In parallel, a series of simplification measures, already being implemented or under discussion, will allow implementing partners to achieve efficiency gains and reorient resources to the origination and implementation of projects that maximises added value for partner countries. The reduced time to market will also support Global Gateway acceleration and implementing policy objectives in a faster way.

The constitution phase of the EFSD Guarantee ended on 31 December 2024. From this date, the working document referred to in Article 41(5) of the Financial Regulation, attached every year to the draft budget, must indicate whether there is a surplus of provisions or a need to replenish provisions. In case of surplus in 2025, 2026 and 2027, the legislative proposal to amend the NDICI – Global Europe Regulation proposes to transfer it to the EFSD+ provisioning.

2.1 EFSD surplus 2024

Under EFSD, the Commission signed EUR 1,548.7 million of EU cover in 18 guarantee agreements. The provisionally estimated 2024 EFSD surplus of EUR 405 million is exceptionally high as, being the first one to be calculated since the establishment of EFSD, it reckons the provisions initially set aside but not needed anymore for 7 guarantee agreements, totalling EUR 399.5 million of EU cover, for which the investment period 8 ended without underlying transactions signed or – as in one case – which has been cancelled. This under-implementation is mainly due to the shock of the Covid outbreak and, in some cases, to the lack of demand for the financial products proposed, a lesson learnt and integrated in the selection of EFSD+ guarantee agreements. Based on the EFSD provisioning rate of 50 %, it implies EUR 199.75 million of estimated EFSD surplus as of 31 December 2024.

An additional EUR 135 million of surplus is due to the termination without losses of two loans of EUR 270 million in total under the ‘COVAX I’ guarantee agreement with the EIB.

The remaining 10 guarantee agreements, totalling initially EUR 879.2 million of EU cover including the loan of EUR 130 million expected to be called under the EU guarantee, reached a level of consumption of the EU cover, in terms of underlying transactions signed, between 75 % and 100 %, except one that reached 35 %. Taking into account the reimbursements, claims and recoveries related to the underlying transactions, the EU liability as of 31 December 2024 was of EUR 760.2 million, i.e. EUR 119 million less than the initial EU cover.

The above figures are summarised in the following table:

2.2 EFSD surplus 2025

On the other hand, as of 31 March 2025, EUR 193.9 million of EFSD+ resources coming form other sources than contributions to provisioning, mainly returns on investments of the EFSD+ resources held in the common provisioning fund, cannot be used during the current MFF to restore the EFSD+ guarantee up to its initial amount, as foreseen by Article 214(6) of the Financial Regulation, because there have been very few guarante calls on the EFSD+ guarantee and a limited amount of calls is forecasted until 2027:

The legislative proposal to amend the NDICI – Global Europe Regulation proposes to allow paying EFSD guarantee calls as from 31 December 2024 with EFSD+ resources not usable by EFSD+ itself.

 
The aggregate EFSD surpluses 2024-2025 would then amount to EUR 471 million (i.e. EUR 405.1m + EUR 65.9m).

Article 36(1) of the NDICI – Global Europe Regulation foresees that the EIB shall have the exclusivity for operations with sovereign counterparts and non-commercial sub-sovereign counterparts under an ‘exclusive dedicated investment window’. It also states that for this window the EU guarantee shall cover a first loss tranche of 65 % of the portfolio of EIB loans guaranteed by the EU. The EIB assumes the residual risk of 35 %.

The legislative proposal to amend the NDICI – Global Europe Regulation proposes reducing the EU cover to 60 %.

A series of simplification measures in the implementation of EFSD+ have already been implemented or are under discussion with the implementing partners. These measures do not require amending the NDICI-Global Europe Regulation. They will allow implementing partners to achieve efficiency gains and reorient resources to the origination and implementation of projects that maximises added value for partner countries. The reduced time to market will also support Global Gateway acceleration and implementing policy objectives in a faster way.

Simplification measures already implemented:

−Reduced negotiation and implementation burden for EFSD+ guarantee agreements by consolidating 9 proposals from 4 implementing partner under a single guarantee agreement with each implementing partner.

The consolidation implies negotiating 4 guarantee agreements instead of 9. The negotiation of each guarantee agreement is a heavy process requiring legal counselling services and, on average, a three months full time effort by three people. The negotiation savings generated by the consolidation are EUR 0.8 million.

In addition, the consolidation diminishes proportionately the number of deliverables by implementing partner. Each guarantee agreement requires annuallly, during 15 years on average, two financial and risk reports, an annual progress report, a set of unaudited and audited financial statements and a management declaration. The savings in terms of audit services and staff work would amount to EUR 3.2 million.

The aggregated savings of consolidating 9 guarantee agreements into 4 are EUR 4 million.

−Signing one contribution agreement covering several technical assistance (TA) components per implementing partner.

Each TA contribution agreement is a one month full time effort by one person. The consolidation of 40 TA contribution agreements into 18 ones represents EUR 0.275 million of savings.

−Prioritising where possible top-ups to existing guarantee agreements for new proposals by implementing partners, which require negotiating only the terms related to the new operations.

Based on an assumption of 10 top-ups during the remaining period of the current multiannual financial framework (MFF), the top-ups represent EUR 1.5 million of savings.

−Reducing the financial reporting for guarantee agreements from a quarterly frequency to a semi-annual one implies for 40 guarantee agreements during 15 years, EUR 8.6 million of savings.

The aggregate savings of the simplification measures already implemented amount to EUR 14.4 million.

A simplification measure has been proposed by repealing Article 38(6) of the NDICI – Global Europe Regulation, i.e. the removal of the requirement in the annual reporting on guarantee agreements by implementing partners to the Commission to audit the information on individual operations. It concerns 40 guarantee agreements with a remaining average lifetime of 15 years. The audit costs reduction represents EUR 1.5 million.

A simplification of the blending framework is under discussion with implementing partners. It concerns:

−the streamlining of the application form and the approval process,

−the simplification of the contracting arrangements by signing framework blending contracts,

−the consolidation of the reporting by aggregating the current individual reporting by blending operation under a single report by framework contract.

Assuming that five implementing partners will agree to the simplification, representing a portfolio of 250 blending operations, 100 of them already approved, EUR 5.6 million of savings would be realised.

The overall savings for implementing partners generated by the simplification of the EFSD+ implementation would amount to EUR 21.5 million.