Changes from plenary report to adopted text

157. Notes that preliminary estimates (based on commitment appropriations) of the climate contribution of the main programmes show that 34,8 % of the Union budget in 2022 was dedicated to climate action, in line with the Interinstitutional Agreement plans for at least 30 % of 2021-27 MFF to be used for this purpose;

158. Notes the changes made to the Commission’s climate-tracking methodology in 2022 in response to the concerns expressed about the Court's finding in Special Report 09/2022, stating that the reported spending was not always relevant to climate action, that the amount reported as having been spent for that purpose had been overstated by at least EUR 72 billion, meaning that only around 13 % of the 2014-2020 budget was spent on climate related purposes; is of the opinion that this fact serves as a warning; urges the Commission to distinguish between climate mitigation and climate adaptation in the tracking methodology by breaking monitoring and reporting category into climate adaptation and climate mitigation;

159. Underlines the importance of proper scrutiny of climate and biodiversity expenditure in the Union budget, and holds the Commission accountable for the implementation of a robust and reliable methodology, in line with the commitments undertaken in the MFF agreement and paragraph 16d of the IIA of 16 December 2020; calls on the Commission to avoid misleading approximation of the spending contribution to climate and biodiversity objectives, lack of explicit targets, as well as only partial coverage of potential negative or unclear climate and biodiversity impacts; acknowledges that there are the interventions with common benefits but underlines the need to avoid double counting;

160. Calls on the Commission to provide Parliament with an annual report setting out in detail the contribution of each budget item to the climate mainstreaming and the biodiversity targets, in order to facilitate their monitoring; calls further on the Commission to report whether any budget item fails to respect the "do no significant harm" criterion as referred to in the Taxonomy Regulation;

161. Notes that the European Health Emergency Response Authority (HERA), following its establishment as an internal Commission service on 1 October 2021, increased its operations throughout 2022 and that its mission is to support the Commission’s priorities for public health, preparedness and crisis management in the sectors of health, research and innovation and industry; notes with concern the overlap of responsibilities and duplication of efforts between mandates of DG HERA with DG SANTE and the ECDC; calls on the Commission to ensure the added value of HERA as an integral part of the Commission and to prevent duplication of work and resources;

162. Regrets that the Commission’s decision on financing HERA heavily relied on the EU4Health Programme, cutting its budget by more than half with an EU4Health contribution of EUR 2,795 billion to HERA between 2021 and 2027; notes with concern that such reduction affected EU4Health’s capability of ambitious financing of other activities as foreseen by the Regulation (EU) 2021/522, including putting at risks actions under Europe’s Beating Cancer Plan and the necessary support for creation of the European Health Data Space; deplores that by assigning such significant amounts to HERA, the Commission breached the agreed funding ceilings for minimum and maximum spending set in the EU4Health Regulation;

Recommendations

163. Calls on the Commission to:

(i) devote explicit attention in the ex-post evaluation of the CAP 2014-2020 to the transitional period 2021-2022 and the additional requirements included in the transitional provisions in Regulation (EU) 2020/2220 ;

(ii) keep the discharge authority informed on the use of SCOs in the current and new CAP and evaluate their use with Member States’ authorities and (potential) beneficiaries to understand the relatively slow uptake of these options;

(iii) continue to promote the use of ARACHNE to increase both the number of Member States using the system, and to increase the extent of use to include all programmes in the context of the concluded revision of the Financial Regulation;

(iv) to carefully consider the risk indicators in ARACHNE with the aim of reducing the number of false indicators and make the remaining ones more efficient in detecting situations with a high risk for the protection of the Union’s financial interests; and

(v) promote, provide incentives and support the Member States’ paying agencies in using IT tools like Copernicus Satellite imagery and other imaging technologies in the field of agri-monitoring;

(vi) make better use and encourage the use of AI and data from new technologies such as the Union owned Copernicus Sentinel satellites to monitor and control the correct use of CAP funds;

Migration and Border management, Security and Defence

164. Notes that the budget for the programmes under MFF heading 4 ‘Migration and Border Management’ was EUR 3,4 billion (1,7 % of the Union budget) distributed as follows: 43,9 % for the Asylum, Migration and Integration Fund (AMIF), 23,1 % for the Integrated Border Management Fund (IBMF) and 33 % for three decentralised agencies: European Boarder Coast Agency (FRONTEX), European Union Agency for Asylum (EUAA) and European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (EU- LISA); notes that, as of 31 December 2022, the final budget commitment appropriations adopted amounted to EUR 3 410,39 million and 99,54 % of them had been implemented (EUR 3 394,69 million); notes further that the final adopted budget payment appropriations amounted to EUR 3 372,54 million and 97,61 % of them have been implemented (EUR 3 292,03 million);

165. Notes that the budget for the programmes under MFF heading 5 ‘Security and Defence’ was EUR 1,2 billion distributed as follows: 45,6 % for the European Defence Fund (EDF), 17 % for the Internal Security Fund (ISF), 19,2 % for decentralised agencies The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), Europol and European Union Agency for Law Enforcement Training (CEPOL), 6,8 % for nuclear safety and decommissioning, and 11,4 % for other areas; notes that, as of 31 December 2022, the final adopted budget commitment appropriations were EUR 1 813,03 million and 99,8 % of them had been implemented (EUR 1 809,43 million); notes further that the final adopted budget payment appropriations amounted to EUR 1 158.67 million and 97,54 % of them have been implemented (EUR 1 130,20 million);

166. Notes that a significant portion of the spending under MFF headings 4 and 5 in 2022 concerned the completion of projects remaining from the 2014-2020 MFF; notes that significant amounts of AMIF and ISF national programmes for 2014-2020 remain undisbursed (26 % for AMIF and 33 % for the ISF at the end of 2022) while funding for 2014-2020 has to be spent by June 2024;

167. Notes that the Court examined a sample of 23 transactions, which is not representative enough of the spending under MFF headings 4 and 5 and, therefore, cannot provide an estimate of the error rate; stresses with concern that the Court’s audit results show that the expenditure is affected by eligibility and procurement issues and that it is a high-risk area (11 out of 23 transactions audited, i.e. 48 %, were affected by errors) and thus, invites the Court to provide a clear estimation of the error rate for this chapter; notes that the Court quantified nine errors which had an impact on the amounts charged to the Union budget and that it also found four cases of non-compliance with legal and financial provisions, which had no impact on the Union budget; notes that the Commission concludes that the risk at payment is below 2% for the expenditure on migration and border management, as well as for security and defence;

168. Welcomes the progress identified by the Court in its review of the work done by six Member States’ audit authorities in preparation for the 2021-2027 AMIF, the Border Management and Visa Instrument (BMVI) and ISF annual accounts; notes the Court’s observation that, at the time of its visits (between September 2022 and February 2023), the six Member States’ audit strategies had not yet been adopted, which is a prerequisite for submitting an ‘assurance package’; notes that, at the time of the Court’s visit, the IT systems to store information and documentation needed for audits of the six Member States’ managing authorities were either under development or yet to be developed;

169. Notes that DG DEFIS’ anti-fraud strategy was updated in February 2022 and its implementation is being monitored and reported to the management annually; welcomes that 100 % of OLAF’s recommendations regarding DG DEFIS were implemented and that no incidences of fraud have been reported at the Commission level or by its partners; notes that the last update of the Directorate-General for Migration and Home Affairs (DG HOME)’s anti-fraud strategy took place in October 2021 and is currently being implemented; welcomes that, by the end of 2022, 72 % of OLAF’s financial recommendations from the previous year were fully implemented and 28 % were under implementation;

Migration and border management

171. Notes that more than 16 million people from Ukraine and Moldova have been recorded as having entered the Union since the beginning of Russia’s war of aggression against Ukraine, and over 4 million persons fleeing the war obtained protection in the Union; notes that the Commission provided financial support to the International Organisation for Migration to support the process, as part of a EUR 15 million project facilitating transfers from Moldova of vulnerable people fleeing Ukraine; notes further that on 30 November 2022, the Commission announced the decision to award financial support of EUR 5,5 million to a project to be carried out by the International Federation of the Red Cross and Crescent Societies (IFRC) to support hosts and all those involved in providing private accommodation to displaced people, putting together good practices for future needs; notes that, in 2022, in the context of financing Ukraine, the Commission adopted decisions authorising the use of the funding not linked to costs amounting to EUR 248 million (May 2022) and EUR 137 million (August 2022), as well as for smaller grants, safe homes and psychosocial support amounting to EUR 15 million;

172. Notes that in 2022 DG HOME provided EUR 27 million for the exchange of security-related information and EUR 25,5 million for combatting and preventing crime, including terrorism; notes further that in July 2022, through the Internal Security Fund (ISF), the Commission allocated EUR 15,7 million to Member States to further support long-term projects and activities within the European Multidisciplinary Platform Against Criminal Threats (EMPACT) - a security instrument “driven” by Member States to identify, prioritise and address threats posed by organised and serious international crime,

Security and defence

173. Welcomes that the participation of SMEs in the EDF (European Defence Fund) (in particular the cross-border participation of SMEs in industrial consortia) is being facilitated through targeted EDF calls, financial bonuses, specific award criteria, and the use of SCOs to decrease the administrative burden; notes that in the 2022 EDF calls, 38,2 % of the participating entities were SMEs, and 20 % of the total funding available through these calls will be for SMEs (EUR 166 million);

174. Recalls that the Preparatory Action on Defence Research (PADR) was a precursor programme of the EDF with a budget of EUR 90 million that funded 18 research projects selected following calls for proposals in the years 2017 to 2019; notes with concern that the Court, in its Special Report 10/2023 ‘The Preparatory action on defence research’, observes that the Union still lacks a long-term strategy for the projects under the EDF, particularly in terms of impact, additional research, development, manufacturing, procurement, and other aspects; welcomes that the Commission has accepted all of the Court’s recommendations;

175. Notes the Court’s observations in its Special Report 10/2023 regarding the limited availability of human resources at the Commission and the subsequent risk for the EDF; notes that, as a result of security issues, the number of staff needed to manage defence projects is higher than for other projects; notes that the ever-growing number of proposals to evaluate and projects to manage puts considerable pressure on human resources and creates challenges in terms of recruiting qualified and suitably experienced staff;

Recommendations

176. Calls on the Commission to:

(i) develop a longer-term strategy for the EDF, building on the experience with PADR and the Court’s recommendations;

(ii) secure the provision of adequate budget and skilled human resources to enhance defence cooperation and investment and to implement the EDF; and

(iii) focus its controls on expenditure found by the Court to be highly affected by eligibility and procurement issues in 2022 and asks the Court to expand a sample of audited transactions to be able to provide an estimate of the error rate;

(iv) monitor the implementation of the outstanding OLAF’s financial recommendations;

Neighbourhood and the world

177. Notes that the budget for the programmes under MFF heading 6 ‘Neighbourhood and the world’ was EUR 14,5 billion (7,4 % of the Union budget) distributed as follows: 64,8 % for the Neighbourhood, Development and International Cooperation Instrument - Global Europe (NDICI-Global Europe), 16,8 % for Humanitarian Aid (HUMA), 14,4 % for Pre-Accession Assistance (IPA III) and 4 % for other actions and programmes; notes that as of 31 December 2022, the final adopted budget commitment appropriations were EUR 17 670,49 million and 99,79 % of them were implemented (EUR 17 632,52 million); notes further that the final adopted budget payment appropriations amounted to EUR 13 156,10 million and 99,19 % of them were implemented (EUR 13 049,50 million);

178. Notes that the Court examined a sample of 72 transactions, which is not representative enough of the spending under this MFF heading and, therefore, cannot provide an estimate of the error rate; considering that the Court’s audit results show that this is a high-risk area (34 out of 72 transactions audited, i.e. 47 %, were affected by errors), invites the Court to provide a clear estimation of the error rate for this chapter; notes that the Court found 25 errors that had a financial impact on the Union budget, relating to ineligible costs, absence of supporting documents, public procurement and expenditure not incurred, areas that could point to risks of unreliable functioning of the national authorities’ control mechanism or even the administrative or political unwillingness to properly execute Union financial rules;

179. Recalls that the Directorate-General for Neighbourhood and Enlargement Negotiations (DG NEAR) reports the risk at closure in its Annual Activity Reports (AARs) based on a study carried out by an external contractor, known as the residual error rate (RER), the aim of which is to estimate the rate of errors not detected by the internal control system and to conclude whether it is effective or not; notes the results of the 2022 RER study that the residual error rate in 2022 is 1 % and thus, below the materiality threshold of 2 %;

180. Notes that the Court identified limitations regarding the methodology used to determine the RER that may contribute to its underestimation, in particular, that the contractor can rely entirely on the results of previous control work in some cases and the fact that the estimation of the residual error rate for grants under direct management is not included in the calculation of DG NEAR’s overall RER; notes that the Commission affirms that it is not subject to such limitations because (i) the reliance on previous control work is subject to strict conditions and (ii) the global error rate includes grants under direct management;

181. Welcomes that the Commission implemented the Court’s recommendations to disclose the limitations of the RER study in DG NEAR’s AARs since 2021, to strengthen checks by identifying and preventing recurrent errors, and for DG NEAR to establish obligations for the RER study contractor to report to the Commission any suspected fraud against the Union budget detected during its work on the RER study;

182. Notes with concern that the AARs of DG NEAR and the Directorate-General for International Partnerships (DG INTPA) reported difficulties in the implementation of the new operational information system OPSYS, which was at times unstable, failing to meet expectations, and requiring frequent intervention from DG DIGIT support teams, leading to it being identified as a critical risk in DG NEAR’s risk assessment exercise;

183. Notes that the Court assessed awareness raising among Union delegation staff in the areas of fraud prevention, ethics and integrity; notes with concern that some members of staff interviewed by the Court had not been trained in fraud prevention in the past five years; notes that DG NEAR makes a series of tools and resources available to its staff to cover fraud-related issues, such as training, an anti-fraud network with focal points and guidance; notes the positive results of the surveys carried out by DG NEAR to monitor the level of fraud awareness of its staff, as well as that some areas for improvement were identified and an action plan is being implemented;

184. Recognises the importance of NGOs in ensuring that the Union, as the largest donor of development aid in the world, continues to contribute to promoting stability and peace, overcoming poverty and advancing sustainable development; commends in particular the activity of NGOs in areas of conflict in ensuring that humanitarian aid reaches the civilian population in a rapid and effective manner; notes the control and audit, transparency and accountability requirements applicable to all Union funding and different stakeholders, but considers that there is always room for improvement, particularly by making the most of digitalisation;

185. Stresses the role of local NGOs and partners in service delivery and support to local communities; underlines the importance of enhancing their capacity to manage and implement actions financed by the Union and invites the Commission to facilitate adequate training towards this aim; is concerned about the continued difficulties faced by small local organisations to access Union funding; encourages the Commission to improve these funding procedures and to systematically prioritise local organisations in order to provide better capacity-building on the ground; highlights the efficacy of local ownership in project implementation in terms of prioritisation, allocation of resources and building local know-how;

186. Highlights the fact that the legitimacy and effectiveness of Union development cooperation hinges on the correct implementation of activities and their proper funding; recognises the work of the Commission in applying controls to make sure that transactions are made in a legitimate manner and that activities are implemented in accordance with the priorities set by the legislator; calls on the Commission to further improve controls in order to decrease the amount of transactional errors, to act upon ECA recommendations that have not been implemented and to redouble efforts to find eligible projects and to ensure a sufficient amount of payments under the current expenditure ceiling; welcomes the finding of the ECA report on the Union budget for 2022 that DG ECHO implemented ECA recommendation and established a procedure ensuring that partner organisations base their allocation of shared costs on expenditure actually incurred;

187. Calls on the Commission to send clear signals to those candidate countries in which a backlash against rule of law standards - including limitations on the freedom of expression, the freedom of press, women’s and minority rights, the harassment of NGOs and human rights defenders - is jeopardising or delaying their accession to the Union; invites the Commission to examine the efficiency of the funds spent on the improvement of the state of the Rule of Law in the accession countries and report back to the AFET and CONT committees;

188. Welcomes the implementation by the Commission of several mechanisms to mitigate risks and safeguard the proper use of Union funds spent in unstable or conflict zones; notes that the Commission systematically assesses corruption risks in partner countries and uses an array of tools to mitigate them, at the same time applies conditions and performance indicators to promote fiscal transparency and accountability through its budget support; welcomes the fact that, according to World Bank data, countries benefiting from Union budget support have improved in the control of corruption over time;

189. Notes with concern that the Court, in its Special Report 14/2023 “Programming the Neighbourhood, Development and International Cooperation Instrument – Global Europe” found that, although the Commission and the EEAS had merged funding into a single instrument, the NDICI-Global Europe Instrument, which covers more than 70 % of the Union funding allocated for external action in the 2021-2027 financing period, they followed two different fund allocation methodologies for Neighbourhood and non-Neighbourhood countries, and that the multiannual indicative programmes did not ensure that the selected sectors of intervention were those in which Union funding could achieve a high impact;

190. Emphasises the significance of meeting all spending and program-related targets outlined in the NDICI-GE instrument and calls for comprehensive information to be provided on the progress achieved; expresses regret over the significant shortfalls in reaching the Instrument's 30% climate target, in contributing to the 10% biodiversity target in the MFF for 2026 and 2027, and in ensuring that the Union's global financial commitments under the UN framework are fulfilled, in particular as regards the contribution to the Loss and Damage Fund; highlights the increasing pressure climate change puts on food production and access, particularly in vulnerable regions, impacting food security and nutrition; reminds that biodiversity is key in combating climate change, and its loss undermines progress on approximately 80% of the assessed targets for the SDGs; calls on the Commission for a detailed plan outlining how it intends to meet spending and gender targets by the end of the MFF;