Post on 29-Apr-2019
III Preparatory acts
COURT OF AUDITORS
2019/C 45/01 Opinion No 10/2018 (pursuant to Article 322(1) TFEU) concerning the proposal for a Regulation of the European Parliament and of the Council establishing the Neighbourhood, Development and Inter national Cooperation Instrument [COM(2018) 460 final] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
C 45
Volume 62
4 February 2019 Information and Notices
Official Journal of the European Union
English edition
Contents
EN
III
(Preparatory acts)
COURT OF AUDITORS
OPINION No 10/2018
(pursuant to Article 322(1) TFEU)
concerning the proposal for a Regulation of the European Parliament and of the Council establishing the Neighbourhood, Development and International Cooperation Instrument
[COM(2018) 460 final]
(2019/C 45/01)
CONTENTS
Paragraph Page
Summary I-IV 2
Introduction 1-9 2
PART I: GENERAL REMARKS 10-19 4
Simplification and coherence 13-14 4
Flexibility 15-16 5
Accountability 17-18 5
EDF specific arrangements 19 5
PART II: SPECIFIC REMARKS 20-68 5
Title I — General provisions (Articles 1-9) 20 5
Chapter I — Programming (Articles 10-15) 21-29 5
Chapter II — Specific provisions for the Neighbourhood (Articles 16-18) 30-38 6
Chapter III — Action plans, measures and implementing methods (Articles 19-25)
39-48 7
Chapter IV — EFSD+, budgetary guarantees and financial assistance to third countries (Articles 26-30)
49-57 8
Chapter V — Monitoring, reporting and evaluation (Articles 31-32) 58-65 9
Conditions for attestation by the Court 66-68 10
ANNEX — Analysis of the Commission’s proposal and the Court’s suggestions 11
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THE COURT OF AUDITORS OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 322(1) thereof;
Having regard to the Multiannual Financial Framework (MFF) 2021-2027 as outlined in the communication ‘A modern Budget for a Union that Protects, Empowers and Defends – The Multiannual Financial Framework 2021-2027’ ( 1 );
Having regard to 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 ( 2 );
Having regard to Court Opinion No 1/2017 concerning the proposal for a Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union ( 3 );
Having regard to the Commission's proposal for a Regulation of the European Parliament and the Council establishing the Neighbourhood, Development and International Cooperation Instrument ( 4 );
Having regard to the Council's request of 9 July 2018 for an opinion on the abovementioned proposal;
Whereas the object of the proposal is to streamline a number of instruments within one broad instrument, thereby providing an opportunity to rationalise management and oversight systems, and so reduce the administrative burden for stakeholders;
HAS ADOPTED THE FOLLOWING OPINION:
Summary
I. The Proposal is made in the context of the Multiannual Financial Framework (MFF) 2021-2027 ( 5 ). The Proposal envisages a major restructuring of the Union’s external action instruments by merging several of them into a broad new one: the Neighbourhood, Development and International Cooperation Instrument, which will apply as of 1 January 2021.
II. The rationale behind the Proposal is to ‘simplify ways of working’ while increasing the coherence and consistency of its interventions, and to be more flexible in responding to unforeseen challenges and crises. Overall, the Proposal achieves these goals.
III. Integrating the EDF into the NDICI addresses an inconsistency between the EDF budgetary process and accountability process. Through the Proposal, the European Parliament would gain budgetary and legislative power. Consequently, the democratic oversight of EU development aid would improve.
IV. This opinion makes suggestions on how to bring clarity to the Proposal by partly reorganising some provisions and making others more specific.
Introduction
1. On 14 June 2018, the Commission published a proposal (‘the Proposal’) for a Neighbourhood, Development and International Cooperation Instrument ( 6 ) (NDICI), as well as annexes to the Proposal for a Neighbourhood, Development and International Cooperation Instrument ( 7 ).
2. The Proposal is made in the context of the Multiannual Financial Framework (MFF) 2021-2027 ( 8 ), as outlined in its communication ‘A Modern Budget for a Union that Protects, Empowers and Defends – The Multiannual Financial Framework for 2021-2027’. The communication sets the main priorities and overall budgetary framework for EU external action programmes under the heading ‘Neighbourhood and the World’, including the establishment of the Neighbourhood, Development and International Cooperation Instrument.
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( 1 ) COM(2018) 321 final, Communication ‘A modern Budget for a Union that Protects, Empowers and Defends – The Multiannual Financial Framework for 2021-2027’ from the Commission to the European Parliament, the European Council and the Council, the European Economic and Social Committee and the Committee of the Regions.
( 2 ) OJ L 193, 30.7.2018, p. 1, ‘the Financial Regulation’. ( 3 ) OJ C 91, 23.3.2017, p. 1. ( 4 ) COM(2018) 460 final. ( 5 ) COM(2018) 321 final, as cited above. ( 6 ) Proposal for a Regulation of the European Parliament and the Council establishing the Neighbourhood, Development and Inter
national Cooperation Instrument, COM(2018) 460 final. ( 7 ) Annexes to the Proposal for a Regulation of the European Parliament and the Council establishing the Neighbourhood, Development
and International Cooperation Instrument, COM(2018) 460 final, Annexes 1 to 7. ( 8 ) COM(2018) 321 final, Communication ‘A modern Budget for a Union that Protects, Empowers and Defends – The Multiannual
Financial Framework for 2021-2027’ from the Commission to the European Parliament, the European Council and the Council, the European Economic and Social Committee and the Committee of the Regions.
3. In the MFF 2014-2020, a number of financing instruments coexist under heading 4 (‘Global Europe’), most of which will expire on 31 December 2020. Under the MFF 2021-2027, the Proposal envisages a major restructuring of the Union’s external action instruments by merging several of them into a broad new one: the Neighbourhood, Development and International Cooperation Instrument, which will apply as of 1 January 2021. The current instruments/programmes to be merged/integrated are:
— the Development Cooperation Instrument ( 9 ) (DCI);
— the European Development Fund ( 10 ) (EDF);
— the European Instrument for Democracy and Human Rights ( 11 ) (EIDHR);
— the European Neighbourhood Instrument ( 12 ) (ENI);
— the Partnership Instrument ( 13 ) (PI);
— the Instrument contributing to Stability and Peace ( 14 ) (IcSP);
— the Instrument for Nuclear Safety Cooperation ( 15 ) (INSC);
— the External Lending Mandate ( 16 ) (ELM);
— a Guarantee Fund for external action ( 17 );
— the European Fund for Sustainable Development (EFSD), its Guarantee and its Guarantee Fund ( 18 );
— Macro-Financial Assistance ( 19 ) (MFA); and
— the Common Implementing Regulation ( 20 ) (CIR).
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( 9 ) Regulation (EU) No 233/2014 of the European Parliament and of the Council of 11 March 2014 establishing a financing instrument for development cooperation for the period 2014-2020. (OJ L 77, 15.3.2014, p. 44).
( 10 ) Internal Agreement on the 11th EDF (OJ L 210, 6.8.2013, p. 1); Council Regulation (EU) 2015/322 of 2 March 2015 on the implementation of the 11th European Development Fund, (OJ L 58, 3.3.2015, p. 1); Council Decision (EU) 2015/334 of 2 March 2015 (OJ L 58, 3.3.2015, p. 75).
( 11 ) Regulation (EU) No 235/2014 of the European Parliament and of the Council of 11 March 2014 establishing a financing instrument for democracy and human rights worldwide (OJ L 77, 15.3.2014, p. 85).
( 12 ) Regulation (EU) No 232/2014 of the European Parliament and of the Council of 11 March 2014 establishing a European Neighbourhood Instrument (OJ L 77, 15.3.2014, p. 27).
( 13 ) Regulation (EU) No 234/2014 of the European Parliament and of the Council of 11 March 2014 establishing a Partnership Instrument for cooperation with third countries (OJ L 77, 15.3.2014, p. 77).
( 14 ) Regulation (EU) No 230/2014 of the European Parliament and of the Council of 11 March 2014 establishing an instrument contributing to stability and peace (OJ L 77, 15.3.2014, p. 1).
( 15 ) Council Regulation (Euratom) No 237/2014 of 13 December 2013 establishing an Instrument for Nuclear Safety Cooperation (OJ L 77, 15.3.2014, p. 109). It is proposed that only a limited number of activities pertaining to the peaceful use of nuclear energy (see Annex II(6)(i)) should come under the NDICI. A complementary instrument will be created in line with the specific procedures of the Euratom Treaty: the European Instrument for Nuclear Safety (EINS). It is proposed that this instrument should cover actions (and financing for nuclear-related activities) pertaining to nuclear safeguards, support for the infrastructure and training, and transfers of EU expertise.
( 16 ) Decision (EU) No 2018/412 of the European Parliament and of the Council of 14 March 2018 amending Decision 466/2014/EU granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union (OJ L 76, 19.3.2018, p. 30).
( 17 ) Council Regulation (EC,Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for external actions (OJ L 145, 10.6.2009, p. 10).
( 18 ) Regulation (EU) 2017/1601 of the European Parliament and of the Council of 26 September 2017 establishing the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD Guarantee Fund (OJ L 249, 27.9.2017, p. 1).
( 19 ) Except Macro-Financial Assistance grants. Macro-Financial Assistance will be activated on a case-by-case basis, as needed. ( 20 ) Regulation (EU) No 236/2014 of the European Parliament and of the Council of 11 March 2014 laying down common rules and
procedures for the implementation of the Union's instruments for financing external action (OJ L 77, 15.3.2014, p. 95). The CIR applies to a number of instruments under heading 4 ‘Global Europe’ of the MFF 2014-2020.
4. According to recital 8 of the Proposal, the implementation of the NDICI shall be guided by the five priorities established in the Global Strategy for the European Union’s Foreign and Security Policy (Global Strategy) ( 21 ). Furthermore, recital 9 highlights the importance of the new European Consensus on Development ( 22 ) (the Consensus), which provides the framework for a common approach to development cooperation by the Union and its Member States. The Consensus aims to implement the 2030 Agenda for Sustainable Development ( 23 ) and the Addis Ababa Action Agenda ( 24 ).
5. The objective of the Neighbourhood, Development and International Cooperation Instrument is ‘to uphold and promote the Union’s values and interests worldwide in order to pursue the objectives and principles of its external action’ ( 25 ).
6. The funding proposed for the implementation of the NDICI for the 2021-2027 period is 89,2 billion euros ( 26 ).
7. One of the main changes of the NDICI is to integrate the EDF, which is currently outside the budget. With a budget of 30,5 billion euros for the 2014-2020 period, the EDF is the largest external instrument ( 27 ). The current EDF(s) ( 28 ) and the NDICI will run in parallel until the funds are exhausted.
8. The Commission proposes that the Proposal will support the framework for implementing the successor partnership to the current Cotonou agreement ( 29 ). This approach is the reverse of the current one, under which the Cotonou agreement has supported the EDFs.
9. Our analysis includes a number of general remarks (Part I), specific remarks (Part II) and a list of specific drafting suggestions (Annex).
PART I: GENERAL REMARKS
10. The NDICI is an ambitious proposal, which:
(a) merges several programmes and instruments (budgetary and off-budget) into one instrument;
(b) includes geographic programmes, thematic programmes and rapid response actions;
(c) includes many different forms of funding (grants, procurement contracts, budget support, contributions to trust funds, financial instruments, budgetary guarantees, blending and debt relief).
This makes the NDICI a very comprehensive and complex instrument.
11. The rationale behind the Proposal is to ‘simplify ways of working’ while increasing the coherence and consistency of its interventions, and to be more flexible in responding to unforeseen challenges and crises ( 30 ).
12. Overall, the Proposal will simplify the legislative framework in the area of external aid. It will provide greater flexibility for budgetary instruments and similar flexibility for the items previously included in the EDF.
Simplification and coherence
13. The simplification sought by the Commission essentially entails merging several budgetary instruments and the EDF into a broad instrument.
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( 21 ) ‘Shared vision, Common Action: A Stronger Europe, A global Strategy for the European Union’s Foreign and Security Policy’, 19.6.2016.
( 22 ) ‘The New European Consensus on Development: Our World, Our Dignity, Our Future’, Joint Statement by the Council and the Representatives of the governments of the Member States meeting within the Council, the European Parliament and the European Commission, 8.6.2017.
( 23 ) ‘Transforming our world: the 2030 Agenda for Sustainable Development’, Resolution adopted by the United Nations General Assembly on 25 September 2015 (A/RES/70/1).
( 24 ) ‘Addis Ababa Action Agenda on the Third International Conference on Financing for Development’, adopted on 16 June 2015 and endorsed by the United Nations General Assembly on 27 July 2015 (A/RES/69/313).
( 25 ) Articles 3(5), 8 and 21 of the consolidated version of the Treaty on the European Union (TEU). ( 26 ) Article 6(1) of the Proposal. ( 27 ) A significant part of the African Peace Facility, which is currently being funded by the EDF, will remain off-budget. In comparison,
the budget for heading 4 ‘Global Europe’ for the 2014-2020 period amounts to 66,3 billion euros. ( 28 ) For the 8th, 9th and 10th EDFs, the commitment period has expired; the commitment period for the 11th EDF will end in 2020,
Article 1(5) of the Internal Agreement on the 11th EDF – (OJ L 210, 6.8.2013, p. 1); Council Regulation (EU) 2015/322 (OJ L 58, 3.3.2015, p. 1).
( 29 ) See recital 20 of the Proposal. ( 30 ) Explanatory memorandum to the Proposal, point 1 ‘Context of the Proposal’.
14. Although the Proposal goes in the right direction and reduces gaps and overlaps ( 31 ), coherence and consistency depend on the implementation arrangements that are chosen, as well as on the Commission’s supervision and management arrangements. For example, capacity building in the area of peace and security can be financed geographically and thematically under the Proposal and implemented by separate Commission departments, EU delegations or EU trust funds. Furthermore, similar actions might also be financed under the CFSP (CSDP training missions not covered by the ‘Athena mechanism’) or under the proposed European Peace Facility.
Flexibility
15. The communication on the new MFF 2021-2027 ( 32 ) stressed that ‘it will in addition be essential that the rules governing the Neighbourhood, Development and International Cooperation Instrument include similar flexibility provisions to those in place for the current European Development Fund’.
16. In order to respond more flexibly to unforeseen challenges and crises, the Proposal involves two main measures: introducing an 11 % ‘emerging challenges and priorities cushion’ (Article 6(3)) and softening the rules on annuality by making it easier to carry over commitments and make decommitments available again to the original budget line (Article 25).
Accountability
17. Our 2017 EDF annual report ( 33 ) drew attention to an inconsistency between the EDF budgetary process and the accountability process. The European Parliament (EP) does not intervene in the establishment of the EDF budget and its rules, or in the allocation of relevant resources. However, it does decide whether to grant discharge to the European Commission for the way it has managed the EDF as part of a specific annual discharge procedure. Integrating the EDF into the NDICI addresses this inconsistency and strengthens the European Parliament’s democratic oversight of EU development aid. Consequently, the democratic control of EU development aid has improved. By means of the Proposal, the European Parliament will gain budgetary and legislative power.
18. Recital 44 stresses the obligation for the Commission to include in ‘(…) agreements with third countries and territories and with international organisations, and any contract or agreement resulting from the implementation of the Regulation should contain provisions expressly empowering the Commission, the Court of Auditors and OLAF to conduct such audits, on-the-spot checks and inspections, according to their respective competences and ensuring that any third parties involved in the implementation of Union funding grant equivalent rights’. The Commission and legislators should consider reinforcing in such agreements the obligation to forward to the Court of Auditors, at its request, any document or information it needs to carry out its task.
EDF specific arrangements
19. Several material points relating to the EDF, such as the use of remaining funds, special reserves and decommitted amounts, the future of the Cotonou agreement and of the ACP Investment Facility, are not covered by the Proposal and will depend on a decision by the Member States when the current Cotonou agreement expires in 2020 and on any subsequent agreement with the ACP countries. This creates uncertainty for partner countries.
PART II: SPECIFIC REMARKS
Title I — General provisions (Articles 1-9)
20. The recitals stress the importance of gender equality and women’s empowerment, climate change, migration and civil society organisations. However, gender equality and climate change are not explicitly mentioned in the specific objectives in Article 3(2).
Chapter I — Programming (Articles 10-15)
21. As regards programming, other than a chapter on Neighbourhood-related issues (Chapter II) that is inspired by the respective provisions for the ENI ( 34 ), the Proposal is mostly based on the DCI Regulation ( 35 ). This is the case of the geographic programmes in particular.
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( 31 ) The impact assessment of the Proposal (SWD(2018) 337 final) identifies fewer gaps and overlaps between instruments as one justification for the change in the architecture of the external instruments, page 19.
( 32 ) COM(2018) 321 final, A Modern Budget for a Union that Protects, Empowers and Defends. The Multiannual Financial Framework for 2021-2027, footnote 16.
( 33 ) Annual report on the activities funded by the 8th, 9th, 10th and 11th European Development Funds for the financial year 2017, paragraph 45 (OJ C 357, 4.10.2018, p. 315).
( 34 ) Regulation (EU) No 232/2014, as cited above. ( 35 ) Regulation (EU) No 233/2014, as cited above.
22. As regards thematic programmes, the Proposal also takes on board programming provisions from other existing instruments (e.g. the IcSP ( 36 ), and the PI ( 37 )). As these instruments are mainly of a thematic nature and in certain respects include very similar provisions, the Proposal results in a significantly simpler set of provisions (particularly as far as programming documents are concerned).
23. Article 11 of the Proposal introduces a number of programming principles, which exclusively address geographic programmes. Although by their very nature it is clear that some principles apply only to this type of programmes (e.g. as regards synchronising the programming period with the partner countries’ strategy cycles), others do not apply exclusively to geographic programmes. An example of this is the principle that programming documents for geographic programmes should be results-based (Article 11(5)); in our view, this should also apply to thematic programmes.
24. The Commission and legislators should consider:
applying the principle that programming documents for geographic programmes should be results-based to thematic programmes as well.
25. Article 11(1) of the Proposal calls for dialogue between the Union, the Member States and the partner countries with a view to programming action. However, we find no reference to this dialogue either in the description of the process of adopting, approving, amending and/or reviewing the multiannual indicative programmes (MIPs) (Article 14), or in the definition of the contents of programming documents (Articles 12 and 13), e.g. the inclusion of a reference to the main stakeholders consulted during the programming procedure.
26. The Commission and legislators should consider:
including in the Proposal the missing reference to the dialogue between the Union, Member States and partner countries.
27. The wording of numbers 3 and 4 of Article 14 only differs insofar as one addresses geographic programmes (number 3), while the other addresses thematic programmes (number 4), as does the final part of number 3 (which also includes ‘following a crisis or post-crisis situation’). The Annex contains a suggestion for re-formulation.
28. Article 15 deals with the ‘emerging challenges and priorities cushion’. It is not clear why this article comes under ‘Programming’ (Chapter I).
29. The Commission and legislators should consider:
moving Article 15, ‘emerging challenges and priorities cushion’, to section ‘General provisions’, after Article 6. This modification would make the order of the articles more logical as Article 15 refers to Article 6.
Chapter II — Specific provisions for the Neighbourhood (Articles 16-18)
30. The Proposal dedicates a separate chapter to ‘Specific provisions for the Neighbourhood’, consisting of three articles related to programming. The proposed structure makes the Proposal more difficult to read.
31. Article 16(2) relates to the programming principles for ‘Neighbourhood’. Although the content of this paragraph is about programming principles, the Article is entitled 'Programming documents'. This is not in keeping with the structure applied in Chapter I, where Programming Principles (Article 11) and Programming Documents (Article 12) come under separate Articles.
32. Article 16(2) states 'By way of derogation from Article 11(2) …'. However, the content of the two paragraphs and the partner country's criteria used for programming are partly similar.
33. In Article 17, the Commission proposes a ‘performance-based approach’. However, this relates only to ‘Neighbourhood’ countries, insofar as only they have characteristics that could be compared using performance indicators.
34. Although a similar mechanism was also included under the 11th EDF ( 38 ) ‘in order to provide incentives for result- oriented reforms’, this is not the case under the current Proposal.
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( 36 ) Regulation (EU) No 230/2014, as cited above. ( 37 ) Regulation (EU) No 234/2014, as cited above. ( 38 ) Regulation (EU) 2015/322, as cited above, Article 7(2).
35. Furthermore, the mid-term review report of the ENI ( 39 ) stated that: ‘The implementation of the incentive-based approach defined in the ENI provided significantly higher financial resources to those partners that have made the strongest progress on political reforms but its impact on leveraging further reforms, in particular in other countries, still needs to be demonstrated. The ENI has not been able to provide sufficient incentives to those countries reluctant to engage in political reforms.’ The Proposal has not changed the existing mechanism of the performance-based approach.
36. The Commission and legislators should consider:
applying a similar mechanism for the ‘performance based-approach’ to the whole Proposal. This modification would ensure that the ‘performance based-approach’ is not limited to ‘Neighbourhood’ countries.
37. The concept of the performance-based approach in Article 17 is the same as the incentive-based approach for the ENI ( 40 ); only the terminology differs. The concept has not been adjusted to reflect the Financial Regulation’s focus on performance and results ( 41 ).
38. The Commission and legislators should consider:
deleting Chapter II, ‘Specific provisions for the Neighbourhood’, and including the articles under Chapter I, 'Programming', keeping the specific provisions for the Neighbourhood to a strict minimum. This modification would make the proposal easier to read.
Chapter III — Action plans, measures and implementing methods (Articles 19-25)
39. As regards implementation, the Proposal is mainly based on the CIR ( 42 ) and takes on board the implementation provisions of some of the existing instruments.
40. Compared to the existing framework, the Proposal includes a significantly simpler list of the types of measures that can be adopted (individual, special, support and exceptional assistance measures). In our opinion, a description of (some of) the situations in which individual measures are to be adopted would make the proposal clearer.
41. Article 19(4) concerns exceptional assistance measures. By analogy with the support measures, which are governed by one specific article (Article 20) exceptional assistance measures should be treated in a separate article, by virtue of their being exceptional.
42. In Article 21, the Commission proposes ceilings (10 million euros and 20 million euros, respectively), below which action plans and measures do not need to be adopted ‘by means of implementing acts adopted in accordance with the examination procedure’. These ceilings are double those of the 11th EDF ( 43 ). In the case of programmes already financed under the budget, the ceilings have also doubled. Increasing the thresholds for those exceptions where an implementing act is not required weakens oversight arrangements.
43. Article 25 of the Proposal goes beyond the Financial Regulation by:
(a) allowing unused commitment and payment appropriations to be automatically carried over and committed up to 31 December of the following financial year;
(b) making available again those commitment appropriations that correspond to the amount of decommitments made as a result of total or partial non-implementation of an action;
(c) not applying the third subparagraph of Article 114(2) of the Financial Regulation ( 44 );
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( 39 ) SWD(2017) 602, Commission staff working document - Evaluation of the European Neighbourhood Instrument Accompanying the document – Report from the Commission to the European Parliament and the Council – Mid-term review of External Financing Instruments.
( 40 ) Regulation (EU) No 232/2014 as cited above, Article 4(2) and (3). ( 41 ) ‘The concept of performance as regards the budget should be clarified. Performance should be linked to the direct application of the
principle of sound financial management. The principle of sound financial management should also be defined, and a link should be established between objectives set and performance indicators, results and economy, efficiency and effectiveness in the use of appropriations. For reasons of legal certainty, while avoiding conflicts with existing performance frameworks of the different programmes, performance terminology - in particular output and results- should be defined’ (Financial Regulation, Recital 9).
( 42 ) Regulation (EU) No 236/2014, as cited above. ( 43 ) Article 9(4) of Regulation (EU) 2015/322, as cited above. ( 44 ) ‘In external actions, where the global budgetary commitment gives rise to a financing agreement concluded with a third country, the
financing agreement shall be concluded by 31 December of year n+1. In that case, the global budgetary commitment shall cover the total costs of legal commitments implementing the financing agreement entered into within a period of three years following the date of conclusion of the financing agreement.’
(d) introducing a derogation from Article 209(3) of the Financial Regulation concerning the repayments and revenues generated by a financial instrument.
44. In the explanatory memorandum, the Commission states that these provisions are needed to import the flexibilities of the EDF, i.e. unallocated funds and multiannuality. Making exceptions to the Financial Regulation introduces an element of additional complexity when applying legislation.
45. Article 25(1) includes the provision that the ‘carried-over amount shall be used first in the following financial year. However, Article 12(2) of the Financial Regulation states that the institution ‘shall first use the appropriations authorised for the current financial year and shall not use the appropriations carried over until the former are exhausted’.
46. Article 25(2) of the Proposal adds an exception to the provisions of Article 15 of the Financial Regulation ( 45 ) by allowing decommitments made as a result of total or partial non-implementation of an action to be made available again to the original budget line.
47. The provisions of Article 25 provide more flexibility in the implementation of the NDICI’s budget. However, the impact of greater flexibility on the management of the funds needs to be assessed given the potential loss of accountability, i.e. less responsibility for the proper management of appropriations.
48. Funds decommitted from previous EDFs can be re-committed under the ongoing EDF, subject to a specific decision by the Council. If no specific decision is taken, the funds are allocated to a special reserve, pending allocation ( 46 ). Under the general budget, decommitted funds from the previous programming period are cancelled. It is not clear if Article 25(2) also applies to funds decommitted after the MFF expires ( 47 ). If this is the case, a specific provision should be included in the Proposal.
Chapter IV — EFSD+, budgetary guarantees and financial assistance to third countries (Articles 26-30)
49. Chapter IV focuses on EFSD+ and External Action Guarantee.
50. We note that the budgetary guarantee can be managed more efficiently with a common provisioning fund.
51. Although the EIB was the only bank in charge of the ELM and the main partner in the EFSD, it is not clear what its future role will be ( 48 ).
52. Article 27(2) lists three conditions with which the External Action Guarantee needs to comply. Necessary achievement of a leverage and a multiplier effect based on a target range of values specified in an ex-ante evaluation for the budgetary guarantee is not stated as one of the criteria ( 49 ).
53. The Commission and legislators should consider
adding leverage to the list of conditions with which the External Action Guarantee needs to comply. This modification would make the list of conditions for the External Action guarantee more complete.
54. According to Article 26(4), the provisioning rate shall range between 9 % and 50 %. Although it is specified when a provisioning rate of 9 % is applied, no information is provided when a higher rate (up to a maximum of 50 %) is applied.
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( 45 ) Article 15(3) allows decommitments to be made available again only when they relate to research projects. ( 46 ) Article 1(4) of the Internal Agreement on the 11th EDF (OJ L 210, 6.8.2013, p. 1), as cited above. ( 47 ) Similar to the special reserve mechanism of the EDF, Article 1(4) of the Internal Agreement on the 11th EDF (OJ L 210, 6.8.2013,
p. 1), as cited above. ( 48 ) Recital 33 of the Proposal: ‘The EFSD+ should support the External Investment Plan and combine blending and budgetary guarantee
operations covered by the External Action Guarantee, including those covering sovereign risks associated with lending operations, previously carried out under the external lending mandate to the European Investment Bank. Given its role under the Treaties and its experience over the last decades in supporting Union policies, the European Investment Bank should remain a natural partner for the Commission for the implementation of operations under the External Action Guarantee.’
( 49 ) See Articles 209(2)(d) and 219(3) of the Financial Regulation.
55. The instruments listed in Article 27(3) entail various risks. Loans in local currency and equity participation have a very high inherent risk. For example, the ACP Investment Facility had rules that limited equity participation to non- controlling minority holdings. In addition, there were also exposure limits for equity participation and loans in local currency (no more than 20 % of the total endowment). Operational agreements should contain similar provisions.
56. Recital 35 of the Proposal states that the guarantee should be priced in order to avoid market distortions. Similarly, Article 209(2)(c) of the Financial Regulation states that the remuneration of external action guarantees shall not distort competition in the internal market. Article 29(3)(d) of the Proposal stipulates that External Action Guarantee agreements should contain ‘the remuneration of the guarantee’, but clarification could be included to stress that market distortions should be avoided. Furthermore, the Proposal does not include any information on how the guarantee should be priced and under what circumstances it could be subsidised. In operational agreements, further clarification is needed about how the guarantee should be priced and under what circumstances it could be subsidised.
57. Terminology is used inconsistently, e.g. financial assistance, macro-financial assistance, and macro-financial assistance loans.
Chapter V — Monitoring, reporting and evaluation (Articles 31-32)
58. Article 31, ‘Monitoring and reporting’, refers mainly to the instrument; Article 32, ‘Evaluation’, deals only with how it is evaluated. The Proposal does not distinguish between evaluation of the instrument and evaluation of actions.
59. Article 31(2) of the Proposal stipulates that ‘progress with respect to expected results should be monitored on the basis of clear, transparent and, where appropriate, measurable indicators’. Indicators may be quantitative or qualitative, but should always be measurable in order to be useful. ‘Where appropriate’ should therefore be deleted.
60. The Commission and legislators should consider:
clearly distinguishing between evaluation of actions and the NDICI Regulation. This modification would make the Proposal clearer by specifying which articles apply to actions as opposed to those which apply to the NDICI Regulation itself.
61. Annex VII of the Proposal provides a list of key performance indicators to ‘help measure the Union’s contribution to the achievement of its specific objectives’.
62. Some key performance indicators refer to several specific objectives, while for other indicators, it is not clear to which specific objective they apply. In the case of other specific objectives, there are no indicators at all.
63. The Commission and legislators should consider:
linking specific objectives and key performance indicators better. When key performance indicators are clearly linked to specific objectives, the achievement of those objectives can be followed up more effectively.
64. Article 32(1) envisages an interim evaluation of the Proposal, but does not provide any details about its purpose and content.
65. The Commission and legislators should consider:
extending the requirements of Article 32(2) concerning the final evaluation of the Regulation to the interim evaluation, where relevant. This modification would clarify the requirements which an interim evaluation needs to satisfy.
EN 4.2.2019 Official Journal of the European Union C 45/9
Conditions for attestation by the Court
66. In our Strategy for 2018-2020, we signalled our aim to move towards an ‘attestation engagement’ for our Statement of Assurance.
67. We acknowledge that the objective of the Proposal is not to define or describe the management and control system, or the overall internal control framework and its mandatory components ( 50 ).
68. However, we note that the current Proposal does not make sufficient provision for the management and control systems to include an internal control framework whose design would allow the Court to pursue the move towards an attestation engagement.
This Opinion was adopted by the Court of Auditors in Luxembourg at its meeting of 13 December 2018.
For the Court of Auditors
Klaus-Heiner LEHNE President
EN C 45/10 Official Journal of the European Union 4.2.2019
( 50 ) Section 2 of the annexed ‘Legislative Financial Statement’ indicates how the Commission intends to put management measures in place.
EN 4.2.2019 Official Journal of the European Union C 45/11
AN
NEX
Ana
lysi
s of
the
Com
mis
sion
’s p
ropo
sal
and
the
Cou
rt’s
sug
gest
ions
The
follo
win
g dr
aftin
g su
gges
tions
ref
lect
som
e -
but
not
all -
con
sider
atio
ns r
aise
d in
thi
s O
pini
on. I
t is
the
legi
slato
rs’ r
espo
nsib
ility
to t
ake
acco
unt o
f the
se p
oint
s an
d in
corp
orat
e th
em
in t
he a
ppro
pria
te a
rtic
les
of t
he p
ropo
sed
Regu
latio
n.
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
Art
icle
8
Gen
eral
Prin
ciples
3.
The
Uni
on s
hall
supp
ort,
as a
ppro
pria
te, t
he i
mpl
emen
ta
tion
of b
ilate
ral,
regi
onal
and
mul
tilat
eral
coo
pera
tion
and
dial
ogue
, pa
rtne
rshi
p ag
reem
ents
and
tria
ngul
ar c
oope
ratio
n.
3.
The
term
‘tr
iang
ular
co
oper
atio
n’
shou
ld
be
spec
ified
.
TITL
E II
IMPL
EMEN
TATI
ON
OF
THIS
REG
ULA
TIO
N
TITL
E II
IMPL
EMEN
TATI
ON
OF
THIS
REG
ULA
TIO
N
TITL
E II
IMPL
EMEN
TATI
ON
OF
THIS
REG
ULA
TIO
N
Cha
pter
I
Prog
ram
min
g C
hapt
er I
Pr
ogra
mm
ing
Art
icle
14
A
dopt
ion
and
amen
dmen
t of
mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
Art
icle
14
A
dopt
ion
and
amen
dmen
t of
mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
3.
Mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
for
geog
raph
ic
prog
ram
mes
may
be
revi
ewed
whe
re n
eces
sary
for
effe
ctiv
e im
plem
enta
tion,
in
pa
rtic
ular
w
here
th
ere
are
subs
tant
ive
chan
ges
in t
he p
olic
y fr
amew
ork
refe
rred
to
in A
rtic
le
7 or
fo
llow
ing
a cr
isis
or p
ost-c
risis
situa
tion.
3.
Mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
for
geog
raph
ic
prog
ram
mes
m
ay
be
revi
ewed
w
here
ne
cess
ary
for
effe
ctiv
e im
plem
enta
tion,
in
pa
rtic
ular
w
here
th
ere
are
subs
tant
ive
chan
ges
in t
he p
olic
y fr
amew
ork
refe
rred
to
in A
rtic
le
7 or
, in
th
e ca
se o
f ge
ogra
phic
pro
gram
mes
, fo
llow
ing
a cr
isis
or p
ost-
crisi
s sit
uatio
n.
4.
Mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
for
them
atic
pr
ogra
mm
es m
ay b
e re
view
ed w
here
nec
essa
ry f
or e
ffect
ive
impl
emen
tatio
n,
in
part
icul
ar
whe
re
ther
e ar
e su
bsta
ntiv
e ch
ange
s in
the
pol
icy
fram
ewor
k re
ferr
ed t
o in
Art
icle
7.
4.
Mul
tiann
ual
indi
cativ
e pr
ogra
mm
es
for
them
atic
pr
ogra
mm
es
may
be
re
view
ed
whe
re
nece
ssar
y fo
r ef
fect
ive
impl
emen
tatio
n,
in
part
icul
ar
whe
re
ther
e ar
e su
bsta
ntiv
e ch
ange
s in
the
pol
icy
fram
ewor
k re
ferr
ed t
o in
Art
icle
7.
EN C 45/12 Official Journal of the European Union 4.2.2019
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
5.
On
duly
just
ified
impe
rativ
e gr
ound
s of
urg
ency
, suc
h as
cr
ises
or i
mm
edia
te t
hrea
ts t
o de
moc
racy
, th
e ru
le o
f la
w,
hum
an
right
s or
fu
ndam
enta
l fr
eedo
ms,
the
Com
miss
ion
may
am
end
mul
tiann
ual
indi
cativ
e pr
ogra
mm
es r
efer
red
to
in A
rtic
les
12 a
nd 1
3 of
thi
s Re
gula
tion
by i
mpl
emen
ting
acts
ad
opte
d in
ac
cord
ance
w
ith
the
urge
ncy
proc
edur
e re
ferr
ed t
o in
Art
icle
35
(4).
5 4.
On
duly
jus
tifie
d im
pera
tive
grou
nds
of u
rgen
cy,
such
as
crise
s or
imm
edia
te t
hrea
ts to
dem
ocra
cy, t
he r
ule
of la
w, h
uman
rig
hts
or f
unda
men
tal
free
dom
s, th
e Co
mm
issio
n m
ay a
men
d m
ultia
nnua
l in
dica
tive
prog
ram
mes
ref
erre
d to
in
Art
icle
s 12
an
d 13
of
this
Regu
latio
n by
im
plem
entin
g ac
ts a
dopt
ed i
n ac
cord
ance
w
ith
the
urge
ncy
proc
edur
e re
ferr
ed
to
in
Art
icle
35
(4).
Cha
pter
II
Spec
ific
prov
isio
ns f
or t
he N
eigh
bour
hood
C
hapt
er I
I Sp
ecifi
c pr
ovis
ions
for
the
Nei
ghbo
urho
od
Art
icle
17
Pe
rform
ance
-bas
ed a
ppro
ach
1.
Indi
cativ
ely
10 %
of
the
finan
cial
env
elop
e se
t ou
t in
A
rtic
le 4
(2)(a
) to
sup
plem
ent
the
coun
try
finan
cial
allo
catio
ns
refe
rred
to in
Art
icle
12
shal
l be
allo
cate
d to
par
tner
cou
ntrie
s lis
ted
in A
nnex
I
in o
rder
to
impl
emen
t th
e pe
rfor
man
ce-
base
d ap
proa
ch.
The
perf
orm
ance
-bas
ed a
lloca
tions
sha
ll be
de
cide
d on
the
bas
is of
the
ir pr
ogre
ss t
owar
ds d
emoc
racy
, hu
man
rig
hts,
rule
of
la
w,
coop
erat
ion
on
mig
ratio
n,
econ
omic
gov
erna
nce
and
refo
rms.
The
prog
ress
of
part
ner
coun
trie
s sh
all
be a
sses
sed
annu
ally
.
Art
icle
17
Pe
rform
ance
-bas
ed a
ppro
ach
1.
Indi
cativ
ely
10 %
of
th
e fin
anci
al
enve
lope
se
t ou
t in
A
rtic
le
4(2)
(a) 6
(2)(a
) to
sup
plem
ent
the
coun
try
finan
cial
allo
ca
tions
ref
erre
d to
in
Art
icle
12
sha
ll be
allo
cate
d to
par
tner
co
untr
ies
liste
d in
A
nnex
I
in
orde
r to
im
plem
ent
the
perf
orm
ance
-bas
ed a
ppro
ach.
The
per
form
ance
-bas
ed a
lloca
tions
sh
all
be
deci
ded
on
the
basis
of
th
eir
prog
ress
to
war
ds
dem
ocra
cy, h
uman
rig
hts,
rule
of
law
, coo
pera
tion
on m
igra
tion,
ec
onom
ic
gove
rnan
ce
and
refo
rms.
The
prog
ress
of
pa
rtne
r co
untr
ies
shal
l be
ass
esse
d an
nual
ly.
Cha
pter
III
A
ctio
n Pl
ans,
mea
sure
s an
d im
plem
entin
g m
etho
ds
Cha
pter
III
A
ctio
n Pl
ans,
mea
sure
s an
d im
plem
entin
g m
etho
ds
Art
icle
23
Fo
rms
of E
U f
undi
ng a
nd m
ethod
s of
im
plem
enta
tion
Art
icle
23
Fo
rms
of E
U f
undi
ng a
nd m
ethod
s of
im
plem
enta
tion
Budg
et s
uppo
rt a
s re
ferr
ed t
o in
poi
nt
(c)
of p
arag
raph
1,
in
clud
ing
thro
ugh
sect
or r
efor
m p
erfo
rman
ce c
ontr
acts
, sh
all
be b
ased
on
coun
try
owne
rshi
p, m
utua
l ac
coun
tabi
lity
and
shar
ed c
omm
itmen
ts t
o un
iver
sal
valu
es,
dem
ocra
cy,
hum
an
right
s, th
e ru
le o
f la
w, a
nd a
ims
at s
tren
gthe
ning
par
tner
ship
s be
twee
n th
e U
nion
an
d pa
rtne
r co
untr
ies.
It sh
all
incl
ude
rein
forc
ed
polic
y di
alog
ue,
capa
city
de
velo
pmen
t, an
d im
prov
ed
gove
rnan
ce,
com
plem
entin
g pa
rtne
rs'
effo
rts
to
colle
ct m
ore
and
spen
d be
tter
in o
rder
to
supp
ort
sust
aina
ble
and
incl
usiv
e ec
onom
ic g
row
th a
nd j
obs
and
pove
rty
erad
ica
tion.
4.
Budg
et s
uppo
rt a
s re
ferr
ed t
o in
poi
nt
(c)
of p
arag
raph
1,
incl
udin
g th
roug
h se
ctor
ref
orm
per
form
ance
con
trac
ts,
shal
l be
pr
ovid
ed i
n ac
cord
ance
with
Art
icle
23
6 of
the
Fin
anci
al R
egu
la
tion.
Iit
shal
l be
bas
ed o
n co
untr
y ow
ners
hip,
mut
ual
acco
unt
abili
ty a
nd s
hare
d co
mm
itmen
ts t
o un
iver
sal
valu
es,
dem
ocra
cy,
hum
an r
ight
s, th
e ru
le o
f la
w,
and
aim
s at
str
engt
heni
ng p
art
ners
hips
be
twee
n th
e U
nion
an
d pa
rtne
r co
untr
ies.
It sh
all
incl
ude
rein
forc
ed p
olic
y di
alog
ue,
capa
city
dev
elop
men
t, an
d im
prov
ed
gove
rnan
ce,
com
plem
entin
g pa
rtne
rs'
effo
rts
to
colle
ct m
ore
and
spen
d be
tter
in o
rder
to
supp
ort
sust
aina
ble
and
incl
usiv
e ec
onom
ic g
row
th a
nd jo
bs a
nd p
over
ty e
radi
catio
n.
EN 4.2.2019 Official Journal of the European Union C 45/13
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
Any
dec
ision
to
prov
ide
budg
et s
uppo
rt s
hall
be b
ased
on
budg
et s
uppo
rt p
olic
ies
agre
ed b
y th
e U
nion
, a
clea
r se
t of
el
igib
ility
crit
eria
and
a c
aref
ul a
sses
smen
t of
the
risk
s an
d be
nefit
s.
Any
dec
ision
to p
rovi
de b
udge
t su
ppor
t sha
ll be
bas
ed o
n bu
dget
su
ppor
t po
licie
s ag
reed
by
the
Uni
on,
a cl
ear
set
of e
ligib
ility
cr
iteria
and
a c
aref
ul a
sses
smen
t of
the
risk
s an
d be
nefit
s.
4.
Budg
et s
uppo
rt s
hall
be d
iffer
entia
ted
in s
uch
a w
ay a
s to
re
spon
d be
tter
to t
he p
oliti
cal,
econ
omic
and
soc
ial c
onte
xt o
f th
e pa
rtne
r co
untr
y, t
akin
g in
to a
ccou
nt s
ituat
ions
of
frag
ility
.
4.
Budg
et s
uppo
rt s
hall
be d
iffer
entia
ted
in s
uch
a w
ay a
s to
re
spon
d be
tter
to t
he p
oliti
cal,
econ
omic
and
soc
ial
cont
ext
of
the
part
ner
coun
try,
tak
ing
into
acc
ount
situ
atio
ns o
f fr
agili
ty.
Whe
n pr
ovid
ing
budg
et
supp
ort
in
acco
rdan
ce
with
A
rtic
le
236
of
the
Fina
ncia
l Re
gula
tion,
th
e Co
mm
issio
n sh
all
clea
rly d
efin
e an
d m
onito
r cr
iteria
for
bud
get
supp
ort
cond
ition
ality
, inc
ludi
ng p
rogr
ess
in r
efor
ms
and
tran
spar
ency
, an
d sh
all
supp
ort
the
deve
lopm
ent
of p
arlia
men
tary
con
trol
, na
tiona
l aud
it ca
paci
ties
and
incr
ease
d tr
ansp
aren
cy a
nd p
ublic
ac
cess
to
info
rmat
ion.
Whe
n pr
ovid
ing
budg
et s
uppo
rt in
acc
orda
nce
with
Art
icle
236
of
the
Fin
anci
al R
egul
atio
n, t
The
Com
miss
ion
shal
l cle
arly
def
ine
and
mon
itor
crite
ria f
or b
udge
t su
ppor
t co
nditi
onal
ity, i
nclu
ding
pr
ogre
ss i
n re
form
s an
d tr
ansp
aren
cy,
and
shal
l su
ppor
t th
e de
velo
pmen
t of
par
liam
enta
ry c
ontr
ol,
natio
nal
audi
t ca
paci
ties
and
incr
ease
d tr
ansp
aren
cy a
nd p
ublic
acc
ess
to i
nfor
mat
ion.
5.
Disb
urse
men
t of
the
bud
get
supp
ort
shal
l be
bas
ed o
n in
dica
tors
de
mon
stra
ting
satis
fact
ory
prog
ress
be
ing
mad
e to
war
ds
achi
evin
g th
e ob
ject
ives
ag
reed
w
ith
the
part
ner
coun
try.
5.
Disb
urse
men
t of
the
bud
get
supp
ort
shal
l be
bas
ed o
n in
dica
tors
de
mon
stra
ting
satis
fact
ory
prog
ress
be
ing
mad
e to
war
ds a
chie
ving
the
obj
ectiv
es a
gree
d w
ith t
he p
artn
er c
ount
ry.
6.
Fina
ncia
l in
stru
men
ts u
nder
thi
s Re
gula
tion
may
tak
e fo
rms
such
as
lo
ans,
guar
ante
es,
equi
ty
or
quas
i-equ
ity,
inve
stm
ents
or
pa
rtic
ipat
ions
, an
d ris
k-sh
arin
g in
stru
men
ts,
whe
neve
r po
ssib
le a
nd i
n ac
cord
ance
with
the
prin
cipl
es l
aid
dow
n in
Art
icle
20
9(1)
of
the
Fina
ncia
l Reg
ulat
ion
unde
r th
e le
ad o
f th
e EI
B, a
mul
tilat
eral
Eur
opea
n fin
ance
ins
titut
ion,
su
ch a
s th
e Eu
rope
an B
ank
for
Reco
nstr
uctio
n an
d D
evel
op
men
t, or
a b
ilate
ral
Euro
pean
fin
ance
ins
titut
ion,
suc
h as
bi
late
ral
deve
lopm
ent
bank
s, po
ssib
ly p
oole
d w
ith a
dditi
onal
ot
her
form
s of
fin
anci
al s
uppo
rt,
both
fro
m M
embe
r St
ates
an
d th
ird p
artie
s.
6. 5
. Fi
nanc
ial
inst
rum
ents
und
er t
his
Regu
latio
n m
ay t
ake
form
s su
ch
as
loan
s, gu
aran
tees
, eq
uity
or
qu
asi-e
quity
, in
vest
men
ts
or
part
icip
atio
ns,
and
risk-
shar
ing
inst
rum
ents
, w
hene
ver
poss
ible
and
in
acco
rdan
ce w
ith t
he p
rinci
ples
lai
d do
wn
in A
rtic
le
209(
1) o
f th
e Fi
nanc
ial
Regu
latio
n un
der
the
lead
of
the
EIB,
a m
ultil
ater
al E
urop
ean
finan
ce i
nstit
utio
n, s
uch
as t
he E
urop
ean
Bank
for
Rec
onst
ruct
ion
and
Dev
elop
men
t, or
a
bila
tera
l Eu
rope
an f
inan
ce i
nstit
utio
n, s
uch
as b
ilate
ral
deve
lop
men
t ba
nks,
poss
ibly
poo
led
with
add
ition
al o
ther
for
ms
of
finan
cial
sup
port
, bot
h fr
om M
embe
r St
ates
and
thi
rd p
artie
s.
Cont
ribut
ions
to
Uni
on f
inan
cial
inst
rum
ents
und
er t
his
Regu
la
tion
may
be
mad
e by
Mem
ber
Stat
es a
s w
ell
as a
ny e
ntity
re
ferr
ed t
o in
Art
icle
62
(1)(c
) of
the
Fin
anci
al R
egul
atio
n.
Cont
ribut
ions
to
Uni
on f
inan
cial
ins
trum
ents
und
er t
his
Regu
la
tion
may
be
mad
e by
Mem
ber
Stat
es a
s w
ell
as a
ny e
ntity
re
ferr
ed t
o in
Art
icle
62
(1)(c
) of
the
Fin
anci
al R
egul
atio
n.
EN C 45/14 Official Journal of the European Union 4.2.2019
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
7.
Thos
e fin
anci
al
inst
rum
ents
m
ay
be
grou
ped
into
fa
cilit
ies
for
impl
emen
tatio
n an
d re
port
ing
purp
oses
. 7.
Th
ose
finan
cial
ins
trum
ents
may
be
grou
ped
into
fac
ilitie
s fo
r im
plem
enta
tion
and
repo
rtin
g pu
rpos
es.
8.
The
Uni
on's
fund
ing
shal
l no
t ge
nera
te o
r ac
tivat
e th
e co
llect
ion
of s
peci
fic t
axes
, dut
ies
or c
harg
es.
8. 6
. Th
e U
nion
's fu
ndin
g sh
all
not
gene
rate
or
activ
ate
the
colle
ctio
n of
spe
cific
tax
es, d
utie
s or
cha
rges
.
9.
Taxe
s, du
ties
and
char
ges
impo
sed
by p
artn
er c
ount
ries
may
be
elig
ible
for
fin
anci
ng u
nder
thi
s Re
gula
tion.
9.
7.
Taxe
s, du
ties
and
char
ges
impo
sed
by p
artn
er c
ount
ries
may
be
elig
ible
for
fin
anci
ng u
nder
thi
s Re
gula
tion.
Cha
pter
IV
EF
SD+,
bud
geta
ry g
uara
ntee
s an
d fin
anci
al a
ssis
tanc
e to
th
ird
coun
trie
s
Cha
pter
IV
EF
SD+,
bu
dget
ary
guar
ante
es
and
finan
cial
as
sist
ance
to
th
ird
coun
trie
s
Cha
pter
IV
EF
SD+,
bu
dget
ary
guar
ante
es
and
finan
cial
as
sist
ance
to
thir
d co
untr
ies
Art
icle
26
Sc
ope
and
finan
cing
6.
The
EFSD
+ an
d th
e Ex
tern
al
Act
ion
Gua
rant
ee
may
su
ppor
t fin
anci
ng
and
inve
stm
ent
oper
atio
ns
in
part
ner
coun
trie
s in
the
geo
grap
hica
l are
as r
efer
red
to i
n A
rtic
le 4
(2).
The
prov
ision
ing
of t
he E
xter
nal
Act
ion
Gua
rant
ee s
hall
be
finan
ced
from
th
e bu
dget
of
th
e re
leva
nt
geog
raph
ic
prog
ram
mes
est
ablis
hed
by A
rtic
le
6(2)
(a)
and
shal
l be
tra
ns
ferr
ed i
nto
the
com
mon
pro
visio
ning
fun
d. T
he E
FSD
+ an
d th
e Ex
tern
al A
ctio
n G
uara
ntee
may
also
sup
port
ope
ratio
ns in
be
nefic
iarie
s lis
ted
in A
nnex
I
of R
egul
atio
n IP
A
III.
The
fund
ing
for
thes
e op
erat
ions
und
er t
he E
FSD
+ an
d fo
r th
e pr
ovisi
onin
g of
th
e Ex
tern
al
Act
ion
Gua
rant
ee
shal
l be
fin
ance
d fr
om t
he R
egul
atio
n IP
A.
The
prov
ision
ing
of t
he
Exte
rnal
A
ctio
n G
uara
ntee
fo
r lo
ans
to
third
co
untr
ies
refe
rred
to
in
A
rtic
le
10(2
) of
Re
gula
tion
EIN
S sh
all
be
finan
ced
from
Reg
ulat
ion
EIN
S.
6.
Ther
e is
a la
ck o
f in
form
atio
n re
gard
ing
wha
t w
ill b
e do
ne w
ith e
.g.
reve
nues
and
any
pay
men
ts
rece
ived
by
the
Uni
on i
n ac
cord
ance
with
gua
rant
ee
or
loan
ag
reem
ents
, am
ount
s re
cove
red
from
de
faul
ting
debt
ors,
retu
rns
on
inve
stm
ents
of
th
e re
sour
ces
held
in
th
e co
mm
on
prov
ision
ing
fund
. Th
ere
is al
so
no
info
rmat
ion
rega
rdin
g an
y co
sts
invo
lved
.
7.
The
prov
ision
ing
refe
rred
to
in A
rtic
le
211(
2) o
f th
e Fi
nanc
ial
Regu
latio
n sh
all
be c
onst
itute
d on
the
bas
is of
the
U
nion
's to
tal
outs
tand
ing
liabi
litie
s ar
ising
fro
m e
ach
oper
at
ion,
incl
udin
g op
erat
ions
sig
ned
befo
re 2
021
and
guar
ante
ed
by t
he U
nion
. Th
e an
nual
am
ount
of
prov
ision
ing
requ
ired
may
be
cons
titut
ed d
urin
g a
perio
d of
up
to s
even
yea
rs.
7.
The
setti
ng
of
a pr
ovisi
onin
g ra
te
refe
rred
to
in
A
rtic
le
211(
2) o
f th
e Fi
nanc
ial
Regu
latio
n sh
all
be c
onst
itute
d on
the
bas
is of
bas
ed o
n th
e U
nion
's to
tal
outs
tand
ing
liabi
litie
s ar
ising
fro
m e
ach
oper
atio
n, i
nclu
ding
ope
ratio
ns s
igne
d be
fore
20
21 a
nd g
uara
ntee
d by
the
Uni
on.T
hat
amou
nt s
hall
excl
ude
the
cont
ribut
ions
ref
erre
d to
in
Art
icle
20
8(2)
of
the
Fina
ncia
l Re
gula
tion
(see
A
rtic
le
211(
1)
FR).
The
annu
al
amou
nt
of
prov
ision
ing
requ
ired
may
be
cons
titut
ed d
urin
g a
perio
d of
up
to s
even
yea
rs.
7.
It se
ems
that
Art
icle
211
(6)
and
Art
icle
211
(7)
of t
he F
inan
cial
Reg
ulat
ion
have
not
bee
n ta
ken
into
ac
coun
t, ev
en t
houg
h th
ey a
re v
ery
impo
rtan
t. W
e be
lieve
th
at
the
Com
miss
ion
shou
ld
imm
edia
tely
in
form
th
e Eu
rope
an
Parli
amen
t an
d th
e Co
unci
l, an
d sh
ould
pr
opos
e ad
equa
te
repl
enish
men
t m
easu
res
whe
re a
cou
ntry
in
rece
ipt
of E
U f
inan
cial
as
sista
nce
fails
to
pay
on a
mat
urity
.
EN 4.2.2019 Official Journal of the European Union C 45/15
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
Hav
e th
e pr
ovisi
ons
of
Art
icle
20
9(3)
an
d A
rtic
le
209(
4)
of
the
Fina
ncia
l Re
gula
tion
been
co
rrec
tly t
aken
in
to
acco
unt
in
the
prop
osal
? Se
e al
so A
rtic
le
29(6
) be
low
.
8.
The
bala
nce
of a
sset
s by
31
Dec
embe
r 20
20 i
n th
e EF
SD
Gua
rant
ee
Fund
an
d in
th
e G
uara
ntee
fu
nd
for
exte
rnal
ac
tions
es
tabl
ished
re
spec
tivel
y by
Re
gula
tion
EU
2017
/160
1 of
the
Eur
opea
n Pa
rliam
ent
and
the
Coun
cil
and
Coun
cil
Regu
latio
n (E
C, E
urat
om)
No
480/
2009
sha
ll be
tr
ansf
erre
d in
to
the
com
mon
pr
ovisi
onin
g fu
nd
for
the
purp
ose
of p
rovi
sioni
ng i
ts r
espe
ctiv
e op
erat
ions
und
er t
he
sam
e sin
gle
guar
ante
e pr
ovid
ed f
or i
n pa
ragr
aph
4 of
thi
s A
rtic
le.
8.
The
bala
nce
of a
sset
s by
31
Dec
embe
r 20
20 i
n th
e EF
SD
Gua
rant
ee F
und
and
in t
he G
uara
ntee
fun
d fo
r ex
tern
al a
ctio
ns
esta
blish
ed r
espe
ctiv
ely
by R
egul
atio
n (E
U) N
o 20
17/1
601
of th
e Eu
rope
an P
arlia
men
t an
d th
e Co
unci
l an
d Co
unci
l Re
gula
tion
(EC,
Eu
rato
m)
No
480/
2009
sh
all
be
tran
sfer
red
into
th
e co
mm
on p
rovi
sioni
ng f
und
for
the
purp
ose
of p
rovi
sioni
ng i
ts
resp
ectiv
e op
erat
ions
und
er t
he s
ame
singl
e gu
aran
tee
prov
ided
fo
r in
par
agra
ph 4
5 of
thi
s A
rtic
le.
Art
icle
27
El
igib
ility
and
sele
ction
of
oper
atio
ns a
nd c
ount
erpa
rts
2.
The
Exte
rnal
Act
ion
Gua
rant
ee s
hall
supp
ort
finan
cing
an
d in
vest
men
t op
erat
ions
com
plia
nt w
ith t
he c
ondi
tions
set
ou
t in
poi
nts
(a)
to (
c) o
f A
rtic
le
209(
2) o
f th
e Fi
nanc
ial
Regu
latio
n an
d th
at:
2.
Plea
se n
ote
that
thi
s is
not
in a
ccor
danc
e w
ith
Art
icle
21
9(3)
of
th
e Fi
nanc
ial
Regu
latio
n,
as
poin
t (d
) m
entio
ning
le
vera
ge
and
the
mul
tiplie
r ef
fect
of
budg
etar
y gu
aran
tees
is
not
incl
uded
. W
as
it om
itted
by
acci
dent
?
(a)
ensu
re c
ompl
emen
tarit
y w
ith o
ther
ini
tiativ
es;
(b)
are
econ
omic
ally
and
fin
anci
ally
via
ble,
with
due
reg
ard
to
the
poss
ible
sup
port
fro
m,
and
co-fi
nanc
ing
by,
priv
ate
and
publ
ic
part
ners
to
th
e pr
ojec
t, w
hile
ta
king
in
to
acco
unt
the
spec
ific
oper
atin
g en
viro
nmen
t an
d ca
paci
ties
of c
ount
ries
iden
tifie
d as
exp
erie
ncin
g fr
agili
ty o
r co
nflic
t, Le
ast
Dev
elop
ed
Coun
trie
s an
d he
avily
in
debt
ed
poor
co
untr
ies
whi
ch m
ay b
enef
it fr
om c
once
ssio
nal
term
s;
(c)
are
tech
nica
lly v
iabl
e an
d ar
e su
stai
nabl
e fr
om a
n en
viro
nm
enta
l an
d so
cial
poi
nt o
f vi
ew.
EN C 45/16 Official Journal of the European Union 4.2.2019
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
5.
Elig
ible
cou
nter
part
s sh
all
com
ply
with
the
rul
es a
nd
cond
ition
s pr
ovid
ed f
or i
n A
rtic
le
62(2
)(c)
of t
he F
inan
cial
Re
gula
tion.
In
the
case
of
bodi
es g
over
ned
by t
he p
rivat
e la
w
of
a M
embe
r St
ate
or
a th
ird
coun
try
whi
ch
have
co
ntrib
uted
to
the
Exte
rnal
Act
ion
Gua
rant
ee i
n ac
cord
ance
w
ith A
rtic
le 2
8 of
this
Regu
latio
n, p
refe
renc
e sh
all b
e gi
ven
to
thos
e bo
dies
tha
t di
sclo
se in
form
atio
n re
late
d to
env
ironm
ent,
soci
al a
nd c
orpo
rate
gov
erna
nce
crite
ria.
5.
Elig
ible
co
unte
rpar
ts
shal
l co
mpl
y w
ith
the
rule
s an
d co
nditi
ons
prov
ided
fo
r in
A
rtic
le
62(2
)(c)6
2(1)
(c)
of
the
Fina
ncia
l Re
gula
tion.
In
the
case
of
bodi
es
gove
rned
by
the
priv
ate
law
of
a M
embe
r St
ate
or a
thi
rd c
ount
ry w
hich
hav
e co
ntrib
uted
to
the
Exte
rnal
Act
ion
Gua
rant
ee in
acc
orda
nce
with
A
rtic
le
28 o
f th
is Re
gula
tion,
pre
fere
nce
shal
l be
giv
en t
o th
ose
bodi
es t
hat
disc
lose
inf
orm
atio
n re
late
d to
env
ironm
ent,
soci
al
and
corp
orat
e go
vern
ance
crit
eria
.
Art
icle
28
Co
ntrib
utio
n fro
m o
ther
don
ors
to t
he E
xter
nal
Acti
on G
uara
ntee
1.
Mem
ber
Stat
es,
third
cou
ntrie
s an
d ot
her
third
par
ties
may
con
trib
ute
to t
he E
xter
nal
Act
ion
Gua
rant
ee.
By
dero
gatio
n fr
om
the
seco
nd
sub-
para
grap
h of
A
rtic
le
218(
2) o
f th
e Fi
nanc
ial
Regu
latio
n, t
he c
ontr
actin
g pa
rtie
s to
the
Agr
eem
ent
on t
he E
urop
ean
Econ
omic
Are
a m
ay c
ontr
ibut
e in
the
for
m o
f gu
aran
tees
or
cash
.
1.
The
rele
vant
art
icle
of
the
FR u
ses
the
wor
d ‘m
ay’,
so i
t is
uncl
ear
why
it
is a
dero
gatio
n.
Cont
ribut
ion
from
thi
rd c
ount
ries
othe
r th
an t
he c
ontr
actin
g pa
rtie
s to
the
Agr
eem
ent
on t
he E
urop
ean
Econ
omic
Are
a an
d fr
om o
ther
thi
rd p
artie
s sh
all
be i
n th
e fo
rm o
f ca
sh a
nd
subj
ect
to a
ppro
val
by t
he C
omm
issio
n.
The
Com
miss
ion
shal
l in
form
the
Eur
opea
n Pa
rliam
ent
and
the
Coun
cil
with
out
dela
y of
the
con
trib
utio
ns c
onfir
med
.
At
the
requ
est
of t
he M
embe
r St
ates
, the
ir co
ntrib
utio
ns m
ay
be e
arm
arke
d fo
r th
e in
itiat
ion
of a
ctio
ns i
n sp
ecifi
c re
gion
s, co
untr
ies,
sect
ors
or e
xist
ing
inve
stm
ent
win
dow
s.
2.
Cont
ribut
ions
in
th
e fo
rm
of
a gu
aran
tee
shal
l no
t ex
ceed
50
% o
f th
e am
ount
ref
erre
d to
in
Art
icle
26
(2)
of
this
Regu
latio
n.
2.
Cont
ribut
ions
in
the
form
of
a gu
aran
tee
shal
l no
t ex
ceed
50
% o
f th
e am
ount
ref
erre
d to
in
Art
icle
26
(2)2
6(3)
of
this
Regu
latio
n.
EN 4.2.2019 Official Journal of the European Union C 45/17
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
Art
icle
29
Im
plem
enta
tion
of E
xter
nal
Acti
on G
uara
ntee
agr
eem
ents
Art
icle
29
Im
plem
enta
tion
of E
xter
nal
Acti
on G
uara
ntee
agr
eem
ents
5.
The
Exte
rnal
Act
ion
Gua
rant
ee m
ay c
over
: 5.
Th
e Ex
tern
al A
ctio
n G
uara
ntee
may
cov
er:
(a)
for
debt
ins
trum
ents
, th
e pr
inci
pal
and
all
inte
rest
s an
d am
ount
s du
e to
the
sel
ecte
d el
igib
le c
ount
erpa
rt,
but
not
rece
ived
by
it
in
acco
rdan
ce
with
th
e te
rms
of
the
finan
cing
ope
ratio
ns a
fter
an e
vent
of
defa
ult
has
occu
rred
;
(a)
for
debt
ins
trum
ents
, th
e pr
inci
pal
and
all
inte
rest
s an
d am
ount
s du
e to
the
sel
ecte
d el
igib
le c
ount
erpa
rt,
but
not
rece
ived
by
it
in
acco
rdan
ce
with
th
e te
rms
of
the
finan
cing
ope
ratio
ns a
fter
an e
vent
of
defa
ult
has
occu
rred
;
(a)
for
equi
ty i
nves
tmen
ts,
the
amou
nts
inve
sted
and
the
ir as
soci
ated
fin
anci
ng c
osts
; (a
b) f
or
equi
ty
inve
stm
ents
, th
e am
ount
s in
vest
ed
and
thei
r as
soci
ated
fin
anci
ng c
osts
;
(b)
for
othe
r fin
anci
ng a
nd i
nves
tmen
t op
erat
ions
ref
erre
d to
in
Art
icle
27
(2),
the
amou
nts
used
and
the
ir as
soci
ated
fu
ndin
g co
sts;
(bc)
for
oth
er f
inan
cing
and
inve
stm
ent
oper
atio
ns r
efer
red
to in
A
rtic
le
27(2
)27(
3),
the
amou
nts
used
and
the
ir as
soci
ated
fu
ndin
g co
sts;
(c)
all r
elev
ant
expe
nses
and
rec
over
y co
sts
rela
ted
to a
n ev
ent
of d
efau
lt, u
nles
s de
duct
ed f
rom
rec
over
y pr
ocee
ds.
(cd)
all
rele
vant
exp
ense
s an
d re
cove
ry c
osts
rel
ated
to
an e
vent
of
def
ault,
unl
ess
dedu
cted
fro
m r
ecov
ery
proc
eeds
.
6.
(b)
the
outs
tand
ing
finan
cial
obl
igat
ion
for
the
Uni
on
arisi
ng f
rom
the
EFS
D+
oper
atio
ns p
rovi
ded
to t
he e
ligib
le
coun
terp
arts
and
the
ir fin
anci
ng a
nd i
nves
tmen
t op
erat
ions
, br
oken
dow
n by
ind
ivid
ual
oper
atio
ns.
6.
(b)
Art
icle
219
(6)
of t
he F
inan
cial
Reg
ulat
ion
is no
t fu
lly c
ompl
ied
with
.
Cha
pter
V
Mon
itori
ng, r
epor
ting
and
eval
uatio
n C
hapt
er V
M
onito
ring
, rep
ortin
g an
d ev
alua
tion
Art
icle
31
M
onito
ring
and
repo
rting
A
rtic
le
31
Mon
itorin
g an
d re
porti
ng
2.
The
Com
miss
ion
shal
l re
gula
rly m
onito
r its
act
ions
and
re
view
pr
ogre
ss
mad
e to
war
ds
deliv
erin
g ex
pect
ed
resu
lts,
cove
ring
outp
uts
and
outc
omes
.
2.
The
Com
miss
ion
shal
l re
gula
rly m
onito
r its
act
ions
and
re
view
pr
ogre
ss
mad
e to
war
ds
deliv
erin
g ex
pect
ed
resu
lts,
cove
ring
outp
uts
and
outc
omes
.
EN C 45/18 Official Journal of the European Union 4.2.2019
Text
in
the
prop
osal
C
ourt
’s s
ugge
stio
n C
omm
ents
Prog
ress
with
res
pect
to
expe
cted
res
ults
sho
uld
be m
onito
red
on
the
basis
of
clea
r, tr
ansp
aren
t an
d, w
here
app
ropr
iate
, m
easu
rabl
e in
dica
tors
. In
dica
tors
sha
ll be
kep
t at
a l
imite
d nu
mbe
r to
fac
ilita
te t
imel
y re
port
ing.
Prog
ress
with
res
pect
to
expe
cted
res
ults
sho
uld
be m
onito
red
on
the
basis
of
clea
r, tr
ansp
aren
t and
, whe
re a
ppro
pria
te, m
easu
rabl
e in
dica
tors
. In
dica
tors
sh
all
be
kept
at
a
limite
d nu
mbe
r to
fa
cilit
ate
timel
y re
port
ing.
6.
The
annu
al
repo
rt
prep
ared
in
20
21
shal
l co
ntai
n co
nsol
idat
ed i
nfor
mat
ion
from
ann
ual
repo
rts
conc
erni
ng t
he
perio
d fr
om 2
014
to 2
020
on a
ll fu
ndin
g fr
om t
he R
egu
latio
ns
refe
rred
to
in
A
rtic
le
40(2
), in
clud
ing
exte
rnal
as
signe
d re
venu
es
and
cont
ribut
ions
to
tr
ust
fund
s, an
d of
ferin
g a
brea
kdow
n of
sp
endi
ng
by
coun
try,
us
e of
fin
anci
al
inst
rum
ents
, co
mm
itmen
ts
and
paym
ents
. Th
e re
port
sha
ll re
flect
the
mai
n le
sson
s le
arnt
and
the
fol
low
-up
to t
he r
ecom
men
datio
ns o
f th
e ex
tern
al e
valu
ativ
e ex
erci
ses
carr
ied
out
in p
revi
ous
year
s.
6.
The
annu
al
repo
rt
prep
ared
in
20
21
shal
l co
ntai
n co
nsol
idat
ed i
nfor
mat
ion
from
ann
ual
repo
rts
conc
erni
ng t
he
perio
d fr
om 2
014
to 2
020
on a
ll fu
ndin
g fr
om t
he R
egul
atio
ns
refe
rred
to
in A
rtic
le40
(2)
39(2
), in
clud
ing
exte
rnal
ass
igne
d re
venu
es
and
cont
ribut
ions
to
tr
ust
fund
s, an
d of
ferin
g a
brea
kdow
n of
spe
ndin
g by
cou
ntry
, use
of
finan
cial
inst
rum
ents
, co
mm
itmen
ts a
nd p
aym
ents
. Th
e re
port
sha
ll re
flect
the
mai
n le
sson
s le
arnt
and
the
fol
low
-up
to t
he r
ecom
men
datio
ns o
f th
e ex
tern
al e
valu
ativ
e ex
erci
ses
carr
ied
out
in p
revi
ous
year
s.