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Document 52023XC00002

Communication from the Commission to the European Parliament, the Council and the Court of Auditors – Consolidated annual accounts of the European Union for the financial year 2022

PUB/2023/757

OJ C, C/2023/2, 12.10.2023, ELI: http://data.europa.eu/eli/C/2023/2/oj (BG, ES, CS, DA, DE, ET, EL, EN, FR, GA, HR, IT, LV, LT, HU, MT, NL, PL, PT, RO, SK, SL, FI, SV)

ELI: http://data.europa.eu/eli/C/2023/2/oj

European flag

Official Journal
of the European Union

EN

Series C


C/2023/2

12.10.2023

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

Consolidated annual accounts of the European Union for the financial year 2022

(C/2023/2)

CONTENTS

FOREWORD 2
FINANCIAL HIGHLIGHTS OF THE YEAR 3
NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS 33
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES 34
BALANCE SHEET 35
STATEMENT OF FINANCIAL PERFORMANCE 36
CASHFLOW STATEMENT 37
STATEMENT OF CHANGES IN NET ASSETS 38
NOTES TO THE FINANCIAL STATEMENTS 39
BUDGETARY IMPLEMENTATION REPORTS AND EXPLANATORY NOTES 140
GLOSSARY 226
LIST OF ABBREVIATIONS 230

FOREWORD

In 2022, the European Union proved once again its power of unity to respond to unprecedented challenges. European solidarity was our response to Russia’s brutal war. On one hand, we have stood by our Ukrainian partners and sought to mitigate the impact of this unlawful and arbitrary war, which affected the daily lives of millions of Ukrainians. On the other hand, we have addressed the direct and indirect consequences for our citizens, businesses and Member States. That is why we have mobilised all available means in the EU budget and under the European Peace Facility to complement support directly provided by the Member States.

The current geopolitical situation has emphasised the importance of a sustainable and diversified source of energy supply. In this context, our dedicated recovery instrument NextGenerationEU proved to be an important tool to further accelerate the green and the digital transition. At the same time, NextGenerationEU has been instrumental for the growth of the EU into the large scale-sovereign style issuer. By implementing unified EU borrowing strategy, the Commission sent a very important signal to financial markets: it showed EU solidarity and has generated confidence in the resilience of the euro area.

In addition, the SURE programme (Support to Mitigate Unemployment Risks in an Emergency) continued to support Member States to maintain people in work and help jobs affected by the pandemic. At the end of 2022, its final year, Member States had signed loan facility agreements of EUR 98,4 billion Euro, all of which were disbursed supporting more than 30 million people and 2,5 million companies across 19 different Member States.

On top of tackling the crisis with rapid responses and ongoing adjustments to the political and financial situation, the European Union kept its promise and delivered on its overall policy objectives. In 2022, the second year of the MFF 2021–2027, it made the best use of the 2022 budget, with commitment implementation amounting to 357,1 billion Euro.

Thanks to the EU budget, the European Union could stand up to its challenges. Therefore, it is my pleasure to present the 2022 annual accounts of the European Union, which will illustrate this in detail. They provide a complete overview of EU finances, including information on contingent liabilities, financial commitments and other obligations of the Union, as well as on the implementation of the EU budget for the past year. The consolidated annual accounts of the European Union are part of the Commission’s integrated financial and accountability reporting package and form an essential part of our highly developed system of fiscal transparency and accountability.

Johannes HAHN

Commissioner for Budget and Human Resources

FINANCIAL HIGHLIGHTS OF THE YEAR

The objective of this Financial Highlights section, which has been prepared on the basis of the principles outlined in the IPSASB Recommended Practice Guideline (RPG) 2 ‘Financial Statement Discussion and Analysis’ is to assist readers to understand how the operational, financial and investment activities of the EU are reflected in the different elements of the consolidated financial statements of the EU. The information presented in this section has not been audited.

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add up.

CONTENTS

1.

KEY FIGURES AND HIGHLIGHTS OF THE YEAR 4

2.

THE 2021–2027 MULTIANNUAL FINANCIAL FRAMEWORK AND NextGenerationEU 6

2.1.

MFF 2021–2027 & NextGenerationEU — Key Figures 6

2.2.

NextGenerationEU — overview 7

2.3.

Financial situation of NGEU at 31 December 2022 8

3.

SUMMARY OF BUDGET IMPLEMENTATION 13

3.1.

Revenue 13

3.2.

Expenditure 14

4.

FINANCIAL INSTRUMENTS AND BUDGETARY GUARANTEES 16

4.1.

Financial instruments financed by the EU budget 16

4.2.

Budgetary guarantees: Financial assets held in guarantee funds 16

4.3.

Loans and related borrowings for financial assistance programmes 17

4.4.

Budgetary contingent liabilities for financial assistance programmes 21

5.

FINANCIAL STATEMENTS ANALYSIS 21

5.1.

REVENUE 21

5.2.

EXPENSES 22

5.3.

ASSETS 23

5.4.

LIABILITIES 26

6.

EU POLITICAL AND FINANCIAL FRAMEWORK, GOVERNANCE AND ACCOUNTABILITY 28

6.1.

POLITICAL AND FINANCIAL FRAMEWORK 28

6.2.

GOVERNANCE AND ACCOUNTABILITY 30

1.   KEY FIGURES AND HIGHLIGHTS OF THE YEAR

Consolidated financial statements

The consolidated financial statements of the EU comprise more than 50 entities (including the European Parliament, the Council, the Commission and EU agencies). They are prepared on the basis of accrual-based accounting rules adopted by the Accounting Officer of the Commission, these rules being based on International Public Sector Accounting Standards (IPSAS).

As can be seen on the balance sheet below and further detailed in the Financial Statements Analysis (Section 5), the 2022 EU consolidated financial statements were particularly marked by an increase of borrowings due to the continued implementation of NextGenerationEU and the Support to mitigate Unemployment Risks in an Emergency (SURE) instrument, as well as the additional financial support provided to Ukraine:

(EUR billion)

 

2022

2021

ASSETS

 

 

Financial Assets

235,4

188,6

Pre-financing

100,5

93,4

Receivables

48,2

72,4

Cash and cash equivalents

46,5

44,9

Property, Plant and Equipment and other assets

15,2

14,7

Total

445,9

414,1

LIABILITIES

 

 

Post-employment benefits

80,6

122,5

Financial liabilities

352,3

246,1

Payables

55,3

46,4

Accruals

86,2

78,1

Other liabilities

2,8

3,3

Total

577,2

496,4

NET ASSETS

 

 

Reserves

1,3

1,3

Amounts to be called from Member States

(132,6 )

(83,6 )

Total

(131,3 )

(82,3 )

see Financial Statement Analysis, Section 5

Key developments in 2022

Continuing the successful track record of bond issuances

Image 1

see Section 4

Delivering on the NGEU obectives

 

Providing financial assistance to Ukraine

Image 2

 

Image 3

see Section 2

 

see Section 4

2.   THE 2021–2027 MULTIANNUAL FINANCIAL FRAMEWORK AND NextGenerationEU

2.1.   MFF 2021–2027 & NextGenerationEU — KEY FIGURES

The EU’s 2021–2027 long-term budget, together with the NextGenerationEU (NGEU) recovery instrument, amounts to EUR 2,018 trillion in current prices (EUR 1,8 trillion in 2018 prices).

The package consists of the long-term budget, the 2021–2027 multiannual financial framework (MFF), made up of EUR 1,211 trillion in current prices (EUR 1,074 trillion in 2018 prices), combined with the temporary recovery instrument, NGEU of up to EUR 806,9 billion in current prices (EUR 750 billion in 2018 prices).

Image 4

The budget has been designed as a response to Europe’s priorities and most urgent needs:

More than 50 % of the total amount of the next long-term budget and NGEU will support the modernisation of the European Union through research and innovation, fair climate and digital transitions, preparedness, and recovery and resilience actions;

30 % of the EU budget will be spent to fight climate change — the highest share of the largest EU budget ever;

20 % of the Recovery and Resilience Facility (RRF) — which accounts for 90 % of NGEU — will be invested in digital transformation;

In 2026 and 2027, 10 % of the annual spending under the long-term budget will contribute to halting and reversing the decline of biodiversity; and

For the first time ever, new and reinforced priorities have the highest share within the long-term budget, 32 %.

Following Russia’s war of agression against Ukraine, the EU budget turned into a key instrument to support the EU’s crisis response and strategic autonomy building. More concretely, in a ‘Team Europe’ approach, the EU, its Member States and financial institutions, had by the end of 2022 together mobilised close to EUR 50 billion in overall support for Ukraine, in a clear expression of the EU’s continued solidarity with the people of Ukraine.

This included:

EUR 18,9 billion in financial assistance, budget support and humanitarian assistance, enabled by the EU budget and directly from EU Member States in grants, loans and guarantees;

An EUR 18 billion package to support Ukraine’s economy, to be paid out in 2023; and

EUR 3,2 billion in military assistance under the European Peace Facility and EUR 7 billion directly by the EU Member States (both the European Peace Facility and the direct support by Member States are not part of the EU budget).

2.2.   NextGenerationEU — OVERVIEW

With a budget of EUR 806,9 billion, NGEU is designed to help repair the immediate economic and social damage brought about by the coronavirus pandemic, thus building a post-COVID-19 Europe that is greener, more digital, more resilient and better fit for the current and forthcoming challenges.

A majority of the funds is channeled through the Recovery and Resilience Facility (RRF). Part of the funds, up to EUR 338,0 billion, are provided in the form of non-repayable support, or grants. The other part, up to EUR 385,8 billion, is used to provide loans from the Union to individual Member States. These loans will be repaid by those Member States starting only after the current MFF period and extending over a long time period, with the final maturity of the loans outstanding at 31 December 2022 ending only as from 2052 (see Section 2.3.3).

In addition, NGEU reinforces several existing EU programmes and policies, as follows:

The Cohesion policy under the recovery assistance for cohesion and the territories of Europe (REACT-EU), to help address the economic consequences of COVID-19 in the first years of the recovery;

The Just Transition Fund, to guarantee that the transition to climate neutrality works for all;

The European Agricultural Fund for Rural Development, to further support farmers;

InvestEU, to support the investment efforts of our businesses;

Horizon Europe, to make sure the EU has the capacity to fund more excellence in research; and

RescEU, safeguards that the EU Civil Protection Mechanism has the capacity to respond to largescale emergencies.

Image 5

In addition, following Russia’s war of aggression against Ukraine and the resulting energy crisis, the Commission put forward REPowerEU, the European Commission’s plan to make Europe independent from Russian fossil fuels well before 2030. Under REPowerEU, Member States add a REPowerEU chapter to their national Recovery and Resilience Plans (RRPs) — the roadmaps to funding under the Recovery and Resilience Facility — to finance key investments and reforms in diversifying energy supplies and reducing dependence on Russian fossil fuels. REPowerEU does not increase the overall envelope for the RRF, but will accelerate the deployment of the current borrowing capacity by offering Member States the possibility to request additional loans under NGEU for REPowerEU objectives. REPowerEU is complemented by grants financed by the auctioning of ETS allowances and transfers from the Brexit Adjustment Reserve.

2.3.   FINANCIAL SITUATION OF NGEU AT 31 DECEMBER 2022

2.3.1.   Overview

From the launch of the NGEU funding operations on 15 June 2021 to the end of 2022, the Commission has raised EUR 170,8 billion of long-term funding (nominal amount), mainly by issuing bonds in syndicated transactions (2021: EUR 71,0 billion). In addition, as of December 2022, the Commission has EUR 17,0 billion of short-term EU-Bills outstanding. Up to year-end 2022, the Commission had disbursed a total of EUR 162,0 billion of financial support (2021: EUR 71,6 billion). The majority of this amount, EUR 138,7 billion, was disbursed under the RRF, with EUR 93,5 billion disbursed as non-repayable support and EUR 45,2 billion disbursed as financial loan support. A further EUR 23,3 billion (net of recoveries of EUR 0,2 billion) was disbursed as MFF payments under existing programmes. Furthermore, liquidity of EUR 20,5 billion is held in the NGEU bank account with the ECB and in the Commission’s central treasury account, pending disbursement to the budget for MFF programmes.

NGEU — Outstanding Borrowings and Disbursements at 31 December 2022

Image 6

2.3.2.   Borrowings

To meet the NGEU funding needs, the Commission issues securities on the international capital markets. Based on a unified funding approach, the Commission combines the use of different funding instruments and funding techniques with an open and transparent communication to market participants.

In 2022, the annual Borrowing Decision allowed the Commission to issue up to a maximum amount of EUR 140 billion in long-term funding and to have up to a maximum outstanding amount of EUR 60 billion in short-term funding (1).

Long-term funding — Syndicated transactions and auctioning of EU bonds

As of 31 December 2022, the outstanding (nominal) amount of long-term funding was EUR 170,8 billion (2021: EUR 71,0 billion). Out of this amount, EUR 36,4 billion related to green bonds (2021: EUR 12 billion). The borrowings will mature between 2025 and 2052 as follows:

(EUR billion)

Maturity

Issued/Raised

Total repaid at year-end

Outstanding at year-end

2025

11,2

0,0

11,2

2026

18,9

0,0

18,9

2027

9,3

0,0

9,3

2028

14,0

0,0

14,0

2029

10,0

0,0

10,0

2031

20,0

0,0

20,0

2032

14,9

0,0

14,9

2033

6,0

0,0

6,0

2037

18,4

0,0

18,4

2041

13,0

0,0

13,0

2042

4,0

0,0

4,0

2043

7,0

0,0

7,0

2048

5,0

0,0

5,0

2051

14,0

0,0

14,0

2052

5,0

0,0

5,0

 

170,8

0,0

170,8

Short-term funding — Auctioning of EU-Bills

The auctioning of EU-Bills gives extra flexibility to the Commission as an issuer, and is supporting the liquidity of its securities. As of 31 December 2022, the outstanding (nominal) amount of short-term funding, raised via the auctioning of EU-bills with a maturity of three or six months, amounted to EUR 17,0 billion (2021: EUR 20,0 billion).

2.3.3.   Disbursements

During 2022 the Commission positively assessed the five remaining Member States’ recovery and resilience plans (Bulgaria, Hungary, Netherlands, Poland and Sweden), which were subsequently approved by the Council. As a consequence, all 27 Member States’ recovery and resilience plans were endorsed by year-end 2022. The total non-repayable support approved under the 27 Member States’ plans amounted to EUR 335,1 billion (2021: EUR 291,2 billion), corresponding to almost the whole financial envelope of NGEU non-repayable support of EUR 338,0 billion (2). Out of this amount, EUR 234,4 billion were covered by financing agreements signed with Member States (2021: EUR 195,4 billion). The total financial loan support approved under the plans amounted to EUR 165,3 billion (2021: EUR 153,9 billion), of which the loan agreements signed by year-end covered EUR 153,9 billion (2021: EUR 153,2 billion).

Non-repayable support

By year-end 2022, the Commission had disbursed a total of EUR 93,5 billion of non-repayable support to 22 Member States (2021: EUR 46,4 billion to 20 Member States). Out of this amount, EUR 36,6 billion related to pre-financing (2021: EUR 36,4 billion) and EUR 56,9 billion related to payments made following the fulfilment of milestones and targets by Member States (2021: EUR 10,0 billion):

(EUR billion)

Member State

Maximum non-repayable support (1)

Signed commitments and budgetary commitments 31.12.2022 ()

Disbursed as pre-financing 31.12.2022

Milestone payments 31.12.2022

Total disbursed at 31.12.2022

Austria

3,8

2,2

0,4

0,4

Belgium

4,5

3,6

0,8

0,8

Bulgaria

5,7

4,6

1,4

1,4

Croatia

5,5

4,6

0,8

1,4

2,2

Cyprus

0,9

0,8

0,1

0,1

0,2

Czechia

7,7

3,5

0,9

0,9

Denmark

1,4

1,3

0,2

0,2

Estonia

0,9

0,8

0,1

0,1

Finland

1,8

1,7

0,3

0,3

France

37,5

24,3

5,1

7,4

12,5

Germany

28,0

16,3

2,3

2,3

Greece

17,4

13,5

2,3

1,7

4,0

Hungary

5,8

4,6

Ireland

0,9

0,9

Italy

69,0

47,9

9,0

20,0

29,0

Latvia

1,8

1,6

0,2

0,2

0,4

Lithuania

2,1

2,1

0,3

0,3

Luxembourg

0,1

0,1

0,0

0,0

Malta

0,3

0,2

0,0

0,0

Netherlands

4,7

3,9

Poland

22,5

20,3

Portugal

15,5

9,8

1,8

0,6

2,4

Romania

12,1

10,2

1,9

1,8

3,6

Slovakia

6,0

4,6

0,8

0,4

1,2

Slovenia

1,5

1,3

0,2

0,2

Spain

77,2

46,6

9,0

22,0

31,0

Sweden

3,2

2,9

Total

338,0

234,4

36,6

56,9

93,5

During 2022 the Commission disbursed non-repayable support totalling EUR 47,2 billion. This amount mainly comprised the first milestone payment to France (EUR 7,4 billion), the first and second milestone payments to Italy (EUR 10,0 billion each), and the second milestone payment to Spain (EUR 12,0 billion).

Loans

By year-end 2022, the Commission had disbursed EUR 45,2 billion of financial loan support to five Member States (2021: EUR 18,0 billion to four Member States). Out of this amount, EUR 19,9 billion related to pre-financing (2021: EUR 18,0 billion) and EUR 25,2 billion related to loan instalments made following the fulfilment of milestones and targets by Member States (2021: nil):

(EUR billion)

Member State

Maximum financial loan support

Total signed at 31.12.2022

Disbursed as prefinancing 31.12.2022

Milestone payments 31.12.2022

Total outstanding at 31.12.2022

Cyprus

0,2

0,2

0,0

0,0

Greece

12,7

12,7

1,7

1,8

3,5

Italy

122,6

122,6

15,9

22,0

37,9

Portugal

2,7

2,7

0,4

0,6

1,0

Romania

14,9

14,9

1,9

0,8

2,7

Poland

11,5

0,0

Slovenia

0,7

0,7

Approved

165,3

153,9

19,9

25,2

45,2

Reserve

220,5

 

385,8

153,9

19,9

25,2

45,2

During 2022 the Commission provided financial loan support totalling EUR 27,2 billion. This amount comprised the loan pre-financing of EUR 1,9 billion to Romania, the payment of the first loan instalments to Greece (EUR 1,8 billion), Italy (EUR 11,0 billion), Portugal (EUR 0,6 billion) and Romania (EUR 0,8 billion), as well as the payment of the second loan instalment to Italy (EUR 11,0 billion).

According to the loan agreements, Member States will make annual repayments of 5 % of the disbursed amounts starting ten years after the disbursement date. Thus Cyprus, Greece, Italy and Portugal will start repaying the loans as from 2032 and Romania as from 2033. The repayment schedule for the nominal amounts outstanding at year-end is as follows:

(EUR million)

Member State

Repayment period

Annual repayment

Total repayment

Cyprus

2032–2051

1

26

Greece

2032–2052

175

3 500

Italy

2032–2052

1 897

37 938

Portugal

2032–2052

48

960

Romania

2033–2052

137

2 732

 

 

2 258

45 156

NGEU contribution to other programmes under the EU budget

By year-end 2022, the total net payments disbursed to other programmes under the MFF amounted to EUR 23,3 billion (2021: EUR 7,2 billion). This contribution, which is net of recoveries of EUR 0,2 billion, mainly related to REACT-EU which finances the European Regional Development Fund (ERDF) and the European Social Fund (ESF, including FEAD):

(EUR billion)

MFF-Programme

Total allocation

Total net commitments 31.12.2022†

Total net payments 31.12.2022

REACT-EU

50,6

50,5

18,2

of which ERDF

30,0

29,9

13,6

of which ESF (incl. FEAD)

20,6

20,6

4,6

Just Transition Fund

10,9

5,0

0,2

Rural Development (EAFRD)

8,1

8,1

1,3

InvestEU

6,1

3,6

1,4

Horizon Europe

5,4

3,5

1,9

RescEU

2,0

0,9

0,3

Total

83,1

71,6

23,3

During 2022, the Commission disbursed payments to other MFF programmes totalling EUR 16,1 billion. This amount comprised mainly the payments relating to REACT-EU (EUR 11,2 billion, of which EUR 8,7 billion under the ERDF and EUR 2,5 billion under the ESF, including FEAD), Horizon Europe (EUR 1,9 billion), InvestEU (EUR 1,2 billion) as well as Rural Development (EUR 1,2 billion).

2.3.4.   Liquidity

Loans provided under NGEU do not follow the strict back-to-back principle used in the past. Instead, a diversified and pooled funding strategy has been developed for the NGEU that has required the implementation of an efficient liquidity management. The objective of the NGEU liquidity management is to ensure that the amounts held on the NGEU bank account are sufficient to meet all upcoming disbursement needs and to maintain a defined safety buffer, while avoiding any excess balances. For the liquidity management, the Commission has developed an IT tool that allows for the monitoring of the NGEU account on a daily basis. At year-end 2022 the funds held in the NGEU off-budget account amounted to EUR 19,9 billion. In addition, EUR 0,6 billion of funds were held in the Commission’s central treasury account pending disbursement to the budget for MFF-programmes (including EUR 0,2 billion of recovered NGEU funds previously paid).

Following the success of the diversified funding strategy for NGEU and the growing recurrence to borrowing to secure funding for EU policy priorities, the Commission decided in 2022 to start using the unified funding approach as a main funding method as of 2023. Under this approach, the Commission — on behalf of the EU — will henceforth issue only ‘EU-Bonds’ rather than separately denominated bonds for individual programmes. The NGEU recovery programme and the new Macro-Financial Assistance + programme for Ukraine of EUR 18 billion for 2023 are the first programmes to benefit from the new funding approach.

3.

SUMMARY OF BUDGET IMPLEMENTATION

3.1.   REVENUE