Uncovered liabilities of €5 billion may render EU insolvent

EU Parliament Committee on Budgetary Control. 19/03/2013, (EU Parliament Audiovisual Services).

EU Parliament Committee on Budgetary Control. 19/03/2013, (EU Parliament Audiovisual Services).

The deplorable tactics of practically all European Union governments to hide the problems under the carpet, for the next administration to confront them, couldn’t leave Brussels untouched. In this way the European Union budget for 2013 has been loaded with a huge burden of €16.2 billion of unpaid 2012 bills, a fact that threatens the EU with insolvency some time before the end of this year. It’s the well know tactics of European politicians, to pompously announce new popular programmes and more public spending thus increasing their electoral chances, without however having secured the needed funds from existing sources.

The 2013 dead-end for the EU budget was denounced by the European Parliament Budgets Committee chair Alain Lamassoure (EPP, FR) last week. He said that the Commission proposal to settle only part of the EU’s €16.2bn debt rolled over from 2012 threatens the EU with insolvency later in 2013. The Commission, Parliament and Council agreed last year to settle in 2013 all bills left over from 2012.

In detail, when adopting the 2013 EU budget last November, the European Council regrouping the 27 governments and the Parliament issued a joint statement acknowledging that the level of payments proposed by the Commission in its 2013 draft budget was based on the assumption, that payment needs in 2012 would have been addressed with funds available in the 2012 budget. Unfortunately this was not the case.

In view of that the statement went on stressing that the Commission undertakes to present at an early stage in 2013 a draft amending budget devoted to the sole purpose of covering the 2012 temporarily suspended claims along with the other pending legal obligations without prejudice to the proper implementation of the 2013 budget. To this end the Council and the European Parliament will soon have to take position on this draft amending budget as quickly as possible, in order to cover the outstanding gap.

Now the Parliament comes out and denounces that the Commission’s proposal for additional 2013 funding of ‘only’ €11.2bn, is not enough and the EU may go bankrupt within the year. According to a Parliament Press release, “It is thus confirmed: there is a threat that the EU will run out of funds before the end of 2013. This is forbidden by the treaties and the Parliament will not accept a deficit”, Lamassoure said after EU Commissioner Janusz Lewandowski’s announcement of an amending budget worth €11.2bn. Because the amending budget is insufficient to pay the bills, the €5bn shortfall will have to be paid from the 2013 budget, which was not calculated to cover rolled-over bills”.

The European Parliament’s Budgets Committee will hear Lewandowski’s presentation of the amending budget on 15 April. It must be noted that in a resolution voted on 13 March, the Parliament unanimously rejected the 27 EU leaders’ agreement of 7-8 February on the EU’s next Multiannual Financial Framework 2014-2020.

The Commission notes that the extra €11.2bn is enough to cover all the legal obligations left pending at the end of 2012, as well as those arising before the end of 2013.













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