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EU auditors urge financial instruments to keep cost reasonable

Xinhua, July 8, 2016 Adjust font size:

Financial instruments, which provide support from the European Union (EU) to recipients through loans, guarantees and equity investments, are sometimes expensive in terms of management costs and fees, according to a new report from the European Court of Auditors.

According to the report, by the end of 2014, financial instruments set up under the European Regional Development Fund (ERDF) and the European Social Fund (ESF) had been paid around 16 billion euros (17.69 billion U.S. dollars) as contributions from EU budget.

The auditors found a significant increase of management costs and fees during recent years. During 2007-2013, the overall contribution from the EU budget to the 21 financial instruments managed directly or indirectly by the European Commission was about 5.5 billion euros, compared with 1.3 billion euros during 2000-2006 and 0.6 billion euros during 1994-1999.

"Under certain conditions, financial instruments represent a better way to spend public money. But it is essential that their associated fees and costs are kept at a reasonable level going forward to 2020," Iliana Ivanova, the Member of the European Court of Auditors responsible for the report said.

The auditors also criticized that financial instruments were unsuccessful in attracting private capital and only a limited number succeeded in providing re-usable financial support.

Improvements were made for the 2014-2020 program period, but certain issues remain, say the auditors.

Therefore, the auditors urged the European Commission, EU's chief executive body, to ensure that the EU member states report comprehensive information on management costs and fees already incurred.

Moreover, the auditors require the European Commission to change the regulations during 2016, strengthening the element of incentives in fees for fund managers over the period to 2020.

The European Court of Auditors serves as the EU's independent external auditor, its main mission is to check that EU funds are correctly accounted for, are raised and spent in accordance with the relevant rules and regulations and have achieved value for money. Endit