The European Union (EU) is negotiating its budget for 2014 to 2020. Although not part of the EU budget itself, the negotiations on the European Development Fund (EDF), the financial arm of the Cotonou Agreement between the EU and 78 countries of Africa, the Caribbean and the Pacific (ACP) and the Overseas Countries and Territories (OCTs) form an important part of the broader budget debate.

The EU is coming to the end of its 10th EDF, which runs for six years from 2008 to 2013 with a budget of €22.7 billion. This represents about 30% of EU spending on development cooperation aid, with the remainder coming directly from the EU budget.

Negotiations are underway for the 11th EDF, which, as proposed, would cover a seven-year period from2014 to 2020. This one-year extension allows the end of the 11th EDF to coincide with the expiration of the Cotonou Partnership Agreement in 2020 and the EU budget period. In June 2011, the European Commission made five proposals that would determine the direction of the EDF. It proposed:

• maintaining the EDF as a separate fund outside the main budget – the Multi-Annual Financial Framework (MFF)
• increasing the overall amount of the EDF from €26.93 billion to €30.32 billion, a 13% increase (in 2011 prices)
• further aligning the Member States’ EDF ‘contribution key’ with the key used for the EU budget (based on GNI per capita)
• improving the democratic scrutiny of the EDF
• increasing the support/administrative expenditureof the EC from 2% to 5%.

This Background Note analyses the proposals by the European Commission (EC) for the11th EDF (2014-2020) and reviews the current state of play on the the design of future funding to the ACP.