Changes from report parliamentary committee draft to plenary report

11. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

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with observations forming an integral part of the decisions 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

(2024/2019(DEC))

The European Parliament,

– having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section III – Commission,

– having regard to its decisions on discharge in respect of the implementation of the budgets of the executive agencies for the financial year 2023,

– having regard to Rule 101 of and Annex V to its Rules of Procedure,

– having regard to the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on Employment and Social Affairs, the Committee on the Environment, the Committee on Transport and Tourism, the Committee on Regional Development, the Committee on Culture and Education, the Committee on Civil Liberties, Justice and Home Affairs, the Committee on Women's Rights and Gender Equality,

– having regard to the letter from the Committee on Agriculture and Rural Development,

Changed– having regard to the report of the Committee on Budgetary Control (A100000/2025),(A10-0074/2025),

▸6 unchanged paragraphs

A. whereas the eleventh EDF has reached its final stage as its sunset clause came into effect on 31 December 2020; whereas, however, specific contracts for existing financing agreements were signed until 31 December 2023, and the implementation of the ongoing projects funded by the EDF will continue until their final completion;

B. whereas the ninth, tenth and eleventh EDFs were not incorporated into the Union general budget and continue to be implemented and reported on separately until their closure;

C. whereas, for the 2021-2027 MFF, development cooperation aid to ACP countries is integrated in the Neighbourhood, Development and International Cooperation Instrument – Global Europe (‘NDICI-Global Europe’) as part of the EU general budget, and development cooperation aid to OCTs, including Greenland, has been incorporated into the Decision on the Overseas Association;

D. whereas the EDFs are managed almost entirely by the Commission’s DG INTPA with a small proportion (7 %) of the 2023 EDF expenditure being managed by DG NEAR;

Political priorities

1. Underlines its strong commitment to the Union’s fundamental values and principles which are enshrined in the Treaty on the European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU); in the framework of the discharge process, stresses especially the principles of sound financial management as set out in Article 317 TFEU and the combatting of fraud and protection of the financial interests of the Union as set out in Article 325 TFEU;

Change 11

Removed2. Notes that the Court of Auditors (the Court) for the financial year 2023 has issued a clean opinion concerning the reliability of the accounts and the legality and regularity of revenue; at the same time, regrets that again the Court has had to issue an adverse opinion on the legality and regularity of Union budget expenditure and a qualified opinion on the legality and regularity of expenditure under the Recovery and Resilience Facility (RRF);

Added2. Underlines the importance of the principle of separation of powers in the Union and recalls that according to the Treaty, the institutions shall practice mutual sincere cooperation; believes that under no circumstances the actions of one Union institution should affect the independence of another institution; urges all other institutions to respect the role of the Parliament as the sole Union institution directly elected by the citizens and to refrain from any undue, direct or indirect interference in its legislative processes, thereby ensuring that Parliament’s decision making-process remains free and independent from other Union institutions or any other entities;

Removed3. Deeply regrets that the overall error rate estimated by the Court has been on a rising trend since the financial year 2020 and has reached 5,6 % for the financial year 2023; notes that there are significant differences in the error rates between headings which range from spending areas with error rates below the materiality threshold of 2 % up to an error rate of 9,3 % in the case of cohesion policy; further notes that discharge is a political process where all issues related to a specific financial year may be taken into consideration and that the decision on whether to grant or refuse discharge is taken for the budget as a whole; at the same time, notes that if discharge was granted or refused heading by heading, it is unclear whether discharge could be granted for the implementation of the budget in heading 2 ‘Cohesion, Resilience and Values’, in light of the very high error rate; strongly encourages the Commission to take into account the Court’s recommendations and to reduce the overall error rate over the coming years;

Added3. Highlights the importance of the Union budget for achieving the Union’s political priorities, as well as its role in assisting Member States in unforeseen situations such as international conflicts or crises and their consequences; points out in this regard the continuing relevance of investments and support from the Union budget for reducing disparities between Member States and regions, for promoting economic growth and employment, for combating poverty and social exclusion, and thus for improving the daily life of European citizens;

Removed4. Is concerned that the Commission and the Court have different interpretations of what the “error rate” represents, thus generating confusion; expresses its support for the audit approach and methodology of the Court and strongly calls on both institutions to find a solution to the divergent approaches; is concerned that the Commission may be systematically underestimating the existing error level and that this could lead to an ineffective protection of the financial interests of the Union;

Added4. Notes that the Court of Auditors (the Court) for the financial year 2023 has issued a clean opinion concerning the reliability of the accounts and the legality and regularity of revenue; at the same time, regrets that the Court has had to issue for the 5th consecutive year an adverse opinion on the legality and regularity of Union budget expenditure and a qualified opinion on the legality and regularity of expenditure under the Recovery and Resilience Facility (RRF);

Removed5. Expresses its concern that the accumulated outstanding commitments (RAL - reste à liquider) have reached a record level of EUR 543 billion, equivalent to 3,2 % of total EU GDP at the end of 2023; underlines that such a record high level of outstanding commitments risks creating challenges for the future smooth implementation of extraordinary high levels of payments and/or leading to significant decommitments to the detriment of the implementation of EU policy objectives;

Added5. Expresses its deep concerns that the overall error rate estimated by the Court has been on a rising trend since the financial year 2020 and has reached 5,6 % for the financial year 2023; notes that there are significant differences in the error rates between headings which range from spending areas with error rates below the materiality threshold of 2 % up to an error rate of 9,3 % in the case of cohesion policy; further notes that discharge is a political process where all issues related to a specific financial year may be taken into consideration and that the decision on whether to grant or refuse discharge should remain factual and anchored in the Union acquis, and that it is taken for the budget as a whole; urges the Commission, finally, to take into account the Court’s recommendations and to reduce the overall error rate over the coming years; further asks the Commission to present an Action Plan within the four months on reducing the error rate;

Removed6. Further expresses its concern that the outstanding debt from borrowing has reached EUR 458,5 billion, equivalent to 2,7 % of total EU GDP at the end of 2023; notes that the increase in outstanding debt during 2023, equivalent to EUR 110,5 billion, has made the Union one of the largest debt issuers in Europe; further notes that the amount of outstanding debt is projected to increase further during the coming years, especially due to increased borrowing linked to the RRF and financial assistance to a number of countries including Ukraine; notes that the increase in debt makes the Union budget more vulnerable to increases in interest rates since a part of the debt will have to be serviced and repaid by the Union budget;

Added6. Is concerned that the Commission and the Court have different interpretations of what the “error rate” represents, thus generating confusion; expresses its support for a common audit approach and methodology and strongly calls on both institutions to find a solution to the divergent approaches before the 2024 discharge; is concerned that the Commission is systematically underestimating the existing error level and that this could lead to an ineffective protection of the financial interests of the Union;

Removed7. Underlines the importance of the rule of law as one of the fundamental values of the Union and stresses that the Rule of Law Conditionality Mechanism is crucial in order to ensure that Member States continue to respect the principles of the rule of law; reiterates its deep concerns about the situation concerning the rule of law in certain Member States, which is deeply worrying in its own right and leads to serious losses for the Union budget; calls on the Commission to ensure strict and fast implementation of all elements of the mechanism when Member States breach the principles of the rule of law where this affects, or risks affecting, financial interests of the Union; at the same time, underlines the need for complete and timely information on decisions related to the implementation of the Rule of Law Conditionality Mechanism;

Added7. Expresses again its deep its concern that the accumulated outstanding commitments (RAL - reste à liquider) have reached a record level of EUR 543 billion, equivalent to 3,2 % of the total GDP of the Union at the end of 2023 and representing more than double the Union annual budget for 2023; underlines that such a record high level of outstanding commitments risks creating challenges for the future smooth implementation of extraordinary high levels of payments and/or leading to significant decommitments to the detriment of the implementation of Union policy objectives;

Removed8. Takes note of the innovative nature of the Recovery and Resilience Facility (RRF) while underlining that any new proposals for financing mechanisms in the Union, including in the Commission’s upcoming MFF proposal for the period after 2027 must not use the RRF as a blueprint, as many problems were identified in the implementation of the RRF, including, but not limited to: the lack of adequate consultation of the regional and local authorities and the lack of their involvement in the implementation; the weak cross border dimension and the questionable EU added value; the insufficient flexibility; the serious transparency, audit and control problems of the program which make it impossible for the citizens to be informed about the final beneficiaries of EU-funded actions; re-iterates the concern about the interpretation of the Commission and Member States on what a “final recipient” of RRF funding represents, which is not in line with the agreement of the REPowerEU negotiations and maintains that ministries, public authorities or other contracting authorities cannot be listed as final recipients of RRF funding; further expresses concern about the findings of the Court concerning the risk of double funding and financing of recurring budgetary expenditure which are not in line with the RRF legal basis;

Added8. Further expresses its concern that the outstanding debt from borrowing has reached EUR 458,5 billion, equivalent to 2,7 % of the total GDP of the Union at the end of 2023; notes that the increase in outstanding debt during 2023, equivalent to EUR 110,5 billion, has made the Union one of the largest debt issuers in Europe; further notes that the amount of outstanding debt is projected to increase further during the coming years, especially due to increased borrowing linked to the RRF and financial assistance to a number of countries including Ukraine which is the victim of a war of aggression by Russia; reiterates its deep concerns that the increase in debt makes the Union budget more vulnerable to increases in interest rates since a part of the debt will have to be serviced and repaid by the Union budget;

Removed9. Notes that the set-up of the NGEU mechanism implies that the repayment of NGEU loans must start before the end of 2027 and be completed by 2058 at the latest; is concerned that the increase in interest rates over the last years has increased the borrowing costs under the NGEU significantly compared with original estimates; reiterates the need to fully respect the timeline of the legally binding roadmap for the introduction of new own resources and underlines that swift progress on new own resources is essential, both for the repayment of NGEU borrowing costs and for the financial robustness and implementation of the current and future MFFs;

Added9. Recalls the importance of a strict application of the financial rules of the Union in all programmes and on all beneficiaries, in order to avoid all forms of fraud, conflicts of interest, corruption, double funding and money laundering;

Removed10. Stresses the need for significant de-bureaucratisation and simplification of Union policies and their funding in line with the recommendations in the Draghi report in order to ease the burdens for European business and increase European competitiveness; underlines that simplification will also have a positive effect on error rates in the implementation of policies because many errors happen because of overcomplicated rules which are difficult to navigate especially for small and medium sized enterprises (SMEs);

Added10. Underlines the importance of the rule of law as one of the fundamental values of the Union and stresses that the Rule of Law Conditionality Mechanism is crucial in order to ensure that Member States continue to respect the principles of the rule of law; reiterates its deep concerns about the deteriorating rule of law situation in certain Member States including attacks or restrictions to the activities of civil society organisations, which not only poses a significant threat to democratic values but also leads to an increased risk of financial losses for the Union budget; calls for the provision of adequate support to civil society organisations active in the field; acknowledges the emergence of new forms of rule of law violations by national governments and calls on the Commission to address these evolving challenges; calls on the Commission to ensure strict and fast implementation of all elements of the mechanism when Member States breach the principles of the rule of law where such breaches affect, or risk affecting, the financial interests of the Union; at the same time, underlines the need for complete and timely information on decisions related to the implementation of the Rule of Law Conditionality Mechanism; encourages the Commission to explicitly assess when shortcomings in the rule of law are of a systemic nature; calls for a stronger emphasis on the implementation of country-specific recommendations, coupled with effective follow-up mechanisms and measurable benchmarks; proposes the establishment of a comprehensive rule of law monitoring framework involving all Union institutions, Member States, and candidate countries, aimed at ensuring coherence and uniformity across the Union, while at the same time ensuring a fair and impartial application; calls on the Commission to propose measures to ensure the protection of final beneficiaries in cases of breaches of the rule of law by national governments without undermining the application and effectiveness of the regulation;

Removed11. Reiterates the need to balance the further simplification of rules and procedures with better controls over the most repeated areas of irregular spending, develop training sessions and practical information for applicants, in particular new applicants, and improve the assistance and guidelines for SMEs, spin-offs, start-ups, administration and payment agencies and all other relevant stakeholders;

Added11. Takes note of the innovative nature of the RRF and its contribution to supporting Member States in recovering from the economic and social consequences of the pandemic and creating a more resilient European economy; is of the opinion that any shift to a performance-based approach based on the RRF as a model requires addressing the many issues identified in its implementation, as well as assessing data on its full impact, before using such a model; recalls the many problems identified in the implementation of the RRF which would need to be addressed, including, but not limited to: the lack of adequate consultation of the regional and local authorities and other relevant stakeholders, such as social partners and civil society organisations and the lack of their involvement in the implementation; the weak cross border dimension, which may hint to a reduced EU added value in that respect; the lack of a clear definition of the milestones and targets and their satisfactorily fulfilment; the insufficient flexibility; the common debt with long-term debt payment as a consequence; the serious transparency, audit and control problems of the program which make it impossible for the citizens to be informed about the final beneficiaries of actions funded by the Union and pushes Member States to use RRF funds to cover projects very similar to those financed by Cohesion funds but with a much more limited capacity of control; reiterates the concern about the interpretation of the Commission and Member States on what a “final recipient” of RRF funding represents, which is not in line with the agreement of the REPowerEU negotiations and maintains that ministries, public authorities or other contracting authorities cannot be listed as final recipients of RRF funding; further expresses concern about the findings of the Court in relation to the risk of double funding and financing of recurring budgetary expenditure which are not in line with the RRF legal basis;

Removed12. Underlines that it is imperative for the credibility of the Union that the Commission ensures that no European funds allocated to individuals or organisations linked to any kind of terrorist movements or any other movement expressing extremist views, inciting violence and hatred, that are directly in opposition to the European Union’s fundamental values, including Islamist and Anti-Israel movements; in this context, recalls that there have been credible reports that UNRWA has employed members of the terrorist organisation Hamas; underlines that the Commission should also establish controls ensuring that no such funding happens indirectly through third parties;

Added12. Notes that the set-up of the NGEU mechanism implies that the repayment of NGEU loans must start before the end of 2027 and be completed by 2058 at the latest; is concerned that the increase in interest rates over the last years has increased the borrowing costs under the NGEU significantly compared with original estimates; reiterates the need to fully respect the timeline of the legally binding roadmap for the introduction of new own resources and underlines that swift progress on new own resources is essential to repay NGEU and safeguard the current and future MFFs;

Removed13. Notes that Non-Governmental Organisations (NGOs) represent an important element in a vibrant and lively democratic society, ensuring a sound basis for broad coverage of all relevant views in different debates and that NGOs may receive support from Union funds to exercise these functions; stresses however, that these general principles are being misused when Union funds are being used to generate targeted lobbying campaigns towards MEPs or other political actors in order to obtain specific political objectives; is extremely concerned by the findings of the discharge authority that EU funding, notably from the LIFE programme, has supported NGOs which engaged in lobbying activities towards the Parliament, Council or Member States, thus giving the impression that the Commission is indirectly lobbying the Parliament and potentially contradicting the principles of separation of powers and sincere cooperation; is of the opinion that the measures put in place by the Commission so far fail to address the root causes of the issue and requests that the Commission creates additional rules which distinguish between sound distribution of information and engagement in public debates and targeted lobbying of MEPs and other politicians and stops funding to NGOs that violate these rules; asks that the Commission requires that all EU-funded beneficiaries, including NGOs are obliged to publish all meetings with MEPs or MEP assistants or other representatives of other EU institutions, bodies or agencies whenever such meetings relate to ongoing EU legislative files or to the EU financing that such beneficiaries receive or apply for;

Added13. Stresses the urgent need for significant de-bureaucratisation, streamlining and simplification of all Union policies and their funding in line with the recommendations in the Draghi report in order to ease the burdens for European businesses and increase European competitiveness, while ensuring the protection of the financial interests of the Union; underlines that simplification will also have a positive effect on error rates in the implementation of policies because many errors happen because of overcomplicated rules which are difficult to navigate, especially for small and medium sized enterprises (SMEs), new applicants, spin-offs and start-ups;

Removed14. Welcomes the entry into force of the recast of the Financial Regulation; welcomes, in particular, the enhancements related to tracking Union funds through digital tools and interoperability that will bolster the protection of the Union Financial Interests, the targeted extension of the Early Detection and Exclusion System (EDES) to shared management following MFF 2027, the reference to the Rule of Law conditionality mechanism and Union values as enshrined in Article 2 TEU, as well as the opportunity to streamline support for small and medium-sized enterprises and individual applicants with the introduction of very low-value grants;

Added14. Reiterates the need to balance the further simplification of rules and procedures with much more systematic use of digitalised reporting, better and more robust controls and adequate ex post checks on the most repeated areas of irregular spending that do not add excessive bureaucratic complexity for beneficiaries, develop training sessions and practical information for applicants, in particular new applicants, and improve the assistance and guidelines for SMEs, spin-offs, start-ups, administration and payment agencies and all other relevant stakeholders; reminds that a robust control system under the responsibility of the Commission is particularly needed for the RRF;

Added15. Stresses the need and highlights the importance of the NDICI programme for the support to global challenges, the promotion of human rights, freedoms and democracy; underlines the importance of reinforcing the Eastern Neighbourhood line in order to support political, economic and social reforms in this challenged region;

Added16. Underlines that it is imperative for the credibility of the Union that the Commission ensures that no Union funds are allocated to individuals or organisations linked to any kind of terrorist movements or any other movement expressing extremist views, inciting violence and/or hatred, that are directly in opposition to the European Union’s fundamental values, including Islamist anti-Semitic and anti-Islamic movements; in this context, recalls that there have been allegations that 19 of 13 000 UNRWA employees in Gaza were involved in the despicable terrorist attacks by Hamas against Israel on 7 October; recalls that in 9 cases their employment was formally terminated in the interests of UNRWA; takes note of the results of the investigation launched by the UN Office of Internal Oversight Services (OIOS); underlines that the Commission should also establish better controls ensuring that no such funding happens indirectly through third parties and organise better traceability of Union funds to final beneficiaries;

Added17. Reiterates deep concerns about the increase in the exploitation of Union funds against Union principles and values, especially when the use of funds and transfers to other organisations are not entirely traceable; warns of the danger of Union funds ultimately being used within corrupt circles and being subject to fraud and irregularities, foreign interference or entrism; emphasises the importance of ‘final beneficiary transparency’ for Union funds;

Added18. Recalls the crucial role of civil society organisations (CSOs), including NGOs, in upholding democratic values to support a vibrant and lively democratic society, ensuring a sound basis for broad coverage of all relevant views in different debates and highlights that CSOs may receive support from Union funds to exercise these functions, as provided in Article 11 of the Treaty on European Union;

Added19. Notes that there have been allegations from some Members of the Budgetary Control committee that grant agreements, concluded by the Commission included detailed lobbying activities which could be interpreted as potentially interfering with internal decision making in the Union Institutions; notes that the Commission took a series of measures to address the allegations by adopting guidance on funding for activities related to the development, implementation, monitoring and enforcement of Union legislation and policy, stating that while such grant agreements did not breach the EU legal framework, they could potentially entail a reputational risk for the Union; notes that all grant agreements include a disclaimer stating that ‘views of the beneficiary do not in any way represent views of the EU and that granting authority cannot be held responsible for them’; notes that such a disclaimer was further added in the 2024 call for proposals for operation grants;

Added20. Notes that a screening of grant agreements in all portfolios to verify their alignment with the new guidance is ongoing and that, so far, the Commission has not communicated to the Parliament the full results of the screening nor other measures that the Commission might take, if necessary; calls the Commission to keep the discharge authority informed at all times; emphasises that transparency in stakeholder meetings is fundamental to democratic integrity and should apply equally to all entities engaging with Union institutions; stresses that clear documentation and disclosure of such interactions strengthens public trust and democratic accountability;

Added21. Welcomes the entry into force of the recast of the Financial Regulation; welcomes, in particular, the enhancements related to tracking Union funds through digital tools and interoperability that will bolster the protection of the Union Financial Interests, the targeted extension of the Early Detection and Exclusion System (EDES) to shared management following MFF 2027, the reference to the Rule of Law conditionality mechanism and the introduction of a conditionality based on Union values as enshrined in Article 2 TEU, as well as the opportunity to streamline SMEs and individual applicants with the introduction of very low-value grants;