1. MFF mid-term revision Prospects for the EU budget for the second half of MFF
Jacek Dominik
European Parliament
Committee on budgets
Public hearing
17 March 2016

2. Outline Review or Revision (article 2 of MFF Reg.)
Article 2 - Mid-term review/revision of the MFF
By the end of 2016 at the latest, the Commission shall present a review of the functioning of the MFF taking full account of the economic situation at that time as well as the latest macroeconomic projections. This compulsory review shall, as appropriate, be accompanied by a legislative proposal for the revision of this Regulation in accordance with the procedures set out in the TFEU. Without prejudice to Article 7 of this Regulation, preallocated national envelopes shall not be reduced through such a revision
Duration of MFF (5 or 5+5 or 7 years)
Revenues
Expenditures
Backlog, RAL, Flexibility

3. Revenues New OR – but the same ceiling
Can it solve the problem of the under-funding of the EU budget?
Bigger visibility for EU citizens – bigger support for the European integration?
Rabates – can we get rid of them by introducing genuine own resources?

4. Expenditures Challenges: Growth and jobs – Investments Migrations
Security
Energy and Climate
etc
Tools
Financial instruments
MFF :
Cellings (in comparison with )
Conditionalities
Cohesion policy

6. Expenditures - Conditionalities
Performance improvements in the new MFF :
Higher amounts in key growth and competitiveness areas
Multiple objectives: example climate mainstreaming
Higher leverage for EU money
Reinforced link to economic governance
Programme performance framework + performance reserve
Simplified delivery system

7. Financial Instruments
In this MFF we can see shift from grant financing towards greater use of financial instruments
There are natural constrains to go further along this path.
Commission cannot be turned into the giant banker (this could crowed out private financial system).
Financial instruments can be applied only to revenue generating projects. There are plenty of areas where the EU projects contribute to economic development or wider societal goals, for instance training to young unemployed, but where generating financial returns is impossible or impractical

8. Flexibility We need increased room for maneuver
but not at the expense of EU budget’s
predictability and legal certainty
It’s been only 2 years since current MFF’s
startup – it is too early for another
rearrangement and transfers between budget
headings
„Satelite instruments” outside EU budget (e.g. Turkey Facility) as a consequence of lack of appropriations and time constraints

9. Not sufficient payment appropriations in adopted budgets
After temporary decline backlog in years is expected to mount up (from 2018) as a consequence of n+3 rule in Cohesion Policy
Flexibility instruments (e.g. Contingency Margin) are already nearly fully exhausted

10. Mainly (more than 90%) in Cohesion Policy
The backlog of outstanding payment claims at year-end for the Cohesion Policy programmes (EUR billion)
Amending Budgets (not only in Cohesion)
‚fresh money’ – more than 20 bln EUR:
2012 – 7,5 bln EUR
2013 – 11,2 bln EUR
2014 – 3,5 bln EUR

11. RAL
After artificial decrease in RAL at the end of 2014, its level increased significantly in 2015 as a natural consequence of the full implementation of EUR 32 billion of differentiated commitment appropriations, either reprogrammed or carried over from 2014.
In 2016, due to a difference of over EUR 10 billion between budgeted commitment and payment appropriations, a further increase of RAL is expected.

12. RAL
RAL end of 2003 – 102 bln EUR

13. EU funds have continued to play a key role in a number of Member States. In Bulgaria, the Czech Republic, Estonia, Croatia, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovenia and Slovakia, EU funds account for a large share of investment
Positive, countercyclical impact on MS
economies
Contributes to achievement of Europe2020 goals
Increasing role in economic governance,
macro-economic conditionalities
Links with CSRs

19. European Added Value
Definition – what is EAV – No usiversal definition
How to measure? Different attitude
Limitations
Centralised vs shared implementation – more contitionality in shared management

20. Thank you