Accounting Officer's Status Report to the European Parliament and the Council 30 June 2018

Transcription

1 Ref. Ares(2018) /09/2018 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission Accounting Officer's Status Report to the European Parliament and the Council 30 June 2018 Article 251 of the Financial Regulation

2 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 2 of 11 INDEX 1. Purpose and scope EU annual accounts & audit Introduction Key elements of the 2017 EU annual accounts audit Main developments and topics during Introduction Treasury situation European Fund for Strategic Investments (EFSI) Pre-financing situation: half-year report at 30 June Galileo and Copernicus Assets Borrowing and lending activities Information on financial corrections: Mid-term report at 30 June Fines Validation of the local systems EU Trust Funds Annexes... 11

3 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 3 of Purpose and scope Article 251 of the Financial Regulation (2018) 1, and article (150)4 of the Financial Regulation (2012) 2, require that by 15 September of each financial year, the accounting officer of the Commission shall send to the European Parliament and to the Council a report containing information on current risks noted, general trends observed, new accounting issues encountered and progress on existing accounting matters, including where identified by the Court of Auditors, as well as information on recoveries. It is thus the purpose of this status report to provide the reader with a high-level overview of the main issues concerning the EU accounting environment at 30 June It includes information on the evolution of major situations up to 15 September EU annual accounts & audit 2.1 Introduction The following paragraphs provide an overview of the key elements of the previous annual accounts and serve as a comparative to chapter 3 on the developments and progress made since the last balance sheet date. 2.2 Key elements of the 2017 EU annual accounts European Fund for Strategic Investments (EFSI) The European Fund for Strategic Investments (EFSI) was created via Regulation of the European Parliament and of the Council, which was adopted on 1 July Following the Regulation, an agreement was signed with the European Investment Bank (EIB) on the management of EFSI and on the granting of the EU Guarantee ('EFSI Agreement'). Under this agreement, the EU has provided a guarantee of up to EUR 16 billion, to protect the EIB against the potential losses from the underlying guaranteed operations. The EFSI operations are conducted within two windows: the Infrastructure and Innovation Window (IIW) implemented by the EIB and the SME Window (SMEW) implemented by the European Investment Fund (EIF), both of which have a debt portfolio and an equity portfolio. 1 2 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 193/1, 30/07/2018); hereinafter referred to as FR(2018). Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, ). Hereinafter referred to as FR(2012).

4 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 4 of 11 At 31 December 2017, contracts for EUR million had been signed by the EIB Group and covered by the EU guarantee, out of which EUR million has been disbursed. These amounts, being guaranteed by the EU budget, have been disclosed as a contingent liability in the 2017 EU annual accounts. Pursuant to the EFSI Regulation, the EFSI Guarantee Fund has been established to provide a liquidity cushion against potential losses from the EFSI guaranteed operations. At 31 December 2017, the EFSI Guarantee Fund held financial assets of EUR 3.5 billion, including debt securities, term deposits and cash in bank accounts. The only guarantee calls during 2017 related to EIB Funding Costs for the IIW Equity Portfolio and amounted to EUR 0.4 million. They were paid from the EFSI Account 3. See point 3.3 below for information on amendment made to the EFSI Regulation in December Galileo and Copernicus Assets Since the declaration of the Galileo Initial Services on 15 December 2016, Galileo operational assets (including 18 satellites and the ground infrastructure) have been transferred from assets under construction to fixed assets. At 31 December 2017, the Galileo fixed assets amounted to EUR million, net of depreciation. The remaining assets under construction totalled EUR million, including four satellites launched in 2017, which were undergoing the in-orbit testing at the year-end. Regarding Copernicus, the Sentinel satellites recognised at the EU balance-sheet at 31 December 2017 amounted to EUR million, net of accumulated depreciation. It concerns five satellites in operation (Sentinel 1A, 2A, 3A, 1B and 2B), with Sentinel 2B having been launched in Assets related to the Copernicus satellites under construction amounted to EUR million at the year-end, including Sentinel 5P satellite launched in 2017 but which was still under testing at the year-end. Borrowing & lending activities Balance of Payments (BoP): On 18 February 2002 the Council adopted Regulation (EC) No 332/ establishing a facility providing medium-term financial assistance for Member States' balances of payments. Member States which have not yet adopted the euro and those that are facing balance of payments problems can benefit from it. The maximum outstanding amount of loans granted under the instrument is limited to EUR 50 billion. Currently no new programme is envisaged. In 2017, a capital repayment of EUR 1.04 billion was made by Romania. As at 31 December 2017, the general budget of the EU was, through the BOP loans, exposed to a maximum possible financial risk of EUR 3.05 billion (nominal value): Romania EUR 2.35 billion and Latvia EUR 0.7 billion. 3 4 The EFSI account is an account opened at the EIB for the purpose of collecting the EU revenues resulting from the guaranteed operations and to service the potential guarantee calls. This Regulation was amended by Council Regulation (EC) No 1360/2008 of 2 December 2008 and by Council Regulation (EC) No 431/2009 of 18 May 2009.

5 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 5 of 11 European Financial Stabilisation Mechanism (EFSM): EFSM was established in 2010 with a view to preserving the financial stability of the European Union. In principle, all EU Member States can receive support under this loan facility. Today, euro area Member States in need of financial assistance turn to the European Stability Mechanism (ESM). Under the Irish and the Portuguese EFSM financial assistance programmes, loans totalling EUR 46.8 billion (nominal value) have been disbursed: EUR 24.3 billion to Portugal and EUR 22.5 billion to Ireland. As those programmes expired in 2014, no additional funding can be drawn. However, EFSM continues to be active as outstanding loans can be extended. No capital repayments were due in 2017 and as at 31 December 2017 the EU budget was exposed to a maximum possible risk of EUR 46.8 billion. Macro-Financial Assistance (MFA): MFA is a policy-based financial instrument of exceptional nature mobilised on a case-by-case basis and designed to support the recipient third countries in dealing with serious but shortterm balance of payments or budget difficulties. It takes the form of loans or grants (or an appropriate combination of both) and generally complements financing provided in the context of an IMF-supported adjustment and reform programme. In 2017, repayments under MFA were received to the value of EUR 58 million. New disbursements took place corresponding to a value of EUR 1 billion, bringing the total outstanding loan volume to EUR 3.9 billion as at 31 December The most important loan beneficiary country under MFA at the end of 2017 was Ukraine, which has been granted loans to the amount of EUR 2.8 billion. MFA loans granted but undisbursed at the end of 2017 totalled EUR 460 million (EUR 300 million for Tunisia, EUR 100 million to Jordan and EUR 60 million to Moldovia). Euratom On 7 August 2013, the Euratom loan facility agreement with Energoatom and the related guarantee agreement were signed to finance nuclear safety upgrades of operating nuclear power plants in Ukraine (EUR 300 million). The loan will be provided in cooperation with the EBRD, which provides another EUR 300 million. The Euratom loan will be disbursed in six equal tranches and the first disbursement of EUR 50 million was made in April At 31 December 2017 an amount of EUR 249 million of outstanding loans (nominal value) were recorded under this facility. Crisis management mechanisms which are not covered by the EU budget: The inter-governmental financial stability mechanisms European Financial Stability Facility (EFSF) and the ESM are outside the EU Treaty framework and the EU budget.

6 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 6 of audit The ECA's audit of the EU and EDF accounts is completed but the related opinions and the annual reports of the Court of Auditors have not yet been published. No major issues remain following the adversarial processes. 3. Main developments and topics during Introduction This chapter provides an overview of the main topics, developments and progress made up to 15 September of the financial year Treasury situation In the first half of 2018 and similar to the same period of the previous year, available treasury resources were sufficient to cover all monthly payment needs, and the end of month treasury balances remained generally at a comfortable level. This was mainly due to a high amount of assigned revenue not yet spent and a significant level of offsetting between outstanding debts and receivables, carried out between programming cycles during this period. The offsetting resulted in a substantial execution of payment appropriations without a corresponding consumption of cash resources, due to netting with outstanding recovery orders. 3.3 European Fund for Strategic Investments (EFSI) The amended EFSI Regulation as adopted in December enabled an increase of the EFSI EU guarantee up to EUR 26 billion. The EFSI Agreement with the EIB was amended accordingly in March 2018, while the increased guarantee (EUR 26 billion) became effective on the 6 July As of 30 June 2018, contracts signed by the EIB Group covered by the EU guarantee amounted to EUR million, out of which EUR million has been disbursed and is still outstanding. In the first half of 2018, EUR 720 million from the EU budget and EUR 36 million from the EFSI Account were transferred to the EFSI Guarantee Fund and invested in money and capital market instruments. As at 30 June 2018, the value of the EFSI Guarantee Fund stood at EUR million. In the first half of 2018, net guarantee calls relating to the failed Midland Metropolitan Hospital project materialised for a total of EUR 80.1 million. As at 30 July 2018, EUR 79.6 million has 5 Regulation (EU) 2017/2396 of the European Parliament and of the Council of 13 December 2017 amending Regulations (EU) No 1316/2013 and (EU) 2015/1017 as regards the extension of the duration of the European Fund for Strategic Investments as well as the introduction of technical enhancements for that Fund and the European Investment Advisory Hub (OJ L 345/34, )

7 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 7 of 11 been paid, leaving an amount payable of EUR 0.5 million 6. For the period from January to July 2018 guarantee calls relating to EIB Funding Costs and Value Adjustments for the IIW Equity Portfolio amounted to EUR 4.2 million. They were paid from the EFSI Account. 3.4 Pre-financing situation: half-year report at 30 June 2018 The half-year report at 30 June 2018 is included in annex 4.1. The main points to note regarding the first half of the year are: Increase in direct management EUR 4.4 billion has been paid as new pre-financing, mainly under research and external actions, however clearings done until mid-year reach nearly the same level; Increase in indirect management during the first six months of 2018, EUR 4.8 billion was paid relating mainly to education, research and external actions; Shared management amounts are stable EUR 9.7 billion relating to the programming period has been paid during the first semester of Due to limited declared expenditure for the period 01/07/2016 till 30/06/2017, EUR 7.8 billion has been recovered in 2018 following Art 139 of the Regulation (EU) No 1303/2013 (CPR). 3.5 Galileo and Copernicus Assets Galileo At the reporting date, 26 Galileo satellites have been deployed in orbit. Out of these, four satellites were launched in July The additional satellites needed for deploying the full constellation of 30 units are being developed. Further to the deployment of the Galileo Initial Services in December 2016, the Open Service, the Security and Rescue (SAR) Service and the Public Regulated Service (PRS) continue to be developed. Galileo Full Operational capacity is expected in Copernicus After the successful launch of Sentinel 2B and Sentinel 5P in 2017, another Copernicus satellite, Sentinel 3B, was launched in April This has completed the pairs of satellites of Sentinels 1, 2 and 3, and will reduce by half the time for provision of real-time observation data. Sentinels 4 and 5 are not stand-alone units but are foreseen as missions attached to EUMETSAT satellites. Sentinels 6A and 6B will be developed jointly by ESA, EUMETSAT, NASA and NOAA. Their launch is scheduled for the coming years. All Sentinels currently in orbit, except for Sentinel 3B that is still in testing phase, are operational; they are performing well and are providing high quality data on a regular basis. The development of the recurrent Sentinels C&D units is ongoing, and is funded under the Copernicus delegation agreement with ESA. 6 The amount is payable 12 months after the call date.

8 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 8 of Borrowing and lending activities BOP transactions A capital repayment of EUR 1.2 billion was executed by Romania in April 2018, bringing the total outstanding BOP loan stock to EUR 1.85 billion: Romania EUR 1.15 billion and Latvia EUR 0.7 billion. In October 2018, Romania is due to provide a further capital repayment EUR 0.15 billion. EFSM transactions At 30 June 2018, the total outstanding principal amount under the EFSM stood at EUR 46.8 billion: Portugal EUR 24.3 billion and Ireland EUR 22.5 billion. A first repayment of EUR 3.4 billion by Ireland was scheduled to take place on 4 April As Ireland had requested a maturity extension of the maturing loan, it was re-financed in the first quarter of 2018 on the capital markets and rescheduled for repayment in two new loan instalments of EUR 2.4 billion and EUR 1 billion in 2025 and 2033 respectively. A second repayment by Ireland of EUR 0.5 billion and a repayment of EUR 0.6 billion by Portugal was scheduled to take place on 4 October Both countries had, prior to the maturity date, requested a lengthening of the maturing loans, which was realised though a refinancing operation on the capital markets of EUR 1.1 billion in June The new loan instalments have been rescheduled for repayment in MFA transactions In April 2018, the European Parliament and the Council decided to provide a second MFA programme to Georgia for a maximum of EUR 45 million, including EUR 10 million in grants. In the first half of 2018, no new loan disbursements under MFA took place, while total reimbursements of the active loans amounted to EUR 13 million. As at 30 June 2018, the total loan volume under the MFA loan programme (nominal value) stood at EUR 3.9 billion. Undrawn loan commitments under MFA, not yet disbursed as at 30 June 2018, were as follows: EUR 100 million to Jordan, EUR 300 million to Tunisia and EUR 60 million to Moldova. Euratom transactions On 6 July 2018, the second loan instalment of EUR 50 million of the EUR 300 million loan facility agreement with Energoatom (Ukraine) was disbursed.

9 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 9 of Information on financial corrections: Mid-term report at 30 June 2018 The mid-term report on financial corrections under Cohesion policy at 30 June 2018 is included in annex 4.2. The main points to note are: Total financial corrections confirmed in the six months to 30 June 2018 amounted to EUR million (EUR million for the same period in 2017), while the total financial corrections implemented for the same period were EUR 143 million in 2018 (EUR million in 2017). The decrease in both amounts is due to the approaching closure of programming period and an increased focus on preventive measures (interruptions and suspensions). Cumulative financial corrections confirmed at 30 June 2018 amounted to EUR 15.7 billion of which about EUR 1.3 billion have not yet been implemented. 3.8 Fines Fines totalling EUR million have been imposed by the Commission on various companies in different sectors in the first six months of In July 2018, the Commission imposed one fine of EUR million on Google for abusing its dominant position in its Android operating system. For the first six month of 2018, fines amounting to EUR 782 million (interest included) became definitive. Some of these fines were imposed in previous years. The total amount of the financial guarantees provided by the fined companies up to June 2018 has increased (EUR million at 30 June 2018 compared to EUR million at the end of 2017). 3.9 Validation of the local systems Since mid-2017, the Commission has gradually implemented a new strategy for the validation of local systems aimed to drastically increase the efficiency of the process by obtaining adequate evidence on the functioning of the local systems over a maximum period of four years without increasing the available resources. By the end of 2017, the validation activities have produced results, which, together with those under the previous approach, support the conclusions on assurance: Redefinition of the control universe and risk analysis in terms of accounting processes. This allows for covering several departments in each assessment and drawing conclusions, which may be relevant at the corporate level. A continuous assessment of accounting risks for each department, based on a desk review of available information, resulting on a risk score. The assessment results are communicated to each authorising department outlining the strengths and deficiencies on which the score was based.

10 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 10 of 11 Instead of covering in-depth all systems implemented in each authorising department, the engagements have a narrower, risk-focused scope on processes, allowing for a significant increase of our output. Twelve reports 7 were completed in At present, three validation engagements 8 are ongoing, covering eight Commission departments and nine Traditional Agencies and EU Joint Undertakings. In addition, the sharpened risk focus has yielded results, which have identified risks directly relevant for the completeness and accuracy of financial reporting. Completion of the follow up of past recommendation before the end of the year, so as to base the conclusions on a full inventory of unmitigated risks. In addition to considering risks that may have an impact on the annual accounts, the strategy pays particular attention to those that may prevent authorising departments from producing high quality financial data as they have a direct impact on financial and managing reporting. This matter requires management attention in all departments. The work carried out has identified a number of weaknesses and issues, resulting in recommendations intended to improve the control environment in authorising departments and accounting quality. Nevertheless and based on the work accomplished, the team have not identified any weaknesses in the design or implementation of the local systems which would indicate that they do not meet the validation criteria. Furthermore, the team have not identified any weaknesses likely to have a material impact on the annual accounts, but have identified risks, which impact the accuracy of the financial and regulatory management reporting EU Trust Funds The Financial Regulation allows the Commission to create and manage EU Trust Funds (EUTFs) that pool funds from the EU budget with contributions of Member States and other donors. The same provisions have been foreseen in the amended Financial Regulation 9 of the European Development Fund (EDF). The objective of the EUTFs, which can only be established with at least one external donor and whose scope is limited to emergency, post-emergency or thematic actions, is to provide the Commission with a new tool combining the visibility, control and cost-related advantages of Validation engagements on DG RTD, HR, SANTE, AGRI and the IMI2 Joint Undertaking; the accounting of reflows from financial instruments in DG NEAR, RTD, MOVE-ENER, ECFIN and BUDG; and two advice notes resulting from an evaluation of the control systems in place for the management of user access to SAP and SWIFT in DG BUDG. These are: (1) Validation of the local systems implemented for the identification, registration and recovery of receivable amounts in DG DEVCO, DG ECHO, DG ESTAT, DG HOME, DG JUST and DG NEAR; (2) Validation of the local systems in DG HR and PMO; and (3) Validation of local systems implemented in Traditional Agencies and Joint Undertakings under the responsibility of the Accounting officer of the Commission (ACER, BEREC, CEPOL, GSA, BBI, FCH, IMI, SESAR and S2R.) Council Regulation (EU) No 2015/323 of 2 March 2015 on the Financial Regulation applicable to the 11th EDF, OJ L 58, , p. 32.

11 EUROPEAN COMMISSION Budget The Accounting Officer of the Commission ACCOUNTING OFFICER'S STATUS REPORT 30 JUNE 2018 ARTICLE 251 OF THE FINANCIAL REGULATION Date: 15/09/2018 Page 11 of 11 assigned revenues together with the flexibility and responsiveness advantages of delegating funds to third entities. To date, the Commission has set up four EUTFs: The EU Bêkou Trust Fund, whose objective is to support all aspects of the Central African Republic's (CAR's) exit from crisis and reconstruction, has received an amount of EUR 107 million at 30 June 2018 (EUR 101 million at 31 December 2017). The Madad Trust Fund, an EU Regional Trust Fund in response to the Syrian crisis has received an amount of EUR 579 million at 30 June 2018 (EUR 473 million at 31 December 2017). The European Union Emergency Trust Fund for stability addressing root causes of irregular migration and displaced persons in Africa. This EU Trust fund was created in order to respond to the crisis in three geographical regions: Sahel (incl. the Lake Chad area), the Horn of Africa and North Africa. It has received an amount of EUR 820 million of contributions at 30 June 2018 (EUR 725 million at 31 December 2017). A fourth EUTF, meant to address Colombia s special needs following the peace agreement between the government and the FARC-guerrilla, was signed on 12 December EUR 30 million has been received at 30 June 2018 (EUR 26 million at 31 December 2017). 4. Annexes 4.1: Pre-financing half-year report at 30 June : Mid-term report on financial corrections under the Cohesion policy at 30 June : Budget implementation reports at 30 June 2018

12 Annex 4.1 Pre-financing half year report at 30 June 2018

13 1. INTRODUCTION: OBJECTIVES OF THE REPORT BASIC PRINCIPLES OF PRE-FINANCING ACCOUNTING Definition: cash advance Accounting treatment: budgetary accounts and general accounts Interest on pre-financing ANALYSIS OF OUTSTANDING PRE-FINANCING AS AT 30 JUNE General overview of the pre-financing amounts Evolution of pre-financing during the first semester of Analysis of clearing type Analysis of clearing progression (ageing)

14 1. INTRODUCTION: OBJECTIVES OF THE REPORT Pre-financing is one of the main items on the balance sheet of the European Commission, and as such subject to close monitoring by the European Court of Auditors and the discharge authority. This annex explains the way the management of pre-financing is integrated in the Commission's follow-up of the use of EU funds by beneficiaries. It also explains how the Commission accounts for this asset in the financial statements in accordance with the European Union Accounting Rules 1 adopted by the Accounting Officer of the Commission. This report is based on the figures in the accounting system of the European Commission as at 30 June BASIC PRINCIPLES OF PRE-FINANCING ACCOUNTING 2.1. Definition: cash advance Pre-financing is a payment 2, intended to provide the beneficiary with a float, i.e. a cash advance. As such, it is paid before the goods or services are delivered (in the case of procurement contracts) and before the occurrence of eligible costs by beneficiaries (in the case of grant agreements) Accounting treatment: budgetary accounts and general accounts In the budgetary accounts, pre-financing is treated as a charge to the budget when it is paid, i.e. budgetary expenditure. In the general accounts however, the payment of pre-financing is recognised as an asset. In accordance with the relevant accounting rule 3, the pre-financing asset is generally derecognised (i.e. cleared / reduced) as follows: if the amount of an interim/final invoice or cost claim, or part of it, is justifying the use of a pre-financing, then the validation of these eligible expenditures will generate a clearing of the pre-financing. if the beneficiary does not use (part of) the pre-financing, then the prefinancing amount will be partially or totally recovered from the beneficiary. By monitoring the level of pre-financing and executing the necessary clearings, the Commission also ensures a close follow-up of the underlying projects and increases the chances of timely identifying and correcting potential errors Interest on pre-financing In the past, interest was generally earned on pre-financing paid out in accordance with the Financial Regulation. However, since the FR(2012), interest generated on pre-financing remains the property of the third party. Exceptions are possible for indirect management, but the interest would belong to the EU only if it is so indicated in the contribution agreements or the financing agreements concerned Based on the International Public Sector Accounting Standards (IPSAS) Article 90 FR(2012) and article 115 FR(2018) EU Accounting Rule 5 on pre-financing, hereinafter referred to as 'EAR 5' Article 8(4) FR(2018) 3

15 3. ANALYSIS OF OUTSTANDING PRE-FINANCING AS AT 30 JUNE 2018 This section presents the pre-financing balance at 30 June 2018 in a similar way as is done in the annual accounts. It should be noted that some of the elements specific to the year-end closure exercise are not available during the year, and therefore are not part of this annex General overview of the pre-financing amounts The chart below shows an overview of pre-financing amounts, grouped by management modes 5 : Chart 1 Prefinancing by management mode Indirect 28% Shared 41% Direct 31% The details of Chart 1 are provided in the table below. 5 In accordance with article 58 FR(2012) and article 62 FR(2018), the Commission implements the general budget using the following methods: - Direct management: means that the implementation of the budget is undertaken directly by the departments of the Commission or through executive agencies (for instance research programmes). - Shared management: this refers to cases where the implementation tasks are entrusted to Member States (e.g. structural funds). - Indirect management: similarly, under this method of management, the Commission delegates certain tasks for implementation of the budget to third countries, to international organisations, to the EIB and the European Investment fund, or to other bodies as the joint-undertaking and the traditional agencies. 4

16 Table 1: Pre-financing balances EUR millions PRE-FINANCING AMOUNTS Balance at Balance at Direct management Indirect management Shared management Total gross pre-financing amounts Less accrued charges (at 31/12 only) - (40 399) Total net pre-financing (at 31/12 only) It should be noted that several aspects strictly linked to the annual closure exercise are not included in the June 2018 balances in the table above: accrued charges 6, the split between current and non-current pre-financing and value reduction. Establishing these elements is a complex and time-consuming process, therefore this is done only once a year, for the closure exercise and preparation of the annual accounts Evolution of pre-financing during the first semester of 2018 The variations that occurred in the first half of the year can be explained as follows: Increase in direct management EUR 4.4 billion have been paid as new prefinancing, mainly under research and external actions, however clearings done until mid-year reach nearly the same level; Increase in indirect management during the first six months of 2018, EUR 4.8 billion was paid relating mainly to education, research and external actions; Shared management amounts are stable EUR 9.7 billion relating to the programming period have been paid during the first semester of Due to limited declared expenditure for the period 01/07/2016 till 30/06/2017 EUR 7.8 billion has been recovered in 2018 following Art 139 of the Regulation (EU) 1303/2013 (CPR) Analysis of clearing type As explained above, pre-financing is either used for the purpose for which it was provided during the period defined in the agreement (clearing via invoice - interim or final payment) or it is refunded (clearing via recovery). Additionally, the outstanding balance might need to be adjusted if the controls performed on pre-financing reveal some anomalies. The table below shows how pre-financing has been cleared: 6 Accrued charges refer to expenditure estimated to have been incurred, but which was not declared and validated before year-end. 5

17 Table 2: Nature of clearing analysis Payment year Amounts paid Clearings until 30/06/2018 EUR millions BALANCE as at 30/06/2018 Invoice Recovery Adjustments Pre TOTAL * The amounts related to financial instruments of the Commission are not considered in this analysis. At 30 June 2018, the outstanding pre-financing gross balance amounted to EUR 89.1 billion. This balance is a result of the opening balance at 1 January 2005 and subsequent transactions carried out by all the Commission services involved: - A total of EUR 311 billion pre-financing was paid out from the EU budget. It should be noted that payments were concentrated in three particular areas: structural funds (EUR 114 billion), research (EUR 88 billion) and external actions (EUR 63 billion). - The Commission has received sufficient justifications to clear prefinancing totalling EUR 199 billion. - The Commission had to recover EUR 20.5 billion, of which EUR 14.2 billion were recovered due to limited declared expenditure for the period 01/07/2015 till 30/06/2017 following Art 139 of the Regulation (EU) 1303/2013 (CPR). - Amounts for the beginning of period are still open as declaration relating to these pre-financings at the beginning of the previous period could be done until 31/03/2017. The closure procedure is still on-going at 30/06/ Adjustments of about EUR 2.2 billion were initiated by the Commission services, mainly to the opening balance when accrual-based accounts were first prepared in The table below shows the same data, but shown as percentage of the total amount paid each year: 6

18 Table 3: Nature of clearing analysis by percentage % of PAID amount Payment year Amounts paid (100%) Clearings until 30/06/2018 BALANCE as at 30/06/2018 Invoice Recovery Adjustments Pre % -5% -5% 1% % -2% -1% 1% % -2% -1% 1% % -2% 0% 6% % -2% 0% 11% % -1% 0% 11% % -4% 0% 5% % -3% 0% 3% % -3% 0% 4% % -2% 0% 11% % -2% 0% 32% % -2% 0% 64% % -21% 0% 57% % -26% 0% 67% % 0% 0% 100% TOTAL The higher percentage of amounts open from 2008 and 2009 primarily relates to the frontloading of cohesion payments in the early years of that MFF, for which the final closure procedure is still ongoing. The graph in this section clearly shows that most of the pre-financing cleared (90 %) was done following the justification of the expenses incurred, which means that the amounts paid in advance to the beneficiaries have been used for the purposes for which they were provided. In a limited number of cases, the pre-financing amounts were not used, or incorrectly used, and this led to clearing via a recovery (9 % of the clearings). Chart 2 Clearing of prefinancing (by nature) Adjustments 1% Recovered 9% Spent 90% The relevant DGs have strived over the years to make a closer monitoring of their pre-financing balances and to perform clearings as soon as the necessary elements are available. They are also trying to identify possibilities to speed up the clearing as much as possible. 7

19 3.4. Analysis of clearing progression (ageing) The table below shows at Commission level, the evolution over time of the outstanding balance of pre-financing each year. Table 4: Ageing of pre-financing at Commission level % of Amount paid Pre-financing Outstanding as at Outstanding as at 31/12/. payment Year Amount % amount Pre % 2% 1% 1% 1% % 1% 1% 1% 1% % 1% 1% 1% 1% % 24% 8% 6% 6% % 40% 14% 12% 11% % 39% 15% 11% 11% % 10% 7% 5% 5% % 18% 8% 3% 3% % 32% 15% 6% 4% % 58% 34% 17% 11% % 73% 52% 36% 32% % 80% 69% 64% % 61% 57% % 67% % TOTAL As at 30 June 2018, most of the pre-financing paid during the programming period had been cleared; only 0.7 % (EUR 412 million) of the prefinancing paid in this period was still outstanding. The largest part of these amounts relates to structural funds, the closing of which can be a very complex and lengthy process. As at 30 June 2018, a large part of the pre-financing paid during the programming period had been cleared; only 7.8 % (EUR 10 billion) of the prefinancing paid in this period was still outstanding. The largest part of these amounts relates to structural funds. The following tables present a similar ageing report for the DGs operating in the largest areas of expenditure 7 : structural funds, research and external actions. The composition of the groups is the following: - Structural funds: DG AGRI, DG REGIO, DG EMPL, DG MARE; - Research: DG RTD, DG CNECT, DG ENER, DG GROW, ERC, REA, DG MOVE, EASME, INEA; - External actions: DG DEVCO, DG NEAR, DG ECHO, FPI. 7 The grouping is subjective and has been done for comparison purposes only. 8

20 Table 5: Ageing of pre-financing (structural funds DGs) % of Amount paid Pre-financing Outstanding as at Outstanding as at 31/12/. payment Year Amount % amount Pre % 3% 2% 1% 1% % 6% 5% 4% 4% % 9% 6% 4% 4% % 40% 13% 11% 11% % 71% 25% 21% 21% % 77% 28% 23% 21% % 48% 32% 30% 29% % 35% 32% 10% 7% % 9% 8% 8% 2% % 33% 26% 18% 8% % 93% 79% 76% 73% % 92% 92% 92% % 42% 42% % 16% % TOTAL Table 6: Ageing of pre-financing (research DGs) % of Amount paid Pre-financing Outstanding as at Outstanding as at 31/12/. payment Year Amount % amount Pre % 0% 0% 0% 0% % 0% 0% 0% 0% % 0% 0% 0% 0% % 0% 0% 0% 0% % 2% 2% 0% 0% % 3% 1% 0% 0% % 7% 3% 1% 1% % 23% 6% 1% 1% % 51% 21% 5% 3% % 76% 51% 24% 14% % 80% 56% 40% 36% % 83% 68% 57% % 85% 81% % 99% % TOTAL

21 Table 7: Ageing of pre-financing (external actions DGs) % of Amount paid Pre-financing Outstanding as at Outstanding as at 31/12/. payment Year Amount % amount Pre % 0% 0% 0% 0% % 0% 0% 0% 0% % 1% 0% 0% 0% % 1% 0% 0% 0% % 3% 0% 0% 0% % 6% 3% 2% 1% % 9% 7% 5% 5% % 15% 9% 7% 6% % 19% 12% 8% 7% % 35% 20% 13% 11% % 56% 30% 15% 12% % 59% 35% 25% % 62% 50% % 90% % TOTAL

22 Annex 4.2 Financial corrections under the Cohesion policy 2018 Mid-term report at 30 June 2018 Provisional figures Commission européenne/europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel Office: BRE2 09/533 - Tel. direct line

23 INDEX 1. INTRODUCTION FINANCIAL CORRECTIONS UNDER COHESION POLICY ANALYSIS OF 2018 FINANCIAL CORRECTIONS

24 1. INTRODUCTION During the 2006 discharge exercise the Budget Authority asked the European Commission (EC) to provide regular information on the financial corrections made to programmes under the Cohesion policy. This report gives information on the 2018 financial corrections at the end of June FINANCIAL CORRECTIONS UNDER COHESION POLICY Financial corrections are the main tool used for the correction of errors and irregularities in the context of shared management. They are made by the EC so as to exclude from EU funding expenditure that is not in accordance with applicable rules and regulations. The term 'financial correction' is used to cover a wide range of preventive and corrective measures, which apply both before and after the EC makes (or reimburses) expenditure. They can result from controls and audits at any level of the control system in the Member States or from audits by the EC or the European Court of Auditors (ECA) or OLAF investigations. Member States are primarily responsible for making financial corrections in relation to irregularities committed by beneficiaries. Where the Member State agrees to make a correction as a result of its own or EU control and audit activity, so as to implement the financial correction, it may withdraw the amount of irregular expenditure in the following declaration of expenditure or deduct the irregular amount from a next payment claim, and thus re-use the EU funding released for other eligible expenditure under the programme concerned (but not related to the operation or operations that were the subject of the correction). The Commission may take a formal decision to apply financial corrections to the Member State where the Member State has failed to make the required corrections or where there are serious failings in the management and control systems which could lead to systemic irregularities. A financial correction applied by a Commission decision involves a net reduction of EU funding to the programme concerned. 3. ANALYSIS OF 2018 FINANCIAL CORRECTIONS The financial corrections reported below result from audit work performed at EU level (i.e. by the EC, the ECA and OLAF). These financial corrections were either confirmed or implemented in the period from 1 January 2018 to 30 June 2018 for: the programming period ; and for the last phase of the programming period The following tables 1 do not include the results of the Member States' own checks of Structural Funds expenditure. The financial corrections are shown per fund, per programming period and per classification of financial correction. 1 All figures are rounded one digit after the decimal. It should be noted that due to rounding of figures, some figures in the tables may appear not to add up. 3

25 COHESION POLICY 2018 FINANCIAL CORRECTIONS CONFIRMED AT 30th JUNE 2018 ACCRUAL BASIS ERDF CF ESF FIFG /EFF EAGGF Guidance EUR millions TOTAL Financial Corrections : With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented Sub-total period Financial Corrections : With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented Sub-total period Total financial corrections per category: With recovery order Deduction by Member States Decommitment/deduction at closure Not yet implemented Total financial corrections accepted or decided at 30th June The figures are presented on an accrual basis, which means that financial corrections confirmed during the reporting period from 1 January 2018 to 30 June 2018 are included, even if those corrections have not been implemented during that period. In the reporting period, out of a total of EUR million of financial corrections confirmed, EUR 97.6 million was implemented via decommitment/deduction by the Commission at closure. For the ERDF and the Cohesion Fund the amount of financial corrections reported as confirmed during the first 6 months of 2018 totalled EUR million. Of this amount EUR 84 million relates to the closure of the programmes of programming period. EUR 51.6 million is financial corrections related to programming period. The Member States with the highest level of corrections confirmed for both programming periods are Italy (EUR 79.1 million), Spain (EUR 23.5 million) and Portugal (EUR 14 million). For ESF, the total amount of financial corrections confirmed for the reporting period stands at EUR 0.05 million for the programming period post-closure for France. EUR 3.2 million relates to the closure of the programming period The Member States with the highest level of financial corrections are Cyprus (EUR 2 million) and Italy (EUR 0.9 million). 4

26 COHESION POLICY 2018 FINANCIAL CORRECTIONS IMPLEMENTED AT 30th JUNE 2018 CASH BASIS ERDF CF ESF FIFG /EFF EAGGF Guidance EUR millions TOTAL Financial Corrections : With recovery order Deduction by Member States Decommitment/deduction at closure Sub-total period Financial Corrections With recovery order Deduction by Member States (6.0) Decommitment/deduction at closure Sub-total period (6.0) Total financial correction per category: With recovery order Deduction by Member States (6.0) Decommitment/deduction at closure Total financial corrections implemented at 30th June (5.8) The figures are presented on a cash basis, which means that financial corrections implemented during the reporting period from 1 January 2018 to 30 June 2018 are included, regardless of whether they were confirmed in that period, or in previous years. In the reporting period, EUR million or 83.4 % of the total of EUR 143 million of financial corrections implemented, were implemented by decommitment/ deduction at closure. For ERDF and the Cohesion Fund together, the corrections implemented total EUR million. Out of this amount, EUR 83.1 million relates to the programming period and EUR 65.6 million to programming period. The Member States with the highest level of corrections implemented are Italy (EUR 77.6 million), Spain (EUR 22 million), Slovakia (EUR 20.8 million) and Poland (EUR 20 million). For ESF, the financial corrections confirmed in 2018 relating to the programming period were not yet implemented. For the programming period the financial corrections implemented represent EUR 3.3 million (Cyprus EUR 2 million and Italy EUR 0.9 million), offset by a negative adjustment to previously reported financial corrections for Belgium (EUR 9.3 million), implemented after recalculation of the error rate of the programmes at closure. 5

27 COHESION POLICY FINANCIAL CORRECTIONS CONFIRMED CUMULATIVE FIGURES AT 30th JUNE 2018 ACCRUAL BASIS ERDF CF ESF FIFG /EFF EAGGF Guidance EUR millions TOTAL period period Total financial corrections confirmed at end Q Total financial corrections confirmed as at end The figures presented report the cumulative financial corrections confirmed at 30 June 2018, which means all financial corrections confirmed since the first report in COHESION POLICY FINANCIAL CORRECTIONS IMPLEMENTED CUMULATIVE FIGURES AT 30th JUNE 2018 ERDF CF ESF FIFG /EFF EAGGF Guidance EUR millions TOTAL period period Total financial corrections implemented at end Q Total financial corrections implemented as at end The above table illustrates the cumulative total of financial corrections implemented as at 30 June 2018, regardless of the year in which the financial correction was confirmed. It shows that by the end of the first half of 2018, 92 % (EUR million) of confirmed financial corrections have been implemented. COHESION POLICY FINANCIAL CORRECTIONS CONFIRMED NOT YET IMPLEMENTED CUMULATIVE FIGURES AT 30th JUNE 2018 ERDF CF ESF FIFG /EFF EAGGF Guidance EUR millions TOTAL period period Total financial corrections not yet implemented at end Q Total financial corrections not yet implemented as at end The above table gives information on the cumulative financial corrections not yet implemented at 30 June 2018 per programming period and per fund. EUR million remain to be implemented. 6

28 Concerning the ERDF and the Cohesion Fund, EUR million are financial corrections confirmed but not yet implemented at the end of June An amount of EUR 26 million relates to programing period, reflecting the finalising stages of closure of this programming period and a 99.6 % implementation rate. Out of EUR 4.9 billion of financial corrections confirmed related to programming period, 80.2 % have been implemented so far, leaving the amount of financial corrections not yet implemented at EUR 987 million. The Member States with the highest level of financial corrections not yet implemented irrespective of the programming period are Hungary (EUR 419 million), Greece (EUR 183 million), Poland (EUR 169 million), Czech Republic (EUR 72 million), Spain (EUR 68 million) and Slovakia (EUR 52 million). The significant part of related programmes is expected to be closed during the second half of For ESF, almost all financial corrections related to the programming period have been implemented. For the programming period , the cumulative amount of financial corrections not yet implemented stands at EUR 264 million, bringing the implementation ratio for this period to 82.6 %. The not yet implemented amount represents mostly financial corrections accepted during implementation of the programmes for which the closure procedure is not yet finalised. The Member States with the highest amount of financial corrections not yet implemented are Spain (EUR 154 million), Italy (EUR 80 million) and France (EUR 12 million). 7

29 Annex 4.3 Budget implementation reports at 30 June 2018

30 Title FINANCIAL YEAR 2018: SUMMARY OF BUDGET IMPLEMENTATION - REVENUE ON Income appropriations Entitlements established Revenue current year carried Total current year carried Total Outstanding 1 Own resources 142,374,438,534 69,248,364,874 38,968,172 69,287,333,046 69,247,461, ,188 69,247,721, % 39,611,323 3 Surpluses, balances and adjustments 555,542,325 1,294, ,294, , , % 493, Miscellaneous community taxes, levies and duties Revenue accruing from the administrative operation of the Institution Contributions and refunds in connection with union agreements and programmes % of budget 1,181,016, ,824,581 10,571, ,395, ,127,141 10,571, ,698, % 64,697,440 45,000, ,720,814 18,020, ,741, ,907,288 13,470, ,377, % 44,363, ,000,000 10,223,702, ,037,573 10,531,739,936 8,871,139, ,013,801 9,006,152,846 8,187.4% 1,525,587,090 7 Default interest and fines 115,000,000 1,993,409,060 7,813,979,182 9,807,388, ,813, ,081, ,895, % 8,901,493,218 8 Borrowing and lending operations 6,186,061 7,806,157 15,081,378 22,887,535 7,806,157 15,081,378 22,887, % 0 9 Miscellaneous revenue 25,000,000 3,855,711 5,799,462 9,655,173 2,607, ,739 3,188, % 6,466,901 Total 144,412,183,114 82,266,978,442 8,210,457,420 90,477,435,862 79,429,663, ,059,571 79,894,723, % 10,582,712,575 EUR Chapter Income appropriations DETAIL TITLE 1: Own resources Entitlements established Revenue current year carried Total current year carried Total % of budget Outstanding 11 Sugar levies 0 898, , , , % 0 12 Customs duties 22,844,000,000 8,240,914,185 38,968,172 8,279,882,358 8,240,010, ,188 8,240,271, % 39,611, VAT 17,249,560,050 8,777,807, ,777,807,921 8,777,807, ,777,807, % 0 14 GNI 102,280,878,484 52,247,994, ,247,994,222 52,247,994, ,247,994, % 0 15 Correction of budgetary imbalances 0-21,678, ,678,329-21,678, ,678, % 0 16 Reduction of GNI based contribution of the Netherlands and Sweden 0 2,428, ,428,043 2,428, ,428, % 0 Total 142,374,438,534 69,248,364,874 38,968,172 69,287,333,046 69,247,461, ,188 69,247,721, % 39,611,323 Chapter Income appropriations DETAIL TITLE 3: Surpluses, balances and adjustments Entitlements established Revenue current year carried Total current year carried Total % of budget Outstanding 30 Surplus from previous year 555,542, % 0 31 VAT balances 0 491,764, ,764, ,271, ,271, % 493, GNI balances 0 801,486, ,486, ,486, ,486, % 0 33 Netting of VAT and GNI balances 0-1,291,955, ,291,955,791-1,291,955, ,291,955, % 0 Total 555,542,325 1,294, ,294, , , % 493,342 Data extracted: 01/07/2018 Report printed: 05/09/2018 BUDG C6

31 Financial Year 2018: Implementation on by MFF Heading Commitment appropriations EUR mil. Heading Initial appropriat. incl. changes Budget Additional appropriations Total Implemen tation % Appropriations Implemen tation % Appropriations Implemen tation % % n-1 1 Smart and inclusive growth , ,92 90,9 % ,34 774,52 7,6 % , ,44 81,2 % 81,9 % 2 Sustainable growth: natural resources , ,41 91,0 % 2.385,74 718,63 30,1 % , ,04 88,6 % 79,1 % 3 Security and citizenship 3.493, ,21 65,5 % 400,01 314,90 78,7 % 3.893, ,12 66,8 % 58,7 % 4 Global Europe 9.620, ,81 26,8 % 834,99 422,44 50,6 % , ,25 28,7 % 47,6 % 5 Administration 5.650, ,33 95,3 % 284,31 176,19 62,0 % 5.934, ,51 93,7 % 92,3 % 6 Compensations 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,0 % 8 Negative reserve and deficit carried over from the previous financial year 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,0 % 9 Special Instruments 612,85 62,69 10,2 % 31,44 0,00 0,0 % 644,29 62,69 9,7 % 7,5 % Total , ,37 86,3 % , ,68 17,0 % , ,05 80,5 % 77,8 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

32 Heading Financial Year 2018: Implementation on by MFF Heading Initial appropriations incl. changes Payment appropriations Budget Additional appropriations Total Implemen tation % Appropriations Implemen tation % Appropriations Implemen tation EUR mil. % % n-1 1 Smart and inclusive growth , ,16 42,3 % , ,19 15,5 % , ,35 38,1 % 35,5 % 2 Sustainable growth: natural resources , ,60 78,7 % 2.613, ,52 40,4 % , ,12 77,0 % 67,8 % 3 Security and citizenship 2.980, ,20 48,0 % 169,10 93,84 55,5 % 3.149, ,04 48,4 % 27,2 % 4 Global Europe 9.011, ,54 35,0 % 1.358,43 280,02 20,6 % , ,56 33,2 % 36,4 % 5 Administration 5.651, ,58 47,0 % 632,56 334,82 52,9 % 6.283, ,40 47,6 % 48,3 % 6 Compensations 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,00 0,00 8 Negative reserve and deficit carried over from the previous financial year 0,00 0,00 0,0 % 0,00 0,00 0,0 % 0,00 0,00 0,0 % 9 Special Instruments 412,22 2,55 0,6 % 29,19 9,78 33,5 % 441,41 12,33 2,8 % 10,8 % Total , ,63 56,5 % , ,17 21,5 % , ,80 52,7 % 48,8 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

33 Financial year 2018 Implementation of budget appropriations on by policy area Heading Initial appropriations incl. changes Commitment appropriations Budget Additional appropriations Total Implement ation % Appropriations Implem entatio n % Appropriations Implement ation EUR mil. % % n-1 01 ECONOMIC AND FINANCIAL AFFAIRS 2.313, ,60 96,5 % 470,81 208,04 44,2 % 2.784, ,64 87,7 % 94,0 % 02 INTERNAL MARKET, INDUSTRY, ENTREPRENEURSHIP AND SMES 2.356, ,47 71,1 % 201,13 34,78 17,3 % 2.557, ,25 66,9 % 77,8 % 03 COMPETITION 109,84 99,69 90,8 % 4,03 2,56 63,4 % 113,87 102,25 89,8 % 89,1 % 04 EMPLOYMENT, SOCIAL AFFAIRS AND INCLUSION , ,19 98,0 % 1.768,90 6,89 0,4 % , ,08 87,3 % 88,6 % 05 AGRICULTURE AND RURAL DEVELOPMENT , ,37 90,6 % 2.295,69 725,08 31,6 % , ,45 88,4 % 78,9 % 06 MOBILITY AND TRANSPORT 4.008, ,58 97,8 % 171,09 13,66 8,0 % 4.179, ,24 94,1 % 96,6 % 07 ENVIRONMENT 498,28 438,14 87,9 % 13,21 2,64 20,0 % 511,49 440,79 86,2 % 68,4 % 08 RESEARCH AND INNOVATION 6.890, ,69 47,7 % 843,34 193,91 23,0 % 7.733, ,60 45,0 % 48,7 % 09 COMMUNICATIONS NETWORKS, CONTENT AND TECHNOLOGY 2.131, ,55 74,4 % 272,62 67,61 24,8 % 2.404, ,15 68,8 % 41,8 % 10 DIRECT RESEARCH 403,73 326,34 80,8 % 519,74 56,13 10,8 % 923,46 382,47 41,4 % 34,2 % 11 MARITIME AFFAIRS AND FISHERIES 1.084, ,76 96,4 % 117,92 0,90 0,8 % 1.202, ,66 87,0 % 86,0 % 12 FINANCIAL STABILITY, FINANCIAL SERVICES AND CAPITAL MARKETS UNION 94,56 86,35 91,3 % 3,71 3,19 86,0 % 98,27 89,54 91,1 % 81,6 % 13 REGIONAL AND URBAN POLICY , ,27 99,0 % 5.729,93 149,03 2,6 % , ,30 86,9 % 87,0 % 14 TAXATION AND CUSTOMS UNION 175,80 91,92 52,3 % 7,38 2,41 32,7 % 183,18 94,33 51,5 % 57,8 % 15 EDUCATION AND CULTURE 3.806, ,82 78,5 % 521,40 183,89 35,3 % 4.327, ,71 73,3 % 72,4 % 16 COMMUNICATION 213,02 162,62 76,3 % 9,31 5,57 59,9 % 222,33 168,20 75,7 % 78,3 % 17 HEALTH AND FOOD SAFETY 599,10 487,59 81,4 % 23,82 20,83 87,5 % 622,93 508,43 81,6 % 81,3 % 18 MIGRATION AND HOME AFFAIRS 2.637, ,57 66,2 % 380,50 288,13 75,7 % 3.017, ,70 67,4 % 57,9 % 19 FOREIGN POLICY INSTRUMENTS 840,67 388,14 46,2 % 20,78 9,52 45,8 % 861,45 397,66 46,2 % 55,0 % 20 TRADE 115,92 98,24 84,7 % 2,35 1,50 63,8 % 118,27 99,74 84,3 % 83,0 % INTERNATIONAL COOPERATION AND DEVELOPMENT NEIGHBOURHOOD AND ENLARGEMENT NEGOTIATIONS 3.491,68 522,40 15,0 % 195,45 143,38 73,4 % 3.687,12 665,78 18,1 % 36,3 % 3.847,49 644,61 16,8 % 77,29 16,00 20,7 % 3.924,78 660,61 16,8 % 38,7 % 23 HUMANITARIAN AID AND CIVIL PROTECTION 1.243, ,62 87,8 % 114,16 106,75 93,5 % 1.357, ,37 88,3 % 92,7 % 24 FIGHT AGAINST FRAUD 82,29 58,08 70,6 % 0,09 0,00 0,0 % 82,38 58,08 70,5 % 87,6 % 25 COMMISSION'S POLICY COORDINATION AND LEGAL ADVICE 244,57 226,00 92,4 % 9,07 6,28 69,2 % 253,63 232,28 91,6 % 90,2 % 26 COMMISSION'S ADMINISTRATION 1.126, ,78 89,7 % 144,09 83,83 58,2 % 1.270, ,61 86,2 % 81,6 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

34 Financial year 2018 Implementation of budget appropriations on by policy area Heading Initial appropriations incl. changes Commitment appropriations Budget Additional appropriations Total Implement ation % Appropriations Implem entatio n % Appropriations Implement ation EUR mil. % % n-1 27 BUDGET 78,63 57,86 73,6 % 7,73 4,81 62,1 % 86,37 62,66 72,6 % 70,8 % 28 AUDIT 19,36 18,56 95,9 % 0,79 0,54 68,6 % 20,15 19,10 94,8 % 92,7 % 29 STATISTICS 144,07 94,90 65,9 % 13,10 2,97 22,7 % 157,17 97,87 62,3 % 61,9 % 30 PENSIONS AND RELATED EXPENDITURE 1.899, ,33 100,0 % 0,01 0,00 0,0 % 1.899, ,33 100,0 % 100,0 % 31 LANGUAGE SERVICES 398,80 380,31 95,4 % 57,33 40,20 70,1 % 456,13 420,51 92,2 % 90,6 % 32 ENERGY 1.640, ,84 83,5 % 122,30 20,82 17,0 % 1.762, ,66 78,9 % 79,3 % 33 JUSTICE AND CONSUMERS 257,56 135,14 52,5 % 5,99 4,34 72,4 % 263,55 139,48 52,9 % 51,2 % 34 CLIMATE ACTION 155,16 112,03 72,2 % 0,77 0,50 64,5 % 155,93 112,53 72,2 % 82,2 % 40 RESERVES 661,89 0,00 0,0 % 0,00 0,00 0,0 % 661,89 0,00 0,0 % 0,0 % Total , ,37 86,3 % , ,68 17,0 % , ,05 80,5 % 77,8 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

35 Heading Financial year 2018 Implementation of budget appropriations on by policy area Initial appropriations incl. changes Payment appropriations Budget Additional appropriations Total Implemen tation % Appropriations Implemen tation % Appropriations Implemen tation EUR mil. % % n-1 01 ECONOMIC AND FINANCIAL AFFAIRS 2.153, ,55 94,1 % 754,30 64,20 8,5 % 2.907, ,75 71,9 % 94,0 % 02 INTERNAL MARKET, INDUSTRY, ENTREPRENEURSHIP AND SMES 2.062,36 853,76 41,4 % 411,99 85,08 20,7 % 2.474,36 938,85 37,9 % 77,8 % 03 COMPETITION 109,84 46,04 41,9 % 14,85 7,91 53,2 % 124,69 53,94 43,3 % 89,1 % EMPLOYMENT, SOCIAL AFFAIRS AND INCLUSION AGRICULTURE AND RURAL DEVELOPMENT , ,61 37,4 % 2.839, ,50 38,2 % , ,10 37,5 % 88,6 % , ,23 79,3 % 2.412,35 944,82 39,2 % , ,05 77,6 % 78,9 % 06 MOBILITY AND TRANSPORT 2.267,79 932,18 41,1 % 134,05 44,66 33,3 % 2.401,84 976,84 40,7 % 96,6 % 07 ENVIRONMENT 350,53 154,28 44,0 % 14,03 5,40 38,5 % 364,57 159,68 43,8 % 68,4 % 08 RESEARCH AND INNOVATION 6.472, ,77 41,0 % 1.536,88 254,48 16,6 % 8.009, ,25 36,3 % 48,7 % 09 COMMUNICATIONS NETWORKS, CONTENT AND TECHNOLOGY 2.258,34 658,17 29,1 % 351,10 63,97 18,2 % 2.609,43 722,14 27,7 % 41,8 % 10 DIRECT RESEARCH 397,34 183,84 46,3 % 502,30 65,32 13,0 % 899,64 249,17 27,7 % 34,2 % 11 MARITIME AFFAIRS AND FISHERIES 659,59 209,61 31,8 % 249,12 130,98 52,6 % 908,71 340,59 37,5 % 86,0 % 12 FINANCIAL STABILITY, FINANCIAL SERVICES AND CAPITAL MARKETS UNION 94,37 45,02 47,7 % 7,42 5,22 70,4 % 101,79 50,25 49,4 % 81,6 % 13 REGIONAL AND URBAN POLICY , ,85 39,6 % 5.651,05 75,76 1,3 % , ,61 34,2 % 87,0 % 14 TAXATION AND CUSTOMS UNION 168,30 79,83 47,4 % 13,45 6,22 46,3 % 181,76 86,06 47,3 % 57,8 % 15 EDUCATION AND CULTURE 3.502, ,02 62,6 % 649,55 160,16 24,7 % 4.152, ,19 56,7 % 72,4 % 16 COMMUNICATION 211,97 95,54 45,1 % 21,51 11,88 55,2 % 233,48 107,42 46,0 % 78,3 % 17 HEALTH AND FOOD SAFETY 562,93 181,73 32,3 % 35,59 18,76 52,7 % 598,51 200,49 33,5 % 81,3 % 18 MIGRATION AND HOME AFFAIRS 2.257, ,81 53,0 % 152,05 80,71 53,1 % 2.410, ,52 53,0 % 57,9 % 19 FOREIGN POLICY INSTRUMENTS 714,00 299,14 41,9 % 38,43 23,84 62,0 % 752,43 322,98 42,9 % 55,0 % 20 TRADE 114,52 58,19 50,8 % 5,71 3,83 67,0 % 120,24 62,02 51,6 % 83,0 % INTERNATIONAL COOPERATION AND DEVELOPMENT NEIGHBOURHOOD AND ENLARGEMENT NEGOTIATIONS HUMANITARIAN AID AND CIVIL PROTECTION 3.248, ,15 36,0 % 260,98 127,04 48,7 % 3.509, ,19 37,0 % 36,3 % 3.680,71 943,70 25,6 % 256,91 80,93 31,5 % 3.937, ,63 26,0 % 38,7 % 1.311,51 723,97 55,2 % 113,84 44,87 39,4 % 1.425,35 768,84 53,9 % 92,7 % 24 FIGHT AGAINST FRAUD 79,88 30,80 38,6 % 6,45 3,65 56,6 % 86,33 34,45 39,9 % 87,6 % 25 COMMISSION'S POLICY COORDINATION AND LEGAL ADVICE 244,02 103,08 42,2 % 28,56 17,14 60,0 % 272,57 120,22 44,1 % 90,2 % 26 COMMISSION'S ADMINISTRATION 1.128,23 570,59 50,6 % 306,79 147,07 47,9 % 1.435,03 717,65 50,0 % 81,6 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

36 Heading Financial year 2018 Implementation of budget appropriations on by policy area Initial appropriations incl. changes Payment appropriations Budget Additional appropriations Total Implemen tation % Appropriations Implemen tation % Appropriations Implemen tation EUR mil. % % n-1 27 BUDGET 78,63 24,44 31,1 % 24,92 13,55 54,4 % 103,55 37,98 36,7 % 70,8 % 28 AUDIT 19,36 8,58 44,3 % 1,85 1,17 63,0 % 21,21 9,75 46,0 % 92,7 % 29 STATISTICS 130,59 69,88 53,5 % 26,54 8,28 31,2 % 157,13 78,16 49,7 % 61,9 % 30 PENSIONS AND RELATED EXPENDITURE 1.899,41 922,64 48,6 % 0,01 0,00 0,0 % 1.899,42 922,64 48,6 % 100,0 % 31 LANGUAGE SERVICES 398,80 177,31 44,5 % 81,47 41,92 51,5 % 480,28 219,24 45,6 % 90,6 % 32 ENERGY 1.579,05 731,75 46,3 % 133,26 33,52 25,2 % 1.712,31 765,28 44,7 % 79,3 % 33 JUSTICE AND CONSUMERS 224,74 104,08 46,3 % 9,89 6,54 66,1 % 234,63 110,62 47,1 % 51,2 % 34 CLIMATE ACTION 96,81 28,49 29,4 % 5,32 2,78 52,2 % 102,13 31,27 30,6 % 82,2 % 40 RESERVES 394,32 0,00 0,0 % 0,00 0,00 0,0 % 394,32 0,00 0,0 % 0,0 % Total , ,63 56,5 % , ,17 21,5 % , ,80 52,7 % 77,8 % Data extracted: 01/07/2018 Report printed: 13/09/2018 BUDG C6

37 1 2 Heading Smart and inclusive growth Sustainable growth: natural resources Commit. initiated before 2016 Financial Year 2018: Commitments to be settled by financial perspective on % 2016 % 2017 % Total Decommit. / Exchange rate ajustm. Payments made Autom. cancel. on (non dissoc. credits) 1 2=1/7 3 4=3/7 5 6=5/7 7= Remainder 11= % of Com. settled 12= (11-7)/7 Commitm. initiated in 2018 remaining to be settled EUR mil. Total commitm. to be settled 13 14= , % 55, % 75, % 196, , , % 68, , , % 14, % 15, % 37, , , % 17, ,069.0 Security and 3 citizenship % 1, % 2, % 5, , % 1, , Global Europe 11, % 6, % 8, % 26, , , % 1, , Administration % % % % 2, , Compensations % % % % Negative reserve and deficit carried over from the previous financial year % % % % Special Instruments % % % % Total 85, % 78, % 103, % 266, , , % 92, ,365.9 Breakdown of commitments to be settled Liquidation rate Data extracted: 01/07/2018 Report printed: 05/09/2018 BUDG C6

38 01 02 Heading ECONOMIC AND FINANCIAL AFFAIRS INTERNAL MARKET, INDUSTRY, ENTREPRENEURSHIP AND SMES Commitme nts initiated before 2016 Financial Year 2018: Commitments to be settled (Weight of the past) by policy area on % 2016 % 2017 % Total Decommitm./ Exchange rate ajustments Payments made Autom. cancel. on (non dissoc. credits) 1 2=1/7 3 4=3/7 5 6=5/7 7= Remaind er 11= % of Com's settled Commitment s initiated in 2018 remaining to be settled EUR mil. Total Commit ments to be settled 12=(11-7)/ = % % 2, % 3, , , % 2, , % % 1, % 2, , % 1, , COMPETITION % % % % EMPLOYMENT, SOCIAL AFFAIRS AND INCLUSION AGRICULTURE AND RURAL DEVELOPMENT MOBILITY AND TRANSPORT 14, % 12, % 15, % 42, , , % 13, , , % 13, % 14, % 33, , , % 15, , , % 3, % 3, % 8, , % 3, , ENVIRONMENT % % % 1, , % , RESEARCH AND INNOVATION COMMUNICATIONS NETWORKS, CONTENT AND TECHNOLOGY 5, % 3, % 4, % 13, , , % 3, , % % 1, % 2, , % 1, , DIRECT RESEARCH % % % % MARITIME AFFAIRS AND FISHERIES FINANCIAL STABILITY, FINANCIAL SERVICES AND CAPITAL MARKETS UNION REGIONAL AND URBAN POLICY TAXATION AND CUSTOMS UNION EDUCATION AND CULTURE 1, % % 1, % 3, , % , % % % % , % 34, % 43, % 114, , , % 39, , % % % % % % 1, % 2, , % 1, , COMMUNICATION % % % % HEALTH AND FOOD SAFETY MIGRATION AND HOME AFFAIRS FOREIGN POLICY INSTRUMENTS % % % % % 1, % 2, % 4, , % 1, , % % % 1, % , TRADE % % % % Data extracted :01/07/2018 Report printed: 03/07/2018 BUDG C6

39 Heading INTERNATIONAL COOPERATION AND DEVELOPMENT NEIGHBOURHOOD AND ENLARGEMENT NEGOTIATIONS HUMANITARIAN AID AND CIVIL PROTECTION Commitme nts initiated before 2016 Financial Year 2018: Commitments to be settled (Weight of the past) by policy area on % 2016 % 2017 % Total Decommitm./ Exchange rate ajustments Payments made Autom. cancel. on (non dissoc. credits) 1 2=1/7 3 4=3/7 5 6=5/7 7= Remaind er 11= % of Com's settled Commitment s initiated in 2018 remaining to be settled EUR mil. Total Commit ments to be settled 12=(11-7)/ = , % 2, % 3, % 9, , , % , , % 3, % 4, % 13, , % , % % % % , FIGHT AGAINST FRAUD % % % % COMMISSION'S POLICY COORDINATION AND LEGAL ADVICE 26 COMMISSION'S ADMINISTRATION % % % % % % % % BUDGET % % % % AUDIT % % % STATISTICS % % % % PENSIONS AND RELATED EXPENDITURE LANGUAGE SERVICES % % % % ENERGY 3, % % 1, % 5, , % 1, , JUSTICE AND CONSUMERS % % % % CLIMATE ACTION % % % % RESERVES Total 85, % 78, % 103, % 266, , , % 92, , Data extracted :01/07/2018 Report printed: 03/07/2018 BUDG C6

40 Breakdown of commitments to be settled Liquidation rate Data extracted :01/07/2018 Report printed: 03/07/2018 BUDG C6