Annual report on the EU budget for 2023.

The European Court of Auditors (ECA) has published its annual report on the EU budget for 2023. In its opinion, it gave a positive assessment of the EU’s annual financial report. According to the prepared document, among other things, the 2023 EU budget made investments worth 159 billion euros (38 percent of total spending) in the area of climate action. Thus, carbon dioxide pollution of our environment was reduced by about 87 million tons per year.

ECA report and its significance

Each year, the European Court of Auditors audits the income and expenditures of the EU budget and provides its opinion on the extent to which the annual accounts are reliable and whether income and expenditures are implemented in accordance with the rules. On the basis of the audit, it issues a statement of assurance, which it is required to present to the European Parliament and the European Council.

The publication of the ECA’s annual report and the submission of the Integrated Financial and Accountability Reporting (IFAR) package to the European Parliament give rise to the annual budget discharge procedure to take stock of its management and summarize the activities implemented.

The IFAR package includes five Commission reports that provide a comprehensive overview of how the EU budget is used. These reports are key to ensuring transparency and accountability from the perspective of how taxpayers’ money is used.

In the discharge procedure, the European Parliament takes into account the IFAR package, the ECA’s annual report and any relevant special reports, and then decides whether to grant, delay or refuse discharge of the budget.

Annual report on the EU budget for 2023. – highlights

In 2023. total spending from the EU budget reached €191.2 billion. After taking into account spending from funds allocated to the Reconstruction and Resilience Facility (€48 billion), payments made by the EU in 2023 totaled €239.2 billion.

The Reconstruction and Resilience Facility (RRF) – the centerpiece of NextGenerationEU (NGEU) – has provided member states with funds earmarked for more than 700 milestones and targets in 2023, including in connection with 22 growth-enhancing reforms implemented in line with country-specific recommendations. In addition, the introduction of NGEU Green Bonds, which raised 49 billion euros by the end of 2023, strengthened climate finance and expanded the EU’s market for sustainable financing.

The current budget, which covers 2021-2027, has allocated nearly €15 billion through 2023 for the development of high-speed broadband and 5G networks, improving digital connectivity and offering citizens and businesses better access to the digital single market.

In 2023. four member states received more than 755 million euros from the European Union Solidarity Fund to support reconstruction and rehabilitation – a tangible demonstration of the EU’s solidarity with citizens affected by natural disasters.

In support of Ukraine in its struggle against the war until the end of 2023. The EU and its member states have provided Ukraine and its people with nearly €85 billion in aid. This amount included the disbursement of €18 billion in highly concessional loans, part of an unprecedented package of support implemented through the MFA plus facility.

In addition, the European Commission has allocated 2.4 billion euros for humanitarian aid, including quadrupling support for Palestinians affected by hostilities in the Middle East. A total of more than 100 million euros has been allocated for them.

Every year, the European Parliament and the Council agree on the EU’s general budget in the context of the Multiannual Financial Framework (currently the MFF for 2021-2027). We wrote about the arrangements for next year in a previous article: EU Budget 2024.

EU financial report 2023. – ECA conclusions

The ECA approved the financial statements because it found them to be reliable (issued an unqualified opinion), as it did for all fiscal years from 2007 onward. The Court concluded that the 2023 financial statements present fairly, in all material respects, the Union’s financial position and results for the year under review, as well as its cash flows and changes in net assets.

The auditors found that there was no material error in revenue. Regarding expenditures, the Court issued two separate opinions: on the EU budget and on the Reconstruction and Resilience Facility (RRF), the main pillar of the EU’s Next Generation EU (NGEU) pandemic recovery package. The estimated error rate in EU budget spending was 5.6 percent, a significant increase over previous years (4.2 percent in 2022, 3 percent in 2021 and 2.7 percent in 2019 and 2020). As in the previous four years, the Court’s auditors found that in 2023 the error was so large that they were forced to issue a negative opinion on EU budget spending.

The RRF is implemented in a completely different way than spending from the EU budget. While beneficiaries receive payments for undertaking certain activities or reimbursement for costs incurred, under the RRF, Member States receive funds for satisfactorily achieving predetermined milestones or targets. Because of this distinction, the Court has formulated a separate opinion on RRF expenditures, and has devoted a separate chapter of its annual report to the issue.

The auditors found irregularities in 16 of the 452 milestones and targets covered by the audit, as well as errors in 6 payments made to 6 member states. In addition, they found persistent weaknesses in the reporting and control systems of the Member States that pose a risk to the adequate protection of the EU’s financial interests. Accordingly, the Court issued a qualified opinion on the RRF.