Debate: Discharge
Date: WEDNESDAY, 10 APRIL 2024
Speaker: Tony Murphy
Language: EN

I think our annual reports hold significant importance as they serve as the centrepiece of our efforts to address the challenges faced by the European Union in terms of managing the EU budget. And they are also a key contribution to this discharge procedure, which Commissioner Hahn has said is the last one within this legislative procedure. While I have already discussed the main findings of our annual report in the plenary session last October, today I would just like to give a very brief overview of the key messages contained therein.  As in previous years, we have no issues with the opinion on the EU accounts, nor on the revenue. In terms of expenditure, for the second time, we have two separate opinions, reflecting that there are fundamental differences between the budget spending under the MFF, the Multi Financial Framework and the RRF spending.  Starting with the spending related to the MFF, we saw an increase in the overall level of irregularities, rising to 4.2 % from 3.0 % the previous year. Given the widespread occurrence of the errors identified, we have maintained an adverse opinion for the fourth consecutive year.  The cohesion policy area continues to be the main driver of the increase in our overall error rate. It represents the EU’s largest policy area, accounting for 40 % of our audited expenditure. And for this policy area, we estimate the error rate to be 6.4 % compared to 3.6 % the previous year.  Moving on to our audit of the expenditure on the Recovery and Resilience Facility, here, we also have a separate opinion, which is necessitated by the distinct delivery model of the RRF, which focuses on the achievement of milestones and targets. We assessed almost all the milestones and targets included in the payments made to 11 Member States during 2022. Our conclusion is that several milestones and targets were affected by regularity issues. We also found weaknesses in the RRF control system. Based on a combination of these qualitative and quantitative considerations, we issued a qualified opinion on the RRF expenditure for 2022. It’s important to note that unlike other EU funding programmes, investment projects’ compliance with EU and national rules is not a condition for payment under RRF and therefore not covered by the Commission assessment.  However, these large investment projects, which only now begin to be funded through the facility, are similar in nature to cohesion fund investments. Considering the observed significant increase in the error rate within this policy area, a risk exists that under the RRF, the EU’s financial interests would not be sufficiently protected.  As we passed the halfway point of the RRF’s eligibility period, we should acknowledge we should acknowledge its contribution to the EU’s economic recovery as detailed in the Commission’s recently published mid-term evaluation report. We also must acknowledge that only over a third of the funds available for disbursement under the facility have actually been paid out to date. In fact, three EU Member States have not yet received any RRF funding and a further two have only received pre-financing. So a portion of the loans on offer amounting to EUR 90 billion will now go unused, suggesting limited interest in such financing.  Furthermore, the timeline for addressing the RRF-associated debt is also rapidly approaching. While no dedicated source of EU funding has yet been created to repay it, the budget is already feeling the strain of interest charges. They could rise to as much as EUR 27 billion for the EU’s entire MFF period, doubling initial estimates.  Ladies and gentlemen, as we look to the future, I believe that we find ourselves at a critical juncture within the European Union. Amidst significant debt burdens, we also face the clear prospect of enlargement, a pressing migration crisis, with parallel energy and environmental challenges, as we strive to meet ambitious green objectives. Amidst these changes, the ECA remains steadfast in its commitment to upholding accountability and transparency.