Annexes to COM(2024)80 - Amending budget N° 1 to the budget 2024 Amendments of the 2024 budget required due to the MFF revision

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AGREEMENT ON THE ARTIFICIAL INTELLIGENCE ACT (AI OFFICE) 6

4. FINANCING 8

5. SUMMARY TABLE BY MFF HEADING 9


EXPLANATORY MEMORANDUM

1. INTRODUCTION

The purpose of Draft Amending Budget No 1 for the year 2024 (DAB 1) is to introduce the necessary changes to the 2024 budget stemming from the revision of the Multiannual Financial Framework.

The revision of the MFF Regulation applies retroactively as of 1st January 2024 and includes inter alia amendments to the MFF ceilings that have been communicated in the updated technical adjustment of the MFF for 2024 in the form of a Commission Communication adopted on 29 February 20246, as foreseen in Article 4(1) of the MFF Regulation.

In order to reflect the impact of the MFF revision on the financial year 2024, DAB 1 covers the following elements:

- Creation of the budget nomenclature and remarks to cater for the Ukraine Facility7, and mobilisation of the new special instrument, the Ukrainian Reserve, with an amount of EUR 4,8 billion of commitment appropriations and EUR 3,8 billion of payment appropriations for the Union’s support other than in the form of loans, including administrative support. in line with the MFF regulation;

- Reinforcement of the European Defence Fund within the framework of the Strategic Technologies for Europe Platform (STEP)8 by EUR 376 million in commitment appropriations;

- Adjustment to the budget nomenclature in order to split the Solidarity and Emergency Aid Reserve in two separate instruments and to increase the amounts for each instrument;

- Creation of the budget nomenclature and remarks to cater for the Reform and Growth Facility for the Western Balkans, with an amount of EUR 501 million in commitment appropriations in reserve and EUR 23,9 million in payment appropriations, in reserve pending the adoption of the legal basis;

- Reduction of the level of commitment appropriations of the reserve for the European Globalisation Adjustment Fund for Displaced Workers (EGF) by EUR 175,7 million in 2024.

Additionally, DAB 1 includes an adjustment to the budget remarks of the budget line for support expenditure of the Digital Europe Programme following the political agreement reached in December 2023 by the European Parliament and the Council on the establishment of the Artificial Intelligence Office.

Overall, the net impact of DAB 1 on expenditure amounts to an increase of EUR 5 833,7 million in commitment appropriations and an increase of EUR 4 143,6 million in payment appropriations.

2. ADJUSTMENTS STEMMING FROM THE MFF REVISION

1. UKRAINE FACILITY

The revised Multiannual Financial Framework Regulation creates a new special instrument – the Ukraine Reserve - for the period 2024-2027 for the sole purpose of financing the new Ukraine Facility. The latter aims to support Ukraine's efforts to sustain macro-financial stability, support reconstruction as well as modernise the country whilst implementing key reforms on its EU accession track. The Facility is designed as a flexible instrument adapted to the unprecedented challenges of supporting a country at war and ensuring predictability, transparency, and accountability of the funds.

The Commission therefore proposes to make the necessary adjustments to the budget nomenclature and budget remarks and proposes to mobilise the Ukraine facility in this DAB. This includes creating eight new budget lines for which the corresponding budget remarks are set out in the budgetary annex. It is proposed to mobilise an amount of EUR 4 767,5 million of commitment appropriations and EUR 3 754,8 million of payment appropriations. Out of this amount, EUR 38,6 million is proposed to be used for technical and administrative support expenditure, which will also be used to finance external personnel, in line with the corresponding legislative financial statement.

EUR
Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
16 01 06Support Expenditure for the Ukraine Facility38 612 00038 612 000
16 04 06Ukraine Facilityp.m.p.m.
16 06 01Pillar I: Ukraine Plan3 000 000 0003 000 000 000
16 06 02 01Provisioning of the Common Provisioning Fund819 000 000200 000 000
16 06 02 02Other actions under the Ukraine Investment Framework527 065 000210 826 000
16 06 03 01Union accession assistance and other measures155 000 00077 500 000
16 06 03 02Borrowing costs subsidy195 333 904195 333 904
16 06 03 03Provisioning of the Common Provisionning Fund - Legacy32 533 12832 533 128
Total4 767 544 0323 754 805 032


2. EUROPEAN DEFENCE FUND (EDF) WITHIN THE STRATEGIC TECHNOLOGIES FOR EUROPE PLATFORM (STEP)

In order to boost the defence investment capacity contributing to the STEP objectives, the revision of the Multiannual Financial Framework includes an increase of EUR 1,5 billion for the remainder of the MFF, for which an increase of EUR 376 million of commitment appropriations in 2024 is proposed, split between both strands of the programme (i.e. defence research, and capability development) in line with the legislative amendment presented in the proposal for a STEP Regulation9. Considering expected budgetary implementation, there is no need for additional payment appropriations in 2024.

EUR
Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
13 02 01Capability development250 667 000p.m.
13 03 01Defence Research125 333 000p.m.
Total376 000 000p.m.


3. EUROPEAN SOLIDARITY RESERVE AND EMERGENCY AID RESERVE

Following the revision of the Multiannual Financial Framework and in the light of the increased number of natural disasters and humanitarian crises and in order to avoid competing priorities, the Solidary and Emergency Aid Reserve (SEAR) has been split in two separate instruments retroactively as of 1st January 2024: the European Solidarity Reserve (ESR) and the Emergency Aid Reserve (EAR) as follows:

- the European Solidarity Reserve with an annual amount of EUR 1 016 million (in 2018 prices, corresponding to EUR 1 144,2 million in 2024 prices) for assistance to respond to emergency situations covered by the European Union Solidarity Fund (EUSF);

- the Emergency Aid Reserve with an annual amount of EUR 508 million (in 2018 prices, corresponding to EUR 572,1 million in 2024 prices) for rapid responses to specific emergency needs within the Union or in third countries.

To reflect these changes, the 4 current sublines under line 30 04 01 will be deleted as follows:

Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
30 04 01 01Internal (excluding EUSF)-152 031 938-152 031 938
30 04 01 02EUSF-456 773 125-456 773 125
30 04 01 03External-354 741 188-354 741 188
30 04 01 04End-of-Year Cushion (25%)-337 848 750-337 848 750
Total-1 301 395 001-1 301 395 001

The current line 30 04 01 will be split into two lines corresponding to the two new instruments with the corresponding level of annual amounts of commitment and payment appropriations, as follows:

Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
30 04 01 01European Solidarity Reserve1 094 181 0181 094 181 018
30 04 01 02Emergency Aid Reserve572 090 509572 090 509
Total1 666 271 5271 666 271 527

In accordance with Article 4a (4) of Council Regulation (EC) 2012/200210, an amount of commitment and payment appropriations of EUR 50,0 million has been already mobilised in commitment and payment appropriations from the European Solidarity Reserve and entered into the 2024 budget for the EUSF under budget article 16 02 01, in order to ensure the timely availability of sufficient budgetary resources for EUSF advance payments.

The corresponding budget remarks are set out in the budgetary annex.


4. REFORM AND GROWTH FACILITY FOR THE WESTERN BALKANS

The revision of the Multiannual Financial Framework includes the additional allocation for Western Balkans, which will be implemented through a new Reform and Growth Facility for the Western Balkans. The new Instrument will serve as the centrepiece of the Growth Plan for the Western Balkans by significantly increasing financial assistance based on an ambitious reform agenda focusing on necessary socioeconomic reforms coupled with fundamental reforms, including rule of law and targeted investments.

The Commission therefore proposes to make the necessary adjustments to the budget nomenclature, budget remarks and level of appropriations in this DAB 1. This includes creating three new budget lines for which the corresponding budget remarks are set out in the budgetary annex. Additionally, it is proposed to include and allocate an amount of EUR 501 million of commitment appropriations and 23,9 million of payment appropriations, in line with the legislative financial statement attached to the proposal for the Reform and Growth Facility for the Western Balkans Regulation11. Also, the amount of EUR 7,5 million proposed for technical and administrative support expenditure will also be used to finance external personnel. The amounts will be placed in reserve pending the adoption of the legal base.

EUR
Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
15 01 02Support expenditure for the Reform and Growth Facility for the Western Balkansp.m.p.m.
15 03 01Reform and Growth Facility for Western Balkans – Operational expenditurep.m.p.m.
15 03 02Reform and Growth Facility for Western Balkans – Provisioning of the Common Provisioning Fundp.m.p.m.
30 02 01Non-differentiated appropriations (Reserve for budget article 15 01 02)7 450 0007 450 000
30 02 02Differentiated appropriations (Reserve for budget article 15 03 01)403 550 000p.m.
30 02 02Differentiated appropriations (Reserve for budget article 15 03 02)90 000 00016 443 000
Total501 000 00023 893 000


5. EUROPEAN GLOBALISATION ADJUSTMENT FUND

The revision of the Multiannual Financial Framework foresees a reduction of the annual allocation of EGF for the period 2024-27, which shall not exceed a maximum amount of EUR 30 million (in 2018 prices, corresponding to EUR 33,8 million in 2024 prices). Consequently, a reduction of commitment appropriations in 2024 by EUR 175,7 million is proposed.

EUR
Budget lineNameCommitment appropriationsPayment appropriations
Section III – Commission
30 04 02Reserve for the European Globalisation Adjustment Fund for Displaced Workers (EGF)-175 681 337p.m.
Total-175 681 337p.m.

3. ADJUSTMENTS STEMMING FROM THE POLITICAL AGREEMENT ON THE ARTIFICIAL INTELLIGENCE ACT (AI OFFICE)

The initial Commission proposal for the Artificial Intelligence (AI) Act12 was based on entirely national implementation, with only a minimal coordination role at European level. Accordingly, it included a staffing estimation of 10 officials and temporary staff at EU level, including the staff for the European Data Protector Supervisor (EDPS) as data controller for all AI applications launched by the European institutions.

However, the political agreement reached by the European Parliament and the Council in December 2023 on the establishment of the Artificial Intelligence Office is based on a completely different European coordination mechanism, with a vastly larger set of tasks and responsibilities. Therefore, considerably increased staffing levels are required to be able to effectively deliver on those tasks. The increased costs for the initiative to finance the external personnel and IT costs will have to be financed from the Digital Europe Programme, whereas the permanent establishment plan posts will be redeployed within the Commission and financed under heading 7.

On 9 January 2024 the Commission transmitted a revised Legislative Financial Statement to the European Parliament and the Council, which sets out the budgetary impact of the new governance model covering the period 2024-2027.

As regards staffing, the Commission was fully ready to address the initial staffing needs of up to ten posts under the intitially proposed model by reallocation and reprioritisation of resources within the institution, in line with the policy of stable staffing which the Commission has implemented since the start of the current MFF. However, at full cruising speed an estimated 100 staff will be needed to ensure the implementation of the agreed centralised model, of which 20 posts and 80 external staff as from 2025. Also given that the Commission has met the needs of other priority areas within its stable staffing policy over the past years, it is not possible to find such large staff numbers by redeployment, without jeopardising other critical ongoing activities. That is why the Commission issued a unilateral statement on the financing of human resources for the Artificial Intelligence Act in December 2023:

The Commission recalls that the final agreement reached by the co-legislators on the proposal for a Regulation laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) has evolved significantly. It is much more extensive than the Commission initial proposal, entrusting many additional tasks and an additional enforcement role to the AI Office. As a consequence, it requires much more staff and resources, compared to the initial quantification made in the legislative financial statement which accompanied the original proposal, which was based on a national implementation, with only a minimal coordination role at European level.

The additional Commission human resources required by the final agreement endorsed by the co-legislators will not allow the Commission to respect the principle of stable staffing and will require additional resources, to be authorised by the European Parliament and the Council during the annual budgetary procedure along with the related budgetary appropriations.

Without any additional means, the options to finance the necessary administrative costs for staff of the Artificial Intelligence Office cannot be found. Heading 7 European Public Administration of the multiannual financial framework 2021-2027 was built on the principle of stable staffing, and there is no margin to finance additional officials and external staff. The Commission will internally redeploy the officials required for this initiative. However, for the additional staff needed, the new budget line to be created under the Digital Europe Programme will be used to finance them beyond the limit of the principle of stable staffing.  

It is against this background that the Commission proposes in DAB 1 to adjust the budget remarks of the support expenditure for the Digital Europe Programme to allow recruiting staff and paying them from the corresponding budget line (02 01 30 01 – Support expenditure for the Digital Europe Programme).

The corresponding changes are set out in the budgetary annex.

4. FINANCING

Overall, the net impact of DAB 1 on expenditure amounts to an increase of EUR 5 833,7 million in commitment appropriations and EUR 4 143,6 million of payment appropriations.


5. SUMMARY TABLE BY MFF HEADING

In EUR
Budget 2024Draft Amending Budget 1/2024Budget 2024 (incl. DAB 1/2024)
CAPACAPACAPA
1Single Market, Innovation and Digital21 493 372 99020 827 967 00321 493 372 99020 827 967 003
Of which under Flexibility Instrument
Ceiling21 598 000 00021 598 000 000
Margin104 627 013104 627 013
2Cohesion, Resilience and Values74 560 690 94933 715 996 20474 560 690 94933 715 996 204
Of which under Flexibility Instrument1 289 495 3331 289 495 333
Of which under Single Margin Instrument 11(1)(a)
Ceiling73 289 000 00073 289 000 000
Margin17 804 38417 804 384
2a.Economic, social and territorial cohesion64 665 195 61624 155 654 15264 665 195 61624 155 654 152
Of which under Flexibility Instrument
Ceiling64 683 000 00064 683 000 000
Margin17 804 38417 804 384
2b.Resilience and values9 895 495 3339 560 342 0529 895 495 3339 560 342 052
Of which under Flexibility Instrument1 289 495 3331 289 495 333
Of which under Single Margin Instrument 11(1)(a)
Ceiling8 606 000 0008 606 000 000
Margin
3Natural Resources and Environment57 338 630 83954 151 402 94157 338 630 83954 151 402 941
Of which under Flexibility Instrument
Ceiling57 449 000 00057 449 000 000
Margin110 369 161110 369 161
Of which: Market related expenditure and direct payments40 517 278 00040 505 482 21340 517 278 00040 505 482 213
EAGF sub-ceiling41 649 000 00041 649 000 000
Rounding difference excluded for calculating the sub-margin722 000722 000
Net transfers between EAGF and EAFRD-1 046 000 000-1 046 000 000
Net balance available for EAGF expenditure (sub-ceiling corrected by transfers between EAGF and EAFRD)40 603 000 00040 603 000 000
EAGF sub-margin85 722 00085 722 000
4Migration and Border Management3 892 705 6713 248 967 4433 892 705 6713 248 967 443
Of which under Flexibility Instrument
Ceiling4 020 000 0004 020 000 000
Margin127 294 329127 294 329
5Security and Defence2 321 177 9262 035 413 531376 000 0002 697 177 9262 035 413 531
Of which under Flexibility Instrument317 177 926317 177 926
Of which under Single Margin Instrument 11(1)(a)
Ceiling2 004 000 000376 000 0002 380 000 000
Margin
6Neighbourhood and the World16 230 000 00015 291 157 313501 000 00023 893 00016 731 000 00015 315 050 313
Of which under Flexibility Instrument28 828 20428 828 204
Of which under Single Margin Instrument 11(1)(a)371 171 796371 171 796
Ceiling15 830 000 000501 000 00016 331 000 000
Margin
7European Public Administration11 988 000 60311 988 000 60311 988 000 60311 988 000 603
Of which under Flexibility Instrument
Of which under Single Margin Instrument 11(1)(a)215 000 603215 000 603
Ceiling11 773 000 00011 773 000 000
Margin
of which: Administrative expenditure of the institutions9 175 375 8419 175 375 8419 175 375 8419 175 375 841
Sub-ceiling9 006 000 0009 006 000 000
Sub-margin
Appropriations for headings187 824 578 975141 258 905 038877 000 00023 893 000188 701 578 975141 282 798 038
Ceiling185 963 000 000170 543 000 000877 000 000186 840 000 000170 543 000 000
Of which under Flexibility Instrument1 635 501 4631 734 392 2971 635 501 4631 734 392 297
Of which under Single Margin Instrument 11(1)(a)586 172 399586 172 399
Margin360 094 88731 018 487 259-23 893 000360 094 88730 994 594 259
Thematic special instruments1 560 861 2111 371 395 0014 956 739 2214 119 681 5586 517 600 4325 491 076 559
Total appropriations189 385 440 186142 630 300 0395 833 739 2214 143 574 558195 219 179 407146 773 874 597


1 Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom, OJ L 424, 15.12.2020.

2 Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027, OJ L 433I , 22.12.2020, p. 11.

3 Council Regulation (EU, Euratom) 2024/765 of 29 February 2024 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027, OJ L, 2024/765, 29.02.2024.

4 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.

5 OJ L, 2024/207, 22.2.2024.

6 COM(2024) 110 final

7 Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine Facility, OJ L, 2024/792, 29.02.2024.

8 Regulation (EU) 2024/795 of the European Parliament and of the Council of 29 February 2024 establishing the Strategic Technologies for Europe Platform (STEP), and amending Directive 2003/87/EC and Regulations (EU) 2021/1058, (EU) 2021/1056, (EU) 2021/1057, (EU) No 1303/2013, (EU) No 223/2014, (EU) 2021/1060, (EU) 2021/523, (EU) 2021/695, (EU) 2021/697 and (EU) 2021/241, OJ L, 2024/795, 29.02.2024.

9 COM(2023) 335 final

10 Council regulation (EC) No 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund (OJ L 311, 14.11.2002, p. 3), as last amended by Regulation (EU) 2020/461 of the European Parliament and of the Council of 30 March 2020 (OJ L 99, 31.3.2020, p. 9).

11 COM(2023) 692 final

12 COM(2021) 206 final

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