Presentation of the 2023 EU Budget Implementation Report to the Seimas Committee on European Affairs

Press Release, 19 December 2024

Laima Andrikienė, Lithuanian Member of the European Court of Auditors (ECA), presented the ECA’s annual report on the implementation of the 2023 EU budget to the Seimas Committee on European Affairs.

Ms Andrikienė, who co-authored the report, highlighted that the ECA’s opinion on the legality and regularity of EU budgetary expenditure was adverse. The auditors expressed concern over the increase in the level of error to 5.6 % (up from 4.2 % in 2022 and 3.0 % in 2021), impacting EUR 191.2 billion of EU budgetary expenditure. ‘Why is the level of error so high? One reason is the pressure on national administrations to disburse funds from competing EU sources, primarily the Recovery and Resilience Facility (RRF), within a limited timeframe, which complicates the proper financing of cohesion projects in compliance with the rules. Another possible reason is that the 2023 payments from the EU budget reflect the state of controls and checks during the COVID-19 pandemic in 2020–2021, when control procedures, especially on-site checks, were restricted due to lockdowns. We believe this may have also affected the quality of controls and the increased number of infringements,’ Ms Andrikienė stated.

The ECA’s report indicates that approximately one-third of RRF payments failed to comply with the established rules and conditions, resulting in significant errors in six payments. The auditors also identified design flaws related to guidelines or objectives and ongoing issues with the reliability of the information included by Member States in their management declarations. Consequently, the auditors issued a qualified opinion on RRF expenditures.

‘Lithuania is among the EU countries whose grant payments from the EU budget exceed their contributions. In 2023, Lithuania received EUR 2.28 billion from the EU budget (excluding RRF funds), accounting for 12 % of the state budget, while its contributions to the EU budget amounted to EUR 746 million. Additionally, Lithuania received EUR 542 million from the RRF. Thus, overall, Lithuania’s grant payments from the EU budget exceeded its contributions by more than 3.8 times,’ Ms Andrikienė emphasized.

The report also warns of increasing financial risks to the EU budget due to record-high debt levels, Russia’s war of aggression against Ukraine, and high inflation. The EU is now one of the largest issuers of securities in Europe. In 2023, the outstanding EU debt from borrowing surged to EUR 458.5 billion, an increase of more than 30 % (up from EUR 348 billion in 2022). At the end of 2023, the EU had EUR 268.4 billion in nominal value of outstanding EU bonds for financing NextGenerationEU (NGEU) loans and grants and other NGEU programmes. Moreover, the EU’s debt is now twice as high as in 2021 (when it was EUR 236.7 billion). It remains unclear whether the Commission’s proposal for own resources will make it possible to generate sufficient revenue to repay the NGEU debt. Inflation also significantly impacts the EU budget. According to the Commission’s inflation forecast, by the end of 2025, the EU budget could lose nearly 13 % of its purchasing power. Additionally, new future priorities, such as security and defence, as well as EU enlargement, will require significantly increased funding.

Committee members were interested in the number of countries that receive grant payments exceeding their contributions to the EU budget, the positions of other Member States on the proper use of EU funds, and the effectiveness of direct payments.

The ECA has an equal status with the European Parliament, the European Council, and the European Commission. This ensures its independence and authority. The main task of the ECA is to audit the EU accounts and thus contribute to improving financial management. The ECA also informs European citizens on how EU funds are spent.

Ms Andrikienė works in the ECA’s Chamber III– External action, security and justice and the Audit Quality Control Committee, where she is responsible for the quality of audits conducted by Chamber II – Investment for cohesion, growth and inclusion.

Aistė Pikiotienė, Adviser, Office of the Committee on European Affairs, tel. +370 5 209 6864