Brussels, 26/06/2012 (Agence Europe) - The European Parliament and the Council have agreed on new rules aimed at equipping the EU budget with simpler financial rules while securing sound treatment of European taxpayers' money. Thanks to expanded room of manoeuvre provided by the Permanent Representatives Committee (COREPER) to the Danish Presidency last Friday, subsequent contacts between the European Parliament and the Council have confirmed an agreement on a compromise text. In order to enter into force the new rules have to be formally adopted by the European Parliament and then by the Council in first reading and published in the Official Journal of the EU.
The financial regulation can be considered as a cornerstone of EU legislation since it contains all the principles and rules for the implementation of the EU budget and is applicable to all areas of expenditure and all revenue. The agreement on the financial regulation paves the way for the adoption of around 70 proposals for sector specific legislative acts covering areas such as agriculture, cohesion policy, research, environment, transport, energy and external aid.
Ingeborg Grässle MEP (EPP, Germany), rapporteur on the financial regulation, explained to EUROPE that the stumbling point with the Council involved Article 56 on shared management or, more precisely, the responsibility of the member states. The EP had obtained a reference whereby countries that wished to provide a national declaration on good management of European funds could do so. Four countries have already provided such declarations (United Kingdom, Denmark, Sweden and the Netherlands) but the Council no longer wanted to include this possibility in the text for the financial regulation so as to avoid “naming and shaming” (with some countries providing such a declaration and others not). Grässle explained that it would still be the necessary to carry out further work on the inclusion of the wording referring to the possibility of a national declaration.
The EP considers that other important subjects include: financial corrections (a possibility that the Commission is responsible for this and not committee procedures) and the annual basis of structural funds. Grässle said: “Currently, a balance sheet is drawn up after seven years at the end of the financial framework and afterwards it is not possible to do anything, there are only financial corrections. I do not want money to be taken from the member states. I want them to use it but I want mistakes to be corrected earlier.” She concluded: “We want a credible system to show our citizens that the EU is doing its best to manage funds, with penalties introduced where it is not working.”
The new rules also strengthen the accountability for European taxpayers' money. Where member states have been delegated the implementation of the budget by the Commission (shared management), they will have to designate and supervise bodies responsible for the management and control of EU funds. These bodies will have to set up and ensure the functioning of an effective internal control system. Once a year they will have to provide the Commission with their accounts and with a management declaration confirming that the money has been spent for the intended purpose and that the control systems works properly. Beneficiaries of EU funds will no longer be obliged to open a separate bank account to receive an upfront payment at the start of a project and to return to the Commission any interest yielded by this money while it stays on this account. The regime of grants will be shifted from a real-cost based management (inputs) towards a performance-based scheme (outputs). This move is expected to simplify significantly the procedural and documentary requirements for the benefit of beneficiaries.
In order to improve the leverage of the limited EU resources in support of job creation and growth the revised financial regulation includes provisions to facilitate the use of novel financial instruments such as loans, guarantees, equity investments or other risk-sharing instruments. These instruments will have to comply with the principle of sound financial management.
The new rules authorise the Commission to set up and manage multi donor EU trust funds for external actions, which would intervene in emergency, post-emergency crisis operations or for thematic actions. These funds would pool the contribution from the EU budget with funds from other donors and are expected to improve the delivery and visibility of EU aid.
The revised financial regulation facilitates also the pooling of EU resources with private funds via public and private partnerships, notably in the research field.
Once the new financial regulation is formally adopted by the European Parliament and the Council, the Commission will adopt rules of application for this regulation. The financial regulation will become applicable the same day as the rules of application, probably on 1 January 2013, a year before the start of the new multiannual financial framework 2014-2020. (LC/transl.fl)