 Okay. Welcome to the people here. Most of the people post pandemic are online for our events these days. And most of all, welcome to the only Irish person to lead an EU enshrined, sorry, and treaty enshrined EU institution, Tony Murphy, who's president of the European Court of Auditors, as you well know. Today, Tony will discuss the EU's potentially groundbreaking recovery and resilience facility, agreed after some very unsightly squabbling among the member states in the early months of the pandemic. Before handing over to Tony for 20 or 25 minutes for his presentation, a brief introduction. Tony spent first 20 years of his career with the National Auditor here, the Office of Controller and Auditor General. He then spent a decade at the European Commission before moving to the European Court of Auditors in 2013. He has been president of the court since last year. You're very welcome. Okay, first of all, I'd like to thank the IA for the invitation. I think it's a very important topic, at least for us as auditors of the EU budget. So I think I hope what we have a lot of information, we will try and give a detailed overview of basically the different areas in terms of what we think is important. And obviously, at the end, we were more than willing to take any questions or suggestions that you may have. So I think because it's so, as I say, detailed with so much information on it, we kind of try to structure a little bit to give an overview in the first instance. Then another perspective, which is obviously our own primary interest, but then the risks and challenges of the recovery and resilience, formed basically from another perspective, but also in general terms from a general EU budgetary perspective, I think, and then just in a list of our ongoing and upcoming audits, because as I say, it's an area which occupies our mind a lot these days and will for the next couple of years. Now, in terms of an overview, I mean, as you all may know, the next generation EU, it started a flagship project, I would say, of the European Commission, since it was basically a reaction to the COVID pandemic. The next generation EU is around 806 billion euros, and of that, around 715 is actually related to recovery and resilience facility. So what this recovery and resilience facility is what we will concentrate on today. The rest of the 806 is basically top ups to the existing cohesion funding instruments are new instruments which are specifically introduced at the time. So what I would say is this instrument was basically brought in, you know, at a time of an emergency situation, let's say. And I think, you know, it was a response which, you know, a lot of work was done very quickly, but like that when something is done in a hurry, normally afterwards, there's some practical problems arise, and this is I think is where we are starting to see some of the issues arising now. But as I say, it's a huge investment in terms of funds, 806 billion. The recovery and resilience facility, as you know, each member state had to basically prepare a recovery program. So they're all individual programs that are not, it's not a general program that basically each framework that each member state had to follow. They obviously concentrated on the priorities which were most important for them. And that's why it's difficult as an auditor as well, because they're so different each and every one of them. So if I go to the key components, as I said, it's a temporary instrument, and it was supposed to be basically a swift reaction. I mean, so to allow member states basically to get funding very quickly to help them with, you know, the economic consequences, if you like, of the COVID pandemic. It's a novel delivery method. So, you know, here it's basically not about costs. It's, you know, finance not linked to costs in fact, and that basically is one of the big issues for us as auditors, because there's no direct correlation between the costs and court and the payments which are being made to the member states. But look at the next thing is it's the funding model is completely different as well. We were talking about 100% borrowing, which was the first time in the history of the EU. So where you had this kind of not back to back borrowing, they did borrow before, but only to a limited extent. And it was really just for, you know, they borrowed and they passed on the borrowing to a member state and the member state basically, you know, they were back to back borrowing. So there was no real exposure if you like, to the EU budget. Whereas the whole 117 billion, 15 billion is basically loans. Some of which is for grants, which is the more important aspect from us as auditors because once the money is gone, it's gone, whereas the rest is loans, which are still an obligation of the member states to repay back. So it's basically been called by the Commission a performance based instrument and we have different discussions with them where we say sometimes we're not convinced that actually is a performance based instrument. We would consider it more to be like an implementation based instrument or a delivery based instrument because you do something and you get paid. Basically either implement the reform or you make an investment. But the impact obviously to be really performance based, you have to wait and see what the impact is and that's really what a performance based instrument will be about. And if we look at the reforms, I mean, I think that the real impetus from this came from the fact that many big member states like Italy and Spain have, they've been required through the EU semester process for many years to basically implement reforms. And the Commission basically saw this as an opportunity, the front load funding to encourage them to implement reforms which hadn't been done for years. And then the investments could follow later. So basically the whole plan was constructed based on a combination of, you know, milestones and targets linked to reforms and investments. So this is why I say it's completely different, you know, mentality or approach. And basically, each plan then had an agreed overall value, for instance, in Ireland, it's 915 million euros, which is one of the smaller ones, but like this. So there was a value for the whole plan, but there was no basically which again causes as problems for us. There's no individual price tag on any measure in the plan. So it was just a global plan. And then you did, you know, there was based on installments and once you submitted that you had reached the target or reached the milestone, then you were paid the installment. And basically at this stage, what we're doing is we're, these are payments to Member States and we're assessing the assessment of the commission to be like or reassessing the assessment of the commission. Because at this stage, we're not looking at money going into projects, for instance, it's really about money being paid on the basis of the delivery of a milestone or target. So that's the big, big difference for us. Obviously, the period that was from February 20 until December 26. So we're almost halfway, halfway through now, as I say reforms and investments were agreed in the plans and we're somehow linked to the US semester project. And it was obviously a focus on two particular areas to green and digital there was this targets in the overall plans that they want to reach 37 and different percentages for digital and green to basically, you know, economies more resilient in terms of digitalization and also climate friendly in terms of the green, green measures, the green deal. And as I say, the payment is linked to the achievement of milestones and targets. So the problem is not the problem is, as I say, it's all borrowing. So the borrowings will have to start to be repaid in 2028 over a 30 year time period so until 2058. And that's why we always say that it has been very well named this instrument because it would be the next generation will have to pay it all back. I mean, so we think it's very well, well, well named. But as I say, I mean, the loans will the loan element will be repaid by the member states because that's their obligation and the grants which is around 348 billion euros. That's basically a cost for the tax payer at the end of the day, because the loans which have funded it will have to be be repaid. So 250 billion or around 30% will actually be from the true green bonds and the rest will be just, you know, other other bonds on the market. And as I say, to grant the to repay, they have made a proposal in terms of additional sources of funding because the budget as it stands, they cannot repay the loans and related interest because it will have obviously an impact on the activity levels of the commission unless they, you know, unless they borrow more, let's say, or unless the member states want to increase their contributions, which in the current climate is not really very enthusiastically received. So the state of play at the moment is, as I said, it was an emergency instrument, but we still only halfway through we have around 35% of the grants have been drawn down, 35. And Ireland, I mean, is made its first payment claim in September for 324 million, but it's still in the process of being assessed by the commission. As I said, the pressure will be that the funds need to be committed by the end of 2026. So we still have three years left. And, you know, approximately, as I said, as I already said, 35% have been paid as we reached a halfway point and 15% of the loans. But what's very interesting to me is we have 27 member states as you all know, five member states have got absolutely no money so far, including Ireland. And another four member states have only got the pre-financing. So the pre-financing was 13%, you were entitled to the one your plan was approved. So in fact, nine member states actually have no real, you know, claim yet in terms of the NGU. So this is what we're being worried that this is, you know, pressure will build basically to spend the money before the end of 2026. In terms of at the time when these loans were being negotiated, obviously the interest rates were negligible and didn't have any real impact. For 2022, we see that there's a half a billion euro charge on the EU accounts. And in the 2024 budget, which was just approved a couple of weeks ago, it's another 3.3 billion charge for 2024. So it's becoming a significant figure in the accounts. And another issue is, I think if you've seen this in the midterm, maybe we'll come back to a later. There's a midterm review on going up the multi financial framework. Part of that is also needed. There's another 18, 19 billion euro required to cover interest rates, interest charges after 2024 for the rest of the programming period. So it's a very significant amount. So that's basically the context where we are at the moment. And then with our perspective. So basically, we've done a lot of work here and I don't want to go into every one of them. Just to say we have done a number of opinions on the scheme and it was initially introduced. We have reviewed the plans. We have looked at different aspects like the debt management, you know, how the commission, you know, goes on the market to fund. We've also done the ones in yellow. I think at the most ones we will probably touch on in the presentation today. We see, you know, in terms of the commission's control system, we have, we have concluded in that report, which was issued in was number seven of 2023. I think it was March 23. We issued that there is an accountability gap at the level we see. And it's a bit worrying. We will, we will again come back to that later. We have an annual report where we basically report on the multi financial framework budget. But because of the difference in nature of the recovery and resilience facility, we actually have a separate chapter on that. And we give a separate opinion on the, on that facility because as I say, it's so different than you know. And I think a very interesting report, which is only issued a few weeks ago is about the performance monitoring framework where you will see that we have some serious concerns about how they're actually going to measure the performance of this instrument because there are a lot of, you know, we will come back to it again. I mean, there's not a lot of the basic, the framework in place in our view won't allow for a proper management of the actual impact, which goes back to what I was talking about earlier. That's really an implementation. You get paid for what you do and then the impact will be very difficult to measure. So our annual report, as I say, we have a chapter because of the delivery model we have. The year before was there was only one payment and that was in their annual report for 2021. That was to Spain and just to give you an indication of the type of things we're talking about here. It was 52 milestones, all reforms, 11 and a half billion euros was the payment. Again, no real costs at that stage for Spain. The costs will be later on when they make investments. So again, it was like a cara for Member States to actually implement reforms and then you get the money up front, basically, and then you spend the money later. But this is leading to its own issues, which again we will come back to. So basically, we looked at all of the 13 grand payments to 11 Member States and this covered 244 milestones and 37 targets. So far we've been looking in a way that we've been able to cover all the payments so far because they have been much less than we anticipated. So we've actually been able to look at almost every payment. So in our view, 15 of those milestones and targets are affected by regularity issues, which means we don't think either the milestone hasn't been satisfactory fulfilled or there's some eligibility issue with the milestone. And based on this, we've given a qualified opinion based on these quantitative milestones and also other qualitative considerations that we have. So it's a qualified opinion that we have given for 2022. And this is basically a breakdown by the different Member States of the quantitative and qualitative findings. And not surprisingly, I mean, because of the volume of payments which have been drawn down by Spain and Italy, you can see that six out of the 15 basically relate to Spain and Italy. So this is basically the breakdown of the type of issues that we're finding. So either the non-satisfactory fulfilment of milestones and targets, which I already mentioned, financing, recurring national budgetary expenditure of something that was already in place before the city and it's just ongoing recurring expenditure, which we consider not to be eligible. You know, measures starting before the eligibility period because there was a starting deadline and we had one case of potential double funding and one reversal of a measure. The reversal of a measure is a very interesting thing because that's the only basically option where the Commission has the right to reclaim money afterwards. I mean, unless there's a serious fraud or regularity, but if a reform is implemented and it's subsequently reversed, they're entitled to ask for some of the money back. But again, we will come back to how we quantify that amount of money is another issue or challenge, let's say. So again, these are some of the challenges and risks that we see. So as I say, you know, assessing whether something is regular is a persistent challenge because basically the milestones and targets are very highly defined and leads to an awful lot of interpretation of arguments between us and the Commission, you know, because there are multiple judgments, you know, get legal opinions, which are different and, you know, and varying conclusions and interpretation. So it's really a difficult thing. I mean, we have the same sort of issues under the multi-financial framework, but the less the more concentrated. I mean, there it's clear that the difference is here. There's a lot of vagueness and maybe, you know, that helps the flexibility to keep things vague. So as I say, we don't pursue the narrow rate for our normal expenditure. We actually have a narrow rate, which we cannot do here because it makes sense because it's not a homogeneous population. As I already alluded to, the partial payment methodology is an issue. If, for instance, the Commission decides when a payment claim is submitted that two of the measures haven't been satisfactorily fulfilled, well, what's the value of that? How much will they retain from the payment? And they've developed the methodology base because we raised the issue saying you don't have any methodology, you should have it. In fact, in their view, they should have basically had some sort of a price tag at the very start that you can follow. I mean, that's not what it's going to dream. Then it's easy to match. But their methodology is exactly the same. It's extremely judgmental. And, you know, what we would say is they always try and pay where they can. That's the principle objective. So even the partial payment, there's a lot of judgmental issues involved. And as I say, the absorption is an issue because, as we said, only 35% has already been drawn down. And the issue here is if it's not extended, basically the pressure will be on to spend the money very quickly. And what we find whenever we're doing audits of any programs is where does pressure on administrations to spend money? They make mistakes or they take projects which are not the best use of, say, taxpayers money. So we see this as a potential risk going forward. We have issues with the Commission's control system, as I said earlier. We think there's a gap there because basically they're saying to us, you know, under the normal cohesion or natural resources funding, it's sort of shared management, shared responsibility between the Commission and the Member State. Here I think they've gone a bit forward or it's almost like decentralized responsibility. They basically said to the Member States, you declared to us that all the national and EU rules have been complied with. And to be honest with you, for us, it's sort of a self-policing by the Member States, if you like. But for us, the problem is we're having problems. These type of investments, when they do materialize, are going to be very like the cohesion type, their infrastructure, etc. So they're going to be very like the cohesion type expenditure that we already have, as I say, you know, and they need to be compliance. Because the compliance with EU and natural rules is not a condition at the time when the initial payment is made to the Member State. It's subsequently when the investments are actually realized then. So the problem will only feature down the road, I think. I mean, that's where we're going to run into the real problems, because I say most of the payments have been based on reforms rather than investments. And as I say, because the investments are like cohesion, in our normal sort of budgetary annual report, we show that our error rate in cohesion, where we do have an error rate, went up to 6.4% in 2022, increased by 80%. I mean, there were reasons for it, but we also said we can't rely on the work of the control systems in the Member States. So we can't rely where there is a control system in place, and now we're asking the Member States to self-declare that everything is okay. We see huge risk there. And just to show you, you know, the three reasons why even for the cohesion that the 6.4, I think, went up. One was because, again, the 14-20 programming periods come into an end. Again, pressure to spend. Secondly, the sample was the fourth period where COVID conditions really applied. It was July 20 to June 21. So the other authorities, et cetera, in the Member States couldn't go on the spot. They were walking from home, or whatever it was. So we see that that contributed. And the total, which again, is linked to the pressure to absorb. And it's something like where, you know, a well-intentioned initiative caused some problems there. We had the COVID response investment initiative where basically Member States could get 100% funding for one year. It was extended by another year afterwards, but initially it was for a year. So again, the focus was on Member States to spend this money quickly. And of the 6.4%, 3% is related to those type of projects. So it's a difficult area, as I say. Now, performance monitoring framework. This is the report I referred to just a while ago. I mean, we issued it about a month ago now, I would say. And again, the problem is that, you know, very few of the indicators that they've set up are actually related to results. So they're mostly, again, output indicators, which is basically a criticism we often have of commission programs that the indicators they set won't actually measure impact or performance, really. There are 14 policy areas across the six different pillars, which are not covered by any common indicator. So here we're saying, OK, how are you going to measure in that policy area when you have no indicator, neither output or result? And the last thing which I think was very interesting for us was we basically did a survey where we asked 16 Member States to basically map themselves for us. We said, OK, there are measures you map to the indicators that we'll be able to measure. And basically, I think it's 36 of the measures could not be linked to any indicators. And that varied from 18% in, I think it was Belgium to 61% in Romania. So again, how are you going to be able to measure this if, in one Member State, the 61% of the actual measures or targets have no actual related indicator? So that's why, as I say, we can't, at this stage, I mean, it's so early in the process, but we see problems in terms of actually being able to manage to adequately judge as a really, whether it's performance-based or whether it has actually achieved the objectives that it was set out to do. So some of the other links here I would say are, again, at the start, the idea was we have green tagging. At the start, we target certain projects or measures or milestones that were flagged as green. And then basically the Member State just puts in expenditure and no one is really checking this. And we're a bit worried because two reasons. First of all, there's the green bonds, which means there is an obligation to the issuers of the bonds to make sure that the expenditure is actually green. And secondly, we have a sort of a history here where we looked at, in terms of a special report we've done on climate targets where the Commission said they had met the 20% target in terms of spending one in five euros on greening measures. We assessed that and we disagreed. I think the total was something like 210 billion during the programming period. And we said they overestimated it by 72 billion. So we're saying that that's not really green. So again, we have some issues about the reliability of the information which might not be reported as green, let's say. And digital, there's no actual really monitoring of that. That's just in the plan as a target. And again, they were tagged at the start and then that's it basically. So as I say, it was designed based on installment profiles. Some Member States get a lot of money up front. Others get it more equal installments that depended on different criteria. I mean, how much the Member State needed the money was one of them. Basically, the Commission said it was based on the importance of the reforms or whatever was in the different installments. But it's very difficult to see that direct link as I say. Then we see that there are huge difficulties in amending the plans. Many Member States have amended the plans because as you can imagine, the situation compared to, you know, the middle of 2020 is not the same now. So priorities and even indeed governments have changed and that their plan doesn't relate to what they want to do, let's say. And it's a very, very administratively heavy process to change the plans. So I think the initial negotiation took very long in the first place. I mean, to get them approved took, I mean, it took much longer than anyone anticipated. Now we have the changes in the plans. And again, as I said earlier, because there's no price tags on anything, this is even worse for us. Because now if you start messing around with the plans and taking some important things in, you know, what are we talking here? Are we replacing like but like? It's really from, as I say, from an auditor's point of view, it's really a difficult thing to audit. And as I already said that, you know, the error rate and cohesion has increased. As I say, we see a direct correlation in the future maybe between the cohesion type expenditure and the investment expenditure under this regulation. So I think it's also important to put the whole thing in the context. I mean, you know, the recovery resilience specifically is just one form which is available. What we actually see is that there are competing funds now. I mean, the same projects, there's a limited amount of projects and there are a lot of different funds. And I mean, a member states are attracted obviously to the ones which give the most funding. I mean, in terms of our in terms of the recovery and resilience facility, again, it's 100 percent there. There's no co-financing required. So compared to the multi financial framework, the attraction will be to start in the recovery and resilience force. So what we see is low absorption of 14-20 funds, which the cutoff is December this year. So it was 80 percent at the start of at the end of 2022. So what we really see in here is in Italy and Spain, particularly because they're particularly benefiting from the recovery and resilience, their absorption rate at the end of September 2023. If you take out the agricultural funds of the other four ease of funds, if you take out the agricultural ones, it's only 57 and 67 percent at the end of September. So three months left to spend that amount of money again goes back to what I was saying earlier about absorption pressure. You know, how are they going to spend all this money in a very good way, let's say. So, you know, we have a standard commitments have reached the record level of 453 billion. I mean, it's a multiple of the budget, let's say, as I say, the pressure to increase spending, you know, you've got the inflation impact in terms of the portioning power of the budget. At the same time, you have this, you know, increase in terms of the EU interest charge. I mean, we've gone up to 344 billion. There's another 220 billion, which will potentially drop be drawn down just for the recovery and resilience facility before the end of 26. The midterm review, I mean, as I already referred to earlier, 66 billion. I think 17 of that is for Ukraine grants to Ukraine. There's another 23, but that's loans. So you've got all this and that is really, it's really problematic at the moment in terms of being negotiated member states are saying they don't want to pay any money, any extra money in. So where's the 66 billion going to come from? They want the commission to basically cook in different areas. The commission is already saying, well, we've already been caught and the problem I see with the commission is they're taking on more and more responsibilities, put more and more, you know, pressure even on our own administration, let's say, and especially the administrating heading like in most member states, that's really under pressure that nobody wants to give any increases there in terms of either additional resources or whatever. I think, you know, there's a big issue there in terms of the debt itself. I mean, another 220 billion. I've already given the figures for the 3.3 for 2024. There's another 18, maybe 19 billion in the 66 MFF review is related to interest charges for NGU going forward. And then, you know, again, as I said, there's more and more activities coming online like the Ukraine, which obviously is a very good cause, but I mean, at the end of the day, it has to be paid for. I mean, our exposure has doubled in 2022 from 7 to 16 billion. And as you know, there are still many, many loans which have gone out in 2023. And then there's the Ukraine facility, which will be another 50 billion, a mixture of 33 billion in loans and 17 in grants. So there's all this pressure on the budgetary system, I think, as to how they can source the funding for this. I mean, there's more and more demands and the problem is where is the money actually going to come from. And this leads me to the next thing, which is one of the proposals on the table as you probably have seen in the Irish media in the last few weeks is that we've given the opinion on this proposed on resources. I mean, there are three, three basically, you know, sources, EU emissions, carbon border adjustment mechanism. But the big one, basically in terms of the Irish situation is the share of the residual profits of the operating profits of operating sources of the multinational. I mean, that is a huge issue for basically for Ireland. We have given an opinion on the basically the technicalities of these sources, not about fairness or whether it's good or it's bad, just whether they can work or not. And I mean, you can see the attraction for the commission of number three because it's basically based on the percentage of your GNI, which is made up of these operating surplus and they just apply a levy of 0.5%. And so it's easy for them. But the problem is in the detail. Let me come to this. You can see that Ireland is really an outlier. I mean, Ireland has 80%, 80% of its GNI is basically made up of these operating sources compared to we have Luxembourg and Malta, the next two there. The average is around 23% across the EU. So it would really impact Ireland very, very heavily, I would say. And as you know, I mean, the approval of this process is ongoing through the system, but I mean, it would require unanimity at the council. And I think they will have a hard job convincing Ireland to agree to this. It would increase basically our EU contribution last year was around 3.5 billion. And I think it would increase by another 1.5 billion. So it's really significant. So as I say, this is a huge area for us in terms of resources. We've got additional resources specifically to do this for the temporary timeline that that's supposedly involved. As we said, absorption, we're doing another on absorption. We've already raised some of the issues there. Looking at the control systems in the member states, because as I say, this is key now if the commission is delegating it to the member states, you know, digital transition, green transition. Obviously, they're two important elements, as I said, in terms of following whether this is really, you know, being followed through in the plans. We will have our annual report for 2023 again, which will look at the again, the legalty and legalty and regularity of the payments. Now, the payments this year will be we're expecting 16, 16 member 18 member states around 67 billion euros, 23 payments. That was actually expected to be around 40, 42. So you can see that, you know, it's half roughly of what was expected to be processed this year, which again brings us back to the absorption again at the start. And then we're looking at just double funding because of this competing funds to make sure that, you know, projects are not getting funding from multiple sources of the funds. And then we're looking at the labor market. This is where we're starting to go into the actual. This is the force when we do and we see how it goes because I mean, we're looking then to see there, you know, how the labor market reforms in the plans are being implemented, let's say. But I mean, then you're, you know, we have to be careful not to stray into into a national competences there. But at least from the perspective of the, you know, the RF funding, which is being directed in that direction. Then we have a lot of other work, which has yet to start. As I say, this is really a big bulk of work that we're doing. I mean, we have a review of the RF, you know, was it well designed. Now, the member states control systems, they already mentioned the minister of reforms, repowering you obviously is very important. We gave an opinion already on the repowering you where we weren't convinced that was the best idea basically to give everyone, which is the EU approach. Generally, everyone gets a slice of the pie. You know, there's an allocation key every member states get something we taught there it would have been better. They pick key energy projects that maybe transport the projects and concentrate on them, which would have a better added value. You know, for the EU rather than this piecemeal approach, which maybe the other value may not be, may not be so, so much. So to say the next one, if the labor reforms goes okay, we will look at educational forms. We're also looking at RF fund investments and energy efficiency. So it's a really a huge range of work that we're doing. And what we're hoping to do is all this won't be finished by by by next year. But during this year, we hope to sort of do a synopsis of all the work that we have done to date and feed it in as a contribution because the negotiations on what's next. We'll already start in terms of the next multi financial framework, whether it will be an MFF plus or whether it'll be some sort of an RF variant or whatever. So I think it's important that we, at least without, you know, I think I was talking to Dan earlier. I mean, we're not there to criticize legislation. What we're there to say is this is the legislation that was enacted and now we're looking at how it's been implemented. And if we see particular risks or problems or challenges with it, we highlight that to the legislators in this case, the European Parliament and the Council. And at the end of the day, they they weigh up the risks and they make the decision based on that. So it's really just a contribution to the legislative process. So I hope there wasn't too much there overall. We could we could have added a lot more slides, but we thought enough is enough detail there and any questions are more than welcome. Thank you.