Annual statistical accounts of the EU institutions and bodies subsector
Data extracted in December 2023
Planned article update: July 2024
Highlights
This article presents the main indicators from the annual statistical accounts of the European Union institutions and bodies subsector, based on ESA 2010. They include Maastricht debt, total revenue, total expenditure and net lending/net borrowing.
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(€ billion)
Source: Eurostat (gov_eu_nfa) and (gov_eu_debt)
The subsector of EU institutions and bodies in national accounts covers EU institutions and bodies financed by the EU budget, as well as the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF). These institutions have separate budgetary and accounting structures, different funding methods and different memberships and policy mandates.
The statistics presented in this article provide an aggregate view for the sub-sector and its dynamics over the years. They should not be used as the basis for assessing the financial situation of the individual institutions and bodies, which should be performed on the basis of their published financial statements. The numbers presented in this article differ from the annual accounts of the EU published by Directorate-General for Budget (DG BUDG) due to differences in the accounting systems.
It should be noted that a substantial part of the observed net borrowing of the subsector of EU institutions and bodies in national accounts is due to the grants provided to the Member States through the Recovery and Resilience Facility (RRF) under the Next Generation EU, which is financed by debt to be repaid by future budgets (post-2028). These amounts do not form part of the EU annual budgetary procedure.
This information comes from data on on debt and on financial and non-financial accounts published by Eurostat in its database.
Full article
Revenue and expenditure of the EU institutions and bodies subsector
In 2022, the main components of the EU institutions and bodies’ revenue were current transfers receivable and taxes.
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Current transfers receivable, which made up 74.6 % of total revenue, concern mainly transfers made by the Member States to the EU Budget in relation to own resources based on GNI, VAT and non-recycled plastic packaging waste. Among these transfers, the GNI-based resource, which amounted to €103.9 billion in 2022, represents 56.2 % of the total revenue of the EU institutions and bodies.[1]
Figure 2 depicts the composition of total expenditure of the EU institutions and bodies in 2022. In 2022, the main components of the total expenditure of the EU institutions and bodies were capital transfers payable, subsidies and current transfers payable.
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(% of total expenditure)
Source: Eurostat (gov_eu_nfa)
Current and capital transfers, which made up 61.7 % of total expenditure, concern mainly the payments made in the context of the European structural and investment funds, such as the European Regional Development Fund and the European Social Fund Plus. They also include the non-repayable support provided in the context of the RRF that are financed by proceeds of debt issuance, which will be repaid from future budgets (post-2028).
The increased absorption of RRF grants at Member State level (€11.2 billion in current and capital transfers payable) is the main contributor to the increase in total expenditure of the EU institutions and bodies in 2022 compared with 2021 (€17.6 billion).
Maastricht debt liabilities of the EU institutions and bodies subsector and its financing
The Maastricht debt liabilities of the EU institutions and bodies and other institutions included in the subsector of EU institutions and bodies stood at €645.7 billion, at the end of 2022, before consolidation with the EU Member States.
Maastricht debt means total gross debt at nominal (face) value, outstanding at the end of the year. It comprises liabilities in currency and deposits, debt securities and loans.
As shown in Figure 3, the vast majority (94.8 %) of end-2022 debt is in the form of long-term debt securities. Debt securities are negotiable financial instruments, which have defined basic terms such as an issue date, the coupon rate the issuer pays to holders, the original maturity date, an issue price at which investors buy the debt securities when first issued and a redemption price (or face value), which is the amount to be paid by the issuer to the holder at maturity.
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The debt of the EU institutions and bodies subsector before consolidation with Member States has increased by €106.1 billion in 2022. The increase reflects mainly the new net borrowings to finance NGEU grants and loans (€97.9 billion), SURE[2] loans (€8.7 billion) and MFA[3] loans to Ukraine (€7.5 billion), partly offset by some decreases in debt liabilities. Most of the increase is in the form of long-term debt securities.
More information reconciling the €47.9 billion net borrowing and the €106.1 billion change in Maastricht debt can be found in the stock-flow adjustment table at the end of the section “Data coverage, sources and methods” below.
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It should be noted that the majority of the now published Maastricht debt of the EU institutions and bodies subsector concerns issuances with the aim of on-lending to the Member States. Such loans already represent debt of the Member States and assets of the EU institutions and bodies subsector. The major share of EU institutions and bodies debt that is not aimed at on-lending to Member States concerns the debt issued to fund the grants provided in the context of the NGEU/RRF. A smaller share of EU institutions and bodies debt that is not aimed at on-lending to Member States concerns loans to non-EU Member States (e.g., in the context of the macro-financial assistance (MFA)), financial leasing, repurchase agreements and cash collateral received for financial derivatives’ contracts. To have a complete picture of the financial position of the EU institutions and bodies subsector it is, therefore, very important to consider its consolidated debt, i.e. after consolidating the assets this subsector holds against the Member States.
Table 3 shows that by end-2022 the debt of the EU institutions and bodies after consolidating the assets it holds against Member States governments stood at €148.1 billion.
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(€ billion)
Source: Eurostat (gov_eu_debt)
Figure 4 shows the net incurrence of liabilities of the EU institutions and bodies in 2022.
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The net incurrence of debt securities of €96.4 billion in 2022 is mainly explained by the net issuances of the European Commission, in the form of EU bonds and EU bills, aimed at funding the grants and loans under RRF as well as loans under SURE and MFA programmes.
The observed net incurrence in other accounts payable (€11.8 billion) concerns essentially the payables of the European Commission towards some Member States which in 2022 have incurred expenditure in the context of the RRF (see description of the ESA 2010 national accounts treatment of such items, the so-called neutralisation principle, at the end of the section “Data coverage, sources and methods” below).
Figure 5 shows that the biggest share of the €63.1 billion net acquisition of assets of the EU institutions and bodies in 2022 relates to net loans, which notably includes loans provided in the context of the RRF (€27.2 billion), the SURE programme (€8.7 billion) and a further MFA loan provided to Ukraine (€7.5 billion).
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The net acquisition of other accounts receivable (€17.7 billion) is predominantly explained by advances from the European Commission to the Member States not yet materialised in expenditure at national level, both in the RRF context (€16.9 billion) as well as other pre-financing (€14.9 billion) concerning mostly the 2021-2027 programming period and the REACT-EU[4]. These are partly compensated by a decrease in the net other accounts receivable concerning the EU-UK Withdrawal Agreement (€13.0 billion), mostly via cash contributions by the United Kingdom.
The positive net acquisition of debt securities assets of €11.8 billion is mainly explained by increased investmentsin 2022, notably in the Innovation Fund and the Common Provisioning Fund compartments.
Source data for tables and graphs
Data sources
Data coverage, sources and methods
The data cover the EU institutions and bodies financed by the EU budget (e.g., the European Commission, the European Parliament, the European External Action Service (EEAS) and the agencies) as well as the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF), which are classified in sector S.1315[5].
The primary basis for this compilation is the underlying data of the consolidated annual accounts of the European Union, provided by DG Budget with accompanying clarifications and close cooperation, as well as the data underlying the ESM and EFSF annual reports, provided by ESM.
The compilation of annual statistical accounts of the EU institutions and bodies subsector, follows the same approach used by the Member States for the compilation of their national general government sector accounts i.e., starting from a public administrative source and applying to it the ESA 2010 methodology.
For the EU institutions financed by the EU budget, the compilation exercise starts from the budget (cash) accounts and then moves to accrual-based transactions. This is due to the fact that, in the ESA 2010 framework, transactions are recognised and recorded when economic value is created, transformed, exchanged, transferred or extinguished. For the ESM and the EFSF, the exercise starts from already accrued information, to which some conceptual and methodological adaptations are applied.
There is thus sizeable overlap between International Public Sector Accounting Standards (IPSAS), and to some extent also International Financial Reporting Standards (IFRS), and statistical accounts compiled following the ESA 2010. However, a 1:1 comparison between the financial statements observed in the consolidated annual accounts of the European Union and the annual reports of the ESM and the EFSF, on the one hand, and the data sub-sets published today by Eurostat, on the other hand, is not possible or valid, due to relevant presentational, conceptual and valuation differences.
The difference between total revenue and total expenditure — including capital expenditure (in particular, gross fixed capital formation) — equals net lending/net borrowing of general government, which is also one of the balancing items of the government non-financial accounts.
The reconciliation between the €47.9 net borrowing and the €106.1 change in Maastricht debt is shown in the stock-flow adjustment table below:
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(€ million)
Source: Eurostat (gov_eu_nfa), (gov_eu_fa) and (gov_eu_debt)
In National Accounts, the recording of the so-called EU flows, and the RRF associated flows, follow the neutralisation principle, i.e., Member States’ revenue from the EU is imputed at the time expenditure is undertaken at national level (and not when cash flows are received). In this context, the expenditure of the EU institutions and bodies on grants to Member States follows the time of revenue from the EU recorded by Member States.
Context
Background
In 2021, the Next Generation EU temporary instrument was launched with the aim to bring more than €800 billion in support to Europe's recovery from the Covid-19 pandemic, and to build a greener, more digital and more resilient Europe.
The European Commission has started borrowing on capital markets, implementing a diversified funding strategy with an open and transparent communication to market participants. The funding raised is being used to provide grants and loans to the Member States through the Recovery and Resilience Facility (RRF) under Next Generation EU, as well as for the SURE programme and to support Ukraine.
These developments have generated demands[6] for compiling statistical accounts of the EU institutions and bodies subsector based on the ESA 2010, thus bringing more transparency and a comprehensive picture of its financial position.
Direct access to
See also
Database
- Non-financial accounts for EU institutions (gov_eu_nfa)
- Financial accounts for EU institutions (gov_eu_fa)
- Debt of the EU institutions (gov_eu_debt)
Dedicated section
External links
Notes
- ↑ The GNI-based resource amounted to €116 billion (61.1%) in 2021. The decrease in GNI-based revenue is mainly due to the higher collection on customs duties and VAT, given that the call rate for the GNI-based resource is adjusted to finance the part of the budget not covered by other revenue sources.
- ↑ The European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE)
- ↑ Macro-Financial Assistance
- ↑ Recovery assistance for cohesion and the territories of Europe (REACT-EU)
- ↑ The government sector of EU institutions (similarly to the Member States) comprises entities financed by the EU Budget (European Commission, European parliament, etc.) and other bodies, namely the EFSF and the ESM, set-up for the support of euro area governments. Principles of sectorisation are set in the ESA 2010 Chapter 19 and para 20.09-20.10, which are developed further in the Manual on Government Deficit and Debt Chapter 1.9. Notwithstanding the statistical sectorisation rules, the EFSF and the ESM are, legally, not EU Institutions strictu sensu. The EFSF has the legal form of a limited corporation established in Luxembourg, while the ESM is legally an international financial institution.
- ↑ Council conclusions on EU statistics, November 2022 ([1])