EUROPEAN COMMISSION

Brussels, 2.10.2025

COM(2025) 595 final

2025/0313(APP)

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 332/2002 as regards funding arrangements and the use of a diversified funding strategy

{SWD(2025) 286 final}

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

Council Regulation (EC) No 332/2002 1 , adopted on 18 February 2002, establishes a medium-term financial assistance facility enabling loans to be granted to one or more Member States that have not adopted the euro and are experiencing, or are seriously threatened with, difficulties in their balance of current payments or capital movements. The facility’s funding method set out in Regulation (EC) No 332/2002 is currently based on back-to-back financing. Under this funding method, the Commission conducts market operations based on the requirements of each specific lending situation, meaning each borrowing transaction by the Commission is directly linked to a disbursement need.

After the adoption of Regulation (EC) No 332/2002, the Commission has been authorised to implement a different funding method to fund programmes of financial assistance. Specifically, Article 224 of Regulation (EU, Euratom) 2024/2509 2  provides for the implementation of a diversified funding strategy. This method of funding allows the Commission to decouple the timing and the maturity of single funding transactions from the disbursements to beneficiaries. A common liquidity pool financed by the issuance of short-term funding enables the Commission to organise payments independently of the exact timing of the long-term bond issuance.

The diversified funding strategy offers several advantages over the back-to-back approach. First, it avoids the need to contract a fixed amount of EU borrowings on capital markets or from financial institutions in volatile or adverse conditions to fund programmes of financial assistance, allowing for payments to Union programme beneficiaries to be made independently of the market conditions prevailing at the time of the disbursement. Second, it enables the Commission to consolidate the financial needs of multiple assistance programmes, preventing individual programmes from competing for a limited pool of funding opportunities. This consolidation simplifies management of funding operations, reduces costs, and avoids the fragmentation of Union debt securities, thereby enhancing their liquidity. Consequently, the cost-effectiveness of financing for financial assistance programmes is enhanced, benefiting both the Union and the beneficiaries.

As the financial assistance available to Member States threatened with difficulties in their balance of current payments or capital movement under the facility is meant to be disbursed rapidly in order to restore financial stability, and as such assistance is often disbursed in volatile and adverse market conditions, funding arrangements for using the facility should be amended in light of the experience gained and the significant advantages of the diversified funding strategy compared to the back-to-back funding method. This amendment would also enable the Commission to further consolidate the financing of EU financial programmes by incorporating the facility's funding requirements into its general funding strategy.

Against this background, this proposal aims at introducing technical amendments to Regulation (EC) No 332/2002 in order to modify the funding arrangements for using the facility and specifically to provide for a diversified funding strategy.

The proposed amendments to Regulation (EC) No 332/2002 are consistent with the existing policy provisions in the policy area, considering the significant changes that have occurred in the regulatory landscape since its adoption in 2002. In particular, the European Financial Stabilisation Mechanism 3 , established in 2010 as an EU-wide instrument and broadly similar in its workings to the facility under Regulation (EC) No 332/2002, allowed borrowing operations in anticipation of later loan disbursements, departing from the Commission’s traditional back-to back financing. In addition, since 2022, the Commission has been authorised to implement a diversified funding method to fund programmes of financial assistance 4 . Specifically, Article 224 of Regulation (EU, Euratom) 2024/2509 provides for the implementation of a diversified funding strategy, except in duly justified cases, for the borrowing and debt management operations to fund programmes of financial assistance. 

The proposed amendments will contribute to the Commission’s simplification agenda aimed at boosting competitiveness and safeguarding economic, social and environmental goals by streamlining the process of funding for financial assistance programmes available under Regulation (EC) No 332/2002.

•Legal basis

•Ex-post evaluations/fitness checks of existing legislation

The proposed amendments focus on targeted changes to the existing regulation. The proposal does not have implications for the EU budget. For these reasons, no formal impact assessment was carried out.

•Regulatory fitness and simplification

•Fundamental rights

4.BUDGETARY IMPLICATIONS

•Implementation plans and monitoring, evaluation and reporting arrangements

The proposed amendments do not require measures to facilitate their implementation and do not pose implementation challenges for Member States.

Article 10 of the Regulation (EC) No 332/2002 requires that every three years the Council examines, on the basis of a report from the Commission and after the EFC has delivered an opinion, whether the facility established still meets, in its principle, arrangements and ceiling, the need which led to its creation. The last report from the Commission was published in 2024.

2025/0313 (APP)

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 332/2002 as regards funding arrangements and the use of a diversified funding strategy

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 352 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Parliament 9 ,

Having regard to the opinion of the European Central Bank 10 ,

Acting in accordance with a special legislative procedure,

Whereas:

(1)Council Regulation (EC) No 332/2002 11 establishes a medium-term financial assistance facility enabling loans to be granted to one or more Member States which have not adopted the euro and which are experiencing, or are seriously threatened with, difficulties in their balance of current payments or capital movements.

(2)After the adoption of Regulation (EC) No 332/2002, the Commission has been authorised to implement a funding method different to that currently provided for in Regulation (EC) No 332/2002 to fund programmes of financial assistance. Article 224 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and the Council 12   provides for the implementation of a diversified funding strategy. That method of funding allows the Commission to decouple the timing and the maturity of single funding transactions from the disbursements to beneficiaries. A common liquidity pool financed by the issuance of short-term funding enables the Commission to organise payments independently of the exact timing of the long-term bond issuance.

(3)The rules on the diversified funding strategy set out in Regulation (EU, Euratom) 2024/2509 do not apply to programmes of financial assistance for which the basic acts have entered into force on or before 9 November 2022. As Regulation (EC) No 332/2002 neither entered into force nor has been amended since that time, it needs to be amended to extend the application of the diversified funding strategy to that Regulation. The transition to a diversified funding strategy would further necessitate the removal of certain provisions from Regulation (EC) No 332/2002 to ensure the alignment of the legal framework with this funding method.

(4)The diversified funding strategy offers several advantages over the funding method under Regulation (EC) No 332/2002. Specifically, it avoids the need for the Commission to contract borrowings on capital markets or with financial institutions in volatile or adverse conditions to fund programmes of financial assistance. In addition, it enables the Commission to consolidate the financial needs of multiple financial assistance programme, thereby simplifying management of funding operations, reducing costs, and avoiding the fragmentation of Union debt securities.

(5)As medium-term financial assistance to Member States experiencing or seriously threatened with difficulties in their balance of current payments or capital movement under Regulation (EC) No 332/2002 is often disbursed in volatile and adverse market conditions, the funding arrangements for using the facility should be amended in light of the experience gained and the significant advantages of the diversified funding strategy compared to the back-to-back funding method.

(6)Loan agreements with Member States concluded after the entry into force of this amendment should contain a provision on early reimbursement to be exercised following a mutual agreement on the conditions.

(7)Regulation (EC) No 332/2002 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Amendments to Regulation (EC) No 332/2002

Regulation (EC) No 332/2002 is amended as follows:

(1) in Article 1, paragraph 2 is deleted;

(2) Article 7 is replaced by the following:

‘Article 7

1. In order to finance loans under the Union medium-term financial assistance facility, the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds on the capital markets or from financial institutions in accordance with Article 224 of Regulation (EU, Euratom) 2024/2509.

2. In addition to the elements laid down in Article 223(4) of Regulation (EU, Euratom) 2024/2509, loan agreements shall lay down the maximum loan amount, the availability period, the maximum duration of each disbursement of the loan and the detailed terms and conditions of the support.’

Article 2

Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE3

1.1.Title of the proposal/initiative3

1.2.Policy area(s) concerned3

1.3.Objective(s)3

1.3.1.General objective(s)3

1.3.2.Specific objective(s)3

1.3.3.Expected result(s) and impact3

1.3.4.Indicators of performance3

1.4.The proposal/initiative relates to:4

1.5.Grounds for the proposal/initiative4

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative4

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.4

1.5.3.Lessons learned from similar experiences in the past4

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments5

1.5.5.Assessment of the different available financing options, including scope for redeployment5

1.6.Duration of the proposal/initiative and of its financial impact6

1.7.Method(s) of budget implementation planned6

2.MANAGEMENT MEASURES8

2.1.Monitoring and reporting rules8

2.2.Management and control system(s)8

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed8

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them8

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure)8

2.3.Measures to prevent fraud and irregularities9

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE10

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected10

3.2.Estimated financial impact of the proposal on appropriations12

3.2.1.Summary of estimated impact on operational appropriations12

3.2.1.1.Appropriations from voted budget12

3.2.1.2.Appropriations from external assigned revenues17

3.2.2.Estimated output funded from operational appropriations22

3.2.3.Summary of estimated impact on administrative appropriations24

3.2.3.1. Appropriations from voted budget24

3.2.3.2.Appropriations from external assigned revenues24

3.2.3.3.Total appropriations24

3.2.4.Estimated requirements of human resources25

3.2.4.1.Financed from voted budget25

3.2.4.2.Financed from external assigned revenues26

3.2.4.3.Total requirements of human resources26

3.2.5.Overview of estimated impact on digital technology-related investments28

3.2.6.Compatibility with the current multiannual financial framework28

3.2.7.Third-party contributions28

3.3.Estimated impact on revenue29

4.Digital dimensions29

4.1.Requirements of digital relevance30

4.2.Data30

4.3.Digital solutions31

4.4.Interoperability assessment31

4.5.Measures to support digital implementation32

1.FRAMEWORK OF THE PROPOSAL/INITIATIVE 

1.1.Title of the proposal/initiative

1.2.Policy area(s) concerned 

1.3.Objective(s)

1.3.1.General objective(s)

1.3.2.Specific objective(s)

1.3.3.Expected result(s) and impact

1.3.4.Indicators of performance

1.4.The proposal/initiative relates to: 

 a new action 

 a new action following a pilot project / preparatory action 13  

 the extension of an existing action 

a merger or redirection of one or more actions towards another/a new action

1.5.Grounds for the proposal/initiative 

1.5.1.Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative

1.5.2.Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone.

1.5.3.Lessons learned from similar experiences in the past

1.5.4.Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments

1.5.5.Assessment of the different available financing options, including scope for redeployment

1.6.Duration of the proposal/initiative and of its financial impact

 limited duration

–    in effect from [DD/MM]YYYY to [DD/MM]YYYY

–    financial impact from YYYY to YYYY for commitment appropriations and from YYYY to YYYY for payment appropriations.

 unlimited duration

–Implementation with a start-up period from YYYY to YYYY,

–followed by full-scale operation.

1.7.Method(s) of budget implementation planned

 Direct management by the Commission

– by its departments, including by its staff in the Union delegations;

–    by the executive agencies

 Shared management with the Member States

 Indirect management by entrusting budget implementation tasks to:

– third countries or the bodies they have designated

– international organisations and their agencies (to be specified)

– the European Investment Bank and the European Investment Fund

– bodies referred to in Articles 70 and 71 of the Financial Regulation

– public law bodies

– bodies governed by private law with a public service mission to the extent that they are provided with adequate financial guarantees

– bodies governed by the private law of a Member State that are entrusted with the implementation of a public-private partnership and that are provided with adequate financial guarantees

– bodies or persons entrusted with the implementation of specific actions in the common foreign and security policy pursuant to Title V of the Treaty on European Union, and identified in the relevant basic act

–bodies established in a Member State, governed by the private law of a Member State or Union law and eligible to be entrusted, in accordance with sector-specific rules, with the implementation of Union funds or budgetary guarantees, to the extent that such bodies are controlled by public law bodies or by bodies governed by private law with a public service mission, and are provided with adequate financial guarantees in the form of joint and several liability by the controlling bodies or equivalent financial guarantees and which may be, for each action, limited to the maximum amount of the Union support.

Comments

2.MANAGEMENT MEASURES 

2.1.Monitoring and reporting rules 

2.2.Management and control system(s) 

2.2.1.Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed

The implementation of a diversified funding strategy in Regulation (EC) No 332/2002 is expected to streamline operations and reduce costs associated with managing a standalone funding programme for disbursements under the facility. By integrating funding operations with other Commission programmes, these changes will simplify and increase the efficiency of the Commission’s overall funding management. The use of a diversified funding strategy allows the flexible implementation of the funding programme while fully respecting the principles of budget neutrality and budgetary balances as set out in Article 310(1) TFEU. Finally, a risk, compliance and governance framework overseen by the Commission's Chief Risk Officer is in place for all Commission’s borrowing and lending operations.

2.2.2.Information concerning the risks identified and the internal control system(s) set up to mitigate them

2.2.3.Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure)

2.3.Measures to prevent fraud and irregularities 

3.ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 

3.1.Heading(s) of the multiannual financial framework and expenditure budget line(s) affected 

·Existing budget lines

In order of multiannual financial framework headings and budget lines.

·New budget lines requested

In order of multiannual financial framework headings and budget lines.

3.2.Estimated financial impact of the proposal on appropriations 

3.2.1.Summary of estimated impact on operational appropriations 

–The proposal/initiative does not require the use of operational appropriations

–    The proposal/initiative requires the use of operational appropriations, as explained below

3.2.1.1.Appropriations from voted budget

EUR million (to three decimal places)

3.2.2.Estimated output funded from operational appropriations (not to be completed for decentralised agencies)

Commitment appropriations in EUR million (to three decimal places)

3.2.3.Summary of estimated impact on administrative appropriations 

–The proposal/initiative does not require the use of appropriations of an administrative nature

–    The proposal/initiative requires the use of appropriations of an administrative nature, as explained below

3.2.3.1. Appropriations from voted budget

The appropriations required for human resources and other expenditure of an administrative nature will be met by appropriations from the DG that are already assigned to management of the action and/or have been redeployed within the DG, together, if necessary, with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the light of budgetary constraints.

3.2.4.Estimated requirements of human resources 

–The proposal/initiative does not require the use of human resources

–    The proposal/initiative requires the use of human resources, as explained below

3.2.4.1.Financed from voted budget

Estimate to be expressed in full-time equivalent units (FTEs)

The staff required to implement the proposal (in FTEs):

Description of tasks to be carried out by:

3.2.5.Overview of estimated impact on digital technology-related investments

3.2.6.Compatibility with the current multiannual financial framework 

The proposal/initiative:

–can be fully financed through redeployment within the relevant heading of the multiannual financial framework (MFF)

–    requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation

–    requires a revision of the MFF

3.2.7.Third-party contributions 

The proposal/initiative:

–does not provide for co-financing by third parties

–    provides for the co-financing by third parties estimated below:

Appropriations in EUR million (to three decimal places)

3.3.    Estimated impact on revenue 

–The proposal/initiative has no financial impact on revenue.

–    The proposal/initiative has the following financial impact:

–    on own resources

–    on other revenue

–    please indicate, if the revenue is assigned to expenditure lines

EUR million (to three decimal places)

For assigned revenue, specify the budget expenditure line(s) affected.

Other remarks (e.g. method/formula used for calculating the impact on revenue or any other information).

4.Digital dimensions

4.1.Requirements of digital relevance

4.2.Data

4.3.Digital solutions

4.4.Interoperability assessment

4.5.Measures to support digital implementation

(1)

   Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p. 1, ELI:  http://data.europa.eu/eli/reg/2002/332/oj ).

(2)    Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (recast) (OJ L, 2024/2509, 26.9.2024, ELI: http://data.europa.eu/eli/reg/2024/2509/oj ).

(3)    Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism (OJ L 118, 12.5.2010, p.1, ELI: http://data.europa.eu/eli/reg/2010/407/oj).

(4)    The diversified funding strategy as a general borrowing method was established by Regulation (EU, Euratom) 2022/2434 of the European Parliament and of the Council of 6 December 2022 amending Regulation (EU, Euratom) 2018/1046 as regards the establishment of a diversified funding strategy as a general borrowing method (OJ L 319, 13.12.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/2434/oj).  

(5)    COM(2024) 41 final, 29.1.2024.

(6)    Regulation (EU, Euratom) 2022/2434 of the European Parliament and of the Council of 6 December 2022 amending Regulation (EU, Euratom) 2018/1046 as regards the establishment of a diversified funding strategy as a general borrowing method, no longer in force, replaced by Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union.

(7)    EFC opinion on the Facility Providing Medium-Term Financial Assistance to Member States' balance of payments pursuant to Council Regulation (EC) No 332/2002, 25 March 2024, ecfin.cef.cpe (2024)1688523.

(8)    Council conclusions on the Union's facility providing medium-term financial assistance for Member States' balances of payments pursuant to Council Regulation (EC) No 332/2002, approved by Coreper, Part 2, on 10 April 2024, 8300/24, 8302/24 ECOFIN.

(9)    OJ C , , p. .

(10)    OJ C , , p. .

(11)    Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p. 1, ELI:  http://data.europa.eu/eli/reg/2002/332/oj ).

(12)    Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (recast) (OJ L, 2024/2509, 26.9.2024, ELI: http://data.europa.eu/eli/reg/2024/2509/oj ).

(13)    As referred to in Article 58(2), point (a) or (b) of the Financial Regulation.

(14)    COM(2023) 461 final.

(15)    Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.

(16)    EFTA: European Free Trade Association.

(17)    Candidate countries and, where applicable, potential candidates from the Western Balkans.

(18)    Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.).

(19)    As described in Section 1.3.2. ‘Specific objective(s)’

(20)    As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 20% for collection costs.