Title page
Contents
LIST OF ABBREVIATIONS 6
EXECUTIVE SUMMARY 9
1. INTRODUCTION 23
1.1. Impact of the galaxy on the EU budgetary principles 23
1.2. Issues related to the use of external assigned revenues 24
1.3. Issues related to the use of EU borrowing instruments 25
1.4. Objectives of the study 26
2. UPDATING THE EU BUDGET "GALAXY" 27
2.1. From 2017 to 2021: Main changes in the EU budgetary galaxy 27
2.1.1. EU budgetary guarantee instruments 28
2.1.2. Common Provisioning Fund 29
2.1.3. Financial assistance and other debt-based instruments 30
2.1.4. Hybrid instruments 30
2.1.5. Off-budget instruments 30
2.2. The EU budgetary galaxy from a parliamentary perspective 31
2.2.1. European Parliament's legislative involvement 31
2.2.2. The European Parliament's involvement in budgetary authorisations 32
2.2.3. EP's capacity to exert budgetary scrutiny 33
2.2.4. European Parliament's role as discharge authority 34
3. EXTERNAL ASSIGNED REVENUES 35
3.1. Legal and accounting framework 35
3.2. Contributions by third countries to EU programmes 36
3.2.1. Contributions by EFTA 37
3.2.2. Switzerland 38
3.2.3. Contributions by associated countries under IPA 39
3.2.4. Contributions by the UK 39
3.3. External assigned revenues of the Innovation fund 40
3.4. The use of External Assigned Revenues for borrowing and lending 40
3.4.1. External assigned revenues in the SURE programme 41
3.4.2. External assigned revenues in the NGEU programme 41
3.5. EARs for hybrid instruments 41
3.6. The implications of the expansion of EARs for budgetary governance 42
4. FUNCTIONING AND GOVERNANCE OF BORROWING AND LENDING OPERATIONS 43
4.1. The fundamental logic of borrowing and lending operations 44
4.2. The evolution of borrowing and lending operations 46
4.3. Pre-pandemic borrowing and lending 47
4.3.1. Macro-financial assistance 47
4.3.2. Euratom loans 47
4.3.3. Balance of Payments facility 48
4.3.4. The European Financial Stabilisation Mechanism 48
4.4. European instrument for temporary Support to mitigate Unemployment Risks in an Emergency - SURE 50
4.5. The European Union Recovery Instrument 51
4.5.1. The involvement of the EP in NGEU governance 52
4.5.2. NGEU implementation 53
4.6. Conclusions and preliminary recommendations on B&L 55
5. MEMBER STATES' CONTRIBUTIONS TO TRUST FUNDS 56
6. EXPERIENCE FROM OTHER JURISDICTIONS 58
6.1. Assigned revenue 59
6.2. Switzerland and Australia 60
6.3. Borrowing and lending 60
6.4. The United Nations 62
6.5. Implications for the Financial Regulation 63
7. CONCLUSIONS AND PROPOSALS FOR REFORM OF THE FINANCIAL REGULATION 64
7.1. Shortcomings identified in the research and approach to correcting them 65
7.2. Reforms of the governance of EAR and trust funds 67
7.3. Reforms of the governance of B&L: moderate scenario 69
7.4. More ambitious B&L reform scenario 69
ANNEX I. THE GALAXY OF THE EU BUDGET 76
ANNEX II. THE ROLE OF THE PARLIAMENT AS BUDGETARY AUTHORITY 77
ANNEX III. NON MEMBER CONTRIBUTIONS TO THE EU BUDGET 78
ANNEX IV. NON-MEMBER CONTRIBUTIONS TO THE EU BUDGET 79
ANNEX V. MFA BALANCES AND NEW OPERATIONS 81
ANNEX VI. SURE IMPLEMENTATION 82
Table 1. EFTA budgetary contributions to EU programmes 2014-2020 (EUR) 38
Table 2. Switzerland's contributions to EU programmes 2019 39
Table 3. Overview of the Union's borrowing and lending operations 44
Table 4. The overview of the outstanding balances of EU B&L operations 2013-2021 46
Table 5. Risk borne by the Budget from EFSM loans (2021-2029), EUR million 49
Table 6. Key statistics of the NGEU borrowing transactions, up to 31 December 2021 54
Table 7. Overview of EU trust funds and the Facility for Refugees in Turkey 57
Table 8. Reforms of the governance of EAR and Trust Funds 72
Table 9. Reforms of the governance of B&L 74
Table 10. Overview of non-member contributions to the EU budget in €, 2014-2019 79
Table 11. MFA loans disbursements 2019 to 2021(expected) in EUR 81
Table 12. Key statistics of the SURE borrowing transactions 83
Table 13. Repayment Schedule of EU' SURE Outstanding Loans 84
Figure 1. Total contributions to the EU budget from non-member countries, 2014-2019 37
Figure 2. Basic mechanism of B&L operations 45
Figure 3. NGEU B&L activities for grants and loans 52
Figure 4. The Galaxy of the EU Budget 76
Figure 5. The role of the parliament as budgetary authority 77
Figure 6. Overview of main contributions to the EU budget in 2019 by country, programme and responsible DG 78
Boxes
Box 1. Classification of EU B&L operations 43
Box 2. Overview of findings from practice in other jurisdictions and implications for reform 63