LegalizeFinancial Regulation of 16 June 1998 applicable to development finance cooperation under the fourth ACP-EC Convention
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, hereinafter referred to as ‘the EC Treaty’,
Having regard to the fourth ACP-EC Convention, signed at Lomé on 15 December 1989, hereinafter referred to as ‘the Convention’, as amended by the Agreement signed in Mauritius on 4 November 1995,
Having regard to the Internal Agreement on the financing and administration of Community aid under the Fourth ACP-EEC Convention(1), signed in Brussels on 20 December 1995, hereinafter referred to as ‘the Internal Agreement’, and in particular Article 32 thereof,
Having regard to Council Decision 91/482/EEC of 25 July 1991 on the association of the overseas countries and territories with the European Economic Community(2), hereinafter referred to as ‘the Decision’,
Having regard to the general regulations and general conditions for works, supplies and service contracts financed by the European Development Fund(3) which were approved by the ACP-EEC Council of Ministers on 29 March 1990, hereinafter referred to as ‘the General Regulations and Conditions of Contract’,
Having regard to the proposal submitted by the Commission,
Having regard to the opinion of the European Investment Bank, hereinafter referred to as ‘the Bank’,
Having regard to the opinion of the Court of Auditors(4),
Whereas, pursuant to Article 1(1) of the Internal Agreement, the Member States have set up an eighth European Development Fund, hereinafter referred to as ‘the EDF’;
Whereas, under Article 32 of the Internal Agreement, the provisions for implementing this Internal Agreement shall be the subject of a Financial Regulation adopted, upon the entry into force of the Convention, by the Council acting by the qualified majority laid down in Article 21(4) of the said Agreement,
HAS ADOPTED THIS FINANCIAL REGULATION:
The amount of the EDF set in Article 1 of the Internal Agreement shall be allocated as indicated in Annex I. The allocation of appropriations and the rules of transfer shall be laid down by the Convention and the Internal Agreement.
Annual contributions to the EDF shall be called up in four instalments payable on:
— 20 January,
— 1 April,
— 1 July,
— 1 November.
Supplementary contributions for the financial year decided on by the Council in accordance with Article 6(3) of the Internal Agreement shall, unless otherwise decided by the Council, be due and be made within as brief a period as possible which shall be laid down in the decision to call for such contributions and which may not exceed three months.
The Commission shall notify the Member States as soon as possible, not later than the beginning of each financial year, and on the basis of the Council decision referred to in Article 6(1) of the Internal Agreement, of the amount of the instalments of contributions to be paid on each of the due dates. The Commission shall set the amounts to be paid by each Member State so that they are in proportion to its contributions to the EDF as fixed in Article 1(2) of the Internal Agreement.
The Commission shall inform the Member States of any alteration to the amount of the calls for contributions as soon as possible before the date on which each instalment of contributions is due, on the basis of the cash situation of the EDF and its expenditure estimates for the remainder of the year.
Where an instalment of contributions payable under this Article is not paid within 15 days of the due date, the Member State concerned shall be required to pay interest in respect of the amount not paid on the basis of a rate of two percentage points above the interest rate for short-term financing applicable on the date on which the instalment is due on the money market of the Member State for the ecu. This rate shall be increased by a quarter of a percentage point for each month of delay. The increased rate shall be applicable to the entire period of delay. Amounts received by the Commission in respect of such late payment interest shall be credited to the account provided for in Article 9(2) of the Internal Agreement.
The financial contributions of the Member States shall be expressed in ecus.
Each Member State shall pay the amount of its contribution in ecus. The Member States may, however, make actual payments of their contributions in their national currencies.
Financial contributions shall be credited by each Member State to a special account entitled ‘Commission of the European Communities — European Development Fund’ opened with the bank of issue of that Member State or the financial institution designated by it. The amount of such contributions shall remain in these special accounts until required to meet payments needs provided for in Article 319 of the Convention.
Upon expiry of the Convention, that part of the contributions which the Member States remain obliged to make shall be called up by the Commission, as required, on the conditions laid down in this Financial Regulation.
The ecu is the sum of specified amounts of the currencies of the Member States as set out in Council Regulation (EC) No 3320/94 of 22 December 1994 on the consolidation of the existing Community legislation on the definition of the ecu following the entry into force of the Treaty on European Union(5).
Any change in the composition of the ecu decided on by the Council pursuant to the EC Treaty shall automatically apply to this provision.
The value of the ecu in a given currency shall be equal to the sum of the equivalents of the amounts of the currencies which make up the ecu.
It shall be determined by the Commission on the basis of the exchange rates recorded each day on the exchange markets.
The daily rates for conversion into the various national currencies shall be available each day and shall be published in the Official Journal of the European Communities.
Any operations involving conversions of the ecu into a national currency shall, in principle, be effected on the basis of the exchange rate applicable on that day; derogations from this principle may be permitted in duly justified exceptional cases, in accordance with the implementing rules of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities(6).
In order to make payments provided for in Article 319(1) and (4) of the Convention, the Commission shall open accounts with financial institutions in the ACP States and the OCT, for payments in the national currencies of the ACP States or in the local currencies of the OCT, and in the Member States, for payments in ecus and other currencies. Subject to Article 319(3) of the Convention, deposits in these accounts shall bear interest. Subject to Article 192 of the Convention, such interest shall be credited to the account provided for in Article 9(2) of the Internal Agreement.
The Commission shall transfer from the special accounts opened pursuant to Article 3(3) amounts needed to replenish the accounts opened in its name in accordance with Article 5. Such transfers shall be made on the basis of the cash needs of the projects and programmes.
The Commission shall endeavour to make any withdrawals from the special accounts referred to in Article 3(3) in such a way as to maintain a distribution of its assets in those accounts corresponding to the proportions in which the various Member States contribute to the EDF.
The signatures of the Commission officials and agents who are empowered to carry out operations on the EDF's accounts shall be lodged with the banks concerned when the accounts are opened or, in the case of officials and agents who are authorised subsequently, when they are designated. This procedure also applies to the lodging of signatures of national and regional authorising officers and their deputies for operations in paying agent accounts opened in the ACP States or the OCT and, where appropriate, in the accounts opened in the Member States.
EDF resources must be used in accordance with the principles of sound financial management, and in particular those of economy and cost effectiveness. Qualitative and quantitative objectives must be identified and the progress of their realisation monitored by means of appropriate indicators.
To this end the use of EDF resources must be preceded by an ex ante evaluation of the operation to be undertaken with a view to ensuring that the expected results justify the means deployed.
All operations must be periodically examined and their grounds checked, particularly with a view to the estimates of calls for contributions referred to in Article 6(1) of the Internal Agreement.
The financing decisions taken pursuant to Articles 25 to 27 of the Internal Agreement, with regard to aid administered by the Commission, and the financing agreements, have a time limit for starting implementation of the project. Beyond this date, the financing decision and agreement no longer apply.
The financing decisions referred to in paragraph 1 and the financing agreements also have a time limit for implementation of the operation. Continuation of the operation beyond this date must be justified by the third-party beneficiary and accepted by the Commission before the implementation time limit expires.
The termination of a project and the non-commitment of the funds committed under Article 20 shall be carried out when the legal commitment entered into by the Commission in connection with that project with respect to the beneficiary is concluded and the related payments and collections have been recorded in the accounts.
Subject to Article 15(3)(c) and Article 39, the provisions of this Title are not applicable to risk capital and interest rate subsidies managed by the Bank.
Appropriations shall be administered by authorising officers, who alone shall have the power to enter into commitments regarding expenditure, establish sums due to be collected and issue recovery orders and payment orders.
Collection and payment operations shall be carried out by the accounting officer.
The duties of authorising officer, financial controller and accounting officer shall be mutually incompatible.
Where revenue and expenditure operations are managed by means of integrated computer systems, the provisions of Sections II and III of this Title shall apply with due allowance for the possibilities and requirements deriving from computerised management.
To this end:
— the supporting documents may remain with the chief authorising officer or the accounting officer or their deputies for the purposes of checking,
— signatures and approvals may be added in appropriate computerised form.
The financial controller shall be consulted on the setting up of the EDF accounting system and shall have access to the data of the system.
The chief authorising officer of the EDF, whose duties are laid down in Article 311 of the Convention, shall be appointed by the Commission.
The chief authorising officer of the EDF may delegate his powers of implementation of the EDF to authorised persons, whom he shall appoint, subject to approval by the Commission. The rules governing responsibilities adopted under this Title shall apply to such persons within the limits of the powers delegated to them. Each decision to delegate powers shall state the extent and, where appropriate, the duration of the delegation.
Those to whom powers are delegated may act only within the limits of the powers expressly conferred upon them. Decisions to delegate powers shall be notified to those to whom powers are delegated, to the accounting officer, the financial controller, the chief authorising officer and the Court of Auditors.
The financial controller of the EDF shall be the financial controller of the Commission. He shall be responsible for monitoring the commitment and authorisation of expenditure and for monitoring the recording and collection of revenue and debts. The financial controller may be assisted in his duties by one or more assistant financial controllers.
Monitoring shall be carried out by the financial controller by means of inspection of the files and, if necessary, on the spot. In this connection he shall have access to files and to the original supporting documents relating to commitments, expenditure and revenue and, where appropriate, to files relating to appropriations and assigned funds. Any document or information drawn up or kept on a magnetic medium which the financial controller deems necessary for the performance of his work shall be sent to him at his request.
The special rules applicable to the financial controller are those laid down in the Financial Regulation applicable to the general budget of the European Communities.
The accounting officer shall be appointed by the Commission. He may be assisted in his duties by one or more assistant accounting officers appointed, on the basis of a reasoned opinion by the accounting officer, under the same conditions as the accounting officer.
The accounting officer shall be responsible for the collection of revenue and the payment of expenditure, the recovery of debts and the management of the cash flow. Subject to Article 36, the accounting officer alone shall be empowered to manage funds and assets. He shall be responsible for their care.
The accounting officer shall be responsible for maintaining the accounts for:
(a) the appropriations referred to in Article 1;
(b) the commitments referred to in Article 20;
(c) the risk capital decisions and interest-rate subsidies referred to in Article 39;
(d) payments, revenue and debts.
The accounting officer shall be responsible for the preparation of the financial statements referred to in Article 66(2) of this Financial Regulation.
The Court of Auditors shall be notified of the appointment of the chief authorising officer, the accounting officer, the assistant accounting officer and the administrator of advance funds referred to in Article 36 and of the accounting plan referred to in Article 40. The Commission shall forward to the Court any rules of procedure drawn up by it in respect of financial matters.
EDF revenue consists of payments made by the Member States in accordance with the Internal Agreement, the income generated by deposits and any other sum whose acceptance is established by the Council.
The accounting officer shall be responsible for the monitoring and entry in the accounts of payments by the Member States and other revenue.
For all other revenue, the accounting officer shall draw up a revenue order which is sent to the financial controller for prior approval. The purpose of the approval of the financial controller shall be to establish that:
(a) the revenue is booked to the correct item;
(b) the order is in order and conforms to the relevant provisions;
(c) the supporting documents are in order,
(d) the order conforms to the principles of sound financial management;
(e) the amount and currency of the revenue are correct.
Entry in the accounts of revenue becomes final after the approval of the financial controller.
All measures or situations which may give rise to or modify a debt due to the EDF and are brought to the attention of the Commission by the national authorising officer must be preceded by a debt estimate from the chief authorising officer. Such estimates shall be sent to the financial controller for his approval and to the accounting officer for provisional recording in the accounts. They shall mention, in particular, the type of debt, the estimated amount thereof and the budget item to which it is to be booked and also the name and description of the debtor. The purpose of the approval of the financial controller shall be to establish that:
(a) the revenue is booked to the correct item;
(b) the debt estimate is in order and conforms to the relevant provisions relating to the management of the EDF and all acts made in implementation thereof and to the principles of sound financial management referred to in Article 8.
The financial controller may withhold his approval if he considers that the conditions laid down in paragraph 1(a) and (b) above have not been met.
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