Changes from plenary report to adopted text

– having regard to the report of its Committee on Budgetary Control of 23 April 2025 on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section III – Commission, executive agencies and the ninth, tenth and eleventh European Development Funds,

– having regard to the Commission report of December 2023 entitled ‘Study supporting the mid-term Evaluation of the Recovery and Resilience Facility’,

– having regard to the 2024 annual report of the European Public Prosecutor’s Office (EPPO), published on 3 March 2025,

– having regard to the report of September 2024 by Mario Draghi entitled ‘The future of European competitiveness’ (the Draghi report),

– having regard to the information published on the Recovery and Resilience Scoreboard (RRF Scoreboard),

– having regard to its in-house research, in-depth analysis and briefings related to the implementation of the RRF,

– having regard to the report of 17 April 2024 by Enrico Letta entitled ‘Much more than a market – speed, security, solidarity: empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’ (the Letta report),

– having regard to the report of 20 February 2024 of the Commission’s High-Level Group on the Future of Cohesion Policy entitled ‘Forging a sustainable future together – Cohesion for a competitive and inclusive Europe’,

– having regard to the Commission communication of 11 February 2025 entitled ‘The road to the next multiannual financial framework’ (COM(2025)0046),

– having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ (COM(2025)0030),

– having regard to the European Council conclusions of 20 March 2025, 6 March 2025 and 19 December 2024,

– having regard to the political guidelines for the 2024-2029 Commission term, presented by the President-elect of the Commission on 18 July 2024,

– having regard to the report of the Committee on Budgetary Control (A10-0074/2025),

– having regard to Rule 55 and Rule 148(2) of its Rules of Procedure,

– having regard to the report of the Committee on Budgetary Control (A10-0022/2026),

A. whereas the increasing number of political priorities in the EU is placing additional pressure on the EU budget, making the responsible use of available financial resources more critical than ever; whereas sound financial management, as defined in the Financial Regulation, requires that EU funds be implemented in accordance with the principles of economy, efficiency and effectiveness to ensure resources are used in a cost-effective manner, that objectives are achieved in due time, in the appropriate quantity and at the best price, and that the intended results and impacts are delivered; whereas this reinforces the imperative of vigilance in financial management to guarantee that expenditure yields a demonstrable return on investment in terms of economic growth, competitiveness, and the achievement of EU priorities;

B. whereas, if EU financing takes the form of support not linked to the reimbursement of eligible costs but to results, outputs or other performance indicators, payments depend on the achievement of predefined milestones or targets, which must be verified before any disbursement is made;

C. whereas this approach, by decoupling the disbursements from actual expenditures undermines access to actual cost data, thereby hampering the assessments of economy, efficiency and effectiveness; highlights that this data gap prevents the systematic identification of irregularities, fraud risks and double funding, while also weakening the EU’s capacity to implement early-warning mechanisms and data-driven risk assessments;

D. whereas the absence of expenditure verification increases the risk of inaccuracy in cost estimates, thereby undermining sound financial management, transparency and accountability; whereas the ECA has repeatedly warned of shortcomings in cost assessments, variability in national audit standards, and weaknesses in Commission oversight capacity;

E. whereas wide discretion in assessing whether milestones and targets have been fulfilled may lead to inconsistent treatment of Member States by the Commission, or to the premature release of funds before the conditions for disbursement are fully met;

F. whereas the ECA has identified weaknesses in the design of the Recovery and Resilience Facility’s control system, including over-reliance on national bodies, incomplete audit trails, systemic failures and risks of inconsistent application across Member States; notes that these weaknesses are further aggravated by the fragmentation and incompatibility of national data systems, which hinder interoperability, timely risk detection and the effective protection of personal data in audit and control operations;

G. whereas the control of performance-based instruments relies on the credibility of national monitoring mechanisms; whereas deficiencies in the rule of law amplify the risk to EU financial interests, as their protection is contingent on an independent judiciary and autonomous anti-fraud bodies;

H. whereas democratic accountability requires that Parliament’s role as legislator and budgetary and discharge authority be safeguarded, with strict accountability mechanisms and full transparency on the final recipients of Union funds, and whereas Member States and other national authorities should not be considered final recipients of Union funding;

Challenges affecting the transparency, accountability and effective control of performance-based instruments

1. Stresses that, as provided in the Financial Regulation, performance-based instruments must respect the principles of legality, regularity, economy, efficiency and effectiveness, and that simplification should never come at the expense of sound financial management and transparency; calls for risk-based and proportionate controls, and insists that indicators for performance-based instruments should capture tangible results and the EU’s added value rather than just predefined outputs; stresses that, when properly designed, such instruments can enhance the focus on results, reforms and competitiveness;

2. Notes that the Recovery and Resilience Facility (RRF) with its focus on disbursement based on the satisfactory fulfilment of milestones and targets is the first major performance-based instrument at EU level that is exclusively based on financing not linked to costs (FNLC); further notes that the RRF model has been replicated in other financial instruments such as the Ukraine Facility and the Western Balkans Facility; is concerned by the Commission’s proposals to use a similar model in the next multiannual financial framework (MFF) for most EU financing programmes including for Heading 1; notes that the RRF has, to a certain extent, incentivised some national investments and reforms;

3. Stresses the importance of drawing lessons from the critical weaknesses revealed by the centralised performance-based delivery model of the RRF, as acknowledged by the ECA and the Commission, including reduced accountability and limited EU-level oversight of compliance with rules and regulations; underlines that transparency regarding final recipients must be ensured through a uniform, interoperable EU-wide reporting system accessible to the Commission, the ECA, the EPPO and Parliament; highlights that the EU’s added value can be reinforced by increasing the number of cross-border projects and by ensuring adequate decision-making powers for subnational entities, in particular local and regional authorities, in the design and implementation of the facility;

4. Considers that, although the RRF is intended to be a performance-based instrument, its implementation often prioritises outputs over results; expresses its regret that the vaguely defined milestones and targets, primarily emphasising inputs and outputs rather than results, risk undermining the achievement of the RRF’s objectives; believes that future performance-based instruments should establish more specific key performance indicators, ensuring that investments align with the objectives of the instrument, and deliver a positive impact and clear added value for the EU; calls on the Commission to ensure that future performance-based instruments are harmonised across Member States, transparent in their design and stable over time to foster consistency, accountability and long-term effectiveness;

5. Stresses that reliance on ex ante cost estimates without verification of actual expenditure risks creating a structural accountability gap, limiting the possibility of assessing value for money and thus undermining the principles of economy and efficiency; underlines the necessity of implementing risk- and materiality-based verification mechanisms with clearly defined thresholds for mandatory checks; calls on the Commission to systematically integrate data mining, cross-checking tools, and analytics into future performance-based instruments to detect irregularities and risks of corruption and conflicts of interest;

6. Is extremely concerned by the Commission’s proposals to make generalised use of FNLC in the next MFF, and underlines the importance of establishing adequate safeguards to ensure sound financial management in the implementation of Union funding; highlights the need to carefully assess such a significant shift towards the use of FNLC considering the shortcomings identified in previous or existing performance-based instruments, and stresses the necessity of conducting a comprehensive evaluation of the RRF;

7. Expresses concern regarding the EU’s growing debt burden and borrowing costs; notes that the ECA’s 2024 Annual Report estimates that outstanding EU borrowing could exceed EUR 900 billion by 2027, nearly ten times the 2020 level prior to the introduction of the NextGenerationEU (NGEU) recovery package; warns that rising borrowing costs pose a risk to future budgets and constrain fiscal space for new priorities;

8. Asserts that the generalised use of FNLC, while potentially reducing the administrative burden, increases the risk of irregularities, double funding and fraud, thereby reducing the transparency and traceability of EU funds; stresses that a lack of link to costs may lead to the financing of non-viable projects designed to meet milestones, rather than value for money; highlights Parliament’s scrutiny role in overseeing the implementation of the EU budget, particularly its authority to grant discharge; calls for robust governance in the next MFF designed to ensure Parliament can fully exercise its role as the discharge authority;

9. Takes note of the aspects related to the rule of law in the Commission proposal for the MFF for 2028-2034, and calls for a unified, coherent and comprehensive framework across all EU funding programmes under the umbrella of the Rule of Law Conditionality Regulation; calls, furthermore, for any application of FNLC to be fully compatible with the regulation;