There were increased irregularities in the spending of the EU budget and recovery funds in 2022, according to a new report by the European Court of Auditors (ECA).
The annual report, published on Thursday (5 October), examines the state of the 2022 EU budget, looking at how funds were used and whether revenue and expenditure transactions complied with the rules.
In their report, the auditors looked at the number of irregularities in the 2022 EU budget spending, which amounted to €196 billion, and warned that errors increased significantly, from 3% to 4.2% compared to 2021.
As in previous years, the errors were found to be “pervasive” and were mainly due to the complex nature of the rules and eligibility criteria governing expenditure. Moreover, the increase was also likely due to the closing of the 2014-2020 programming period as well as the start of the current 2021-2027 period.
“Given the widespread occurrence of the errors identified, we have maintained an adverse opinion for the fourth consecutive year,” the ECA’s president Tony Murphy said.
“[T]he risk has to be better managed, as we continue to detect errors through our work that led to a significant increase in spending affected by error,” he added.
Spending of recovery funds
When it comes to the spending of recovery funds, EU auditors found irregularities, such as double funding and spending before eligibility date, in 11 out of 13 tranche payments made to 11 countries in 2022. The total payments for the year amounted to €46.9 billion.
While EU auditors voiced concerns over these irregularities, they said they were not found to be pervasive.
At the same time, the ECA found that not all milestones and targets set by member states were satisfactorily fulfilled or complied with eligibility conditions. On top of this, the absorption pressure due to the requirement to spend the money quickly likely helped increase the risk of errors.
“The pressure to increase spending places a strain on administrative resources, consequently elevating the risk of errors,” the report said.
Concerns over EU debt
In their report, EU auditors also warned of increased risks to the EU budget due to external pressure, including the aid needed to support Ukraine from Russia’s aggression and the rising borrowing costs for the repayment of the EU debt issued to finance the pandemic recovery plan.
“We obviously just can’t keep borrowing money without having a plan in place [on] how it’s going to be repaid,” Murphy said, pointing to the slow progress in the current discussions on ways to finance the EU budget and cover EU debt costs.
“We still have no clarity yet on how it will be repaid,” he said, adding that the net interest cost on the recovery plan amounted to €0.5 billion in 2022.
Overall, outstanding commitments from the EU budget and the recovery grants reached a record level of €453 billion at the end of 2022.
In the report, the auditors called on the European Commission to better assess the impact of high inflation on the EU budget and provide tools to mitigate its risks.
“The Commission should protect the EU budget’s ability to meet its legal and contractual commitments, such as rising financing costs,” the report reads.
[Edited by János Allenbach-Ammann/Nathalie Weatherald]
