Mr. Gerald Angley:

I thank the Chair and the committee for the opportunity to discuss European Union amending budget No. 3 of 2023, in particular the elements which relate to the Act in support of ammunition production, ASAP. The Department of Finance has had some correspondence with the committee already on this matter, while I know other committees have discussed the specific measures involved. I lead the EU budget unit in the Department of Finance and am joined by my colleague, Sean Brennan, and colleagues from the Department of Defence, as well as colleagues from the Directorate General for budget at the Commission, who the Chair just introduced. Our focus, as the Department of Finance, is on the EU budget as a whole, its negotiation on a multi-annual basis and annual basis and, of course, Ireland’s financial interests as a member state. Individual funding programmes, policy content and arrangements are negotiated by the relevant Departments and Ministers based on policy area, and we work with them on budgetary questions as they take place.

In the broadest terms, the overall EU budget is agreed on a multi-annual basis between the Council and the European Parliament, following a proposal from the Commission. The current budget runs from 2021 to 2027. Each year, an annual budget is agreed – which is what we are now discussing - by member states and the Parliament. It must, however, remain within the overall parameters set in the multi-annual budget. Within each year, there are a number – usually four to seven – of draft amending budgets. These are not identical but also not dissimilar to the Supplementary Estimates we have in Ireland. That is by way of some background.

Amending budgets such as No. 3 from 2023 can be proposed due to relatively routine developments, such as unused or delayed funds or changes in expected receipts, while they can also reflect new decisions and legislation linked to exceptional circumstances, which is the case here. As members know well, Russia's illegal war of aggression against Ukraine prompted an unprecedented EU response across multiple policy areas, for example, energy. Another area is defence. The extended nature of the war in Ukraine led in 2023 to the proposal and eventual agreement of two emergency instruments, namely, the European defence industry reinforcement through common procurement Act, EDIRPA, and the Act in support of ammunition production, known as ASAP, which is the focus today. My Department of Defence colleagues to my left will speak to the substance of these measures, but in budgetary and financing terms, I note that the EDIRPA was adopted by the European Parliament and Council on 27 October 2023, while the ASAP was adopted some months earlier, on 20 July 2023. That is key to why the amendment was made. Commission colleagues may explain further.

The earlier adoption of ASAP as against EDIRPA informed the Commission’s proposal for draft amending budget No. 3, involving the transfer of credits originally intended for EDIRPA to ASAP. Put more technically, this involved the transfer of €157 million in commitment appropriations from the reserve lines for EDIRPA onto the reserve lines for ASAP. In amounts and financing, the ASAP has a total budget of €500 million allocated across two budgetary years. ASAP is financed through redeployments of existing funds under heading 5 of the EU budget, covering security and defence, and by mobilisation of special instruments. In effect, no new or additional money needed to be found outside of the budgetary parameters set in the multi-annual and annual EU budgets. As is normal, the draft amending budget No. 3 of 2023 was adopted by both the Council and European Parliament, which are sometimes referred to as the budgetary authority of the European Union. This took place on 18 October 2023, allowing for the transfer of commitment appropriations from EDIRPA to ASAP. I will conclude by noting that the ASAP regulation is in place.

It is a temporary one applying to 30 June 2025. The annual budget process continues to provide for it with the budget for 2024 formally adopted by the Council and Parliament on 22 November 2023. This is background on the procedures and processes leading to this decision we are discussing today. I am happy to leave it there and hand over to colleagues from the Department of Defence. We look forward to members' questions.