On the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address strategic challenges in the context of the mid-term review

BUDGETARY ASSESSMENT

for the Committee on Regional Development on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/1058 and (EU) 2021/1056 as regards specific measures to address strategic challenges in the context of the mid-term review

(COM(2025)0123 – C100063/2025 – 2025/0084(COD))

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

The Committee on Budgets,

A. whereas the proposal does not modify existing budgetary commitments and remains within the limits of the overall allocations for the period 2021-2027, and is therefore budgetary neutral;

B. whereas the combined effect of exceptional one-off 30 % pre-financing and 100 % co-financing on new EU priorities, as well as additional one-off pre-financing of 4.5 % (9.5 % for NUTS 2 regions that have borders with Russia, Belarus or Ukraine) for programmes that reallocate at least 15 % of their resources to the new priorities, leads to a partial front-loading of estimated payment appropriations of EUR 3.6 billion in 2026, followed by lower payments in 2027;

C. whereas the extension of the eligibility period by one year – from the end of 2029 to the end of 2030 – for programmes that reallocate at least 15 % of their total allocation to new specific objectives creates payments in 2030 and changes the applicable decommitment rule for 2027 from year n+2 to year n+3;

Conclusions of the budgetary assessment

1. Determines that the proposal is compatible with the MFF Regulation; notes that the proposed measures are voluntary and do not involve any top-up of the initial allocation available to the Member States;

2. Notes that the proposal does not require additional human resources, despite the changes in the policy areas concerned;

3. Determines that the proposal is compatible with the Interinstitutional agreement on budgetary discipline (IIA); notes, however, that re-programming in the context of the mid-term review is considered not to alter the contribution to climate targets as set out in point 16 of the IIA; calls on the Commission to assess the impact of the revised plans on the shares of expenditure supporting climate objectives; notes also that the ‘do no significant harm’ principle should apply and takes note of the current security threats;

4. Considers that the proposal is compatible with the budgetary principles laid down in the Financial Regulation; notes, however, that the pre-financing paid in 2026 will be counted as payments made in 2025 for the purposes of calculating the amounts to be decommitted, in particular as regards respect for the principle of annuality;

5. Recalls the importance of the general regime of conditionality as set out in Article 6 of the Financial Regulation; calls on the Commission and the Member States to ensure compliance with the Charter of Fundamental Rights of the European Union and to respect the Union values enshrined in Article 2 of the Treaty on European Union in the implementation of the budget;

6. Notes that the Commission does not expect any implications for the budget for 2025; expects the Commission to take into account the current proposal and the updated payment needs for the European Regional Development Fund (ERDF) and the Cohesion Fund in the budgetary procedure for 2026 following the actual re-programming by Member States and to keep Parliament informed in a timely manner of the progress of the mid-term review in the Member States and the actual payment needs for 2026;

Recommendations as regards budget implementation

7. Notes that the proposal provides further flexibility and introduces incentives for Member States in the context of the mid-term review of cohesion policy to address strategic challenges that the EU is facing by redirecting resources to new and strategic EU priorities such as strengthening defence capabilities, including the value chains that underpin them, and the overall competitiveness of European companies while ensuring continued investment in territorial cohesion, social justice and the green transition; regrets that cohesion policy is again being used as a flexibility response tool and maintains that this approach risks undermining its longer-term policy and investment objectives, including regional development, and investments in skills, innovation, productivity and key social infrastructure; regrets that the Commission did not perform an impact assessment of the changes; acknowledges that the proposal offers a pragmatic yet unsatisfactory way forward for dealing with insufficient budgetary flexibility and response capacity in the EU budget, which was not adequately addressed in the mid-term revision of the multiannual financial framework (MFF);

8. Recalls that the next MFF should ensure the existence of sufficient budgetary reserves to respond to unforeseen events as well as new challenges faced by the EU, including climate disasters, military threats and conflicts on European soil, or any developments that could significantly affect the Union and its territories; recalls that budgetary reserves cannot come at the expense of nor lead to a reduction in long-term investment in the economic, social and territorial cohesion of the Union, and that safeguards to prevent the dismantling of the core objectives of cohesion policy must be maintained; underlines that the combined effect of reallocating a minimum of 15 % of resources and of lifting the 20 % ceiling for transfer towards Strategic Technologies for Europe Platform (STEP) objectives may have a negative impact on the achievement of targets initially set owing to a discontinuity in matching objectives with resources;

9. Notes that payments to 2021-2027 cohesion policy programmes were very low in the first years of implementation, leading to increased payment needs in the later years; recalls that this actual payment cycle does not coincide with the more linear payment profile set out in the MFF Regulation and that this situation results in a serious risk of exceeding payment ceilings; highlights that the current low absorption rate of cohesion policy is due to the overlapping of the programming periods and the late start of the programmes, combined with the parallel implementation of the Recovery and Resilience Facility; calls for better access to the funds and simplified procedures tailored to administrative capacities, especially for less developed regions smaller communities and beneficiaries; considers that the front-loading of payments towards 2026 could alleviate the pressure on payments, as has been highlighted on numerous occasions;

10. Recalls that the STEP Regulation and the RESTORE Amending Regulation in 2024 were accompanied by a front-loading of payment appropriations in the budgets for 2024 and for 2025; notes that the total amount of payment appropriations in the 2026 draft budget is very close to the payment ceiling and is concerned, in this respect, about the large uncertainty regarding the volume of payment claims in 2026;

11. Recalls that 100 % co-financing without additional resources leads to a lower total amount of financial support through the programme; recalls that broadening the scope of investment under the ERDF and the Cohesion Fund must not lead to a reduction of financial support for initial objectives; recalls that mandatory co-financing is an important principle for cohesion policy funds;

12. Requests that the Commission report on transfers in a traceable and timely way, to make the impact of the mid-term review clearly identifiable for the budgetary authority, including on payment schedules and payment forecasts;

13. Believes that the proposal could potentially create a loophole allowing the release of European funds blocked due to rule of law breaches; calls on the Commission to maintain consistency in applying conditionality across all EU funding streams; insists that amendments in Parliament’s reading are essential to close any loophole; demands enforcement of conditionality mechanisms and explicitly rejects any reallocation of blocked cohesion policy funds that would circumvent the rule-of-law-related requirements established in the Common Provisions Regulation; underlines that rule of law conditionality is a fundamental principle that must apply to all EU funds without exception;

14. Considers that the effectiveness of the threshold of 15 % re-allocation should be reassessed to ensure sufficient flexibility in order to meet the main objectives of the proposal while ensuring that the genuine objectives of cohesion policy are safeguarded; notes that the proposed condition of the reallocation of at least 15 % of the funds to new priorities may be too high, given the advanced stage of implementation of the MFF, and that it may not be suitable for single national programmes; is therefore of the opinion that the required allocation level of the financial resources is disproportionately high;

15. Recalls the need to strengthen safeguards preventing double financing and calls on the Member States and the Commission to ensure that support for the new types of investment is in addition to support under other Union programmes, including the European Development Fund, the European defence industry programme and the Security Action for Europe instrument;

16. Notes that the mid-term review may reduce the amount of funds at risk of decommitment; recalls that an amount equivalent to the cumulative decommitments made on outstanding commitments since 2021 can be made available for the European Union Recovery Instrument (EURI); asks the Commission to provide further analysis about the impact of the mid-term review on EURI;

17. Notes, however, that extending the eligibility period by one more year increases the risk of delayed payment claims, further delays to the implementation of cohesion policy and a higher stock of outstanding commitments.

AMENDMENT

As part of its budgetary assessment, the Committee on Budgets also submits the following amendment to the proposal:

Amendment 1

Proposal for a regulation

Recital [18] a (new)

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