The European Parliament adopted a decision granting discharge to the Commission on the implementation of the budget of the Eighth, Ninth and Tenth European Development Funds (EDFs) for the financial year 2012. Parliament also approved the closure of the accounts regarding these EDFs for 2012 (in accordance with Annex VI, Article 5, para 1 of Parliament’s Rules of Procedure) and approved by 533 votes to 68, with 9 abstentions, a resolution in which it makes a number of observations that need to be taken into account when granting the discharge.
Parliament recalled that global commitments, individual commitments and payments reached EUR 3 745 million, EUR 3 817 million and EUR 3 292 million respectively for the financial year 2012.
Statement of assurance: Parliament welcomed the Court of Auditors' opinion that the final annual accounts present fairly, the financial position of the EDFs, and the results of their operations and cash flows for the year 2012. It noted however, that in the domains of budget support and the Union’s contributions to multidonor projects implemented by international organisations, the nature of the instruments and payments conditions limited the extent to which transactions were prone to errors.
It observed that 1 153 nongovernmental organisations (57% of all NGOs) are operating in the field of EuropeAid and 152 (8 %) in the field of humanitarian aid (ECHO), receiving EUR 1 520 million and EUR 960 million respectively in Union funding. It also noted that Union funding of NGOs had doubled in 10 years. It called on the Commission to provide an overview of the 30 largest and 30 smallest projects being implemented by NGOs using EDF funding.
Parliament was concerned by certain irregularities on interest on pre-financing payments.
At the same time, it regretted that payments were materially affected by error due to the weaknesses identified in the supervision and control mechanisms (out of 167 interim and final expenditure transactions reviewed by the Court of Auditors, 44 (i.e. 26 %) were affected by errors).
Effectiveness of systems: Parliament noted with regret, as in the past, that EuropeAid's ex ante checks, carried out before the project payments were done, still remain vulnerable. Worried by the fact that errors had been found, it called on EuropeAid and Union delegations to focus more on the follow-up of external audits and expenditure verification reports, especially when the recovery of ineligible amounts is at stake. The Commission was called upon to:
- continue its efforts to strengthen its current control systems, and to report annually to Parliament on the corrective actions implemented;
- increase staff awareness and knowledge of control issues.
EuropeAid was called upon to:
- continue developing the appropriate tools and actions in order to improve the overall effectiveness of the control pyramid within EuropeAid's Headquarters and Union delegations;
- reinforce the supervision of the Heads of Union delegations in their capacity as authorising officers by sub-delegation for the Commission.
Audit of the EDFs: Parliament reiterated that the lack of (adequate) supporting documents and the incorrect application of the procurement procedures by contractors and beneficiaries are among the main weaknesses pointed out by the audit findings. It called on the Commission to further reinforce its control mechanisms and training policies in order to prevent the reoccurrence of those weaknesses in the future.
Parliament regretted that no significant improvement could be observed in the functioning of the Internal Audit Capability which has a role to play in the improvement of the internal control system or in the cost-effectiveness analysis of the control architecture/mechanisms.
Budget support: Parliament recalled that budget support, while playing a key role in driving change and in addressing the main development challenges, carries a considerable fiduciary risk and should be granted only if the beneficiary state is able to demonstrate a sufficient level of transparency, traceability, accountability and effectiveness prior to receiving budget support assistance.
Parliament noted that in 2012, EUR 891 million, representing 29 % of the overall EDF aid disbursement, was provided through budget support. It welcomed the stronger focus placed on accountability, transparency and reinforced risk management in the management of budget support operations since the introduction of the new policy outlined in the Commission's communication of 13 October 2011 entitled "The Future Approach to EU Budget Support to Third Countries". However, it looked forward to the implementation of the Commission's commitment to align democratic scrutiny of the EDFs to the scrutiny exercised by Parliament over the Development Cooperation Instrument (DCI).
Parliament supported public disclosure of relevant budget information relating to budget support programmes in order to enhance domestic and mutual accountability, including to citizens. It called the Commission to ensure that the disbursement of funds through budget support was withheld, reduced or cancelled when clear and initial objectives and commitments of partner countries were not achieved and when the Union’s political and financial interests were at stake.
Parliament welcomed the Commission's greater focus on the fight against fraud and corruption, in particular when assessing the Public Financial Management eligibility criterion in terms of budget support. It noted in this respect that corruption and fraud constituted one of the five risk categories identified by the Commission as part of its risk management framework developed for budget support programme. For example, Parliament notes that evaluations of on-going EDF projects in Sub-Saharan countries concluded in 2012 indicate improvements in project design and relevance, impact and sustainability on the one hand but also continued problems relating to efficiency and effectiveness.
Parliament recalled that the risk of resources being diverted away remained high and reiterated that stronger and constant attention should be paid to these risks by EuropeAid's Headquarters and by the Head of Union Delegation in the framework of the political and policy dialogue, especially to assess the responsiveness of the government concerned and its ability to enforce reforms.
Specific aid: Parliament referred to aid granted to two specific countries:
1) Democratic Republic of the Congo (DRC): Parliament called on the Commission and the EEAS to pay increased attention to ensuring an appropriate balance of aid between all provinces, especially the poorer ones. It called for combined support at a central level for programmes at provincial level that link political and territorial decentralisation with improved natural resource management strategies and infrastructure rehabilitation and development.
It called on the Commission and the EEAS to place greater emphasis, in its dialogue with the DRC government on:
- holding democratic elections;
- increased support to strengthen the capacity of national oversight institutions;
- the need to appraise the relevance and credibility of the country’s policies and action plans for improving governance in relation to the available institutional and financial resources;
- focusing objectives on a limited number of priorities;
- insisting that EDF funding should support the long-term restructuring of central judicial bodies in DRC in order to ensure the sustainable establishment of the rule of law in the country;
- strengthening structured political and policy dialogue with the DRC, setting clear, relevant, realistic and time-bound targets and periodically assessing compliance.
Parliament invited the Commission to take a more active leadership role towards Member States by encouraging a coordinated policy dialogue and by increasing Union leverage over the DRC government.
2) Haïti: Parliament took note of the fact that the Commission, notwithstanding Parliament's resolutions in the context of the 2010 and 2011 discharge procedures, had not yet made public exhaustive performance indicators on which the budget support to Haiti was based, nor the detailed assessments of the Government of Haiti's performance on which the decision to give budget support was based. It asked that the Commission to explain what performance targets had been set for the Haitian government in return for budget support and the modalities for the assessment of these targets, particularly in light of recent concerns about the deterioration of the rule of law in Haiti and persistent low scores on international corruption indices. It urged the Commission to ensure that the impact evaluation was completed as required by Parliament. Parliament regretted the lack of progress on accounts for Union funds received and accounting for Union spending.
Cooperation with international organisations and non-governmental organisations: Parliament reiterated the need for the reinforcement of the cooperation and contacts with international organisations on the errors found for transactions implemented by them and discussion on actions to be taken jointly in the future to prevent them. It encouraged all actions, furthermore, leading not only to a better mutual understanding of Union and World Bank methodologies but also reinforcing the overall quality and reliability of the control management with regard to the use of Trust funds. To that end, the European Commission's 7 Pillars Assessment constituted a real benchmark for providing adequate level of assurance.
Parliament asked the Commission to verify, when financing an NGO project, which part of the financing came from the organisation's own private funding and which part of the financing from government funding, be it national or European. It asked the Commission to publish a report each year about its findings.
The investment facility: Parliament recalled that the funds allocated to the Investment Facility from the Ninth and Tenth EDF amounted to EUR 3.137 million. It deplored the fact that the investment facility is not covered by the Court of Auditors' Statement of Assurance or Parliament's discharge procedure. It asked the Court of Auditors to draw up a Special Report on the performance and alignment with Union development policies and objectives of EIB external lending activities.
Visibility of Union aid: Parliament took the view that it is imperative to ensure a more visible Union by projecting Union values in various domains of intervention such as promoting human rights and rule of law, raising environmental and social standards and overall support for sustainable development and inclusive economic growth. In the context of the Union’s external policies, it supported the progressive development of new financial products with the Commission and Member States.
Budgetisation of the EDF: again, Parliament regretted that the EDF had not been included in the general budget in the new financial rules applicable to the general budget of the Union (Regulation (EU, Euratom) No 966/2012). It recalled that Parliament, the Council and the Commission agreed that those financial rules would be revised in order to include amendments made necessary by the outcome of the negotiations on the multiannual financial framework for the years 2014 to 2020, including on the issue of the possible inclusion of the EDF in the EU’s general budget. It repeated its call on the Council and Member States to agree to the full incorporation of the EDF into the general budget.
Parliament underlined that budgetisation would reduce transaction costs and would simplify reporting and accounting requirements by having only one set of administrative rules and decision-making structures, instead of two.
While noting the commitment by the Commission to include the EDF in the general budget no later than when the Cotonou Agreement expires in 2020, Parliament stressed that it was its view that it should happen as soon as possible.