EU spending errors threaten budget amidst record debt levels
According to a report published by the European Court of Auditors (ECA), EU controllers are concerned about irregular expenditures by the European Union, including those from the recovery mechanism, and warn that this could threaten the Community's budget.
6:03 AM EDT, October 10, 2024
The auditors reported that the estimated error rate in EU budget expenditures in 2023 amounted to as much as 5.6 percent, while the allowable rate is 2 percent. The biggest irregularities were noted in cohesion expenditures, where errors accounted for as much as 9.3 percent, and in the post-COVID-19 recovery mechanism.
"Significant irregularities"
The report noted that 2023 was the third year of operation for the recovery fund, under which 23 grants were disbursed to 17 member states. However, the audit found that about one-third of these payments were not in compliance with regulations, and six had significant irregularities. In some cases, milestones, which are the conditions that countries had to meet to receive funds, were poorly designed, while in others, expenditures were poorly estimated.
The Court warned as early as September that expenditures on climate actions under the fund could have been overstated by as much as $37 billion. Some projects were reportedly overestimated; for instance, those implemented as ecological did not meet the criteria.
Moreover, as noted by the ECA, member states are under time pressure to spend on both cohesion policy funds and recovery funds promptly, which could mean that the percentage of irregular EU expenditures might increase even further.
EU debt is growing
The audit showed that the EU debt for 2023 reached a record-high level of $498 billion, representing an increase of 32 percent compared to the previous year. This means the EU's debt is twice as high as in 2021. Additionally, the total value of EU commitments, which could turn into debt if not canceled, reached $590 billion by the end of 2023.
As indicated by the auditors, the EU budget is still burdened by high inflation and assistance to Ukraine; this assistance more than doubled just last year.
Given all these factors, the auditors issued a negative opinion on EU expenditures 2023 and warned of the financial risks facing the Community budget, mainly due to record debt levels, spending errors, and the ongoing situation in Ukraine.
