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Brussels, 24.4.2008

SEC(2008) 518

COMMISSION STAFF WORKING DOCUMENT

Accompanying Annual Report on the Financial Management of the 7th-9th European Development Funds (EDFs) in 2007 {COM(2008)224}

TABLE OF CONTENTS

Annex 1: Evolution of unspent EDF commitments (“RAL”), 2003-07 (€m) 3

Annex 2: EDF General Budget Support global commitments, 2003-07 (€m) Provisional Figures 3

Annex 3 : New EDF GBS and SPSP global commitments, 2007 (€m) Provisional figures 5

Annex 4: EDF net commitments and payments, 2007 (€m) 6

Annex 5: EDF contributions to the UN and World Bank Group, 2007 7

Annex 6 : Stabex – country by country situation, year-end 2007 (€), provisional figures 8

Annex 7 : Follow-up to comments by the Court of Auditors 8

Annex 1: Evolution of unspent EDF commitments (“RAL”), 2003-07 (€m) [1]

Type of unspent commitment (or "RAL") | Measure | Year |

Benin | 55.0 | 18.4 | 17.75 |

Burkina Faso | 151.5 | 20.5 |

Burundi | 43.6 | 7.82 | 31 |

Cameroon | 0.021 |

Cape Verde | 5.8 | 12.5 | 2.92 |

Central African Republic | 4.0 | 13.6 |

Chad | 50.0 |

Comoros | 0.002 |

Côte d'Ivoire | 0.40 |

DR Congo | 106.0 |

Congo, Rep. | 30.45 |

Djibouti |

Dominican Republic | 38.0 | 10.8 |

Ethiopia | 95.0 | 0.037 |

Gabon |

The Gambia | 0.041 |

Ghana | 5.0 | 62.0 | 49 |

Grenada | 10 |

Guinea |

Guinea Bissau | 6.0 | 12.1 |

Guyana | 23.3 | 18.2 |

Haiti | 10.2 | 26 |

Jamaica | 25.0 | 2.5 |

Kenya | 125.0 |

Lesotho |

Liberia | 3.5 |

Madagascar | 35.0 | 55.0 | 31 |

Malawi | 41.5 | 34.0 | 0.037 |

Mali | 132.9 | 21.1 | 2.5 |

Mauritania | 0.71 |

Mauritius | 8.74 |

Mozambique | 16.4 | 95 | 42.92 |

Niger | 90.0 | 70.0 |

Papua New Guinea | 0.03 |

Regional cooperation | 39.3 |

Rwanda | 55.1 | 36.0 | 18.24 |

São Tomé & Príncipe |

Senegal | 53.0 | 0.41 |

Sierra Leone | 50.0 | 12.12 |

Solomon Islands | 0.003 |

St. Lucia | 0.56 |

St Vincent and Grenadines | 0.16 |

Sudan | 1.91 |

Tanzania | 114.0 | 57.0 | 30 |

Tonga | 0.004 |

Turks & Caicos | 10.6 | 4 |

Uganda | 92.0 | 0.044 |

Vanuatu | 1.7 | 3.05 |

Zambia | 117.0 | 62.0 |

Annual totals | 741.4 | 469.4 | 704.8 | 198.3 | 414,5 |

% of EDF annual global commitments | 20% | 18% | 20% | 6% | 11,33% |

Annex 3 : New EDF GBS and SPSP global commitments, 2007 (€m) Provisional figures

Programme e type | Financing | Recipient Countrry | Sector | Amount |

General budget support (GBS) | Benin | Budget Support | 17,75 |

Burkina Faso | 20,5 |

Burundi | 31 |

Cameroon | 0.021 |

Cape Verde | 2,92 |

Central African Republic | 13.6 |

Comoros | 0.002 |

Dominican Republic | 10.8 |

Ethiopia | 0.037 |

Gambia | 0.041 |

Ghana | 49 |

Grenada | 10 |

Guinee Bissau | 12.1 |

Guyana | 18.2 |

Haiti | 26 |

Ivory Cost | 0.40 |

Liberia | 3,5 |

Jamaica | 2,5 |

Madagascar | 31 |

Malawi | 0.037 |

Mali | 2,5 |

Mauritania | 0.71 |

Mauritius | 8,74 |

Mozambique | 42,92 |

Papua New Guinea | 0.03 |

Regional Cooperation | 39.3 |

Rwanda | 18.24 |

Senegal | 0.41 |

Sierra Leone | 12.12 |

Solomon Islands | 0.003 |

St Lucia | 0.56 |

St Vincent and Grenadines | 0.16 |

Sudan | 1.91 |

Tanzanie | 30 |

Tonga | 0.004 |

Turks and Caicos | 4 |

Uganda | 0.044 |

Vanuatu | 3,05 |

Sub-total, macroeconomic budget support | 414.5 |

Sector policy support programmes (SPSPs) | Sectoral budget support (SBS) | Anguilla | 3,95 |

Benin | Infrastructure | 12 |

Botswana | Education | 1,48 |

Burkina Faso | Agriculture | 10 |

Ethiopia | 150 |

Ethiopia | Infrastructure | 7,4 |

Jamaica | Infrastructure | 12,25 |

Mali | Agriculture | 15 |

Montserrat | 6,2 |

Mozambique | Health | 3,85 |

Mozambique | Governance | 11 |

Namibia | 8 |

Namibia | Education | 3 |

St Helena | 2,2 |

St Pierre et Miquelon | 6,1 |

Zambia | Infrastructure | 6 |

Sub-total, SBS | 259 |

Standard project financing | Benin | Health | 8 |

Ghana | Trade | 5 |

Sub-total, standard projects | 13 |

Sub-total, SPSPs | 262 |

Total | 612 |

Annex 4: EDF net commitments and payments, 2007 (€m)

Global commitments | New global commitments (gross) | 3 636 |

De-commitments | - 464 |

Net global commitments | 3 172 |

Individual commitments | New contracts (gross) | 3 816 |

Contracts decommitted/cancelled | - 469 |

Net individual commitments | 3 347 |

Payments | New payments (gross) | 2 920 |

Recoveries received | - 45 |

Net payments | 2 874 |

Annex 5: EDF contributions to the UN and World Bank Group, 2007

2007 |

UN Agencies | Contracted | Paid | Still to Pay |

FAO | 11.695.536,00 | 6.243.710,97 | 20.949.504,79 |

UN Habitat | 5.620.000,00 |

UNCHS | 2.000.000,00 | 880.000,00 |

UNDP | 47.636.908,34 | 57.075.179,17 | 54.606.415,00 |

UNEP | 1.189.103,00 | 11.673.715,35 |

UNESCO | 4.759.222,00 | 1.591.358,51 | 3.579.954,00 |

UNHCR | 11.050.000,00 | 8.167.972,40 | 4.572.741,00 |

UNICEF | 71.499.802,92 | 34.602.754,05 | 104.788.503,95 |

UNCTAD | 5.727.986,00 | 1.894.789,00 | 4.972.253,00 |

UN General Trust Fund | 4.999.600,00 | 601.956,00 | 8.353.021,38 |

UNIDO | 24.399.904,00 | 11.512.744,00 | 13.414.082,56 |

UN International Drug Control Programme | 38.674,00 |

UN Office in Geneva | 4.100.000,00 | 2.175.689,00 | 2.841.964,00 |

UN Office in Vienna | 7.098.000,00 |

UNOPS | 3.600.000,00 | 3.400.000,00 | 465.911,00 |

UN Population Fund | 13.230.000,00 | 13.987.346,00 | 11.936.180,73 |

UN Representative in Chad | 84.469,00 |

Sub-total UN | 205.888.062,26 | 142.172.173,10 | 254.956.715,76 |

WB | 225.860.575,00 | 164.288.000,00 | 243.604.762,00 |

Total UN+WB | 431.748.637,26 | 306.460.173,10 | 498.561.477,76 |

Annex 6 : Stabex – country by country situation, year-end 2007 (€), provisional figures

Balance of double signature accounts (Europe, ACP state) |

Benin |

Burkina F. | 5.549.229 |

Burundi | 32.134.285 |

Cameroon | 13.969.197 |

Cap Verde | 1.273.145 |

CAR | 2.644.115 |

Chad | 947.502 |

Comoros | 1.081.995 |

Dominica | 79.048 |

Eq. Guinea | 1.195.007 |

Ethiopia | 967.335 |

Gambia | 1.640.601 |

Ghana | 2.810.904 |

Grenada | 3.419.005 |

Guin. Bissau | 1.003.027 |

Haiti | 689.794 |

Ivory Coast | 30.041.482 |

Jamaica | 879.067 |

Kenya | 58.901.556 |

Kiribati | 436.325 |

Lesotho | 312.928 |

Madagascar | 12.651.413 |

Malawi | 5.074.282 |

Mauritania | 26.811.712 |

Mozambique | 3.068.928 |

PNG | 1.559.084 |

Rwanda | 12.201.498 |

Samoa | 642.733 |

Senegal | 53.332.464 |

S. Leone | 3.264.083 |

Solomon Is. | 24.927.456 |

St. Lucia | 24.975.770 |

St. Vincent | 24.919.107 |

Sudan | 162.085.709 |

Tanzania | 8.555.577 |

Togo | 15.811.015 |

Uganda | 27.732.205 |

Zimbabwe | 20.511.757 |

Total | 588.100.340 |

Section 5.2.3 of the report indicates the balances for Stabex "Security accounts", that is, accounts managed by the Commission.

This table presents the balances of Stabex "double signature accounts", that is, accounts containing Stabex funds initially transferred from the Security accounts onto Stabex beneficiary accounts, which are therefore no longer managed by the Commission.

Annex 7 : Follow-up to comments by the Court of Auditors

EDF/1 | The control strategy should be established and made operational by the end of 2007. As already indicated by the Court[2], it should establish clear and consistent objectives, ensure coordination and set the type and intensity of checking. This should necessarily entail a balancing act between the costs of the various controls and the accompanying benefits, whilst taking account of the tolerable risk of errors in the underlying transactions. The control strategy should include a well-structured and documented risk analysis that formally involves the Delegations in a fully participative manner; | In progress | Internal Control Templates will be included in the 2007 Annual Activity Report of the Directorate General of AIDCO |

EDF/2 | The management of projects financed by work programmes should be better supported. This should involve greater presence of Delegation staff in the field supporting accounting systems and training. Carrying out more audits at an early stage of the implementation of projects would also help to monitor and, where necessary, improve the quality of the control systems implemented by beneficiaries. | Ongoing | AIDCO makes constant efforts to improve the quality of the controls |

EDF/3 | Checks performed by the Delegations before authorising payments should better scrutinise the payment requests and intensify the focus on the reality, eligibility and accuracy of the expenditure. The quality of the work performed by supervisors should be better monitored. | Ongoing | AIDCO pursues its efforts to tighten up the quality controls carried out by Delegations and National Authorising Officers, while taking into account the costs and benefits of additional checks |

EDF/4 | The quality of the controls performed by external auditors should be enhanced by ensuring that the new terms of reference include a clear definition of the purpose of the audit; the materiality threshold to be applied; the sampling; the nature of the audit procedures to be performed; guidance on how errors should be treated; and how conclusions are to be reported upon. These standard terms of reference should also be used for all external audits initiated by the Delegations. | Done |

EDF/5 | The central monitoring of the external audits organised by the Delegations should be improved so that the results can be effectively communicated to all relevant levels of management. This should be enhanced by the availability, by the end of 2007, of a management system that provides information on the audit process and facilitates access to relevant audit results. | Accepted | The central monitoring of the external audits has been improved in 2007 as foreseen allowing for a more acute analysis and management of external audits in real time. Since January 1st, 2008, CRIS has been completely updated, simplified and restructured. All audits foreseen for 2008 are being introduced into the system. |

EDF/6 | Verification of the Delegations by EuropeAid's central services should be enhanced by increasing the number of missions. | Ongoing | The Commission has developed a harmonised methodology for Headquarters' monitoring-related missions in Delegations and its submission to Management is foreseen for February 2008. |

EDF/7 | As regards budget support, compliance with the Cotonou Agreement should be benchmarked against baseline requirements, such as the availability of timely published and audited accounts. A clear, formal presentation of the conclusions reached would require the parameters of the 'dynamic interpretation' to be made explicit, thus enabling the appropriateness of disbursement decisions to be assessed. | Accepted | The Commission is in the process of carrying out PEFA assessments in all countries receiving BS. These assessments allow the establishment of PFM weaknesses and specific and precise benchmarks against which progress can be measured within performance indicators over time. EC Delegations monitor progress and report to HQ within PFM Annual Reports. |

EDF/8 | As regards budget support, in order to set out its conclusions in a structured manner, the Commission should ensure that the data used as a basis for disbursement decisions rely more on measurements of events that have already taken place than on predictions of future occurrences. | Accepted | Disbursement decisions are always taken on the basis of the fulfillment of the basic 3 eligibility criteria and of indicators formulated in Financing Agreements. In assessing the PFM eligibility criterion, the Commission is ensuring that there is a balance between the devolution of past performances and the reform process, and future PFM commitments and further concrete progress in this area. As regards the specific PFM indicators, the Commission is ensuring that data used is measuring the devolution of past performance and the reform process. |

EDF/9 | As regards budget support, the indicators used should permit clear evidence of progress in public finance management to emerge where appropriate. This could be achieved by including indicators which can be measured over time, and compared from one period to the next, as opposed to indicators which rely on the performance of a one-off event | Accepted | The Commission is in the process of carrying out PEFA assessments in all countries receiving BS. These assessments allow the establishment of PFM weaknesses and specific and precise benchmarks against which progress can be measured within performance indicators over time. EC Delegations monitor progress and report to HQ within PFM Annual Reports. |

[1] Until 01/01/2003 : including old RAL (thus the sum of old+dormant contains double counting) ; from 31/12/2003 on : excluding old RAL

[2] See Opinion No 2/2004.