LUXEMBOURG (ITALPRESS) – As in previous years, the estimated level of error in EU budget spending has increased, according to the European Court of Auditors’ annual report released today. The Court also warns of growing financial risks to the EU budget caused by record debt, Russia’s war of aggression against Ukraine and high inflation.While the Court concludes that the EU’s accounts for the 2023 financial year provide a true and fair view of the financial situation and that revenues can be deemed free of error, it expresses concern because for the €191.2 billion in expenditure financed by the EU budget, the level of error has increased to 5.6 percent (2022: 4.2 percent; 2021: 3 percent). What’s more, a portion of the €48.0 billion spent under the Recovery and Resilience Facility (RRF), the main pillar of the NextGenerationEU (NGEU) pandemic recovery package, is also marred by irregularities. The Court found payments made without all applicable conditions having been met, as well as weaknesses in member states’ control systems. “With the 2021-2027 financial period reaching its halfway point, the findings in our annual report highlight critical issues for the EU budget, including high levels of irregular spending,” said Tony Murphy, President of the Court. “These issues underscore the need for robust control and accountability structures, both at the member state and EU level, in order to maintain public confidence and protect the EU’s future financial allocations,” he added.As with the last four fiscal years, the Court concluded that the level of estimated error was material and pervasive and, therefore, issued an adverse audit opinion on EU spending for 2023.The Court points out that the large increase in the estimated error rate is largely caused by errors found in cohesion spending, which reach 9.3 percent (2022: 6.4 percent). According to the Court, one of the reasons why national administrations are struggling to ensure proper funding of cohesion projects may lie in the fact that they have to spend money from competing EU funds on a tight schedule. Since error-ridden projects correspond to those funded under the RRF and are often audited by the same national bodies, the Court points out that RRF-funded spending is also likely to be subject to similar types of errors. However, under the RRF, compliance with EU and national rules is not a prerequisite for making payments to member states and is therefore not systematically checked.2023 was the third year of implementation of the RRF, under which EU countries receive funds upon achievement of predefined targets and objectives. In 2023, 23 grant payments were made to 17 member states.The Court found that about one-third of these RRF grant payments did not comply with the applicable rules and conditions, to the extent that six payments were affected by a material level of error. The Court also identified instances of weaknesses in the design of targets and objectives, as well as persistent problems related to the reliability of information included by Member States in their management declarations. As a result, the Court issued a qualified opinion on RRF spending.According to the Court, the EU budget data show that certain situations require special attention. The total amount of outstanding commitments, which will result in future payment obligations if not decommitted, reached a record level of €543 billion at the end of 2023 (2022: €452.8 billion).At the same time, the EU’s debt soared, reaching €458.5 billion in 2023 (2022: €348 billion), i.e., increasing by 32 percent, due mainly to new borrowing for NGEU, amounting to €268.4 billion. The EU’s debt has now almost doubled compared to 2021, when it stood at 236.7 billion euros. Thus the EU is now one of the largest debt issuers in Europe, although it is unclear whether the own resources proposal put forward by the Commission will generate enough revenue to repay the NGEU-related debt. The additional debt costs for the NGEU are estimated to be between €17 billion and €27 billion.The Court also points out that the high inflation rate continues to negatively affect the EU budget. Based on the Commission’s inflation forecast, the Court estimates that the EU budget may lose nearly 13 percent of its purchasing power by the end of 2025. The overall exposure of the EU budget, which measures the risk associated with guarantees provided by the EU budget and contingent liabilities, was €298.0 billion at the end of 2023 (up from €248.3 billion in 2022).EU financial assistance to Ukraine more than doubled in 2023, from €16 billion to €33.7 billion. The Court warns that transferring the risks of loan repayment defaults into the future could put the EU budget under pressure. It also highlights the significant risks associated with the facility for Ukraine established in 2024 to provide financial support of up to an additional €33 billion in the form of loans for the period 2024-2027, against which there is no requirement to build provisions.
– Photo Agency Photogram –
(ITALPRESS).
