
on notifications from implementing partners.  

The buffer started 2024 with a balance of EUR 106 million. During the year it received inflows 
of  EUR  385  million (16),  while  a  net  amount  of  nearly  EUR  350  million  was  paid  out  in 
2024 (17).  The  compartments  that  were  in  overdraft  were  reset  by  assets  from  the  CPF 
(amounting to EUR 61 million).  As a result, at the end of 2024 the liquidity buffer balance 
stood at EUR 202 million. 

(15) Commission Decision of 25.3.2020 on the Asset Management Guidelines of the common provisioning fund 

(C(2020) 1896 final, OJ C 131, 22.4.2020, p. 3–11. 

(16)  Out of EUR 385 million, EUR 344 million correspond to CPF redemptions, EUR 41 million are recoveries. 

(17) Compared to EUR 351 million in 2023. 

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The 2024 calls on the CPF provisions by the respective budgetary guarantees (18), as well as 
other demands on the resources held by the CPF compartments, are summarized below (19). 

Table 2: CPF outflows in 2024, detailed overview 

Compartment 

in EUR million 

Nature of outflow 

EFSD 

EFSD+ 

GFEA 
(Total: EUR 49.93 million) 

EFSI 

InvestEU EU 

InvestEU Romania 

InvestEU Malta 

InvestEU Bulgaria 

InvestEU Finland 

InvestEU Blending 

Total outflows 

6.14 

0.09 

48.85 

1.08 

152.16 

96.78 

10.30 

0.53 

4.11 

2.74 

27.07 

349.85 

guarantee calls 

guarantee calls 

guarantee calls 

legal expenses 

guarantee calls 

guarantee calls 

guarantee calls 

guarantee calls 

guarantee calls 

guarantee calls 

guarantee calls 

(18) Individual guarantee calls are mentioned in a separate report under Article 41(5) of the Financial Regulation 

(FR). 

(19) It is important to mention that payments may arise in 2025  or later, which may require ex post adjustment 

of the 2024 accounts. 

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Figure 3: 2024 CPF outflows (EUR million) 

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1.4. Effective provisioning rate 

Article 216  of  the  Financial  Regulation  provides  that  the  provisioning  of  budgetary 
guarantees and financial assistance to third countries in the CPF will be based on the Effective 
Provisioning Rate (EPR) as defined in that Article. The EPR takes account of the fact that the 
pooled management of the CPF  – as opposed to the management of separate guarantee 
funds – could result in potential diversification if calls on the different compartments are not 
correlated in time or intensity. 

The EPR is the ratio between 

• 

• 

the  required  amount  of  cash  and  cash  equivalents  held  by  the  CPF,  taking  account  of 
diversification effects between compartments, and 
the sum of the required amounts of cash and cash equivalents in  the event that each 
compartment is managed separately. 

By  law,  the  EPR  should  be  set  at  between  95%  and  100%,  with  a  figure  below  100% 
reflecting some diversification effects. As a result of calculations based on the established 
methodology (20),  and  given  the  prevailing  macroeconomic  and  geopolitical  uncertainties 
(some of the CPF compartments being highly dependent on the evolution of the situation in 
Ukraine),  the  Commission  proposed  that  the  EPR  for  2024  remain  at  100%  due  to  the 
absence  of  any  observed  diversification  between  calls  on  the  provisions  of  the  different 
compartments. This approach was confirmed in the adopted 2025 Annual Budget. 

PART  2:  INVESTMENT  STRATEGY,  PORTFOLIO  COMPOSITION 
AND PERFORMANCE 

The  general  principles  and  considerations  informing  the  CPF  investment  strategy  are 
established by the CPF Asset Management Guidelines and further described in the first CPF 
annual  report  for  2021 (21).  Based  on  the  conservative  approach  enshrined  in  its  Asset 
Management Guidelines, and low risk-tolerance, the CPF is managed in a way that should, at 
least,  deliver capital  preservation over  its investment horizon (9 years) (22).  Reflecting this 
prudent investment policy, the assets in which the CPF can invest are limited to highly liquid 
and  highly  rated  fixed  income  securities.  The  bulk  of  the  CPF  has  been  restricted  to 
investment in euro and US dollar (hedged against currency risk) denominated investment-
grade fixed income securities (bonds)23. The Asset Management Guidelines were modified in 

(20)  Commission  Delegated  Decision  (EU,  Euratom)  C(2020)7684  supplementing  Regulation  (EU,  Euratom) 
2018/1046 of the European Parliament and of the Council with detailed conditions for the calculation of 
the effective provisioning rate of the common provisioning fund (OJ L 42, 5.2.2021, p. 12). 

(21) EUR-Lex - 52022DC0213 - EN - EUR-Lex (europa.eu) 

(22) Article 2(1) of the Asset Management Guidelines. 

23 The assets of the CPF portfolio may be invested in hedged highly liquid bonds denominated in US dollars 
issued by sovereign and supranational entities solely for the purposes of diversification and exposure to 
another interest rate curve. 

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2022 to allow some limited investment in equity exchange-traded funds to provide additional 
diversification opportunities for the CPF. 

2.1. Composition and characteristics of the portfolio 

As  per  its  Asset  Management  Guidelines,  the  CPF  maintains  a  liquid  diversified  portfolio, 
primarily investing in highly-rated debt instruments, such as bonds issued by governments, 
supra-nationals, state agencies and corporates. 

At the year-end, the CPF portfolio was well diversified across the different asset classes in 
the eligible fixed income universe, including some limited exposure to equity ETFs, cash or 
cash equivalents and hedged US dollar denominated securities (USD). Figure 4 illustrates a 
growing allocation to sovereign/SSA assets and equities over the years, accompanied by a 
decline  in  covered  and  corporate  bonds  over  the  last  four  years.  This  trend  reflects  the 
introduction  of  equity  as  an  eligible  asset  class  and  shifting  perceptions  of  the  relative 
attractiveness of different asset classes amid evolving market conditions. 

The credit quality of the CPF portfolio was high, with an average rating of A, suggesting a 
negligible  default  probability (24).  Over  40%  of  the  portfolio  was  invested  in  AAA 
securities (25), with the rest distributed across the investment-grade scale. 

USD-denominated  investments  represented  7%  of  the  portfolio’s  market  value (26),  with 
currency risk hedged using forward contracts.  

Equity  represented  7%  of  the  portfolio’s  market  value  at  the  end  of  2024 (27).  This 
contributed  to  the  overall  positive  portfolio  performance  by  accounting  for  0.6%  of  total 
annual return. 

As of December 2024, about 11% of the portfolio consisted of short-term liquid assets (28), 
providing for a source of ready-to-hand liquidity in the event of large outflows exceeding the 
size of the liquidity buffer described above (29). 

(24) 0.04% default probability over a one year horizon. 

(25) Compared to over 36% in 2023. 

(26) Compared to 6.6% in 2023. 

(27)  Compared to 5.5% in 2023. 

(28) Compared to 15.2% in 2023. 

(29) On top of liquidity buffer described in Section 1.5. 

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Figure 4: CPF portfolio allocation at year-end (2024) 

2.2. Environmental, social and governance (ESG) footprint 

In 2024 the ESG footprint (30) of the portfolio increased further with the share of ESG-labelled 
bonds (31)  reaching  16%,  compared  to  14.6%  in  2023.  The  proactive  approach  to  ESG 
investing favours ESG-labelled bonds, provided they align with risk management criteria and 
overall investment strategy.  

2.3. CPF performance in 2024 

In 2024, inflation dynamics and central bank actions continued to drive market developments 
(see  Box).  Despite  this  volatility,  the  gradual  reduction  in  rates,  combined  with  robust 
economic growth and resilient labour markets, provided overall support to financial markets 
and had a positive impact on the valuation of the CPF’s bond and equity holdings. Against 
this  background,  the  CPF  achieved  an  annual  return  of  +3.57%,  exceeding  its  portfolio 
benchmark (32) (+3.31%).  

(30)  ESG  footprint  –  a  quick  score  showing  the  portfolio’s  overall  impact  on  environmental,  social,  and 

governance issues. 

(31)  In  assessing  whether  bonds  are  classified  as  ESG-labelled  for  the  purposes  of  CPF  allocation,  the 
Commission  relies on  the  published  assessment  of  the  ‘use  of  proceeds’  of  the  asset  in  question  by  the 
analytics and data providers which the Commission uses for its asset management function.  

(32)  As per the CPF Asset Management Guidelines (Decision COM(2020) 1896), the assets should be managed 
by the financial manager on the basis of an investment strategy that is expressed in the form of a Strategic 
Asset Allocation, reflecting the investment objectives and the risk tolerance. The investment strategy should 
be reflected in a strategic benchmark (the ‘benchmark’). The benchmark should be set in line with good 
industry practices. 

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Market developments in 2024 

Inflation data and respective action by central banks remained the main market drivers in 2024. 
Following the steady decrease in inflation throughout 2023, the new year began with markets 
pricing  a  continuation  of  this  trend.  This  disinflationary  trend  was  driven  by  a  combination  of 
factors, including supply chain improvements, easing energy prices and a cooling housing market. 

In  turn,  interest  rates  were  initially  expected  to  fall  steadily  during  2024,  with  the  European 
Central Bank (ECB) policy rate expected to fall from 4% at the beginning of the year to 2.25% by 
year-end. These market expectations had already suppressed bond yields and the German 10-
Year  government  bond  (Bund)  was  at  its  annual  low  at  2.02%  in  early  January.  As  the  year 
progressed, inflation proved to be stickier than expected and the pace of decrease towards the 
ECB’s 2% target was slower than initially anticipated. This slowly pushed yields higher and the 
German Bund reached a peak of 2.69% in late May. Once the ECB initiated the rate-cutting cycle 
with its first cut of 0.25% in June, yields began to gradually move lower and the German Bund 
ended the year at 2.36%, at which point the ECB had lowered its main policy rate by 1 percentage 
point  in  total,  to  3%.  Headline  inflation  slowly  decreased  towards  ECB’s  target,  from  2.8%  in 
January to 2.4% in December, after briefly dipping to as low as 1.8% in September. 

In the USA, headline inflation remained even stickier than in Europe. The first inflation reading of 
the year came in at 3.1% in January, before dipping to 2.4% in September and then reversing to 
2.9% at year-end. The Federal Reserve Bank also cut its key policy rate by a total of 1 percentage 
point, to a target range of 4.25%-4.50%. However, it only started in September, later than market 
expectations at the beginning of the year. 

In terms of economic growth, the US outperformed Europe. In Europe, weaker growth in Germany 
was compensated by the strong performance of Spain, with EU average growth of close to 1%. 
The job market remained very strong in both the EU and the US, and the unemployment rates in 
both regions remained near record lows, boosting consumer confidence and spending. 

Interest rate cuts, combined with decreasing inflation and good economic growth extended the 
market rally to most asset classes. Equity indices rose to all-time highs. The STOXX Europe 600 
index was up 6%, while the US’s S&P 500 was up 23.3%. 

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CONCLUSIONS 

During  2024,  the  CPF  delivered  a  return  of  +3.57%  exceeding  its  benchmark  of 
+3.31%.Combined with the positive return of +5.21% in 2023,this has restored the market 
value  of  provisioning  for  most  of  the  budgetary  guarantees.  Looking  ahead,  the  current 
positive interest rate environment provides a foundation for sustained medium-term returns. 
However, heightened geopolitical risks could give rise to  increased market volatility in 2025 
in the CPF’s main asset classes (fixed income, equity). 

The CPF broadened its strategy in 2023 by integrating pan-European equity indices alongside 
fixed income investments. In 2024, this equity diversification continued to have a positive 
impact on performance (equity contributing +0.6% to the total CPF performance), enhancing 
returns while maintaining a balanced risk profile. 

Overall, while acknowledging the potential challenges ahead, particularly those arising from 
geopolitical uncertainties, the CPF remains strategically positioned to navigate volatility and 
pursue long-term stability and growth consistent with its investment objectives. 

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