Explanatory Memorandum to COM(2024)80 - Amending budget N° 1 to the budget 2024 Amendments of the 2024 budget required due to the MFF revision - Main contents
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| dossier | COM(2024)80 - Amending budget N° 1 to the budget 2024 Amendments of the 2024 budget required due to the MFF revision. |
|---|---|
| source | COM(2024)80 |
| date | 29-02-2024 |
1. INTRODUCTION
The purpose of Draft Amending Budget No 1 for the year 2024 (DAB 1) is to introduce the necessary changes to the 2024 budget stemming from the revision of the Multiannual Financial Framework.
The revision of the MFF Regulation applies retroactively as of 1st January 2024 and includes inter alia amendments to the MFF ceilings that have been communicated in the updated technical adjustment of the MFF for 2024 in the form of a Commission Communication adopted on 29 February 20246, as foreseen in Article 4(1) of the MFF Regulation.
Contents
- In order to reflect the impact of the MFF revision on the financial year 2024, DAB 1 covers the following elements:
- To reflect these changes, the 4 current sublines under line 30 04 01 will be deleted as follows:
- The current line 30 04 01 will be split into two lines corresponding to the two new instruments with the corresponding level of annual amounts of commitment and payment appropriations, as follows:
In order to reflect the impact of the MFF revision on the financial year 2024, DAB 1 covers the following elements:
- Creation of the budget nomenclature and remarks to cater for the Ukraine Facility7, and mobilisation of the new special instrument, the Ukrainian Reserve, with an amount of EUR 4,8 billion of commitment appropriations and EUR 3,8 billion of payment appropriations for the Union’s support other than in the form of loans, including administrative support. in line with the MFF regulation;
- Reinforcement of the European Defence Fund within the framework of the Strategic Technologies for Europe Platform (STEP)8 by EUR 376 million in commitment appropriations;
- Adjustment to the budget nomenclature in order to split the Solidarity and Emergency Aid Reserve in two separate instruments and to increase the amounts for each instrument;
- Creation of the budget nomenclature and remarks to cater for the Reform and Growth Facility for the Western Balkans, with an amount of EUR 501 million in commitment appropriations in reserve and EUR 23,9 million in payment appropriations, in reserve pending the adoption of the legal basis;
- Reduction of the level of commitment appropriations of the reserve for the European Globalisation Adjustment Fund for Displaced Workers (EGF) by EUR 175,7 million in 2024.
Additionally, DAB 1 includes an adjustment to the budget remarks of the budget line for support expenditure of the Digital Europe Programme following the political agreement reached in December 2023 by the European Parliament and the Council on the establishment of the Artificial Intelligence Office.
Overall, the net impact of DAB 1 on expenditure amounts to an increase of EUR 5 833,7 million in commitment appropriations and an increase of EUR 4 143,6 million in payment appropriations.
2. ADJUSTMENTS STEMMING FROM THE MFF REVISION
1. UKRAINE FACILITY
The revised Multiannual Financial Framework Regulation creates a new special instrument – the Ukraine Reserve - for the period 2024-2027 for the sole purpose of financing the new Ukraine Facility. The latter aims to support Ukraine's efforts to sustain macro-financial stability, support reconstruction as well as modernise the country whilst implementing key reforms on its EU accession track. The Facility is designed as a flexible instrument adapted to the unprecedented challenges of supporting a country at war and ensuring predictability, transparency, and accountability of the funds.
The Commission therefore proposes to make the necessary adjustments to the budget nomenclature and budget remarks and proposes to mobilise the Ukraine facility in this DAB. This includes creating eight new budget lines for which the corresponding budget remarks are set out in the budgetary annex. It is proposed to mobilise an amount of EUR 4 767,5 million of commitment appropriations and EUR 3 754,8 million of payment appropriations. Out of this amount, EUR 38,6 million is proposed to be used for technical and administrative support expenditure, which will also be used to finance external personnel, in line with the corresponding legislative financial statement.
| EUR | |||
| Budget line | Name | Commitment appropriations | Payment appropriations |
| Section III – Commission | |||
| 16 01 06 | Support Expenditure for the Ukraine Facility | 38 612 000 | 38 612 000 |
| 16 04 06 | Ukraine Facility | p.m. | p.m. |
| 16 06 01 | Pillar I: Ukraine Plan | 3 000 000 000 | 3 000 000 000 |
| 16 06 02 01 | Provisioning of the Common Provisioning Fund | 819 000 000 | 200 000 000 |
| 16 06 02 02 | Other actions under the Ukraine Investment Framework | 527 065 000 | 210 826 000 |
| 16 06 03 01 | Union accession assistance and other measures | 155 000 000 | 77 500 000 |
| 16 06 03 02 | Borrowing costs subsidy | 195 333 904 | 195 333 904 |
| 16 06 03 03 | Provisioning of the Common Provisionning Fund - Legacy | 32 533 128 | 32 533 128 |
| Total | 4 767 544 032 | 3 754 805 032 |
2. EUROPEAN DEFENCE FUND (EDF) WITHIN THE STRATEGIC TECHNOLOGIES FOR EUROPE PLATFORM (STEP)
In order to boost the defence investment capacity contributing to the STEP objectives, the revision of the Multiannual Financial Framework includes an increase of EUR 1,5 billion for the remainder of the MFF, for which an increase of EUR 376 million of commitment appropriations in 2024 is proposed, split between both strands of the programme (i.e. defence research, and capability development) in line with the legislative amendment presented in the proposal for a STEP Regulation9. Considering expected budgetary implementation, there is no need for additional payment appropriations in 2024.
| EUR | |||
| Budget line | Name | Commitment appropriations | Payment appropriations |
| Section III – Commission | |||
| 13 02 01 | Capability development | 250 667 000 | p.m. |
| 13 03 01 | Defence Research | 125 333 000 | p.m. |
| Total | 376 000 000 | p.m. |
3. EUROPEAN SOLIDARITY RESERVE AND EMERGENCY AID RESERVE
Following the revision of the Multiannual Financial Framework and in the light of the increased number of natural disasters and humanitarian crises and in order to avoid competing priorities, the Solidary and Emergency Aid Reserve (SEAR) has been split in two separate instruments retroactively as of 1st January 2024: the European Solidarity Reserve (ESR) and the Emergency Aid Reserve (EAR) as follows:
- the European Solidarity Reserve with an annual amount of EUR 1 016 million (in 2018 prices, corresponding to EUR 1 144,2 million in 2024 prices) for assistance to respond to emergency situations covered by the European Union Solidarity Fund (EUSF);
- the Emergency Aid Reserve with an annual amount of EUR 508 million (in 2018 prices, corresponding to EUR 572,1 million in 2024 prices) for rapid responses to specific emergency needs within the Union or in third countries.
| Budget line | Name | Commitment appropriations | Payment appropriations |
| Section III – Commission | |||
| 30 04 01 01 | Internal (excluding EUSF) | -152 031 938 | -152 031 938 |
| 30 04 01 02 | EUSF | -456 773 125 | -456 773 125 |
| 30 04 01 03 | External | -354 741 188 | -354 741 188 |
| 30 04 01 04 | End-of-Year Cushion (25%) | -337 848 750 | -337 848 750 |
| Total | -1 301 395 001 | -1 301 395 001 |
The current line 30 04 01 will be split into two lines corresponding to the two new instruments with the corresponding level of annual amounts of commitment and payment appropriations, as follows:
| Budget line | Name | Commitment appropriations | Payment appropriations |
| Section III – Commission | |||
| 30 04 01 01 | European Solidarity Reserve | 1 094 181 018 | 1 094 181 018 |
| 30 04 01 02 | Emergency Aid Reserve | 572 090 509 | 572 090 509 |
| Total | 1 666 271 527 | 1 666 271 527 |
In accordance with Article 4a (4) of Council Regulation (EC) 2012/200210, an amount of commitment and payment appropriations of EUR 50,0 million has been already mobilised in commitment and payment appropriations from the European Solidarity Reserve and entered into the 2024 budget for the EUSF under budget article 16 02 01, in order to ensure the timely availability of sufficient budgetary resources for EUSF advance payments.
The corresponding budget remarks are set out in the budgetary annex.
4. REFORM AND GROWTH FACILITY FOR THE WESTERN BALKANS
The revision of the Multiannual Financial Framework includes the additional allocation for Western Balkans, which will be implemented through a new Reform and Growth Facility for the Western Balkans. The new Instrument will serve as the centrepiece of the Growth Plan for the Western Balkans by significantly increasing financial assistance based on an ambitious reform agenda focusing on necessary socioeconomic reforms coupled with fundamental reforms, including rule of law and targeted investments.
The Commission therefore proposes to make the necessary adjustments to the budget nomenclature, budget remarks and level of appropriations in this DAB 1. This includes creating three new budget lines for which the corresponding budget remarks are set out in the budgetary annex. Additionally, it is proposed to include and allocate an amount of EUR 501 million of commitment appropriations and 23,9 million of payment appropriations, in line with the legislative financial statement attached to the proposal for the Reform and Growth Facility for the Western Balkans Regulation11. Also, the amount of EUR 7,5 million proposed for technical and administrative support expenditure will also be used to finance external personnel. The amounts will be placed in reserve pending the adoption of the legal base.
| EUR | |||
| Budget line | Name | Commitment appropriations | Payment appropriations |
| Section III – Commission | |||
| 15 01 02 | Support expenditure for the Reform and Growth Facility for the Western Balkans | p.m. | p.m. |
| 15 03 01 | Reform and Growth Facility for Western Balkans – Operational expenditure | p.m. | p.m. |
| 15 03 02 | Reform and Growth Facility for Western Balkans – Provisioning of the Common Provisioning Fund | p.m. | p.m. |
| 30 02 01 | Non-differentiated appropriations (Reserve for budget article 15 01 02) | 7 450 000 | 7 450 000 |
| 30 02 02 | Differentiated appropriations (Reserve for budget article 15 03 01) | 403 550 000 | p.m. |
| 30 02 02 | Differentiated appropriations (Reserve for budget article 15 03 02) | 90 000 000 | 16 443 000 |
| Total | 501 000 000 | 23 893 000 |
5. EUROPEAN GLOBALISATION ADJUSTMENT FUND
The revision of the Multiannual Financial Framework foresees a reduction of the annual allocation of EGF for the period 2024-27, which shall not exceed a maximum amount of EUR 30 million (in 2018 prices, corresponding to EUR 33,8 million in 2024 prices). Consequently, a reduction of commitment appropriations in 2024 by EUR 175,7 million is proposed.
3. ADJUSTMENTS STEMMING FROM THE POLITICAL AGREEMENT ON THE ARTIFICIAL INTELLIGENCE ACT (AI OFFICE)
The initial Commission proposal for the Artificial Intelligence (AI) Act12 was based on entirely national implementation, with only a minimal coordination role at European level. Accordingly, it included a staffing estimation of 10 officials and temporary staff at EU level, including the staff for the European Data Protector Supervisor (EDPS) as data controller for all AI applications launched by the European institutions.
However, the political agreement reached by the European Parliament and the Council in December 2023 on the establishment of the Artificial Intelligence Office is based on a completely different European coordination mechanism, with a vastly larger set of tasks and responsibilities. Therefore, considerably increased staffing levels are required to be able to effectively deliver on those tasks. The increased costs for the initiative to finance the external personnel and IT costs will have to be financed from the Digital Europe Programme, whereas the permanent establishment plan posts will be redeployed within the Commission and financed under heading 7.
On 9 January 2024 the Commission transmitted a revised Legislative Financial Statement to the European Parliament and the Council, which sets out the budgetary impact of the new governance model covering the period 2024-2027.
As regards staffing, the Commission was fully ready to address the initial staffing needs of up to ten posts under the intitially proposed model by reallocation and reprioritisation of resources within the institution, in line with the policy of stable staffing which the Commission has implemented since the start of the current MFF. However, at full cruising speed an estimated 100 staff will be needed to ensure the implementation of the agreed centralised model, of which 20 posts and 80 external staff as from 2025. Also given that the Commission has met the needs of other priority areas within its stable staffing policy over the past years, it is not possible to find such large staff numbers by redeployment, without jeopardising other critical ongoing activities. That is why the Commission issued a unilateral statement on the financing of human resources for the Artificial Intelligence Act in December 2023:
The Commission recalls that the final agreement reached by the co-legislators on the proposal for a Regulation laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) has evolved significantly. It is much more extensive than the Commission initial proposal, entrusting many additional tasks and an additional enforcement role to the AI Office. As a consequence, it requires much more staff and resources, compared to the initial quantification made in the legislative financial statement which accompanied the original proposal, which was based on a national implementation, with only a minimal coordination role at European level.
The additional Commission human resources required by the final agreement endorsed by the co-legislators will not allow the Commission to respect the principle of stable staffing and will require additional resources, to be authorised by the European Parliament and the Council during the annual budgetary procedure along with the related budgetary appropriations.
Without any additional means, the options to finance the necessary administrative costs for staff of the Artificial Intelligence Office cannot be found. Heading 7 European Public Administration of the multiannual financial framework 2021-2027 was built on the principle of stable staffing, and there is no margin to finance additional officials and external staff. The Commission will internally redeploy the officials required for this initiative. However, for the additional staff needed, the new budget line to be created under the Digital Europe Programme will be used to finance them beyond the limit of the principle of stable staffing.
It is against this background that the Commission proposes in DAB 1 to adjust the budget remarks of the support expenditure for the Digital Europe Programme to allow recruiting staff and paying them from the corresponding budget line (02 01 30 01 – Support expenditure for the Digital Europe Programme).
The corresponding changes are set out in the budgetary annex.
4. FINANCING
Overall, the net impact of DAB 1 on expenditure amounts to an increase of EUR 5 833,7 million in commitment appropriations and EUR 4 143,6 million of payment appropriations.
5. SUMMARY TABLE BY MFF HEADING
| In EUR | |||||||
| Budget 2024 | Draft Amending Budget 1/2024 | Budget 2024 (incl. DAB 1/2024) | |||||
| CA | PA | CA | PA | CA | PA | ||
| 1 | Single Market, Innovation and Digital | 21 493 372 990 | 20 827 967 003 | 21 493 372 990 | 20 827 967 003 | ||
| Of which under Flexibility Instrument | |||||||
| Ceiling | 21 598 000 000 | 21 598 000 000 | |||||
| Margin | 104 627 013 | 104 627 013 | |||||
| 2 | Cohesion, Resilience and Values | 74 560 690 949 | 33 715 996 204 | 74 560 690 949 | 33 715 996 204 | ||
| Of which under Flexibility Instrument | 1 289 495 333 | 1 289 495 333 | |||||
| Of which under Single Margin Instrument 11(1)(a) | |||||||
| Ceiling | 73 289 000 000 | 73 289 000 000 | |||||
| Margin | 17 804 384 | 17 804 384 | |||||
| 2a. | Economic, social and territorial cohesion | 64 665 195 616 | 24 155 654 152 | 64 665 195 616 | 24 155 654 152 | ||
| Of which under Flexibility Instrument | |||||||
| Ceiling | 64 683 000 000 | 64 683 000 000 | |||||
| Margin | 17 804 384 | 17 804 384 | |||||
| 2b. | Resilience and values | 9 895 495 333 | 9 560 342 052 | 9 895 495 333 | 9 560 342 052 | ||
| Of which under Flexibility Instrument | 1 289 495 333 | 1 289 495 333 | |||||
| Of which under Single Margin Instrument 11(1)(a) | |||||||
| Ceiling | 8 606 000 000 | 8 606 000 000 | |||||
| Margin | |||||||
| 3 | Natural Resources and Environment | 57 338 630 839 | 54 151 402 941 | 57 338 630 839 | 54 151 402 941 | ||
| Of which under Flexibility Instrument | |||||||
| Ceiling | 57 449 000 000 | 57 449 000 000 | |||||
| Margin | 110 369 161 | 110 369 161 | |||||
| Of which: Market related expenditure and direct payments | 40 517 278 000 | 40 505 482 213 | 40 517 278 000 | 40 505 482 213 | |||
| EAGF sub-ceiling | 41 649 000 000 | 41 649 000 000 | |||||
| Rounding difference excluded for calculating the sub-margin | 722 000 | 722 000 | |||||
| Net transfers between EAGF and EAFRD | -1 046 000 000 | -1 046 000 000 | |||||
| Net balance available for EAGF expenditure (sub-ceiling corrected by transfers between EAGF and EAFRD) | 40 603 000 000 | 40 603 000 000 | |||||
| EAGF sub-margin | 85 722 000 | 85 722 000 | |||||
| 4 | Migration and Border Management | 3 892 705 671 | 3 248 967 443 | 3 892 705 671 | 3 248 967 443 | ||
| Of which under Flexibility Instrument | |||||||
| Ceiling | 4 020 000 000 | 4 020 000 000 | |||||
| Margin | 127 294 329 | 127 294 329 | |||||
| 5 | Security and Defence | 2 321 177 926 | 2 035 413 531 | 376 000 000 | 2 697 177 926 | 2 035 413 531 | |
| Of which under Flexibility Instrument | 317 177 926 | 317 177 926 | |||||
| Of which under Single Margin Instrument 11(1)(a) | |||||||
| Ceiling | 2 004 000 000 | 376 000 000 | 2 380 000 000 | ||||
| Margin | |||||||
| 6 | Neighbourhood and the World | 16 230 000 000 | 15 291 157 313 | 501 000 000 | 23 893 000 | 16 731 000 000 | 15 315 050 313 |
| Of which under Flexibility Instrument | 28 828 204 | 28 828 204 | |||||
| Of which under Single Margin Instrument 11(1)(a) | 371 171 796 | 371 171 796 | |||||
| Ceiling | 15 830 000 000 | 501 000 000 | 16 331 000 000 | ||||
| Margin | |||||||
| 7 | European Public Administration | 11 988 000 603 | 11 988 000 603 | 11 988 000 603 | 11 988 000 603 | ||
| Of which under Flexibility Instrument | |||||||
| Of which under Single Margin Instrument 11(1)(a) | 215 000 603 | 215 000 603 | |||||
| Ceiling | 11 773 000 000 | 11 773 000 000 | |||||
| Margin | |||||||
| of which: Administrative expenditure of the institutions | 9 175 375 841 | 9 175 375 841 | 9 175 375 841 | 9 175 375 841 | |||
| Sub-ceiling | 9 006 000 000 | 9 006 000 000 | |||||
| Sub-margin | |||||||
| Appropriations for headings | 187 824 578 975 | 141 258 905 038 | 877 000 000 | 23 893 000 | 188 701 578 975 | 141 282 798 038 | |
| Ceiling | 185 963 000 000 | 170 543 000 000 | 877 000 000 | 186 840 000 000 | 170 543 000 000 | ||
| Of which under Flexibility Instrument | 1 635 501 463 | 1 734 392 297 | 1 635 501 463 | 1 734 392 297 | |||
| Of which under Single Margin Instrument 11(1)(a) | 586 172 399 | 586 172 399 | |||||
| Margin | 360 094 887 | 31 018 487 259 | -23 893 000 | 360 094 887 | 30 994 594 259 | ||
| Thematic special instruments | 1 560 861 211 | 1 371 395 001 | 4 956 739 221 | 4 119 681 558 | 6 517 600 432 | 5 491 076 559 | |
| Total appropriations | 189 385 440 186 | 142 630 300 039 | 5 833 739 221 | 4 143 574 558 | 195 219 179 407 | 146 773 874 597 |
1 Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom, OJ L 424, 15.12.2020.
2 Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027, OJ L 433I , 22.12.2020, p. 11.
3 Council Regulation (EU, Euratom) 2024/765 of 29 February 2024 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027, OJ L, 2024/765, 29.02.2024.
4 Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, OJ L 193, 30.7.2018.
5 OJ L, 2024/207, 22.2.2024.
6 COM(2024) 110 final
7 Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine Facility, OJ L, 2024/792, 29.02.2024.
8 Regulation (EU) 2024/795 of the European Parliament and of the Council of 29 February 2024 establishing the Strategic Technologies for Europe Platform (STEP), and amending Directive 2003/87/EC and Regulations (EU) 2021/1058, (EU) 2021/1056, (EU) 2021/1057, (EU) No 1303/2013, (EU) No 223/2014, (EU) 2021/1060, (EU) 2021/523, (EU) 2021/695, (EU) 2021/697 and (EU) 2021/241, OJ L, 2024/795, 29.02.2024.
9 COM(2023) 335 final
10 Council regulation (EC) No 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund (OJ L 311, 14.11.2002, p.
3), as last amended by Regulation (EU) 2020/461 of the European Parliament and of the Council of 30 March 2020 (OJ L 99, 31.3.2020, p.
9).
11 COM(2023) 692 final
12 COM(2021) 206 final
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