Annexes to COM(2024)159 - - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2024)159 - . |
|---|---|
| document | COM(2024)159 |
| date | April 8, 2024 |
The key value added of the MFA in comparison to other EU instruments would be to help create a stable macroeconomic framework, including by promoting a sustainable balance-of-payments and budgetary situation, and an appropriate framework for advancing structural reforms. MFA does not provide regular financial support and is to be discontinued as soon as the country's external financial situation has been brought back onto a sustainable path.
MFA would also be complementary to interventions envisaged by the international community, in particular the adjustment and reform programmes supported by the IMF and the World Bank.
1.5.5. Assessment of the different available financing options, including scope for redeployment
By using loans, this MFA operation increases the effectiveness of the EU budget through the leverage effect and provides for the best cost-efficient option.
The Commission is empowered to borrow funds from capital markets on behalf of both the European Union and Euratom using the guarantee of the EU budget. The aim is to obtain funds from the market at the best available rates due to the top credit status.
1.6. Duration and financial impact of the proposal/initiative
X limited duration
- in effect from for 2.5 years from the entry into force of the Memorandum of Understanding, as stated in Article (1.4) of the Decision.
- Financial impact from 2024 to 2027 for commitment appropriations and from 2024 to 2027 for payment appropriations.
1.7. Method(s) of budget implementation planned20
X Direct management by the Commission
X by its departments, including by its staff in the Union delegations;
2. MANAGEMENT MEASURES
2.1. Monitoring and reporting rules
Specify frequency and conditions.
The actions to be financed under this Decision will be implemented under direct management by the Commission from headquarters and with support of the Union delegations.
This assistance is of macroeconomic nature and its design is consistent with the IMF-supported programme. The monitoring of the action by the Commission services will take place on the basis of progress in the implementation of the IMF arrangement and the implementation of specific reform measures to be agreed with the authorities of the partners in a Memorandum of Understanding with a frequency that is consistent with the number of instalments (See also point 1.4.4).
2.2. Management and control system(s)
2.2.1. Justification of the management mode(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed
The actions to be financed under this Decision will be implemented under direct management by the Commission from headquarters and with support of the Union delegations.
MFA disbursements are dependent on successful reviews, and tied to the fulfilment of conditionality attached to each operation. The implementation of conditions is closely monitored by the Commission, in close coordination with the Union delegations.
2.2.2. Information concerning the risks identified and the internal control system(s) set up to mitigate them
Risks identified
There are fiduciary, policy and political risks related to the proposed MFA operations.
There is a risk that the MFA could be used in a fraudulent way. As MFA is not designated to specific expenses (contrary to project financing, for example), this risk is related to factors such as the general quality of management systems in the partner’s Central Bank and the Ministry of Finance, administrative procedures, control and oversight functions, the security of IT systems and the appropriateness of internal and external audit capabilities.
A second risk stems from the possibility that the partner will fail to service the financial liabilities towards the EU stemming from the proposed MFA loans (default or credit risk), which could be caused for example by a significant additional deterioration of the balance of payments and fiscal position of the partner.
Internal control systems
The macro-financial assistance will be liable to verification, control and auditing procedures under the responsibility of the Commission, including the European Anti-Fraud Office (OLAF), and by the European Court of Auditors as foreseen by Article 129 of the Financial Regulation.
Ex-ante: Commission assessment of management and control system in the beneficiary country. For each beneficiary country, an ex-ante operational assessment of the financial circuits and control environment is carried out by the Commission, if necessary, with technical support from consultants. An analysis of accounting procedures, segregation of duties and internal/external audit of the Central Bank and the Ministry of Finance are carried out to ensure a reasonable level of assurance for sound financial management. Should weaknesses be identified, they are translated into conditions, which have to be implemented before the disbursement of the assistance. Also, when needed, specific arrangements for payments (e.g. ring-fenced accounts) are put in place.
During implementation: Commission checks of periodic partner declarations. The payment is subject to (1) monitoring by DG ECFIN staff, in close coordination with the EU delegations and with the external stakeholders, like the IMF, of the implementation of the agreed conditionalities, and (2) the normal control procedure provided for by the financial circuit (model 2) used in DG ECFIN, including the verification by the financial unit of the fulfilment of conditions attached to the disbursement of the assistance mentioned above. The disbursement relating to MFA operations may be subject to additional independent ex-post (documentary and/or on-the-spot) verifications by officials of the ex-post control team of the DG. Such verifications may also be initiated at the request of the responsible AOSD. Interruptions and suspensions of payments, financial corrections (implemented by Commission), and recoveries may be practised where needed (it has not occurred so far), and are explicitly foreseen in the financing agreements with the partners.
2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio of "control costs ÷ value of the related funds managed"), and assessment of the expected levels of risk of error (at payment & at closure)
The control systems in place, such as the ex-ante operational assessments or the ex-post assessments, ensured an effective error rate for the MFA payments of 0%. There are no known cases of fraud, corruption or illegal activity. MFA operations have a clear intervention logic, one that allows the Commission to evaluate their impact. The controls enable the confirmation of assurance and of attainment of policy objectives and priorities.
2.3. Measures to prevent fraud and irregularities
Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy.
To mitigate the risks of fraudulent use several measures have been and will be taken:
First, the Loan Agreement will comprise a set of provisions on inspection, fraud prevention, audits and recovery of funds in case of fraud or corruption. It is further envisaged that a number of specific policy conditions will be attached to the assistance, including in the area of public finance management, with a view to strengthening efficiency, transparency and accountability. Also, the assistance will be paid to a specific account of the central bank of the partner.
Finally, the assistance will be liable to verification, control and auditing procedures under the responsibility of the Commission, including the European Anti-Fraud Office (OLAF), and the European Court of Auditors as foreseen by Article 129 of the Financial Regulation.
3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE
3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s) affected
Existing budget lines
In order of multiannual financial framework headings and budget lines.
| Heading of multiannual financial framework | Budget line | Type of expenditure | Contribution | |||
| Number | Diff./Non-diff.21 | from EFTA countries22 | from candidate countries and potential candidates23 | fromother third countries | other assigned revenue | |
| 14.02.01.70 NDICI — Global Europe — Provisioning of the common provisioning fund [MFA loans – EAG] | Diff. | NO | NO | NO | NO |
New budget lines requested – Not applicable
3.2. Estimated financial impact of the proposal on appropriations
3.2.1. Summary of estimated impact on operational appropriations
The proposal/initiative does not require the use of operational appropriations
X The proposal/initiative requires the use of operational appropriations, as explained below:
EUR million (to three decimal places)
| Heading of multiannual financial framework | 6 | Heading 6 - 'Neighbourhood and the World' |
| DG: ECFIN | Year 2024 | Year 2025 | Year 2026 | Year 2027 | Enter as many years as necessary to show the duration of the impact (see point 1.6) | TOTAL | ||||
| □ Operational appropriations | ||||||||||
| Budget line24 14.02.01.70 NDICI — Global Europe — Provisioning of the common provisioning fund [MFA loans – EAG] | Commitments | (1a) | 40.25 | 4.75 | 45 | |||||
| Payments | (2a) | 40.25 | 4.75 | 45 | ||||||
| Appropriations of an administrative nature financed from the envelope of specific programmes25 | ||||||||||
| Budget line 14.20.03.01 | Commitments | (3) | 0.15 | 0.15 | ||||||
| Payments | (4) | 0.15 | 0.15 | |||||||
| TOTAL appropriations for DG ECFIN | Commitments | =1a+1b +3 | 40.25 | 4.90 | 45.15 | |||||
| Payments | =2a+2b +3 | 40.25 | 4.90 | 45.15 |
| □ TOTAL operational appropriations | Commitments | (4) | 40.25 | 4.75 | 45 | |||||
| Payments | (5) | 40.25 | 4.75 | 45 | ||||||
| □ TOTAL appropriations of an administrative nature financed from the envelope for specific programmes | (6) | 0.15 | 0.15 | |||||||
| TOTAL appropriations under HEADING 6 of the multiannual financial framework | Commitments | =4+ 6 | 40.25 | 4.90 | 45.15 | |||||
| Payments | =5+ 6 | 40.25 | 4.90 | 45.15 |
If more than one operational heading is affected by the proposal / initiative, repeat the section above:
| □ TOTAL operational appropriations (all operational headings) | Commitments | (4) | ||||||||
| Payments | (5) | |||||||||
| TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (all operational headings) | (6) | |||||||||
| TOTAL appropriations under HEADINGS 1 to 6 of the multiannual financial framework (Reference amount) | Commitments | =4+ 6 | ||||||||
| Payments | =5+ 6 |
| Heading of multiannual financial framework | 7 | ‘Administrative expenditure’ |
This section should be filled in using the 'budget data of an administrative nature' to be firstly introduced in the Annex to the Legislative Financial Statement (Annex 5 to the Commission decision on the internal rules for the implementation of the Commission section of the general budget of the European Union), which is uploaded to DECIDE for interservice consultation purposes.
EUR million (to three decimal places)
| Year 2024 | Year 2025 | Year 2026 | Year 2027 | TOTAL | |||
| DG:ECFIN | |||||||
| □ Human resources | |||||||
| □ Other administrative expenditure | |||||||
| TOTAL DG ECFIN | Appropriations |
| TOTAL appropriations under HEADING 7 of the multiannual financial framework | (Total commitments = Total payments) |
EUR million (to three decimal places)
| Year 2024 | Year 2025 | Year 2026 | Year 2027 | TOTAL | |||
| TOTAL appropriations under HEADINGS 1 to 7 of the multiannual financial framework | Commitments | ||||||
| Payments |
3.2.2. Estimated output funded with operational appropriations
Commitment appropriations in EUR million (to three decimal places)
| Indicate objectives and outputs | Year 2024 | Year 2025 | Year 2026 | Year 2027 | TOTAL | ||||||
| Type26 | Number | Cost | Number | Cost | Number | Cost | Number | Cost | Total number | Total cost | |
| - Output 1 | Provisioning of the External Action Guarantee | 1 | 40.25 | 1 | 4.75 | 1 | 45 | ||||
| - Output 2 | Ex-post evaluation | 1 | 0.15 | 1 | 0.15 | ||||||
| Subtotal for specific objective No 1 | 1 | - | - | - | - | 1 | 0.15 | 2 | |||
| TOTAL COST | 1 | - | - | - | - | 1 | 0.15 | 2 |
3.2.3. Summary of estimated impact on administrative appropriations
X The proposal/initiative does not require the use of appropriations of an administrative nature
The proposal/initiative requires the use of appropriations of an administrative nature, as explained below:
EUR million (to three decimal places)
| Year 2024 | Year 2025 | Year 2026 | Year 2027 | TOTAL |
| HEADING 7 of the multiannual financial framework | |||||
| Human resources | |||||
| Other administrative expenditure | |||||
| Subtotal HEADING 7 of the multiannual financial framework |
| Outside HEADING 727 of the multiannual financial framework | |||||
| Human resources | |||||
| Other expenditure of an administrative nature | |||||
| Subtotal outside HEADING 7 of the multiannual financial framework |
| TOTAL |
The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.
3.2.3.1. Estimated requirements of human resources
X The proposal/initiative does not require the use of human resources.
The proposal/initiative requires the use of human resources, as explained below:
Estimate to be expressed in full time equivalent units
| Year 2024 | Year 2025 | Year 2026 | Year 2027 | ||
| 20 01 02 01 (Headquarters and Commission’s Representation Offices) | |||||
| 20 01 02 03 (Delegations) | |||||
| 01 01 01 01 (Indirect research) | |||||
| 01 01 01 11 (Direct research) | |||||
| Other budget lines (specify) | |||||
| 20 02 01 (AC, END, INT from the ‘global envelope’) | |||||
| 20 02 03 (AC, AL, END, INT and JPD in the delegations) | |||||
| XX 01 xx yy zz 28 | - at Headquarters | ||||
| - in Delegations | |||||
| 01 01 01 02 (AC, END, INT - Indirect research) | |||||
| 01 01 01 12 (AC, END, INT - Direct research) | |||||
| Other budget lines (specify) | |||||
| TOTAL |
The human resources required will be met by staff from the DG who are already assigned to management of the action and/or have been redeployed within the DG, together if necessary with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.
Description of tasks to be carried out:
| Officials and temporary staff | Director Dir. D: Supervise and manage the operation, liaise with Council and Parliament for the adoption of the Decision and the approval of the Memorandum of Understanding (MoU), negotiate the MoU with the authorities of Jordan, review reports, lead missions and assess progress with conditionality compliance. HoU/DHoU Dir. D: Assist the Director in managing the operation, liaising with Council and Parliament for the adoption of the Decision and the approval of the MoU, negotiating with the authorities of Jordan the MoU and Loan Facility Agreement (together with DG BUDGET), reviewing reports and assessing progress with conditionality compliance. DG BUDGET: Prepare the Loan Facility Agreement (LFA), negotiate it with the authorities of Jordan and have it approved by the responsible Commission services and signed by both parties. Follow up the entry into force of the LFA. Prepare the Commission decision(s) on the borrowing transaction(s), follow up the submission of the Request(s) for Funds, select the banks, prepare and execute the funding transaction(s) and disburse the funds to the country. Carry out the back-office activities to follow up the reimbursement of the loan(s). Prepare the corresponding reports on these activities. | |
| External staff | Desk economists, MFA Sector (Dir. D): Prepare the Decision and MoU, liaise with the authorities and the IFIs, conduct review missions, prepare Commission staff reports and Commission procedures related to the management of the assistance, liaise with external experts for the operational assessment and the ex-post evaluation. |
3.2.4. Compatibility with the current multiannual financial framework
The proposal/initiative:
can be fully financed through redeployment within the relevant heading of the Multiannual Financial Framework (MFF).
requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation.
requires a revision of the MFF.
3.2.5. Third-party contributions
The proposal/initiative:
X does not provide for co-financing by third parties
provides for the co-financing by third parties estimated below:
Appropriations in EUR million (to three decimal places)
| Year N29 | Year N+1 | Year N+2 | Year N+3 | Enter as many years as necessary to show the duration of the impact (see point 1.6) | Total | |||
| Specify the co-financing body | ||||||||
| TOTAL appropriations co-financed |
3.3. Estimated impact on revenue
X The proposal/initiative has no financial impact on revenue.
The proposal/initiative has the following financial impact:
on own resources
on other revenue
please indicate, if the revenue is assigned to expenditure lines ◻
EUR million (to three decimal places)
| Budget revenue line: | Appropriations available for the current financial year | Impact of the proposal/initiative30 | ||||||
| Year N | Year N+1 | Year N+2 | Year N+3 | Enter as many years as necessary to show the duration of the impact (see point 1.6) | ||||
| Article …………. |
For assigned revenue, specify the budget expenditure line(s) affected.
Other remarks (e.g. method/formula used for calculating the impact on revenue or any other information).
1Decision (EU) 2020/33 of the European Parliament and of the Council of 15 January 2020 providing further macro-financial assistance to the Hashemite Kingdom of Jordan (OJ L 14, 17.1.2020, p. 1, ELI: http://data.europa.eu/eli/dec/2020/33/oj).
2EU Decision (EU) 2020/701 of the European Parliament and of the Council of 25 May 2020 on providing macro‐financial assistance to enlargement and neighbourhood partners in the context of the COVID‐19 pandemic (OJ L 165, 27.5.2020, p. 3, ELI: http://data.europa.eu/eli/dec/2020/701/oj).
3OJ L 129, 15.5.2002, p. 3–176. (http://data.europa.eu/eli/agree_internation/2002/357(1)/oj)
4EU-Jordan Partnership Priorities 2021-2027 available at: https://data.consilium.europa.eu/doc/document/ST-3304-2022-ADD-1/en/pdf.
5Decision (EU) 2016/2371 of the European Parliament and of the Council of 14 December 2016 providing further macro-financial assistance to the Hashemite Kingdom of Jordan (OJ L 352, 23.12.2016, p. 18, ELI: http://data.europa.eu/eli/dec/2016/2371/oj).
6Ex-post evaluation on: MFA Operations to the Southern Neighbourhood Countries of Tunisia and Jordan (2016-2019), September 2021, available at: https://commission.europa.eu/about-european-commission/departments-and-executive-agencies/economic-and-financial-affairs/evaluation-reports-economic-and-financial-affairs-policies-and-spending-activities/joint-ex-post-evaluation-macro-financial-assistance-mfa-operations-tunisia-and_en
7OJ L 193, 30.7.2018, p. 1 (ELI: http://data.europa.eu/eli/reg/2018/1046/oj).
8Position of the European Parliament of … and Decision of the Council of …
9OJ L 129, 15.5.2002, p. 3, ELI: http://data.europa.eu/eli/agree_internation/2002/357(1)/oj.
10Decision (EU) 2020/33 of the European Parliament and of the Council of 15 January 2020 providing further macro-financial assistance to the Hashemite Kingdom of Jordan (OJ L 14, 17.1.2020, p. 1, ELI: http://data.europa.eu/eli/dec/2020/33/oj).
11Decision (EU) 2016/2371 of the European Parliament and of the Council of 14 December 2016 providing further macro-financial assistance to the Hashemite Kingdom of Jordan (OJ L 352, 23.12.2016, p. 18, ELI: http://data.europa.eu/eli/dec/2016/2371/oj).
12Decision No 1351/2013/EU of the European Parliament and of the Council of 11 December 2013 on providing macro-financial assistance to the Hashemite Kingdom of Jordan (OJ L 341, 18.12.2013, p. 4, ELI: http://data.europa.eu/eli/dec/2013/1351/oj).
13Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU and repealing Regulation (EU) 2017/1601 and Council Regulation (EC, Euratom) No 480/2009 (OJ L 209, 14.6.2021, p. 1), ELI: http://data.europa.eu/eli/reg/2021/947/o).
14Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (OJ L 248, 18.9.2013, p. 1, ELI: http://data.europa.eu/eli/reg/2013/883/oj).
15Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’) (OJ L 283, 31.10.2017, p. 1, ELI: http://data.europa.eu/eli/reg/2017/1939/oj).
16Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13, ELI: http://data.europa.eu/eli/reg/2011/182/oj).
17Council Decision 2010/427/EU of 26 July 2010 establishing the organisation and functioning of the European External Action Service (OJ L 201, 3.8.2010, p. 30, ELI: http://data.europa.eu/eli/dec/2010/427/oj).
18Regulation (EU, Euratom) No 1046/2018 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.07.2018, p. 1).
19As referred to in Article 58(2)(a) or (b) of the Financial Regulation.
20Details of budget implementation methods and references to the Financial Regulation may be found on the BUDGpedia site: https://myintracomm.ec.europa.eu/corp/budget/financial-rules/budget-implementation/Pages/implementation-methods.aspx
21Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
22EFTA: European Free Trade Association.
23Candidate countries and, where applicable, potential candidates from the Western Balkans.
24According to the official budget nomenclature.
25Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.
26Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
27Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former ‘BA’ lines), indirect research, direct research.
28Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).
29Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first year of implementation (for instance: 2021). The same for the following years.
30As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 20 % for collection costs.
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