Commission Implementing Decision (EU, Euratom) 2024/1974 of 12 July 2024 establishing the framework for allocating costs related to borrowing and debt management operations under the diversified funding strategy

1 This Decision establishes a single and unified methodology to allocate costs incurred as a result of borrowing and debt management operations conducted under programmes of financial assistance within the scope of Article 220a of Regulation (EU, Euratom) 2018/1046 and non-repayable support under Article 5(1) of Decision (EU, Euratom) 2020/2053 (‘CAM programmes’).

2 The implementation of the cost allocation methodology shall be guided by the principles of fairness and equal treatment, ensuring that costs are spread based on the relative share of support received.

For the purposes of this Decision, the following definitions apply: (1) ‘beneficiary’ means a Member State or a third country that is a party to a loan agreement under a CAM programme, or the general budget of the Union for non-repayable support under Article 5(1) of Decision (EU, Euratom) 2020/2053; (2) ‘disbursement’ means the transfer of proceeds obtained through borrowing and debt management operations to finance repayable or non-repayable support to a beneficiary; (3) ‘funding instruments’ means bonds, notes, commercial paper, EU-bills or any other appropriate short and/or long-term financial transactions under the diversified funding strategy; (4) ‘interest period’ means a period of twelve (12) months, or such other period which may be specified in the confirmation notice, commencing on the date of disbursement or the previous interest payment date; (5) ‘liquidity management’ means management of cash flows related to funding instruments and disbursements; (6) ‘loan agreement’ means an agreement on loan support between the European Union represented by the Commission and a beneficiary under a CAM programme; (7) ‘borrowing operations’ means operations referred to in Article 2(1) of Implementing Decision (EU, Euratom) 2023/2825; (8) ‘debt management operations’ means operations referred to in Article 2(2) of Implementing Decision (EU, Euratom) 2023/2825; (9) ‘liquidity management operations’ means operations referred to in Article 2(3) of Implementing Decision (EU, Euratom) 2023/2825; (10) ‘short-term funding’ means funding referred to in Article 2(16) of Implementing Decision (EU, Euratom) 2023/2825; (11) ‘long-term funding’ means funding referred to in Article 2(10) of the Implementing Decision (EU, Euratom) 2023/2825; (12) ‘single-beneficiary programme’ means a CAM programme whose basic act allows the disbursement of loans or grants to one beneficiary; (13) ‘multi-beneficiary programme’ means a CAM programme whose basic act allows the disbursement of loans or grants to more than one beneficiary; (14) ‘NGEU programme’ or ‘NGEU’ means any programme financed under Article 2(2) of Regulation (EU) 2020/2094, in so far as it implements measures referred to in Article 1(2) of that Regulation; (15) ‘Recovery and Resilience Facility loans’ (‘RRF loans’) mean loan support under Article 14 of Regulation (EU) 2021/241 of the European Parliament and of the Council ; (16) ‘Ukraine Facility’ means the facility established by Regulation (EU) 2024/792 to provide support for Ukraine for the period 2024 to 2027. (17) ‘MFA+’ means the instrument established by Regulation (EU) 2022/2463 for providing support to Ukraine for 2023.

The following categories of costs shall be established: (a) cost of funding; (b) cost of liquidity management; (c) cost of service for administrative overheads.

1 A programme compartment shall cover one CAM programme. It shall be established following the entry into force of each CAM programme.

2 Each programme compartment for a multi-beneficiary programme shall also comprise time compartments. A time compartment shall cover the semester starting on 1 January or on 1 July. When a new CAM programme enters into force, the first time compartment shall fall in the semester in which the first disbursement is made and shall end on 30 June or 31 December. For any given programme compartment, only one time compartment shall be active, at any point in time, with the exception of the derogation under Article 5(6) of this Decision.

3 Any time compartment shall remain active until the amount of disbursements of financial assistance reaches the amount of corresponding long-term funding instruments allocated to it.

4 Programme compartments for single-beneficiary programmes shall not comprise time compartments.

5 Programme compartments shall remain active until the overall amount of disbursements of financial assistance reaches the overall amount of corresponding long term funding instruments allocated to it.

1 Disbursements under a given CAM programme, and the related funding instruments allocated to it, shall be attributed to the programme compartment established for that CAM programme. Disbursements under a given multi-beneficiary programme, and the related funding instruments, shall be attributed to the time compartment that is active at the moment in which the disbursement is made.

2 A disbursement shall remain attributed to the same programme compartment or time compartment in respect to any outstanding amount which is yet to be repaid.

3 Long-term funding instruments, other than those referred to in paragraph 7, shall be attributed to programme compartments and, if applicable, time compartments that are active at the moment of the conclusion of the borrowing operation generating them.

4 However, funding instruments raised with a view to funding a disbursement in the following time compartment may be attributed to that time compartment.

5 Where the amount of disbursements at the end of the semester of a time compartment exceeds the amount of long-term funding instruments, the long-term funding instruments generated from the borrowing operations after the end of the semester of the time compartment shall be attributed to that time compartment until the amount of long-term funding instruments reaches the amount of disbursements of that time compartment.

6 The attribution of long-term funding instruments to a programme compartment or time compartment shall take place at the moment where the transaction is executed while ensuring, to the best degree, an equitable achievement of the different average maturity targets for each CAM programme over the current funding period and taking into consideration the following factors: (a) the aggregate amounts and average maturity target planned under the diversified funding strategy, as set out in decisions adopted under Article 4 of Implementing Decision (EU, Euratom) 2023/2825; (b) any requirements stemming from the underlying basic acts, and in particular, the average maturity ceilings of each CAM programme and maximum amount of liabilities that the general budget of the Union is in position to commit to in a given year under that CAM programme; (c) the loan maturities set out in the loan agreements concluded between the Union represented by the Commission and the beneficiary; (d) any material update to funding or disbursement planning, contained in a decision under Article 4 of Implementing Decision (EU, Euratom) 2023/2825.

7 Any long-term funding instrument shall remain in part or in full attributed to the same programme compartment or time compartment in respect of any outstanding amount which is yet to be repaid.

8 By way of derogation from paragraph 1, where the notional amount of long-term funding instruments attributed to a preceding time compartment of the same programme compartment exceeds the amount of disbursements attributed to that compartment in accordance with that paragraph, the disbursements shall continue to be allocated to that time compartment, which will therefore remain active, until the amount of disbursements made reaches the amount of long-term funding instruments.

9 Long-term funding instruments replacing maturing long-term funding instruments shall be attributed to the same programme compartment or time compartment. Article 7 shall apply in the case of a mismatch between the maturity date of the maturing long-term instrument and the date of borrowing of the long-term instrument replacing it.

1 The liquidity management compartment shall operate until the borrowing operations authorised in CAM programmes are fully repaid.

2 Short-term funding instruments, liquidity management operations and debt management operations and the costs arising from them shall be attributed to the liquidity management compartment.

1 The level of liquidity holdings in any programme compartment and time compartment shall be calculated on a daily basis as the difference between inflows and outflows, as set out in step 3 of point 1 of the Annex.

2 Any positive amount referred to in paragraph 1 (‘liquidity surplus’) shall be on a daily basis allocated from the respective programme compartment or time compartment to the liquidity management compartment, as set out in step 4 of point 1 of the Annex, at the cost of funding of the relevant programme compartment or time compartment on that day.

3 Any amount corresponding to the negative amount referred to in paragraph 1 (‘liquidity deficit’) shall, on a daily basis, be taken from the liquidity management compartment and attributed to the respective programme compartment or time compartment, as set out in step 6 of point 1 of the Annex, at the cost of funding of the liquidity management compartment, including all transfers set out in paragraph 2, on that day.

1 Costs of funding of all programme compartments and time compartments shall be calculated on a daily basis.

2 The cost of funding a funding instrument shall comprise the daily interest in relation to each funding instrument and a potential agio/disagio based on the all-in issuance price.

3 The daily cost of funding of a programme compartment or time compartment shall comprise the daily cost of funding of the funding instruments attributed to that programme compartment or time compartment after the results of the application of Article 7(2) and (3).

1 The cost of liquidity management shall be the sum of the cost of carry in the liquidity management compartment, as set out in point 2 of the Annex.

2 The cost of carry shall be the difference between the interest accrued under the relevant funding instruments of the liquidity management compartment, the costs and returns resulting from the levelling of any liquidity surpluses or liquidity deficits referred to in Article 7(2) and (3), and the return on investment generated by the holdings.

3 The return on investment of liquidity holdings shall comprise any related costs of the investment.

4 The costs of liquidity management shall be calculated on a daily basis.

1 The costs of liquidity management shall be calculated as the sum of the daily costs of liquidity management over a quarter. These costs shall be attributed to each disbursement on a pro rata basis of the relative share of the disbursement to total outstanding amounts of disbursements at the end of the quarter.

1 The disbursements of the same programme compartment or time compartment shall bear the same average daily cost of funding until their repayment.

2 For each outstanding disbursement, the daily cost of funding shall be calculated by multiplying the total cost of funding of the programme compartment or time compartment after application of Article 7(2) and (3) with the disbursement amount divided by the total outstanding amounts of disbursements of the programme compartment to which the disbursement is attributed.

The cost of service for administrative overheads shall comprise recurring administrative costs for beneficiaries. It shall comprise set-up costs for RRF loans, within the limits indicated in Article 14 and Article 21(5). The cost of service for administrative overheads shall be calculated in accordance with point 3 of the Annex.

1 Recurring administrative costs shall comprise any costs incurred by the Commission in the execution of the borrowing and debt management operations, comprised of the following types: legal fees such as those incurred for legal advice and opinions, debt and liquidity management fees, account management and payment management costs, costs for external audit, auction platform maintenance fees, rating agency fees, listing, taxes, registration, publication and settlement fees, information-technology, market related research, consulting fees and other investor relations expenses and management tools well as contractual agent and training fees related to the implementation of the diversified funding strategy.

2 To the extent that such costs are common to borrowing operations implemented for other financial assistance programmes, the costs included in the calculation shall be calculated based on the pro rata share attributed to borrowing and debt management operations assigned to that CAM programme in the relevant calendar year.

3 Recurring administrative costs shall be calculated for each disbursement received under each loan agreement on a pro rata basis of the disbursement to the total amounts of outstanding disbursements made under the different CAM programmes at the end of the calendar year.

1 Set-up costs for RRF loans shall comprise any costs incurred by the Commission in building the capacity for conducting NGEU borrowing, debt management and payment management operations. They include costs related to the establishment of NGEU accounts, the establishment of an auction platform, an investor management tool, other information-technology costs and market related research and consulting fees.

2 Member States which sign RRF loan agreements shall bear 48 % of the total set up costs.

3 In 2021, 2022 and 2023, Member States shall pay the set-up costs referred to in paragraph 1 on a pro rata basis of the amount of loan under the signed RRF loan agreement to the total amount of loans under all signed RRF loan agreements, as set out in point 3(2)(i) and (ii) of the Annex.

4 By 30 June 2024, any unallocated set-up costs to Member States which have signed RRF loan agreements shall be allocated on a pro rata basis to the amount of loans signed under each RRF loan agreement to the total amounts of loans under all signed RRF loan agreements until 31 December 2023, as set out in point 3(2)(iii) of the Annex.

5 No additional set-up costs for borrowing operations shall be due after the end of the year 2023 or allocated to CAM programmes, unless they fall within the scope of Article 5(1) of Decision (EU, Euratom) 2020/2053.

1 In relation to each disbursement, a confirmation notice shall be established which contains the terms giving rise to the cost claim from the Commission.

2 The confirmation notice shall determine terms for cost of funding payment and principal repayment to be repaid from the general budget of the Union under Article 5(1) first subparagraph, of Decision (EU, Euratom) 2020/2053 for non-repayable support and by the beneficiaries of loan agreements.

3 The confirmation notice shall contain the following elements: (a) the amount of the disbursement, (b) the maturity, (c) the repayment schedule, (d) the attribution of the disbursement to a time compartment, (e) interest period indicating the payment date.

4 The confirmation notice for loans shall also contain any additional elements indicated in the loan agreements.

1 The cost of funding shall be calculated in relation to each disbursement at the end of the interest period determined in the confirmation notice.

2 The invoicing shall take place at the end of the interest period set out in the confirmation notice. In relation to disbursements where the general budget of the Union is liable for their costs or redemption of principal, such as disbursements registered as external assigned revenue under Article 3(1) of Regulation (EU) 2020/2094 and MFA+ instrument, where Ukraine requests subsidisation of related costs, and to loan disbursements under the Ukraine Facility, the invoices may be grouped per quarter or in an annual invoice covering four quarters of the year.

The cost of liquidity management shall be invoiced at the beginning of each calendar year for cost incurred during the previous calendar year.

1 Beneficiaries of loans shall be invoiced at the beginning of each calendar year for the cost of service for administrative overheads incurred during the previous calendar year.

2 Payments by beneficiaries for the costs of service shall constitute internal assigned revenue within the meaning of Article 21(3), point (a), of Regulation (EU, Euratom) 2018/1046.

1 Implementing Decision (EU, Euratom) 2022/2545 is hereby repealed.

2 References to the repealed Decision shall be construed as references to this Decision and shall be read in accordance with the correlation table in Annex II.

1 A legacy programme compartment with time compartments is established with this Decision. Such legacy programme compartment shall be constituted by all disbursements attributed to time compartments prior to the entry into force of this Decision, and related funding instruments allocated to them, under NGEU, Regulation (EU) 2022/2463, and any other CAM programme in force before 19 July 2024.

2 Disbursements under NGEU made from 19 July 2024, and related funding instruments, shall be attributed to the legacy programme compartment and respective time compartments within it.

3 The first time compartment of the legacy programme compartment shall remain with a constitution period of 7 months, from 1 June 2021 to 31 December 2021. Without prejudice to Article 4(1), new programmes compartments shall be established for CAM programmes whose basic act entered into force in the period from 1 January 2024 until 19 July 2024.

4 Without prejudice to paragraph 1, disbursements under those CAM programmes made from 19 July 2024, and funding instruments allocated to them, shall be attributed to the respective new programme compartment and, as appropriate, time compartments.

5 Without prejudice to Article 14, set-up costs for RRF loans shall remain due by the relevant beneficiaries.

This Decision shall enter into force the day following that of its publication in the Official Journal of the European Union.