2021 EU Budget: Performance report highlights key role in supporting EU recovery and advancing key EU priorities

(Source: European Commission)

In challenging times, the EU budget, supplemented by the NextGenerationEU recovery instrument, continued to deliver for EU citizens, in full respect of the highest standards of financial management. Today the Commission presents the Annual Management and Performance Report for the EU budget for the 2021 financial year, through which the Commission takes overall political responsibility for the management of the previous year’s EU budget.

Johannes Hahn, Commissioner in charge of the EU Budget and Administration, said: “The EU budget has played a key role in the EU’s comprehensive response to another extremely challenging year. We have continued to support the EU economic recovery, while continuing to deliver added value to EU citizens, business and communities. The successful launch of the Recovery and Resilience Facility is going to provide an even stronger impetus to the green and digital transitions.”

Good results in challenging environment

The report shows that last year, EU funds continued to play a critical role in the EU’s response to the coronavirus pandemic and its consequences. Key projects included financing of the introduction of the digital Covid-19 certificate, the procurement of healthcare-related material, assistance for medical personnel and operational support for mobile medical-response capacities and the purchase of vaccines for lower-income countries.

The report highlights the high level of flexibility shown by the Commission in managing the budget to address challenges as they materialise – something the Commission is continuing to do also in the changing geopolitical environment.

In 2021, the Commission started borrowing for the recovery via NextGenerationEU, and made the first disbursements on the basis of the approved Recovery and Resilience Plans.

Green and digital commitment

The Recovery and Resilience plans approved in 2021 provide allocations for climate and digital policies, which are both higher than the targets foreseen by EU law, in an expression of the EU’s true commitment to the green and digital transformation.

Overall, 34.6% of the combined EU budget and NextGenerationEU or EUR 146 billion was spent on the fight against climate change in 2021. That means that in 2021 only, the EU budget has already spent two thirds of the amount reached overall in the period 2014-2020. It also puts the EU on a good start towards reaching the overall target for the years between 2021 and 2027.

EU budget protection

These results were achieved while ensuring the EU budget has been well-protected against fraud and irregularities, in the interest of taxpayers. Measures to protect the budget include a strong internal control framework, a constant monitoring of the risks (in particular those related to the coronavirus crisis) and well-established multiannual control strategies which help to prevent, detect and correct errors as well as identify areas for improvements.

As a result of the controls in place, the risk of errors when paying out funds to our partners and beneficiaries is estimated at 1.9% of the overall expenditure. This is below the 2% materiality threshold, as applied by the European Court of Auditors. Many of these errors, estimated to correspond to 1.1% of the overall expenditure, will be corrected before the programmes are closed. This leaves us with a risk for actual errors of 0.8% of the overall expenditure at the end of the programmes’ lifecycle.

Background

Annual Management and Performance Report (AMPR)

Through the Annual Management and Performance Report, the Commission takes overall political responsibility for the management of the previous’ year EU budget. It is foreseen by Article 318 TFEU and Article 247 of the Financial Regulation, and is part of the Integrated Financial and Accountability Reporting (IFAR) package, which the Commission submits in support of its request for discharge to the European Parliament. The discharge is the procedure through which the European Parliament evaluates the implementation of the EU Budget by the Commission.

The Annual Management and Performance Report is based on:

  1. Annual Activity Reports
  2. Programme Statements accompanying the draft budget
  3. Evaluations of EU programmes
  4. Work of the Internal Auditor
  5. Work of the Audit Progress Committee
  6. Work of the European Court of Auditors

The Commission is publishing the Annual Management and Performance Report on the implementation of the 2021 budget at the same time as the Draft Budget for 2023. This provides stakeholders with one comprehensive set of performance information, consistent across both the draft budget and the discharge procedures. The Commission thus emphasizes its focus on performance and the role of performance information in budgetary planning.

In addition to the main report, which is very concise to maximize accessibility and readership, the annexes provide valuable additional information. In particular:

  • Annex 1, “Horizontal Priorities”, presents a high-level summary of the performance of the EU budget in 2021 vis-à-vis the key priorities of the Commission;
  • Annex 2, “Internal Controls and Financial Management”, describes how the Commission protected EU resources despite the challenges brought about by the coronavirus pandemic;
  • Anne 3, “The Recovery and Resilience Facility” describes this new performance-based instrument at the service of the EU recovery and its main achievements so far;
  • Annex 4, “Programme Performance Overview” includes short and reader-friendly performance fiches for each EU spending programme.
  • Other technical annexes, presenting notably detailed control results and the preventive and corrective actions taken in 2021.
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