52009DC0547

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 21.10.2009

COM(2009)547 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

2nd financial report on the financial implementation of the European Agricultural Fund for Rural Development (EAFRD)Year 2008

TABLE OF CONTENTS

1. Procedure and budgetary monitoring 3

2. Management of appropriations and financial implementation 5

2.1. Commitment appropriations 5

2.1.1. Commitment appropriations for operational rural development programmes 5

2.1.2. Commitment appropriations available for technical assistance 6

2.2. Payment appropriations 6

2.2.1. Appropriations available for operational rural development programmes 6

2.2.2. Appropriations available for technical assistance 11

3. Rate of implementation of EAFRD programmes (% of EAFRD 2007 and 2008 subsidies paid by the Commission) by Member State 14

PROCEDURE AND BUDGETARY MONITORING

On 2 May 2007 the Commission adopted the preliminary draft budget (PDB) for the year 2008. The PDB for the EAFRD was submitted to the budget authority with the following financial resources (in EUR):

Budget line | Commitment appropriations | Payment appropriations |

05.040501 (Rural Development programmes) | 12 542 462 561.00 | 9 396 700 000.00 |

05.040502 (Technical assistance) | 22 089 328.00 | 10 000 000.00 |

Council Regulation (EC) No 378/2007 laying down rules for voluntary modulation of direct payments was adopted on 27 March 2007. Its direct impact on the EAFRD budget is an increase of EUR 362 000 000.00 in commitment appropriations.

As a result, the general budget for 2008 was adopted by the Parliament at its second reading on 13 December 2007 with the following amounts for the EAFRD:

Budget line | Commitment appropriations | Payment appropriations |

05.040501 (Rural Development programmes) | 12 904 462 561.00 | 9 396 700 000.00 |

05.040502 (Technical assistance) | 22 089 328.00 | 10 000 000.00 |

At the end of 2007 only 54 EAFRD programmes out of a total of 94 were approved by the Commission. The other 40 programmes were approved in 2008 as follows:

- 25 EAFRD programmes were approved at the start of 2008 having benefited from a non-automatic carry-over of the commitment appropriations from the year 2007 to 2008, for a total amount of EUR 1 360 517 165.00.

- 15 EAFRD programmes for which the appraisal work had not been completed by the Commission before the end of 2007 were part of the 2007 instalment which was reassigned to the years 2008-2013 by application of paragraph 48 of the Interinstitutional Agreement (IIA) on budgetary discipline.

For these last 15 EAFRD programmes, the appropriations entered in the 2007 budget for the 2007 annual instalment were cancelled and the budgetary authority approved, in May 2008, a corrected budget for an additional amount of EUR 370 376 764.00 in commitment appropriations which corresponds to the 2008 share of the reassigned 2007 annual instalment.

It should be noted that the application of paragraph 48 of the IIA also necessitated the revision of the financial framework for rural development with the amendment of Council Decision 2006/493/EC determining the level of Community aid for rural development during the period 2007-2013 and its annual allocation, and the amendment of Decision 2006/636/EC establishing, by Member State, the annual allocation of the amount for rural development for the same period.

The above situation means that the amount of commitment appropriations finally available for the budget line for operational EAFRD programmes (excluding technical assistance) is EUR 14 635 356 490.00.

It should be noted that the payment appropriations stayed at the same level during 2008 as that included in the budget adopted by the Parliament at its second reading on 13 December 2007, with the exception of a total transfer of EUR 82 995 000.00 which was made at the end of the year to increase the budget lines for the EAGGF Guidance Section. The table below illustrates the situation per budget line (in EUR):

Financial instrument / budget line | Increase (‘+’) or Decrease (‘-‘) of the available payment appropriation (in EUR) |

EAFRD (05.040501) | - 82 995 000.00 |

EAGGF Guidance Section Objective 1 (05.04.02.01) and EAGGF Guidance Section Leader + (05.040206) | + 82 995 000.00 |

Total variation (increase, decrease) for rural development | 0.00 |

The following section describes how these funds have been used.

MANAGEMENT OF APPROPRIATIONS AND FINANCIAL IMPLEMENTATION

Commitment appropriations

Commitment appropriations for operational rural development programmes

All of the available commitment appropriations for the 2008 instalment (EUR 14 635 356 490.00) were used up (i.e. 100% financial implementation). The following table shows the amounts actually committed in 2008, by Member State, for the EAFRD programmes (in EUR):

Member State | Use of commitment appropriations 2008 |

AT | 594 709 669.00 |

BE | 63 957 784.00 |

BG | 581 200 565.00 |

CY | 24 772 842.00 |

CZ | 392 638 892.00 |

DE | 1 186 941 705.00 |

DK | 128 937 144.00 |

EE | 95 569 377.00 |

ES | 1 548 539 790.00 |

FI | 318 959 772.00 |

FR | 959 359 146.00 |

GR | 463 470 078.00 |

HU | 537 525 661.00 |

IE | 355 014 220.00 |

IT | 1 616 756 298.00 |

LT | 248 836 020.00 |

LU | 13 661 411.00 |

LV | 300 635 734.00 |

MT | 23 962 147.00 |

NL | 72 638 338.00 |

PL | 1 932 933 351.00 |

PT | 587 531 051.00 |

RO | 1 146 687 683.00 |

SE | 277 225 207.00 |

SI | 139 868 094.00 |

SK | 286 531 906.00 |

UK | 736 492 605.00 |

Grand total | 14 635 356 490.00 |

Commitment appropriations available for technical assistance

Article 69(2) of Council Regulation (EC) No 1698/2005 provides for 0.25% of the total amount of Community aid for rural development to be allocated to technical assistance managed by the Commission. In the 2008 budget the amount available for this purpose was EUR 22 089 328.00 in commitment appropriations. At the end of 2008 the use of commitment appropriations amounted to EUR 5 250 376.94.

The table below shows how these commitment appropriations were used. The majority of the commitment appropriations for the year 2008 involved actions related to creating the European Network for rural development and the development of the SFC2007 computer system.

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Payment appropriations

Appropriations available for operational rural development programmes

The payment appropriations included in the 2008 budget for the EAFRD programmes amount to EUR 9 396 700 000.00. Of this available amount, EUR 82 995 000.00 were transferred in November and December 2008 to increase budget lines 05.040201 and 05.040206 (programmes under EAGGF-Guidance Section for Objective 1 and Leader + for the programming period 2000-2006 respectively).

At the end of the year 2008, the use of payment appropriations amounted to EUR 8 538 840 673.98, which was used as follows:

Payments on account: | EUR 2 475 706 914.50 |

Reimbursements 4th quarter 2006 | EUR 21 697 817.73 |

Reimbursement 3rd quarter 2007 | EUR 116 058 716.24 |

Reimbursement 4th quarter 2007 | EUR 1 697 255 282.24 |

Reimbursement 1st quarter 2008 | EUR 1 120 239 109.02 |

Reimbursement 2nd quarter 2008 | EUR 1 303 099 545.58 |

Reimbursement 3rd quarter 2008 | EUR 1 804 783 288.67 |

Total use 2008 | EUR 8 538 840 673.98 |

The 2nd and 3rd quarter 2008 reimbursements for some programmes (see list below) were totally or partially pending at the end of the year due to the fact that the commitments for 2007 and 2008 for these programmes had already been fully used by the payments on account and previous reimbursements. The table below shows the situation of the programmes which have used up the commitment appropriations, and for which the payments have had to await the start of 2009 (in EUR):

EAFRD Programme – CCI No | Q2 2008 (2nd quarter) | Q3 2008 (3rd quarter) | Total |

Flanders (2007BE06RPO001) | 2 634 830.50 | 2 634 830.50 |

North Rhine-Westphalia (2007DE06RPO015) | 10 345 809.87 | 10 345 809.87 |

Aragon (2007ES06RPO002) | 12 299 213.27 | 16 291 566.28 | 28 590 779.54 |

Asturias (2007ES06RPO003) | 1 100 082.61 | 1 100 082.61 |

La Rioja (2007ES06RPO016) | 1 046 530.71 | 1 046 530.71 |

Ireland National (2007IE06RPO001) | 95 219 252.45 | 95 219 252.45 |

Total | 12 299 213.27 | 126 638 072.42 | 138 937 285.68 |

The difference between the total amount of the available payment appropriations and, the amount of payment appropriations used taken with the amount transferred to increase two lines for the previous programming period, was EUR 774 864 326.02. This amount represents financial under utilisation of 8.2% of the amount available in the budget. This under utilisation is mainly the result of the fact that the declaration of expenditure for the third quarter fell below the forecasts initially sent by the Member States. These appropriations have been carried over to the 2009 budget by means of Commission Decision SEC(2009) 164 of 13 February 2009 as C2 appropriations (appropriations not carried over automatically by means of a Commission decision and to be used before 31 December 2009).

The attached graph shows the monthly use of the payment appropriations during 2008. The rate of use is influenced by the dates on which the four payment declarations for the year are sent (31 January, 30 April, 31 July, 10 November for the declarations for Q4 2007, Q1 2008, Q2 2008 and Q3 2008 respectively).

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The table below states the amounts paid by the Commission during the calendar year 2008, by Member State, for the payments on account made and reimbursements of the expenditure incurred by the paying agencies during the periods from 16 October to 31 December 2007 (Q4 2007), from 1 January 2008 to 31 March 2008 (Q1 2008), from 1 April 2008 to 30 June 2008 (Q2 2008), from 1 July 2008 to 15 October 2008 (Q3 2008).

The amounts relating to Q4 2006, which refer to the expenditure declared by the Member States on the basis of the provisional provisions contained in Regulation (EC) No 1290/2005, are paid once the corresponding programmes are finally adopted by the Commission, which led to payments still being made in 2008. These payments relate to programmes which were not yet approved at the end of the 2007 year and which were subject to reassignment (Article 48 of the Interinstitutional Agreement) or the non-automatic carrying over of commitment appropriations from 2007 to 2008.

The amounts relating to Q3 2007 (incurred between 1 July 2007 and 15 October 2007) concern programmes which have exhausted their commitment appropriations for 2007 and were paid with the appropriations for the year 2008.

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For 2008, the total amount of reimbursements (interim payments) amounts to EUR 6 063 133 759.48 and the total amount for advance payments is EUR 2 475 706 914.50.

In terms of the change in comparison with 2007, the table below shows a very significant increase (+ 40.43%) of the payments made to the Member States. This increase is explained by the fact that the reimbursements have more than doubled in 2008 (+ 155.21%), whereas the amount of advance payments has decreased slightly (-33.18%). The reduction in advance payments results from the fact that more than half had already been paid in 2007. The strong growth in reimbursements in turn shows the progressive implementation of the rural development programmes in the Member States.

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Appropriations available for technical assistance

In the 2008 budget the amount initially available for this purpose was EUR 10 000 000.00 in payment appropriations. During the global transfer exercise for 2008 carried out by DG BUDG, a sum of EUR 2 000 000.00 was transferred to another budget line outside the perimeters of rural development. At the end of 2008, the use of payment appropriations amounted to EUR 3 455 471.11.

The following table shows the amounts paid by budget line, and the principle actions carried out, such as the creation of the European Network for rural development and the monitoring centre for rural areas.

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It should be noted that part of the payment appropriations used in 2008 for the budget line corresponding to the development of the SFC 2007 computer system (EUR 316 624) relate to commitments undertaken in the year 2007.

ANALYSIS BY EAFRD PRIORITY AND MEASURE OF THE AMOUNTS DECLARED BY THE PAYING AGENCIES OF THE MEMBER STATES

The table below shows the expenditure declared by the Member States by rural development measure in 2007 (from Q4 2006 to Q3 2007), in 2008 (from Q4 2007 to Q3 2008), and in comparison with the same expenditure since the start of the programmes (Q4 2006 to Q3 2008), and with the amounts shown in the financing plans for 2007-2013 (in millions of EUR). This comparison shows the extent to which the actual implementation in the field corresponds to the forecasts given in the programmes.

For the year 2008, it emerges that 21.3% of these amounts relate to expenditure for measures under Priority 1, 75.0% for measures under Priority 2, and 1.9% to measures under Priority 3. This profile shows significant discrepancies in comparison with the financial plan in force at the end of December 2008 for the whole period 2007-2013 (34% for Priority 1, 43.7% for Priority 2 and 13.4% for Priority 3).

This situation is explained for the most part by the nature of the measures under Priority 2, which are often paid either on the basis of contracts during the previous programming period, or by means of annual payments. However, the delay for Priorities 1 and 3 is explained by the fact that investment projects require a longer approval procedure (publication of conditions of approval, receipt of applications from potential beneficiaries, selection procedure, etc.), and for their implementation.

The balance between the Priorities provided for in the development strategy for each programme will be achieved gradually as the EAFRD programmes are implemented. Indeed, the comparison of the percentages for the year 2008 with those for 2007 already show a trend in this direction and, by way of example, Priority 2 fell from 81.6% of the declared expenditure in 2007 to 75.00% in 2008, whilst Priority 1 shows an opposite trend and increased from 16.0% in 2007 to 21.3% in 2008.

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RATE OF IMPLEMENTATION OF EAFRD PROGRAMMES (% OF EAFRD 2007 AND 2008 SUBSIDIES PAID BY THE COMMISSION) BY MEMBER STATE

The graph on the following page shows the level of EAFRD payments from the start of the programming period, including the amounts paid by the Member States for the last quarter of 2008 (and therefore reimbursed by the Commission under the 2009 budget), compared with subsidies for the years 2007 and 2008. This level is 71.7% across all of the EAFRD programmes.

The graph shows that all the programmes apart from four (Malta, Lithuania, Bulgaria and Latvia) had spent more than 50% of the cumulated amount of the appropriations for 2007 and 2008 at Member State level.

However, five countries (Ireland, France, Luxembourg, Austria and Belgium) have declared expenditure which exceeds the accumulated amount of the instalments for 2007 and 2008, an excess which has had to be borne by the annual commitment for 2009.

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