Contingent liabilities for the EU budget have grown considerably in their magnitude and their complexity and will continue to increase under the MFF 2021-2027. This paper tracks their evolution, explains the risks they might impose on the EU budget, and analyses the risk management practices to address them. We forecast total contingent liabilities will more than double by 2027, reaching EUR 612 billion. This will be driven mainly by RRF loans and, to a lesser extent, by financial support to Ukraine.
Authors
- Pages
- 70
- Published in
- Belgium
Table of Contents
- LIST OF ABBREVIATIONS 6
- List of figures 8
- List of tables 8
- EXECUTIVE SUMMARY 9
- 1. Introduction 12
- 2. Contingent liabilities in the European Union 13
- 2.1. What are contingent liabilities? 13
- 2.2. Contingent liabilities in the EU 15
- 3. Evolution of contingent liabilities in the European Union 23
- 3.1. Provisioned contingent liabilities 23
- 3.1.1. Budgetary guarantees 23
- a. European Fund for Strategic Investments 26
- b. InvestEU 27
- c. European Fund for Sustainable Development 28
- d. External Lending Mandate 30
- e. European Fund for Sustainable Development Plus 30
- 3.1.2. MFA funding to third countries 32
- 3.2. Headroom-backed contingent liabilities 34
- 3.2.1. Financial assistance to Member States 34
- a. SURE 35
- b. Loans from the Recovery and Resilience Facility 36
- 3.2.2. MFA+ and Ukraine Facility (financial assistance to Ukraine since 2023) 38
- 4. Forecast for contingent liabilities until 2027 40
- 4.1. MFA to third countries 40
- 4.2. SURE 41
- 4.3. RRF Loans 42
- 4.4. Total contingent liabilities forecast 43
- 5. Common Provisioning Fund 45
- 6. Reporting and risk management 50
- 6.1. Reporting and risk management standards 50
- 6.2. Reporting and risk management in the EU 54
- 6.3. Stress testing the available headroom for headroom backed contingent liabilities 57
- 6.4. Evaluation and reporting methodology – Financial Assistance Methodology 60
- 7. Policy recommendations 61
- 8. Conclusions 64
- REFERENCES 65
- ANNEX 68
