Opinion on Guidelines for the 2026 Budget – Section III

18.2.2025

Mr Johan Van Overtveldt

Chair

Committee on Budgets

BRUSSELS

Subject: Opinion on Guidelines for the 2026 Budget – Section III (2024/2110(BUI))

Dear Mr Van Overtveldt,

Under the procedure referred to above, the Committee on Budgetary Control has been asked to submit an opinion to your committee. At its meeting of 18 February 2025, the committee decided to send the opinion in the form of a letter.

Yours sincerely,

Niclas Herbst

CONT Chair

Rapporteur for the Commission Discharge

OPINION

1. Recalls its strong commitment to the fundamental principles and values enshrined in the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU);

2. Stresses the fundamental importance of respect for the rule of law to protect the financial interests of the Union in the implementation of EU funds; recalls the improvements needed in the application of the Rule of law Conditionality Regulation and a swifter follow-up by the Commission on breaches of the rule of law principles that affect or risk affecting the EU financial interests, including the Single Market dimension, as for example procurement and state aid;

3. Stresses that the sound and timely implementation of the budget contributes to addressing more efficiently and effectively the needs and challenges faced by the Union and its citizens in different policy areas; warns that the implementation of the budget under time pressure may lead to an increase in errors and irregularities;

4. Recalls that for the last years all available flexibility measures in the EU Budget were used; reiterates the need for flexibility in the EU Budget to address potential new circumstances where EU action is necessary; notes that increasingly the headroom in the EU Budget is used to provide funding to respond to crises; notes in addition, that exposure of the EU Budget to guarantees and contingent liabilities is projected to rise in the coming years, putting additional strain on the headroom in the Budget which further limits the flexibility of the EU Budget, as are the increased interest payments for NGEU related borrowing; urges the Commission to work on a more stringent risk assessment framework to define the exposure more accurately to prevent over-burdening of the EU Budget;

5. Stresses the need to protect the EU Budget from any misuse, particularly fraud and corruption, and calls on the Commission to continue to be vigilant and proactive in the current and future cases when the lack of respect for Union values and the Rule of Law affect or threaten to affect the Union’s financial interests;

6. Stresses the importance of the EU anti-fraud architecture and the need to provide increased resources and to strengthen the role of the European anti-fraud office (OLAF), the European Public Prosecutor's Office (EPPO), the European Union Agency for Criminal Justice Cooperation (Eurojust) and the European Union Agency for Law Enforcement Cooperation (Europol) in the fight against fraud and corruption; stresses the need for a comprehensive cooperation between all these institutions;

7. Notes that while the digital transformation is indispensable to increase the efficiency, control and transparency of the EU Budget, this shift has also heightened its exposure to cyber fraud affecting the financial interests of the Union; calls on the Commission to allocate sufficient funds to strengthen EU digital infrastructure, research and development while ensuring that investments in cybersecurity are impactful and contribute to the overall protection of the Union’s financial interests;

8. Is concerned that total outstanding commitments are reaching record levels for several years now; notes that the Commission projects outstanding commitments to decrease after 2024, when NGEU draws to a close; considers that until the projected decrease of the RAL, the risk of decommitments, and a related reduction of EU added value for the EU Budget, remains high; calls on the Commission to enact a more strategic, transparent, and proactive approach to managing decommitments, also considering the use of decommitments in the cascade mechanism;

9. Is concerned that the Union's debt continues to rise, with a large share of this increase attributed to the temporary recovery instrument NGEU; is concerned that the increased debt and the associated higher interest costs will have long-term consequences on the EU's fiscal stability, potentially leading to greater financial strain and a reduced capacity to respond to future challenges or invest in key strategic areas; encourages the Commission to explore options to reduce the overall debt burden, such as optimising the timing and structure of debt issuance, and consider alternative financing mechanisms that could reduce reliance on high-interest debt; stresses that introducing new own resources is also necessary to prevent future generations from bearing the burden for past debts;

10. Expresses regret that the overall error rate estimated by the Court has been increasing since the 2020 financial year, reaching 5,6 % for the 2023 financial year; notes significant variations in error rates across different budget headings, with some areas reporting error rates below the materiality threshold of 2 %, while cohesion policy has an error rate as high as 9,3 %; notes in particular the conclusion that errors found in 100 % EU-funded priorities contributed 5,0 % to the total estimated level of error of 9,3 %; is concerned that increasing flexibilities without at the same time either decreasing requirements or increasing ex ante checks and controls contributed to the high error rate; calls on the Commission to take careful consideration of the lessons learned from the implementation of EU crisis response tools, such as increased flexibility;

11. Notes that the Court issued a qualified opinion on the legality and regularity of the RRF expenditure in 2023; expresses concern that the Court found 7 out of 23 RRF payments made in 2023 were impacted by quantitative issues, with 6 of these payments being affected by material errors; notes in addition that absorption of RRF funds was delayed in 2023, and that Member States may not be able to complete all measures at the end of the RRF’s implementation period; notes further that the second half of the RRF’s implementation period (post 2023) is more challenging with an increase in number of milestones and targets to be implemented, a shift from reforms to investments, and a high proportion of measures to be completed in the last year; calls on the Commission to support the Member States’ authorities in the implementation of funds, in particular where additional administrative capacity is needed, to stimulate absorption and reduce the occurrence of errors; calls on the Commission to transparently inform the Parliament about the progress of implementation and absorption of funds and to timely propose solutions where bottlenecks in the implementation are observed;

12. Recalls the importance of protecting the Union's own resources from any fraudulent irregularity and, to that end, stimulate the cooperation between anti-fraud services and customs agencies to detect, prevent and correct fraud affecting Union revenue; recalls its position on the amended Commission proposals endorsing the introduction of new own resources.

ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR FOR OPINION HAS RECEIVED INPUT

The Chair in his capacity as rapporteur for opinion declares under his exclusive responsibility that he did not receive input from any entity or person to be mentioned in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.