European Union Institutions resources for development cooperation and humanitarian aid come mainly from the EU budget and the European Development Fund.
The current EU annual budgetary provisions are established under the 2007-2013 Multiannual Financial Framework (MFF), whose Heading 4 – The EU as a Global Player covers EU external action. This budget line funds mostly non-ACP countries and EU thematic funding instruments. The Commission’s proposal for the MFF 2014-2020 is currently under negotiation and EU authorities will agree on this new framework by the end of 2012.[1]
The MFF is adjusted every year in line with movements in EU’s Gross National Income (GNI). These updated figures are used to form the annual budget. The fiscal year runs from 1st January to 31st December. The presentation of a draft budget to the European Council and Parliament by the Commission in April/May starts the budgetary process. Between 1 October and 31 December, the European Council and the Parliament approve the budget. The Commission is responsible for its implementation and the presentation of consolidated accounts by 31 October of the following year.
Development Cooperation and humanitarian aid instruments are presented in different titles of the EU budget as detailed in Table 1. Most of development aid appears under the title 19 (External Relations) and 21 (Development and Relations with ACP). Humanitarian aid is mainly listed under the title 23 (Humanitarian Aid). To respond to exceptional events, additional funds are available under the Emergency Aid Reserve (title 40) and the Flexibility Instrument.
| Budget Title | ODA Commitments (% Total ODA Commitments) |
|---|---|
| Title 19 – External Relations | 45.1% |
| Title 21 – Development and Relations with African, Caribbean and Pacific (ACP) States | 15.9% |
| Title 23 – Humanitarian Aid | 12.8% |
| Title 22 – Enlargement | 11.3% |
| (Administrative Expenditure of External Assistance) | 5.8% |
| Title 13 – Regional Policy | 4.5% |
| Other budget lines | 4.7% |
| TOTAL | 100% |
EU funds are allocated also through the European Development Fund (EDF), an instrument financed by EU members outside the EU budget.[1] The EDF comes under the Lomé and Cotonou agreements and is the main source of financing for Sub-Saharan Africa, Caribbean and Pacific States (ACP).
Each EDF is usually concluded for a period of 5 years (next due in 2013) and resources can be spent over several years. The European Commission manages EDF grants, whereas the European Investments Bank (EIB) manages the EDF Investment Facility. Although the facility supports private sector development through market based financial instruments, it also funds interest rates subsides and technical cooperation initiatives.
