Questions and answers on EU draft budget 2013

Wednesday, 25 April 2012 print

 
The Commission has adopted its draft budget 2013 this Wednesday 25 April 2012. The proposal will now be examined by the Council (Member States) and the European Parliament. The EU budget 2013 will be adopted by both Council and Parliament.

Why do you express the budget in commitments and payments? Which of the two should be used?<br>
Payments and commitments are two sides of the same coin. You cannot tell that one is "better to use" than the other. Commitments are the amount of the combined value of contracts that the EU is allowed to sign in any given year. Payments on the other hand are the actual money at the disposal of the EU budget for that year. For instance, when the EU agrees to co-fund the building of a bridge up to a certain amount of money, that amount that will probably have to be paid in future is a commitment. As the work on the new bridge proceeds, the first bills to be covered by the EU funding start arriving and the Commission must pay them; towards the end of the work, the bills increase and the Commission uses the payments at its disposal to honour its original commitment to co fund the project.

Why is the growing gap between commitments and payments a problem?
Commitments are tomorrow's payments, and payments are yesterday's commitments. Commitments are planned future payments whereas payments are legal obligations from the past. In other words, if every year the increase in commitments is much higher than that in payments you end up promising many partners to pay their future bills but find yourself unable to pay those bills when they arrive years later.
This is what has been happening over the last years: as many commitments were made years ago for projects that are being completed now, and as the budgetary authority (Council and Parliament) consistently cut the Commission's estimates for payments, many bills related to projects remain unpaid and have to be rolled over to the following year. This leaves no choice to the Commission but to call for increases in payments. Everybody must pay their bills.

More information can be found at http://ec.europa.eu/budget/index_en.cfm