Budgetisation of the European Development Fund

The European Commission recommends the incorporation into the EU budget of the aid granted under the European Development Fund (EDF) to the African, Caribbean and Pacific countries (ACP) and the Overseas Countries and Territories (OCT) . This would allow increased public control of this aid, as well as increased transparency and effectiveness, while also making the aid more flexible and adaptable to realities on the ground.

ACT

Communication from the Commission to the Council and the European Parliament of 8 October 2003: "Towards the full integration of cooperation with ACP countries in the EU budget" [COM(2003) 590 final - not published in the Official Journal].

SUMMARY

In this communication, the Commission recommends the incorporation into the EU budget of the aid granted to the ACP and OCT countries under the European Development Fund (EDF).

A POLITICALLY DESIRABLE CHANGE

Countering the risks of marginalisation

With the extension of the external relations of the Union, the conclusion of cooperation agreements with numerous other regions and the increase in the amounts earmarked for external aid in the budget, separate financing for the ACP countries is no longer a privilege, rather the opposite.

These cooperation agreements with numerous regions around the world, like the Cotonou Agreement broach a series of subjects of common interest: political dialogue, trade arrangements, democracy objectives, etc. After the integration of the EDF into the budget, all the major geographical programmes will be part of the structure of the budget. From a technical point of view, that will permit increased synergy between the programmes centred around the national/geographical approach and those that pursue thematic objectives.

The cooperation programmes with the ACP countries have created a wealth of experience and good practice that is worthy of application to other programmes pursued in other developing regions. The incorporation of the EDF will facilitate the mutual enrichment of the different programmes.

The incorporation of the EDF into the budget will also facilitate cooperation between the regions of Africa. A similar gain in coherence could be brought about for Caribbean countries in relation to Latin America and for the Pacific group in relation to Asia.

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Towards greater independence

With the budgetisation of the EDF, the financing of EU-ACP cooperation would gain independence from voluntary contributions determined as a result of national viewpoints and would present better prospects for continuity. For Member States, that would signify that financial cooperation with the ACP was genuinely placed at the EU level.

Towards stronger legitimacy

The EDF is currently the only expenditure that is not subject to authorisation by the European Parliament. Incorporating the EDF into the budget would put an end to this anomaly, thereby strengthening the public legitimacy of the EU's external assistance. Not being part of the budget, cooperation with the ACP countries is clearly excluded from one of the most important political decision-making processes of the Union. The already significant risk that relations with the ACP countries are marginalised in comparison with other economically more advanced regions of the world is exacerbated by their lack of visibility in the political arenas of the Union. Furthermore, the influence of the ACP-EU Joint Parliamentary Assembly will be enhanced through its members in the European Parliament.

Towards greater transparency

A single budget including all external aid expenditures offers the possibility of providing a global picture of the EU's external assistance and of EU development policy, in terms of both size and geographical distribution. Citizens will have to refer only to a single document in future when they want to know what the EC spends on development policy.

Towards greater efficiency and effectiveness

The integration of the EDF into the budget will lead to greater cost effectiveness. The unification of administrative and legal rules, decision-making structures, and commitment and payment procedures will remove a certain amount of duplication which is currently imposed on the different operators and stakeholders. It will help simplify reporting requirements, reduce the administrative burden on beneficiary countries and respond in a more efficient manner to the challenges faced by developing countries. The management principles applicable to the budget will also make the pattern of commitments more regular and help improve the delivery of aid to the ACP.

CONCERNS LINKED TO BUDGETISATION

Will the quality of the partnership with ACP countries be maintained?

Yes. In the Commission's view, the European Development Fund is a historical, not a substantive element in the privileged relations between the ACP and the EU. The Cotonou Agreement remains the cornerstone of this partnership and will continue to govern EU-ACP relations as in the past.

Commitments to individual ACP countries will continue to be made on the basis of programmes prepared and approved with them. In every country, the government will continue to be closely associated with multiannual indicative programming, the preparation of annual action plans, etc.

Will budgetisation challenge the financial commitment of the EU to the ACP?

This financial commitment must be renewed every five years, either through a new EDF within the framework of the general budget. The instruments currently available in the budgetary framework, and more particularly the decisions on the financial perspectives, offer the same guarantees.

Background

There are currently two main channels of EU assistance to the ACP countries: funds from the EU budget and funds from the EDF. Different administrative rules and decision-making structures apply to these two forms of aid. Funds from the EU budget are administered in accordance with the general Financial Regulation. Funds from the EDF meanwhile are administered according to the rules laid down by the Cotonou Agreement.

The proposal to incorporate the EDF into the budget would mean that the new financial perspectives could include the totality of expenditure for EU-ACP cooperation. This is not a new proposal: the Commission had previously proposed the integration of the EDF in the Community general budget in 1973 and 1979. During the negotiations on the 2007-2013 financial perspectives, the Commission revived the proposal, but it was once again rejected by the European Council (15-16 December 2005). The debate is likely to be reopened when the next financial perspectives are prepared.

Last updated: 28.06.2007