LegalizeFinancial regulation of 27 March 2003 applicable to the 9th European Development Fund
2003Q0401 — EN — 24.03.2007 — 001.001
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Amended by:
FINANCIAL REGULATION
of 27 March 2003
applicable to the 9th European Development Fund
THE COUNCIL OF THE EUROPEAN UNION
Having regard to the Treaty establishing the European Community,
Having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (1) (hereinafter referred to as the ‘ACP-EC Agreement’),
Having regard to Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community (‘Overseas Association Decision’) (2),
Having regard to the Internal Agreement between Representatives of the Governments of the Member States, meeting within the Council, on the Financing and Administration of Community Aid under the Financial Protocol to the Partnership Agreement between the African, Caribbean and Pacific States and the European Community and its Member States signed in Cotonou (Benin) on 23 June 2000 and the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies (3) (hereinafter referred to as the ‘Internal Agreement’) and in particular Article 31 thereof,
Having regard to the proposal from the Commission (4),
Having regard to the opinion of the Court of Auditors (5),
Having regard to the opinion of the European Investment Bank,
HAS ADOPTED THIS FINANCIAL REGULATION:
PART ONE
MAIN PROVISIONS
TITLE I
GENERAL PROVISIONS
CHAPTER 1
SUBJECT MATTER AND SCOPE
Article 1
This Regulation lays down the rules for the establishment and financial implementation of the resources of the 9th EDF.
The Commission shall assume the Community's responsibilities defined in Article 57 of the ACP-EC Agreement and in the Overseas Association Decision. To that end, it shall undertake the financial implementation of operations carried out with EDF resources allocated in the form of non-repayable aid, excluding interest rate subsidies, and make payments in accordance with this Regulation.
In applying this Regulation, the Commission shall act on its own responsibility and within the limits of the resources allocated.
The EIB, acting on behalf of the Community, shall manage the Investment Facility, as well as interest rate subsidies, and shall conduct operations thereunder, in accordance with the rules set out in Part Two. In that context, the EIB shall act on behalf of and at the risk of the Community.
The EIB shall undertake the financial implementation of operations carried out by means of loans from its own resources, where applicable combined with interest rate subsidies drawn from the EDF's grant resources.
The provisions of this Part, together with those of Part Three, shall apply exclusively to the financial implementation of the EDF resources managed by the Commission. Those provisions may not be interpreted as giving rise to any obligations on the Commission's part in respect of the financial implementation of EDF resources managed by the EIB.
Unless otherwise specified, references in this Regulation to the ACP States shall be deemed to refer also to the bodies or representatives defined in Articles 13 and 14 of Annex IV to the ACP-EC Agreement, which they may duly mandate to exercise their responsibilities under that Agreement.
The financial year shall begin on 1 January and end on 31 December.
CHAPTER 2
PRINCIPLE OF THE UNIT OF ACCOUNT
Article 2
EDF resources shall be established and implemented in euro and the accounts shall be presented in euro.
However, for the treasury management purposes referred to in Article 26, the accounting officer may carry out operations in euro, in other currencies and in national currencies.
CHAPTER 3
PRINCIPLE OF SPECIFICATION
Article 3
The resources of the EDF shall be earmarked for specific purposes according to the main instruments of cooperation, as described in the Financial Protocol of the ACP-EC Agreement and the Overseas Association Decision.
In respect of the African, Caribbean and Pacific States, (hereinafter referred to as ‘the ACP States’), those instruments are laid down by the Financial Protocol set out in Annex I to the ACP-EC Agreement. Earmarking of resources shall also be based on the provisions of the Internal Agreement and shall take account of the non-allocated reserve provided for in Article 2(2) of that Agreement and of the resources reserved for costs linked to implementation under Article 4 thereof.
In respect of the Overseas Countries and Territories, (hereinafter referred to as ‘the OCTs’), those instruments are laid down in Annex II A to the Overseas Association Decision. Earmarking of those resources shall also take account of the non-allocated reserve provided for in Article 3(3) of that Annex and of the resources reserved for studies or technical assistance measures under Article 1(1)(c) thereof.
CHAPTER 4
PRINCIPLE OF SOUND FINANCIAL MANAGEMENT
Article 4
EDF resources shall be used in accordance with the principles of sound financial management, that is to say, in accordance with the principles of economy, efficiency and effectiveness.
The principle of economy requires that the resources used for the pursuit of activities be made available in due time, in appropriate quantity and quality and at the best price.
The principle of efficiency is concerned with the best relationship between resources employed and results achieved.
The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results.
Objectives shall be set and achievement of those objectives shall be monitored by means of measurable indicators. To that end, the use of EDF resources must be preceded by an ex ante evaluation of the operation to be undertaken and the operation must be submitted to an ex post evaluation with a view to ensuring that the intended results justify the means deployed.
Programmes or operations shall be periodically examined, particularly in relation to the estimates of calls for contributions referred to in Article 38(1), so that it can be established that they are justified.
CHAPTER 5
PRINCIPLE OF TRANSPARENCY
Article 5
The resources of the EDF shall be established and implemented and the accounts presented in compliance with the principle of transparency.
The annual estimates of commitments and payments under Article 10 of the Internal Agreement, together with the EDF accounts referred to in Article 96 of this Regulation, shall be published in the Official Journal of the European Union.
TITLE II
RESOURCES AND ADMINISTRATIVE EXPENDITURE
CHAPTER 1
COMPOSITION OF EDF RESOURCES
Article 6
The EDF shall consist of:
(a)the amount laid down in Article 1 of the Internal Agreement;
(b)pursuant to Article 1(2)(b) of the Internal Agreement, any balances remaining from previous EDFs as defined in Title I of Part Three of this Regulation.
The revenue accruing from interest on the funds referred to in paragraph 1 deposited with the paying agents in Europe referred to in Article 37 of Annex IV to the ACP-EC Agreement shall be credited to one or more bank accounts opened in the name of the Commission, and shall be used in accordance with Article 9 of the Internal Agreement and with this Regulation.
The breakdown of allocations laid down by the ACP-EC Agreement and by the Internal Agreement is indicated in the Annex to this Regulation for information purposes.
Article 7
The amount laid down in Article 4 of the Internal Agreement shall be reserved for the financing of costs linked to implementation incurred by the Commission in the framework of the ACP-EC Agreement. It shall be utilised in accordance with the principles set out in Article 9 of the Internal Agreement.
Those resources shall be used inter alia to reinforce the administrative capacities of the Commission and its Delegations in order to ensure the smooth preparation and implementation of operations financed from the EDF.
CHAPTER 2
CONTRIBUTIONS TO THE EDF
Article 8
Each year, the Commission shall establish and communicate to the Council, by 15 October at the latest, a statement of the payments to be made in the following financial year and a schedule of the calls for contributions. In so doing, the Commission shall take into account the estimates submitted to it by the EIB, in accordance with Article 121 concerning operations, including interest rate subsidies, managed by the EIB.
The Commission shall justify the amount requested on the basis of its capacity to deliver the proposed level of resources effectively. The EIB shall justify the amount requested on the basis of its operational requirements. The Council shall decide on those justifications and on each call for contributions in accordance with the rules referred to in Article 10 of the Internal Agreement and laid down in Article 38 of this Regulation.
As regards balances remaining from previous EDFs which are transferred to the 9th EDF in accordance with Article 6, the contributions of each Member State shall be calculated in proportion to the contribution of that State to the EDF in question.
The Commission's annual estimates of contributions shall cover:
(a)its estimates of commitments for the following financial year, and those of the EIB;
(b)its estimates of commitments and disbursements for each of the four years following the year relating to the call for contributions, and those of the EIB. The schedule shall be approved and reviewed annually by the Council.
The financial information on the EDF provided by the Commission to the budgetary authority in the context of the annual budget procedure, including the estimates of contributions for the current and the following financial year, shall be made available to the Council by 15 June. This information serves as a basis for an intermediate estimate of commitments and disbursements.
Should the contributions prove insufficient to meet the EDF's actual needs in the financial year in question, any supplementary payments may be decided upon in accordance with Article 10(4) of the Internal Agreement.
Payments of contributions by the Member States shall be made in accordance with Article 38.
TITLE III
IMPLEMENTATION OF EDF RESOURCES
CHAPTER 1
GENERAL PROVISIONS
Article 9
The Commission may, within its own departments, delegate its powers to implement EDF resources, in accordance with the conditions laid down by this Regulation and within the limits set by the Commission in the instrument of delegation. Delegates may act only within the limits of the powers expressly conferred upon them.
Article 10
All financial actors as defined in Chapter 3 shall be prohibited from taking any measures implementing EDF resources which may bring their own interests into conflict with those of the Community. Should such a case arise, the actor in question shall refrain from such measures and refer the matter to the competent authority.
Article 11
In accordance with the procedures laid down for financing proposals in Articles 24(1) and (3) of the Internal Agreement, and in order to speed up those procedures, the Commission shall submit financing proposals concerning the authorisation of overall amounts allocated to the financing of the activities referred to in Article 16(7) of Annex IV to the ACP-EC Agreement. After the proposal has been adopted, the Commission may take financing decisions on the basis of the global authorisation.
The financing proposals referred to in paragraph 1 shall specify the objectives and, where appropriate, the intended impact of the Community contribution. They shall also describe the viability of the activities, previous experience and earlier evaluations, and coordination with other donors.
CHAPTER 2
METHODS OF IMPLEMENTATION
Article 12
The Commission shall undertake the financial implementation of EDF resources by means of decentralised management with the ACP States in accordance with the conditions set out in the ACP-EC Agreement and applying the breakdown of responsibilities provided for in Article 57 of that Agreement and Articles 34, 35 and 36 of Annex IV thereto.
The Commission shall undertake the financial implementation of EDF resources by means of decentralised management with the OCTs in accordance with the conditions set out in the Overseas Association Decision and in the measures implementing that Decision.
In the cases provided for in the ACP-EC Agreement, in the Internal Agreement, in the Overseas Association Decision and in the measures implementing that Decision, the Commission may undertake the financial implementation of EDF resources by centralised management.
In certain specific cases provided for in the ACP-EC Agreement, in the Internal Agreement, in the Overseas Association Decision and in the measures implementing that Decision, the Commission may undertake the financial implementation of EDF resources by means of joint management with international organisations.
EDF resources may also be associated with funds from other sources in order to achieve a joint objective.
Article 13
In the context of decentralised management, the Commission shall undertake the financial implementation of EDF resources in accordance with the detailed rules laid down in paragraphs 2, 3, and 4 without prejudice to delegation of residual tasks to bodies referred to in Article 14(3).
The Commission and the beneficiary ACP States or OCTs shall:
(a)check regularly that the operations financed by the EDF have been properly implemented;
(b)take appropriate measures to prevent irregularities and fraud and if necessary bring prosecutions to recover funds wrongly paid.
In order to ensure that funds are used in accordance with the applicable rules and within the limits of powers thereby conferred upon it, the Commission shall implement clearance of account procedures or financial correction mechanisms enabling it to discharge its obligations under the ACP-EC Agreement, in particular under Article 34(1) of Annex IV thereto, and under the Overseas Association Decision, in particular under Articles 20 and 32 thereof, for the clearance of expenditure financed from EDF resources.
The implementation by ACP States and OCTs of operations financed from EDF resources shall be subject to Commission scrutiny, which may be exercised by prior approval, by ex post checks or by a combined procedure, in accordance with the provisions of the ACP-EC Agreement, the Overseas Association Decision and the measures implementing that Decision.
Depending on the degree of decentralisation provided for in the ACP-EC Agreement and in the Overseas Association Decision and the measures implementing that Decision, the Commission shall strive to encourage the beneficiary ACP States and the OCTs to adhere, when exercising the powers entrusted to them under the ACP-EC Agreement and under the Overseas Association Decision, to the principle of sound financial management set out in Article 4, in particular the progressive application of the following criteria:
(a)effective segregation of the duties of authorising officer and accounting officer;
(b)existence of an effective system for the internal control of management operations;
(c)separate procedures for the presentation of accounts showing the use made of EDF resources;
(d)existence of an independent, public or private external audit system;
(e)transparent, non-discriminatory procurement procedures which prevent any conflict of interests;
(f)in the case of the direct-labour operations referred to in Article 80(2), adequate provisions for the management and scrutiny of imprest accounts and for the definition of the responsibilities of the imprest administrator and the accounting officer.
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