The backlog of money the European Union must pay from its budget reached a new high of €267 billion at the end of 2017, the European Court of Auditors (ECA) warned on Tuesday (2 April) and urged the Commission to reduce it.
These outstanding commitments have slowly been accumulating over the past years “which could create significant financial risks for the future,” the ECA said. This backlog could prevent the EU from being able to manage future needs and/or settle future payment requests on time.
The EU budget spending is made up of monetary commitments [to pay out funds to specific projects] and actual payments. The sum of commitments that have not yet been fulfilled is called the RAL (from reste à liquider).
According to the report, this has increased by 90% in the past decade and a high RAL “increases the financial exposure of the EU budget,” said Annemie Turtelboom, a member of the European Court of Auditors, the guardians of the EU’s finances.
The RAL is decreased through the disbursement of the amounts committed or through cancellation. Around 2% of the RAL has been cancelled, according to the report.
“For many years, we have voiced our concern about the increasing level of the RAL and recommend that the [European] Commission act to reduce it,” said Turtelboom.
“But we now see history repeating itself. Some of the factors behind the RAL today are identical to those in the past.”
In a statement, the Commission said that the level of backlog is nothing to be alarmed about and is “absolutely normal and pose[s] no financial risk,” said Günther Oettinger, the Commissioner for budget and human resources.
“Projects last several years before they are completed,” Oettinger said. “It is normal to have a time lag between the initial commitments and actual payments.”
Member states’ contributions are the primary source of revenues for the EU budget. They have up to three years to use the committed amount, which is considered RAL until then.
The ECA recommended that the Commission adjust the budget rules to include: simplification of EU budget spending rules, provision of sound forecasts of payment needs, an appropriate balance between amounts available for commitments and payments.
The Commission said it was working on resolutions for this lag in the upcoming long-term EU Budget (Multiannual Financial Framework – MFF) including simplifying procedures and rules for the member states.
Furthermore, the Commission called for a swift agreement on the next MFF and all the new EU programmes, so there is a timely adoption of the framework.
Roadblocks in reaching in this agreement can lead to a delay in funding for EU projects and beneficiaries, as was the case for the current MFF, according to the Commission.
[Edited by Jorge Valero/Zoran Radosavljevic]