Representatives of the European Union’s main institutions met yesterday (24 September) to discuss shortfalls in payment appropriations that have grown to €26 billion in the current budget year.
Jacek Dominik, the European commissioner for financial programming and budget, used the meeting with the European Parliament’s budgets committee and diplomats from the 28 member states to sound an alarm about a swelling backlog of unpaid invoices, the bulk of which – some 90% – relate to regional aid projects.
The Commission is particularly worried that the value of unpaid bills from regional aid rolled over from one budget year into the next has more than doubled in two years. In 2011, unpaid bills totalling €11bn were rolled over into 2012. In 2013, the figure was €23.4bn, to be paid from the current annual budget.
“For years, annual EU budgets have been voted at levels far lower than the real needs,” Dominik said ahead of the meeting. “This has created an increasing problem of backlogs, legitimate invoices that we simply cannot pay at the end of the year and that are rolled over onto the following year. This is neither sustainable nor sound management. We cannot go on like this.”
In his mission letter to Kristalina Georgieva, the nominee for Commission vice-president for budget and human resources, Jean-Claude Juncker – the president-elect of the Commission – tasked her with drafting, “within our first weeks in office”, a plan for payment priorities.
MEPs have repeatedly criticised member states for allowing unpaid bills to accumulate by cutting the Commission’s payment requests.
Because of the multi-annual nature of regional aid, which often funds large infrastructure projects, the Commission this year is still reimbursing member states for expenditure made during the 2007-13 financial period. However, the ceilings for actual payments are set down in the 2014-20 multi-annual financial framework, and they are lower than during the previous period.
This has made a somewhat obscure philosophical dispute between the Commission and the Council of Ministers highly topical. The member states claim that the EU’s special programmes, such as the globalisation adjustment fund and the emergency-aid reserve, fall within the ceilings set by the multiannual financial framework (MFF), while the Commission maintains that they are not constrained by the MFF. In past years, the argument – which has never been settled – was largely academic. But because of the lower ceilings of the 2014-20 MFF, the Commission’s requests for extra appropriations to pay for rolled-over bills come dangerously close to the annual ceiling.
The Commission has already asked the member states for an additional €4.7bn in payments this year – a request that stands little chance of being granted before negotiations on the 2015 budget begin in earnest in the second half of October. The Commission also made a proposal on Tuesday (23 September) for shifting some €170 million from underspent budget lines to those that are underfunded, an annual exercise known as ‘global transfer’.
The question of special programmes will become acute during the negotiations on the 2015 budget. The Council is seeking a €2.1bn cut to the €142.1bn proposed by the Commission for payments appropriations, arguing that this is the only way to ensure sufficient funding for the special programmes while staying within the MFF ceilings.
The Commission and the Parliament reject that logic, and criticise the Council for seeking cuts to the competitiveness budget line, saying that this contradicts the EU’s strategic focus on jobs and growth.
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