Debate: Discharge
Date: TUESDAY, 9 MAY 2023
Speaker: Tony Murphy
Language: EN

In March of this year, my colleague Marek Opiola represented the European Court of Auditors as a member of a delegation that visited the Ukraine, together with Commissioner Hahn and Ville Itälä, the Director-General of OLAF. They met with representatives of the Ukrainian parliament, the government, as well as the Ukrainian Supreme Audit Office. The purpose of the visit was aimed at boosting fraud prevention and budgetary protection, but fundamentally to show our continued solidarity with Ukraine.  During the visit, we reassured colleagues of our continued efforts to support them through various actions, including the current secondment of five Ukrainian auditors to the European Court from the Ukrainian Supreme Audit Office.  The annual report is the court’s main product, and it contributes to combating challenges to the EU budget and plays an important role in improving accountability across EU policy areas. It covers the reliability of the Commission accounts and also the legality and regularity of EU revenue and expenditure.  As we have previously presented the main findings of this report at the plenary session in October last year, today I would just like to give you a very brief overview of our key messages and offer you a forward-looking perspective on the EU budget landscape.  Today, I am supported by my colleague, Jan Gregor, who was the Court’s Member for the Annual Report for 2022 onwards. So, as in previous years for the EU accounts, we have adopted a clean opinion. For revenue, as for previous years, we concluded that the overall error was not material. This time for the first time – and I think it was alluded to by the Minister earlier – we had two separate opinions, one on MFF and one on the RRF spending.  So, for EU budget spending, we found that the overall level of irregularities increased significantly from last year, reaching 3 % in 2021, and we estimated that it is 4.7 % for high-risk spending, which makes up a clear majority of 63 % of our audit population. So, given the widespread nature of the problems that we uncovered – basically, the pervasiveness of the errors – we gave an adverse opinion for the third year in a row.  If we zoom in for a moment, we estimate that the level of error in ‘Cohesion’ is 3.6 %, and our upcoming 2022 annual report will include for the first time the impact of cohesion payments made to Member States during the COVID-19 period.  The RRF represents the EU’s main financial response to the challenge of the COVID-19 pandemic. Its spending was covered by our statement of assurance for the first time. As you know, the fundamental difference between budget spending under MFF and the RRF is that in the latter the EU makes payments to Member States after it assesses that they have fulfilled the objectives – the milestones and targets – agreed up front in their national recovery plans.  Unlike for other EU funding programmes, investment projects’ compliance with EU and national rules is not a condition for payment under the RRF. We have looked at the RRF at the early stages in its life cycle. For 2021, there was only one payment under the facility, being EUR 11.5 billion to Spain for 52 reform milestones, and we were able to examine this payment in full.  We concluded that overall the impact of the one milestone, which was not satisfactorily fulfilled, was not material so we were able to give a clean opinion based on the assessment of the Commission, but with the caveat that the respect of national and EU rules still had to be checked later on. So as I said, this continues to be a key element of our work and probably will be for the next months and years.  In March of this year, we published a special report on the Commission’s control system for the RRF, which built on the work of our 2021 annual report. We found that the Commission has limited verified information as to whether RRF projects comply with EU and national rules. This is of particular concern for us, as in our 2021 annual report, we provide an error rate of 4.1 % in ‘Cohesion’, which funds similar projects as the investment element of the RRF. We therefore highlight and bring to the attention of the discharge authorities an assurance and accountability gap in protecting the EU’s financial interests.  In terms of the facility itself, to date, EUR 153 billion has been paid out to Member States, a total of EUR 106 billion in grants and EUR 47 billion in loans, of which almost EUR 57 billion represents pre-financing. So while we are almost halfway through the eligibility period for projects under the facility, this represents just around one-fifth of the overall funds available for disbursement.  Furthermore, to date, five Member States have yet to receive any payment and another six Member States have only received pre-financing.  We should, however, be mindful of the capacity of Member States and their ability to spend EU financial resources efficiently and effectively. In this context, we note that EUR 127 billion from the Structural Funds for the period 2014–2020 are still to be used and absorption for the 2021–2027 budget is yet to start in a meaningful way.  Looking forward, I can inform you that our annual report for 2022 will have somewhat of a different face to it. Firstly, again as the Minister mentioned, it will provide a greater overview of the RRF as we have 13 payments for EUR 47 billion which have been made to 11 Member States in 2022 in our sample. In addition, as we move from the close of one programming period to the beginning of the next, we will have a clearer picture about how the 2014–2020 MFF has performed.  So, as we come to the end of this onerous but very important discharge procedure, I look forward to the continued excellent cooperation between the ECA and the Budgetary Control Committee and the various rapporteurs and also our respectful working relationship with the European Commission.