Why the EU Court of Auditors is pulling the Commission on loans to Ukraine
EU auditors are asking for corrections on the revised rules for disbursing loans to Kiev. The Court draws attention to some aspects of the Commission's proposed amendments to the Financial Regulation
The EU Court of Auditors raises doubts about the 18 billion loans intended for Ukraine.
In early November, the European Commission proposed changes to the EU's financial regulation to diversify EU lending operations. In parallel, he also made proposals to provide urgent financial aid to Ukraine.
The law establishes that the European Court of Auditors must be consulted in advance on any proposal affecting the EU budget, recalls the European Court of Auditors (ECA) in an opinion issued on 22 November.
According to the Court, on the one hand there are "advantages" in establishing a "diversified" financing strategy as a basic method for all lending operations but, on the other hand, the new legislation "does not provide any details on the necessary provisions, such as a governance framework and risk management procedures” summarizes Ansa. “A clarification that sounds like a reproach to the Commission and the Council” comments Eunews .
All the details on the note from the European Court of Auditors.
EU AUDITORS' OPINION ON LOANS TO UKRAINE
The European Court of Auditors has issued an opinion on the European Commission's proposed amendments to the EU's financial regulation and thus provide 18 billion in aid to Ukraine in 2023, with maturities of up to 35 years, repayable no sooner than 10 years from today.
On the one hand, Luxembourg's auditors see the benefits of establishing a diversified financing strategy as the foundation method for all lending transactions, the note reads. “This diversified approach mirrors what is currently implemented for lending under the EU's NextGenerationEU COVID recovery package. Instead of the "back-to-back financing" required by current EU financial rules, the new approach is similar to that used by sovereign states, which can temporarily hold borrowed amounts in a bank account and use short-term debt instruments such as EU bills and credit lines. This would give the Commission more flexibility in choosing the best loan option available” underlines the Court of Auditors.
DOUBTS ABOUT THE WARRANTY
However, the EU Court of Auditors observes that "the revised legislation does not provide any details regarding the provisions they deem necessary, such as a governance framework and risk management procedures".
The guarantee for these loans – notes the Court – would be the headroom ("margin of manoeuvre") of the EU budget, ie the difference between the own resources ceiling and the own resources actually used to finance the budget. This margin currently represents a reserve to cover further financial outflows.
THE RELATED RISKS
“If the EU budget headroom covers the risk of non-payment of loans to Ukraine, this would mean that related risks could have an impact on future budgets and payment needs,” the auditors warn. At the moment, concludes the European Court of Auditors, "there are no plans to increase the size of the headroom accordingly".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/perche-la-corte-dei-conti-ue-non-e-convinta-sui-prestiti-ucraina/ on Fri, 25 Nov 2022 07:00:55 +0000.