Changes from report parliamentary committee draft to plenary report

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

▸19 unchanged paragraphs

on control, transparency and traceability of performance-based instruments

(2025/2032(INI))

The European Parliament,

– having regard to Articles 311, 312, 319, 323 and 324 of the Treaty on the Functioning of the European Union (TFEU),

– having regard to Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 20271 and to the joint declarations agreed between Parliament, the Council and the Commission in this context and the related unilateral declarations,

– having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union2 (the Financial Regulation),

– having regard to Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget3 (the Rule of Law Conditionality Regulation),

– having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the effective coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/974,

– having regard to its resolution of 15 December 2022 on upscaling the 2021-2027 multiannual financial framework: a resilient EU budget fit for new challenges5,

– having regard to its position of 27 February 2024 on the draft Council regulation amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 20276,

– having regard to the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources7 (the IIA),

– having regard to its position of 16 December 2020 on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 20278,

– having regard to the European Court of Auditors (ECA) annual report of 10 October 2024 on the implementation of the EU budget for the 2023 financial year, together with the institutions’ replies,

– having regard to ECA special report 13/2024 of 2 September 2024 entitled ‘Absorption of funds from the Recovery and Resilience Facility – Progressing with delays and risks remain regarding the completion of measures and therefore the achievement of RRF objectives’, ECA special report 14/2024 of 11 September 2024 entitled ‘Green transition – Unclear contribution from the Recovery and Resilience Facility’, and ECA special report 22/2024 of 21 October 2024 entitled ‘Double funding from the EU budget – Control systems lack essential elements to mitigate the increased risk resulting from the RRF model of financing not linked to costs’,

– having regard to ECA review 03/2025 of 16 June 2025 entitled ‘Opportunities for the post-2027 Multiannual Financial Framework’, ECA review 04/2025 of 19 June 2025 entitled ‘The Future of EU Cohesion Policy: Drawing lessons from the past’,

– having regard to its resolution of 7 May 2025 on a revamped long-term budget for the Union in a changing world, and to the opinion of the Committee of Budgetary Control for the Committee on Budgets on a revamped long-term budget for the Union in a changing world9,

– 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,

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

▸14 unchanged paragraphs

– having regard to the opinion of the European Committee of the Regions of 8 October 2024 entitled ‘Mid-term review of the post-COVID European recovery plan (Recovery and Resilience Facility)’10,

– 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 opinion of the European Committee of the Regions of 20 November 2024 entitled ‘EU budget and place-based policies: proposals for new design and delivery mechanisms in the MFF post-2027’11,

– having regard to the Commission proposal of 16 July 2025 for a regulation of the European Parliament and of the Council establishing a budget expenditure tracking and performance framework and other horizontal rules for the Union programmes and activities (COM(2025)0545),

– having regard to its resolution of 18 June 2025 on the implementation of the Recovery and Resilience Facility12,

– 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,

Changed– having regard to the report of the Committee on Budgetary Control (A10-0000/2025),(A10-0022/2026),

Change 1

ChangedA. 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 UnionEU funds be implemented in accordance with the principles of economy, efficiency and effectiveness,effectiveness ensuringto thatensure resources are used in a cost-effective manner, that objectives are achieved in due time, in the appropriate quantity and quality, 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;

Change 2

ChangedB. whereas, whenif UnionEU 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;

Change 3

ChangedC. whereas this approach, by decoupling the disbursements from actual expenditure,expenditures severelyundermines limitsaccess to actual cost data, thereby hampering the availabilityassessments of economy, efficiency and effectiveness; highlights that this data ongap actualprevents coststhe systematic identification of irregularities, fraud risks and thereforedouble limitsfunding, while also weakening the abilityEU’s capacity to assessimplement economy,early-warning efficiencymechanisms and effectiveness;data-driven risk assessments;

Change 4

ChangedD. whereas the absence of expenditure verification increases the risk of inflated orinaccuracy unrealisticin 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;

Change 5

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

Change 6

ChangedF. whereas the ECA has identified numerous 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;

Change 7

AddedG. 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

Change 8

Changed1. ReaffirmsStresses thatthat, as provided in the Financial Regulation, performance-based instruments must respect the principles of legality, regularity, economy, efficiency and effectivenesseffectiveness, and that simplification should never come at the expense of sound financial management;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;

Change 9

Changed2. 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; takesis noteconcerned ofby the proposals of theCommission’s Commissionproposals to use a similar model in the next multiannual financial framework (MFF) for most EU financing programmes;programmes including for Heading 1; notes that the RRF has, to a certain extent, incentivised some national investments and reforms;

Change 10

Changed3. ReiteratesStresses itsthe concernimportance thatof thedrawing centralised,lessons performance-basedfrom deliverythe modelcritical ofweaknesses revealed by the Recoverycentralised andperformance-based Resiliencedelivery Facilitymodel hasof revealedthe criticalRRF, weaknesses,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 remainsmust insufficient,be andensured thatthrough a uniform, interoperable EU-wide reporting system accessible to the addedCommission, valuethe forECA, the EUEPPO hasand beenParliament; weakenedhighlights bythat the limitedEU’s added value can be reinforced by increasing the number of cross-border projects and theby inadequateensuring adequate decision-making powerpowers offor subnational entities, in particular local and regional authorities, in the design and implementation of the facility;

Change 11

Changed4. Considers that, although the RRF is intended to be a performance-based instrument, its financing isimplementation often notprioritises linkedoutputs toover performanceresults; sinceexpresses itits focusesregret morethat onthe vaguely defined milestones and targets, primarily emphasising inputs and outputs rather than onresults, 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 instrumentinstrument, 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;

Change 12

Changed5. Stresses that reliance on ex ante cost estimates without verification of actual expenditure createsrisks creating a structural accountability gap, limitslimiting the possibility of assessing value for money,money and thus risks undermining the principles of economy and efficiencyefficiency; inunderlines the implementationnecessity of EUimplementing funds;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;

Change 13

Changed6. Is extremely concerned by the Commission’s proposals to make generalised use of FNLC in the next MFF, withoutand underlines the importance of establishing adequate safeguards to ensure sound financial management in the implementation of Union funding; stresseshighlights itsthe concernneed aboutto carefully assess such a majorsignificant shift towards a newthe modeluse of budget implementation without adequatelyFNLC addressingconsidering the shortcomings identified in previous or existing performance-based instrumentsinstruments, and withoutstresses the necessity of conducting a comprehensive evaluation of the Recovery and Resilience Facility;RRF;

Change 14

Removed7. Asserts that the generalised use of FNLC increases the risk of irregularities, double funding and fraud, thereby reducing transparency and traceability of EU funds; stresses that this could ultimately hinder Parliament’s scrutiny over the implementation of the EU budget and undermine its role as discharge authority;

Added7. 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;

Removed8. Notes with concern that, at the end of 2024, the EPPO was handling 311 active cases related to NextGenerationEU, all but four of which concerned the RRF, representing approximately 17 % of all active expenditure fraud investigations; notes further that the estimated damage to the EU’s financial interests amounts to EUR 2.8 billion, representing 30 % (2023: 25 %) of the total estimated damage resulting from all EU expenditure fraud;

Added8. 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;

Removed9. Expresses concern that performance-based instruments using FNLC focus more on system audits rather than controls on actual expenditure incurred; warns that such system audits may not reveal underlying issues which can spill over and seriously undermine the sound financial management of the Union budget and the protection of the financial interest of the Union; believes that even under the current financial architecture and model of implementation for EU funding, control systems of several Member States have shown systemic weaknesses, resulting in a failure to detect and prevent fraud or other irregularities, such as for the OPEKEPE case in Greece or the cases involving rural development funds in Slovakia; calls therefore on the Commission to take decisive corrective measures, strengthen audit and accreditation procedures, and ensure that similar systemic failures cannot recur, while respecting the principle of proportionality regarding reporting and documentation duties;

Added9. 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;

Removed10. Notes with concern the absence in the legislation of performance-based instruments, such as the RRF, and in the Commission proposals for the MFF 2028-2034 of clear standards and thresholds for when national management and control systems are considered insufficient or unreliable, thereby leaving corrective measures or suspensions to discretionary judgement;

Added10. Notes with concern that, at the end of 2024, the EPPO was handling 311 active cases related to the NGEU, all but four of which concerned the RRF, representing approximately 17 % of all active expenditure fraud investigations and an increase of around 51 % in NGEU-related cases compared to 2023; notes, furthermore, that the estimated damage to the EU’s financial interests amounts to EUR 2.8 billion, representing 30 % (compared with 25 % in 2023) of the total estimated damage resulting from all EU expenditure fraud; highlights that the reporting of cases by EU institutions remains low, thereby raising further concerns about the Commission’s ability to effectively oversee the implementation of the RRF; recalls that out of the 27 EU Member States, 24 currently participate in the EPPO;

Removed11. Underlines that the generalised use of FNLC requires the European Court of Auditors and national audit authorities to significantly adapt their activities and move towards a different auditing approach; warns that such a shift, without ensuring the readiness of audit authorities, will pose significant challenges and could create a structural gap in the audit trail with serious consequences for both the sound financial management of the Union budget and the discharge procedure;