Komisjoni teatis - COM(2026) 327

EN EN

EUROPEAN COMMISSION

Brussels, 22.6.2026

COM(2026) 327 final

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN

PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND FOR THE

FINANCIAL YEAR 2025

Annual accounts of the European Development Fund 2025

1

CONTENTS

CERTIFICATION OF THE ACCOUNTS ................................................................... 2

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES ............................... 3

FUNDS MANAGED BY THE EUROPEAN COMMISSION ............................................. 7 FINANCIAL STATEMENTS OF THE EDF ........................................................................... 9 FINANCIAL STATEMENTS OF THE EU TRUST FUNDS BÊKOU AND EU TRUST FUND AFRICA 51 FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2025 .................................... 52 FINANCIAL STATEMENTS OF THE EUTF AFRICA 2025 ................................................... 60 CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS .......... 69 EDF REPORT ON FINANCIAL IMPLEMENTATION ............................................................ 74

Annual accounts of the European Development Fund 2025

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CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2025 have been prepared in

accordance with Title X of the Financial Regulation of the 11th European Development Fund and with the accounting principles, rules and methods set out in the notes to the financial statements.

I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Development Fund in accordance with Article 18 of the Financial Regulation of the 11th European Development Fund.

I have obtained from the authorising officer and from the EIB, who guarantee its reliability, all the

information necessary for the production of the accounts that show the European Development Fund's

assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present a true and fair view of the financial position of the European Development Fund in all material aspects.

Niall BOHAN

Accounting Officer

Annual accounts of the European Development Fund 2025

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IMPLEMENTING AND ACCOUNTING FOR

THE EDF RESOURCES

1. BACKGROUND

The European Union (‘the EU’) has cooperative relations with many developing countries. The main objective of these relations is to promote economic, social and environmental development, with the primary aim of reducing and eradicating poverty in the long-term by providing beneficiary countries with

development aid and technical assistance. To achieve this, the EU draws up, jointly with the partner countries, cooperation strategies and mobilises the financial resources to implement these strategies.

These EU resources allocated to development cooperation come from three sources:

- the EU budget; - the European Development Fund (EDF); and - the European Investment Bank (EIB).

The EDF is not funded by the EU budget. It was established by an Internal Agreement of the

representatives of the Member States, sitting within the Council, and is managed by a specific committee. The European Commission (‘the Commission’) is responsible for the financial implementation of the operations carried out with EDF resources. The EIB manages the Investment Facility.

The EDF is made up of individual EDFs, each of which is concluded for a period of around five years and is governed by its own Financial Regulation. This requires the preparation of specific financial statements. In addition, these financial statements are aggregated so as to provide a global view of the financial

situation of the resources for which the Commission is responsible.

Up until 2021, when the 11th EDF reached its final stage as the ‘sunset clause’ came into effect on 31 December 2020, the EDF was the main instrument for providing aid for development cooperation to the African, Caribbean and Pacific (ACP) states and overseas countries and territories (‘OCTs’). However, since 2021 EU cooperation with ACP states and OCTs has been funded through the EU budget.

Under the ACP-EU Partnership Agreement, the Investment Facility was established, managed by the EIB, and used to support private sector development in the ACP states by financing mostly – but not

exclusively – private investments. The Investment Facility is designed as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a self-renewing and financially independent facility. Because the Investment Facility is not managed by the Commission, it is not consolidated in the first part of the annual accounts – the financial statements of the EDF’s and the related report on financial implementation. The financial statements of the Investment Facility, prepared by the EIB, are included as a separate part of the EDF’s annual accounts (part II) to provide a full picture

of the development aid of the EDF.

2. HOW IS THE EDF FUNDED?

The Council of 2 December 2013 adopted Regulation (EU, Euratom) 1311/2013 laying down the Multiannual Financial Framework for 2014-2020. In this context, it was decided that geographical cooperation with the ACP states would not be integrated into the EU budget but would continue to be funded through the existing intergovernmental EDF.

Unlike the EU budget, the EDF is a fund that operates based on multi-annuality. Each EDF sets up an overall fund to implement development cooperation typically for a period of five years. Because resources

are allocated on a multiannual basis, the allocated funds may be used over the period of the EDF. The fact that budgets are set for a period of several years – rather than being set for a single year is highlighted in the budgetary reporting, where the budgetary implementation of the EDFs is measured

against the total funds.

The EDF resources are ‘ad hoc’ contributions from the EU Member States. Approximately every five years, Member State representatives met at intergovernmental level and decided on an overall amount to be allocated to the fund and to oversee its implementation.

Annual accounts of the European Development Fund 2025

4

The Commission manages the EDF in accordance with the EU’s policy on development cooperation. Since Member States have their own development and aid policies in parallel to the EU policy, the Member States must coordinate their policies with the EU to ensure they are complementary.

In addition to the contributions, it is also possible for Member States to enter into co-financing

arrangements or to make voluntary financial contributions to the EDF.

3. EDF ACTIVITIES AFTER 31 DECEMBER 2020

The Commission is currently working towards the closure of the 9th EDF (which ran from 2000-2007), and which incorporated remaining balances transferred from the 8th EDF (which ran from 1995 to 2000) in accordance with the provisions of Part 3 of the financial regulation1 applicable to the 9th EDF. Currently, there are still 4 ongoing contracts funded under the 9th EDF, which will reach their conclusion within the specified timeframe, contributing to the finalisation of activities and projects associated with

the 9th EDF. The full closure of the 9th EDF can only be accomplished once all contracts come to an end

and following the completion of their evaluations and audits.

The closure of the 10th EDF (which ran from 2008 to 2013) is progressing well with 97.97 % of its contracts already closed. However, the operational and financial closure of the remaining contracts will take some time. The financial closure requires the launch and completion of all necessary evaluations, audits and recoveries.

The 11th EDF (which ran from 2014 to 2020) has reached its final stage as the sunset clause came into

effect on 31 December 2020. This clause sets a cut-off date for commitments meaning that as of 2021 no further financing decisions can be adopted under the 11th EDF. However, the implementation of actions already committed continues beyond this date. Given the long duration of certain projects, a number of contracts are expected to run until 2035 and, in some cases, even up to 2040. In addition, should a decision be taken to reuse decommitted funds, this could further extend the overall end date of the EDF. Consequently, the closure of the 11th EDF cannot be linked to a fixed date. It will depend on the full

implementation of all ongoing operations, as well as the completion of subsequent audits, evaluations,

and the financial clearance of all accounts.

Under the current Multiannual Financial Framework 2021-2027, EU cooperation with ACP countries is integrated in the Neighbourhood, Development and International Cooperation Instrument –Global Europe. Similarly, the cooperation with OCTs is now covered by the Overseas Association Decision. This means that, although up to 2021 the EDF programmes were funded by the voluntary contributions of EU Member States, as of 2021 development programmes will be funded through the EU budget. This also implies that the funding of development programmes is subject to the authorisation of the European

Parliament, and that the transactions must comply with the EU’s Financial Regulations in the same way as other EU-funded programmes.

4. YEAR-END REPORTING

4.1. ANNUAL ACCOUNTS

In accordance with Article 18(3) of the EDF Financial Regulation, the EDF financial statements are prepared based on accrual-based accounting rules that themselves are based on the International Public Sector Accounting Standards (IPSAS). These accounting rules adopted by the Accounting Officer of the Commission are applied by all the institutions and bodies of the EU in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements. These EU accounting rules are also applied by the EDF while

taking into account the specific nature of its activities.

The preparation of the EDF’s annual accounts is entrusted to the Commission's Accounting Officer who is the Accounting Officer of the EDF and ensures that the annual accounts of the EDF present a true and fair view of the financial position of the EDF.

The annual accounts are presented as follows:

1 OJ L 83, 1.4.2003, p. 27.

Annual accounts of the European Development Fund 2025

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Part I: Funds managed by the Commission

(i) Financial statements of the EDF, including explanatory notes and financial statements for each individual EDF. These statements also include the contributions made to the EU Trust Fund Bêkou and the EU Trust Fund for Africa.

(ii) Financial statements of the EU Trust Fund Bêkou and the EU Trust Fund for Africa, prepared under the responsibility of the Commission’s Accounting Officer and subject to external audit carried out by a private auditor.

(iii) Consolidated financial statements of the EDF and the EU trust funds

(iv) Report on financial implementation of the EDF

Part II: Funds managed by the EIB - Annual report on implementation

(i) Financial statements of the Investment Facility

The EDF’s annual accounts must be adopted by the Commission no later than 31 July of the year following the balance sheet date and presented to the European Parliament and to the Council for discharge.

5. AUDIT AND DISCHARGE

5.1. AUDIT

The EDF’s annual accounts are audited by its external auditor, the European Court of Auditors

(hereinafter referred to as the ‘ECA’), which draws up an annual report for the European Parliament and the Council.

5.2. DISCHARGE

The final control of the financial implementation of the EDF resources for a given financial year is the discharge. Following the audit and finalisation of the annual accounts, it falls to the Council to recommend, and then to the European Parliament to decide, whether to grant discharge to the

Commission for the financial implementation of the EDF resources for a given financial year. This decision is based on a review of the accounts and the annual report of the ECA (which includes an official statement of assurance) and replies of the Commission to questions and further information requests of the discharge authority.

Annual accounts of the European Development Fund 2025

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HIGHLIGHTS OF FINANCIAL

IMPLEMENTATION 2025

* Net amount, only 10th & 11th EDF

Budget implementation

In 2025, net payments of EUR 893 million were made under the 10th EDF and 11th EDF. The total

amount of gross payments for the EDF in 2025 amounted to EUR 949.98 million, which represents 95%

of the target of EUR 1 000 million communicated to the Member States.

In 2022, the Council unanimously decided to reuse EUR 600 million of de-committed funds from the 10th

and 11th EDF to finance actions addressing the food-security crisis and economic shock in ACP countries

following Russia’s war of aggression against Ukraine. The Commission committed this EUR 600 million in

2022 and disbursed EUR 450 million up until 2025.

Impact of the activities in the financial statements

In the financial statements, the impact of the above mentioned activities is most visible when looking at:

— pre-financing (see Note 2.2): a decrease of EUR 219 million largely reflecting the progressive

closure of the EDF and the resulting reduction in the number of new contracts. In 2025, only 21 contracts were signed compared with 181 in 2024;

— cash and cash equivalents (see Note 2.5): a decrease of EUR 125 million, primarily due to lower contributions from donors, which declined from EUR 1 200 million in 2024 to EUR 800 million in 2025;

— accrued charges (see Note 2.8): a decrease of EUR 79 million reflecting the reduction in the number of open contracts at year-end for which cost claims had not yet been validated; and

— aid instruments (see Note 3.4): an overall decrease of EUR 193 million mainly due to the

reduction in expenses under the 11th EDF, from EUR 1 145 million in 2024 to EUR 953 million in 2025. This trend reflects the decreasing volume of new contracts signed since 2021.

(2.000)

0

2.000

4.000

6.000

8.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

10th and 11th EDF budget implementation 2008-2025

Commitments Contracts Payments

Annual accounts of the European Development Fund 2025

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EUROPEAN DEVELOPMENT FUND FINANCIAL YEAR 2025

PART I

FUNDS MANAGED BY THE EUROPEAN

COMMISSION

Annual accounts of the European Development Fund 2025

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CONTENTS

FINANCIAL STATEMENTS OF THE EDF ................................................................ 9

EDF BALANCE SHEET ................................................................................................ 10 EDF STATEMENT OF FINANCIAL PERFORMANCE ........................................................... 11 EDF CASHFLOW STATEMENT ..................................................................................... 12 EDF STATEMENT OF CHANGES IN NET ASSETS ............................................................ 13 BALANCE SHEET BY EDF ........................................................................................... 14 STATEMENT OF FINANCIAL PERFORMANCE BY EDF ...................................................... 16 STATEMENT OF CHANGES IN NET ASSETS BY EDF ....................................................... 17 NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ................................................... 19

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS BÊKOU AND EU TRUST FUND

AFRICA........................................................................................................ 51

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2025 ........................... 52 BALANCE SHEET ...................................................................................................... 57 STATEMENT OF FINANCIAL PERFORMANCE ................................................................. 58 CASHFLOW STATEMENT ............................................................................................ 59

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2025 .......................................... 60 BALANCE SHEET ...................................................................................................... 66 STATEMENT OF FINANCIAL PERFORMANCE ................................................................. 67 CASHFLOW STATEMENT ............................................................................................ 68

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS . 69 CONSOLIDATED BALANCE SHEET ............................................................................... 70 CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE .......................................... 71 CONSOLIDATED CASH FLOW STATEMENT ................................................................... 72 CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ........................................... 73

EDF REPORT ON FINANCIAL IMPLEMENTATION .................................................. 74

Annual accounts of the European Development Fund 2025

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PART I.1

FINANCIAL STATEMENTS OF THE EDF

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up.

Annual accounts of the European Development Fund 2025

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EDF BALANCE SHEET

EUR million

Note 31.12.2025 31.12.2024 NON-CURRENT ASSETS

Financial assets 2.1 116 128

Pre-financing 2.2 492 500

Trust Fund contributions 2.3 87 188

Exchange receivables 2.4 5 5

700 821

CURRENT ASSETS

Financial Assets 2.1 1 5

Pre-financing 2.2 532 742

Exchange receivables and non-exchange recoverables 2.4 37 37

Cash and cash equivalents 2.5 286 411

856 1 194

TOTAL ASSETS 1 556 2 016

NON-CURRENT LIABILITIES

Financial liabilities 2.6 (1) (1)

(1) (1)

CURRENT LIABILITIES

Provisions 2.6 – (2)

Payables 2.7 (187) (256)

Accrued charges 2.8 (695) (774)

(882) (1 032)

TOTAL LIABILITIES (883) (1 032)

NET ASSETS 673 983

FUNDS & RESERVES

Called fund capital - active EDFs 2.9 56 488 55 704

Called fund capital from closed EDFs carried forward 2.9 2 252 2 252

Economic result carried forward from previous years (56 973) (55 733)

Economic result of the year (1 094) (1 240)

NET ASSETS 673 983

Annual accounts of the European Development Fund 2025

11

EDF STATEMENT OF FINANCIAL PERFORMANCE

EUR million

Note 2025 2024 REVENUE

Revenue from non-exchange transactions

Recovery activities 3.1 12 41

12 41 Revenue from exchange transactions

Financial revenue 3.2 8 19

Other revenue 3.2 20 71

28 90

Total Revenue 40 131

EXPENSES

Implemented by other entities 3.3 (4) (4)

Aid instruments 3.4 (1 043) (1 237)

Co-financing expenses 3.5 (1) (17)

Finance costs 3.6 (40) (3)

Other expenses 3.7 (46) (110)

Total Expenses (1 133) (1 371)

ECONOMIC RESULT OF THE YEAR (1 094) (1 240)

Annual accounts of the European Development Fund 2025

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EDF CASHFLOW STATEMENT

EUR million

Note 2025 2024 Economic result of the year (1 094) (1 240)

Operating activities

Capital increase - contributions (net) 784 1 138

(Increase)/decrease in trust funds contributions 101 28

(Increase)/decrease in pre-financing 219 287

(Increase)/decrease in exchange receivables and non-exchange

recoverables (0) (12)

Increase/(decrease) in provisions (2) (0)

Increase/(decrease) in financial liabilities 0 (2)

Increase/(decrease) in payables (68) (136)

Increase/(decrease) in accrued charges and deferred income (79) (210)

Investing activities

(Increase)/decrease in non-derivative financial assets at fair value through surplus or deficit*

15 (42)

NET CASHFLOW (125) (190)

Net increase/(decrease) in cash and cash equivalents (125) (190)

Cash and cash equivalents at the beginning of the year 2.5 411 601

Cash and cash equivalents at year-end 2.5 286 411

Annual accounts of the European Development Fund 2025

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EDF STATEMENT OF CHANGES IN NET ASSETS

EUR million

Fund capital

- active

EDFs (A)

Uncalled

funds -

active

EDFs (B)

Called fund

capital - active

EDFs (C) = (A)-

(B)

Cumulative

reserves (D)

Called fund capital

from closed EDFs

carried forward (E)

Total net

assets

(C)+(D)+(E)

BALANCE AS AT 31.12.2023 60 607 6 040 54 566 (55 732) 2 252 1 086

Capital increase - contributions (62) (1 200) 1 138 – – 1 138

Economic result of the year – – – (1 240) – (1 240)

BALANCE AS AT 31.12.2024 60 544 4 840 55 704 (56 973) 2 252 983

Capital increase - contributions (16) (800) 784 – – 784

Economic result of the year – – – (1 094) – (1 094)

BALANCE AS AT 31.12.2025 60 528 4 040 56 488 (58 066) 2 252 673

Annual accounts of the European Development Fund 2025

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BALANCE SHEET BY EDF

EUR million

31.12.2025 31.12.2024

Note Ninth

EDF 10th EDF 11th EDF Total

Ninth

EDF 10th EDF 11th EDF Total

NON-CURRENT ASSETS

Financial assets 2.1 – 12 104 116 – 14 114 128

Pre-financing 2.2 – 382 110 492 – 418 82 500

Trust Fund contributions 2.3 31 9 47 87 31 9 148 188

Exchange receivables – – 5 5 – – 5 5

31 403 266 700 31 441 349 821

CURRENT ASSETS

Financial assets – – 1 1 – – 5 5

Pre-financing 2.2 – 50 481 532 6 81 655 742

Exchange receivables and non- exchange recoverables

2.4 – 15 23 37 – 21 16 37

Inter-EDF accounts (207) 168 39 – (207) 227 (20) –

Cash and cash equivalents 2.5 – – 286 286 – – 411 411

(207) 233 830 856 (201) 329 1 067 1 194

TOTAL ASSETS (176) 636 1 096 1 556 (170) 770 1 415 2 016

NON-CURRENT LIABILITIES

Financial liabilities 2.6 – – (1) (1) – – (1) (1)

– – (1) (1) – – (1) (1)

CURRENT LIABILITIES –

Provisions 2.6 – – – – – – (2) (2)

Payables 2.7 – (16) (171) (187) (0) (25) (230) (256)

Accrued charges 2.8 – (34) (661) (695) (0) (71) (703) (774)

– (50) (832) (882) (0) (96) (935) (1 032)

TOTAL LIABILITIES – (50) (832) (883) (0) (96) (936) (1 032)

–

NET ASSETS (176) 586 263 673 (170) 674 479 983

Annual accounts of the European Development Fund 2025

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EUR million

31.12.2025 31.12.2024

Called fund capital - active EDFs 2.9 10 434 20 816 25 237 56 488 10 435 20 819 24 449 55 704

Called fund capital from closed EDFs carried forward

2.9 2 252 – – 2 252 2 252 – – 2 252

Called fund capital transfers between active EDFs

2.9 (510) (187) 696 – (510) (187) 696 –

Economic result carried forward from previous years

(12 348) (19 959) (24 666) (56 973) (12 348) (19 887) (23 497) (55 733)

Economic result of the year (5) (85) (1 004) (1 094) – (72) (1 169) (1 240)

NET ASSETS (176) 586 263 673 (170) 674 479 983

Annual accounts of the European Development Fund 2025

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STATEMENT OF FINANCIAL PERFORMANCE BY EDF

EUR million

2025 2024

Note Ninth

EDF

10th

EDF

11th

EDF Total

Ninth

EDF

10th

EDF

11th

EDF Total

REVENUE

Revenue from non-exchange transactions

Recovery activities 3.1 1 5 5 12 1 28 12 41

1 5 5 12 1 28 12 41

Revenue from exchange

transactions

Financial revenue 3.2 – – 8 8 – 1 18 19

Other revenue 3.2 – 1 19 20 2 4 65 71

– 2 26 28 2 5 83 90

Total revenue 2 6 32 40 3 33 95 131

EXPENSES

Implemented by other entities 3.3 – – (4) (4) – – (4) (4)

Aid instruments 3.4 (8) (83) (953) (1 043) (2) (90) (1 145) (1 237)

Co-financing expenses 3.5 – (1) – (1) – (12) (5) (17)

Finance costs 3.6 2 (3) (39) (40) – 5 (9) (3)

Other expenses 3.7 (1) (5) (40) (46) (2) (7) (101) (110)

Total expenses (6) (91) (1 036) (1 133) (3) (104) (1 264) (1 371)

ECONOMIC RESULT OF THE YEAR (5) (85) (1 004) (1 094) – (72) (1 169) (1 240)

Annual accounts of the European Development Fund 2025

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STATEMENT OF CHANGES IN NET ASSETS BY EDF

EUR million

Ninth EDF

Fund capital -

active EDFs

(A)

Uncalled

funds -

active EDFs

(B)

Called fund

capital -

active EDFs

(C) = (A)-(B)

Cumulative

reserves (D)

Called fund

capital from

closed EDFs

carried

forward (E)

Called fund

capital

transfers

between

active EDFs

(F)

Total net

assets

(C)+(D)+(E)

+(F)

BALANCE AS AT 31.12.2023 10 442 – 10 442 (12 348) 2 252 (509) (163)

Transfers to/from the 10th EDF – – – – – – –

Transfers to/from the 10th and 11th EDF – – – – – (1) (1)

Refund to Member States (6) – (6) – – – (6)

Economic result of the year – – – 0 – – 0

BALANCE AS AT 31.12.2024 10 435 1 10 435 (12 348) 2 252 (510) (170)

Capital increase - contributions – – – – – – –

Transfers to/from the 10th and 11th EDF – – – – – – –

Refund to Member States (1) – (1) – – – (1)

Economic result of the year – – – (5) – – (5)

BALANCE AS AT 31.12.2025 10 434 – 10 434 (12 353) 2 252 (510) (176)

EUR million

10th EDF

Fund capital -

active EDFs

(A)

Uncalled

funds -

active EDFs

(B)

Called fund

capital -

active EDFs

(C) = (A)-

(B)

Cumulative

reserves (D)

Called fund

capital from

closed EDFs

carried

forward (E)

Called fund

capital

transfers

between

active EDFs

(F)

Total net

assets

(C)+(D)+(E)

+(F)

BALANCE AS AT 31.12.2023 20 834 – 20 834 (19 886) – (120) 827

Transfers to/from the Eighth and Ninth EDF – – – – – 1 1

Transfers to/from the 11th EDF – – – – – (68) (68)

Refund to Member States (15) – (15) – – – (15)

Economic result of the year – – – (72) – – (72)

BALANCE AS AT 31.12.2024 20 819 – 20 819 (19 959) – (187) 674

Transfers to/from the Eighth and Ninth EDF – – – – – –

Transfers to/from the 11th EDF – – – – – –

Refund to Member States (3) – (3) – – (3)

Economic result of the year – – – (85) – – (85)

Annual accounts of the European Development Fund 2025

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BALANCE AS AT 31.12.2025 20 816 – 20 816 (20 044) – (187) 586

EUR million

11th EDF

Fund capital -

active EDFs

(A)

Uncalled funds

- active EDFs

(B)

Called fund

capital - active

EDFs (C) =

(A)-(B)

Cumulative

reserves (D)

Called fund

capital from

closed EDFs

carried

forward (E)

Called fund

capital

transfers

between

active EDFs

(F)

Total net

assets

(C)+(D)+(E)+

(F)

BALANCE AS AT 31.12.2023 29 331 6 040 23 290 (23 498) – 628 422

Capital increase - contributions – (1 200) 1 200 – – 68 1 268

Refund to Member States (41) – (41) – – – (41)

Economic result of the year – – – (1 169) – (1 169)

BALANCE AS AT 31.12.2024 29 290 4 840 24 449 (24 667) – 696 479

Capital increase - contributions – (800) 800 – – – 800

Refund to Member States (12) – (12) – – – (12)

Economic result of the year – – – (1 004) – – (1 004)

BALANCE AS AT 31.12.2025 29 278 4 040 25 237 (25 671) – 696 263

Annual accounts of the European Development Fund 2025

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NOTES TO THE FINANCIAL STATEMENTS

OF THE EDF

It should be noted that due to the rounding of figures into millions of euros, some financial data in the

tables may appear not to add-up

Annual accounts of the European Development Fund 2025

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1. SIGNIFICANT ACCOUNTING POLICIES

1.1. ACCOUNTING PRINCIPLES

The objective of financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of stakeholders.

The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU Accounting Rule 1 ‘Financial Statements’ and are the same as those described in IPSAS 1: fair presentation, accrual basis, going concern, consistency of presentation,

materiality, aggregation, offsetting and comparative information. The qualitative characteristics of financial reporting are relevance, faithful representation (reliability), understandability, timeliness, comparability and verifiability.

1.2. BASIS OF PREPARATION

1.2.1. Reporting period

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 December.

1.2.2. Currency and basis for conversion

The annual accounts are presented in euro, the euro being the EU’s functional currency. Foreign currency transactions are translated into euro using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euro at the date

when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are translated into euro on the basis of the European Central Bank (ECB) exchange rates applying on 31 December.

Euro exchange rates

Currency 31.12.2025 31.12.2024

Currency 31.12.2025 31.12.2024

BGN 1.9558 1.9558 PLN 4.221 4.275

CZK 24.237 25.185 RON 5.0968 4.9743

DKK 7.4689 7.4578 SEK 10.8215 11.459

GBP 0.8726 0.82918 CHF 0.9314 0.9412

NOK 11.843 11.795 JPY 184.09 163.06

HUF 385.15 411.35 USD 1.175 1.0389

1.2.3. Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to: amounts for employee benefit liabilities, financial risk of accounts receivable and the amounts disclosed in the notes concerning

financial instruments, impairment allowance for financial assets at amortised cost and for financial guarantee contract liabilities, accrued revenue and charges, provisions, degree of impairment of intangible assets and property, plant and equipment, net realisable value of inventories, contingent

assets and liabilities. Actual results could differ from those estimates.

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Reasonable estimates are an essential part of the preparation of financial statements and do not undermine their reliability. An estimate may need revision if changes occur in the circumstances on which the estimate was based or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior periods and is not the correction of an error. The effect of a

change in accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes known.

1.2.4. Application of new and amended European Union Accounting Rules (EAR)

New EAR which are effective for annual periods beginning on or after 1 January 2025

On 12 December 2025 the Accounting Officer of the European Commission adopted a targeted amendment of European Accounting Rule 1 ‘Financial Statements’. The amendment, which is effective for

reporting periods beginning on or after 1 January 2025, introduced changes to the guidance on the

Segment Report. As the EDF is not obliged to, and does not prepare, a Segment Report, the amendment has no impact on these annual accounts.

New EAR adopted but not yet effective at 31 December 2025

EAR 8 (revised 2025)

On 15 April 2025 the Accounting Officer of the European Commission adopted the revised EAR 8 ‘Leases’, which is effective for accounting periods beginning on or after 1 January 2027. The revised EAR 8 has

been updated in line with IPSAS 43 ‘Leases’ (including the amendment ‘Concessionary Leases and Other Arrangements Conveying Rights over Assets’). The main change as compared to the current EAR 8 is the introduction of a right-of-use recognition and measurement model, which requires lessees to recognise all leases, including concessionary leases, on the balance sheet. The EDF does not expect to be affected by the initial application of the revised EAR 8, as it is not engaged in lease contracts or other relevant

arrangements.

EAR 1 (revised 2025)

On 15 April 2025 the Accounting Officer of the European Commission adopted the amended European Accounting Rule 1 ‘Financial Statements’, which is effective for accounting periods beginning on or after 1 January 2027. The amendment aims at ensuring a consistent classification of all borrowings within financing activities, including those related to leases, the acquisition of property, plant and equipment, and back-to-back operations, all of which are currently classified within operating activities. The EDF does not expect to be affected by the initial application of the revised EAR 1, as it is not engaged in the

relevant financing activities.

1.3. BALANCE SHEET

1.3.1. Financial assets

Classification at initial recognition

The classification of the financial instruments is determined at initial recognition. Based on the management model and the asset contractual cash-flow characteristics the financial assets can be classified in three categories: Financial assets at amortised cost (‘AC’), financial assets at fair value through net assets/equity (‘FVNA’) or financial assets at fair value through surplus or deficit (‘FVSD’).

(i) Financial assets at amortised cost

Financial assets at amortised cost are non-derivative financial assets that meet two conditions: (1) The entity holds them in order to collect the contractual cash flows. (2) On specified days, there are contractual cash flows that are solely payments of the principal and interest on the outstanding principal.

This category comprises:

— Cash and cash equivalents;

— Loans (including term deposits with an original maturity of more than three months);

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— Exchange receivables

Financial assets at amortised cost are included in current assets, except for those with a maturity of more than 12 months from the reporting date.

(ii) Financial assets at fair value through net assets/equity

These non-derivatives financial assets have contractual cash flows that represent only principal and interest on the outstanding principal. In addition, the management model is to hold the financial assets both to collect contractual cash flows and to sell the financial assets.

Assets in this category are classified as current assets, if they are expected to be realised within 12 months from the reporting date.

The entity did not hold such assets at 31 December 2025.

(iii) Financial assets at fair value through surplus or deficit

The entity classifies derivatives and equity investments as FVSD because the contractual cash flows do not represent only principal and interests on the principal.

In addition, the entity classifies the debt securities it holds as FVSD because the portfolios of debt securities are managed and evaluated on a portfolio fair value basis.

Assets in this category are classified as current assets, if they are expected to be realised within 12 months from the reporting date.

Initial recognition and measurement

Purchases of financial assets at fair value through surplus or deficit are recognised on their trade-date – the date on which the entity commits to purchase the asset. Cash equivalents and loans are recognised when cash is deposited in a financial institution or advanced to borrowers.

Financial assets are initially measured at fair value. For all financial assets not carried at fair value through surplus or deficit, the transactions costs are added to the fair value at initial recognition. For financial assets carried at fair value through surplus or deficit the transaction costs are expensed in the

statement of financial performance.

The fair value of a financial asset on initial recognition is normally the transaction price unless the transaction is not at arm’s length i.e. at no or at nominal consideration for public policy purposes. In this case, the difference between the fair value of the financial instrument and the transaction price is a non- exchange component which is recognised as an expense in the statement of financial performance. In this case, the fair value of a financial asset is derived from current market transactions for a directly equivalent instrument. If there is no active market for the instrument, the fair value is derived from a

valuation technique that uses available data from observable markets.

Subsequent measurement

Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method.

Financial assets at fair value through surplus or deficit are subsequently measured at fair value. Gains and losses from changes in the fair value (including those stemming from foreign exchange translation and any interests earned) are included in the statement of financial performance in the period in which

they arise.

Fair value at subsequent measurement

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities and over-the–counter derivatives), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cashflow

analysis, option pricing models and other valuation techniques commonly used by market participants.

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Investments in venture capital funds which do not have a quoted market price in an active market are valued at the attributable net asset value, which is considered as an equivalent of their fair value.

Impairment of financial assets

The EU recognises and measures an impairment loss for expected credit losses on financial assets that

are measured at amortised cost and at fair value through net assets/equity.

The expected credit loss (ECL) is the present value of the difference between the contractual cash flows and the cash flows that the EU expects to receive. The ECL incorporates reasonable and supportable information that is available without undue cost or effort at the reporting date.

For assets at amortised cost, the asset’s carrying amount is reduced by the amount of the impairment loss which is recognised in the statement of financial performance. If, in a subsequent period, the amount of the impairment loss decreases, the previously recognised impairment loss is reversed through the

statement of financial performance.

(a) Receivables The entity measures the impairment loss at the amount of lifetime ECL, using practical expedients (e.g. provision matrix). (b) Cash and cash equivalents

The entity holds cash and cash equivalents in current bank accounts and term deposits of up to three months. The cash is held in banks with very high credit ratings, thus having very low default probabilities. Given the short duration and low default probabilities, the expected credit losses from cash and cash equivalents are negligible. As a result, no impairment allowance is recognised for cash equivalents.

(c) Loans

The ECL is measured with a three-stage model that takes into account probability-weighted default events during the lifetime of the financial asset and the evolution of credit risk since the origination of the financial asset. For loans, origination is the date of the irrevocable loan commitment

If there is no significant increase in credit risk since origination (‘stage 1’), the impairment loss is the ECL from possible default events in the next 12 months from the reporting date (’12 month ECL’). If there is a

significant increase in credit risk since origination (‘stage 2’) or if there is objective evidence of a credit impairment (‘stage 3’), the impairment loss equals the ECL from possible default events over the whole lifetime of the financial asset (‘lifetime ECL’)

De-recognition

Financial instruments are derecognised when the rights to receive cash flows from the investments have expired or the entity has transferred substantially all risks and rewards of ownership to another party. Sales of financial assets through surplus or deficit are recognised on their trade date.

1.3.2. Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiaries do not incur eligible expenditure, they have the obligation to return the pre-financing advance to the entity. Thus, as the entity retains control

over the pre-financing and is entitled to a refund for the ineligible part, the amount is recognised as an asset.

Pre-financing is initially recognised on the balance sheet when cash is transferred to the recipient. It is measured at the amount of the consideration given. In subsequent periods pre-financing is measured at the amount initially recognised on the balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the period.

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1.3.3. Receivables and recoverables

The EAR’s require separate presentation of exchange and non-exchange transactions. To distinguish between the two categories, the term ‘receivable’ is reserved for exchange transactions, whereas for non-

exchange transactions, i.e. when the EU receives value from another entity without directly giving approximately equal value in exchange, the term ‘recoverables’ is used (e.g. recoverables from Member States related to own resources).

Receivables from exchange transactions meet the definition of financial instruments. The entity classified them as financial assets at amortised cost and measured them accordingly.

Recoverables from non-exchange transactions are carried at fair value as at the date of acquisition less write-down for impairment. A write-down for impairment is established when there is objective evidence

that the entity will not be able to collect all amounts due according to the original terms of the

recoverables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.

1.3.4. Cash and cash equivalents

Cash and cash equivalents are financial assets at amortised cost and include cash at hand, deposits held

at call or at short notice with banks, and other short-term highly liquid investments with original maturities of three months or less.

1.3.5. Payables

Included under accounts payable are both amounts related to exchange transactions such as the purchase of goods and services, and to non-exchange transactions e.g. to cost claims from beneficiaries, grants or other EU funding, or pre-financing received (see Note 1.4.1).

Where grants or other funding are provided to the beneficiaries, the cost claims are recorded as payables for the requested amount, at the moment when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount. The corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the entity.

1.3.6. Financial liabilities

Financial liabilities are classified as financial liabilities carried at amortised cost, financial liabilities at fair value through surplus or deficit, or as financial guarantee contract liabilities.

Financial liabilities at amortised cost are initially recognised at fair value including transaction costs incurred and subsequently carried at amortised cost using the effective interest method. They are derecognised from the statement of financial position if and only if the obligation is discharged, waived,

cancelled or expired.

Financial liabilities at fair value through surplus or deficit include derivatives where the fair value is negative. Where the guarantee contract requires the entity to make payments in response to changes in financial instruments prices or foreign exchange rates, the guarantee contract is a derivative. They follow the same accounting treatment as financial assets at fair value through surplus or deficit.

The entity recognises a financial guarantee contract liability when it enters into a contract that requires to

make specified payments to reimburse the guarantee holder for a loss it incurs because a specified

debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contract liabilities are initially recognised at fair value.

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The subsequent measurement depends on the evolution of the credit risk exposure from the financial guarantee. If there is no significant increase in credit risk (‘stage 1’), financial guarantee liabilities are measured at the higher of the 12 months expected credit losses and the amount initially recognised less, when appropriate, cumulative amortisation. If there is a significant increase in credit risk (‘stage 2’),

financial guarantee liabilities are measured at the higher of the lifetime expected credit losses and the amount initially recognised less, when appropriate, cumulative amortisation.

Financial liabilities are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. Financial guarantee contracts are classified as current liabilities except if the entity has an unconditional right to defer the settlement of the liability for at least twelve months after the reporting date.

1.3.7. Accrued and deferred revenue and charges

Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, or the supplies have been delivered by the entity or a contractual agreement exists (e.g. by reference to a contract), an accrued revenue will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. Accrued expenses are calculated in accordance with detailed operational and practical guidelines issued by the Accounting Officer. These guidelines aim to ensure that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. By analogy, if a payment has been made in advance for services or goods that have not yet been received, the expense

will be deferred and recognised in the subsequent accounting period.

1.4. STATEMENT OF FINANCIAL PERFORMANCE

1.4.1. Revenue

Revenue comprises gross inflows of economic benefits or service potential received and receivable by the entity, which represents an increase in net assets, other than increases relating to contributions from owners.

Depending on the nature of the underlying transactions in the statement of financial performance, revenue can be categorised as either revenue from non-exchange transactions or revenue from exchange transactions.

Revenue from non-exchange transactions

Revenue from non-exchange transactions relates to transactions such as taxes and transfers where the transferor provides resources to the recipient entity, without the recipient entity providing approximately equal value directly in exchange. Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. For the EU entities, transfers mostly comprise funds received from the Commission (e.g. a balancing subsidy to the traditional agencies or an operating

subsidy for the delegation agreements).

The entity shall recognise an asset in respect of transfers when the entity controls the resources as a result of a past event (the transfer) and expects to receive future economic benefits or service potential from those resources, and when the fair value can be reliably measured. An inflow of resources from a non-exchange transaction recognised as an asset (i.e. cash) is also recognised as revenue, except to the extent that the entity has a present obligation in respect of that transfer (condition), which needs to be satisfied before the revenue can be recognised. Until the condition is met the revenue is deferred and

recognised as a liability.

Revenue from exchange transactions

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Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.

(a) Interest revenue and expense

Interest revenue and interest expense from financial assets and financial liabilities at amortised cost are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest revenue or interest expense over the relevant period.

(b) Revenue from dividends

Revenue from dividends and similar distributions is recognised when the right to receive payment is

established.

(c) Revenue and expense from financial assets at fair value through surplus or deficit

This refers to the fair value gains (revenue) and fair value losses (expense) from these financial assets, including those stemming from foreign exchange translation. For interest-bearing financial assets, this also includes interest.

(d) Revenue from financial guarantee contracts

The revenue from financial guarantee contracts (guarantee premium) is recognised over the time the

entity stands ready to compensate the holder of the financial guarantee contract for the credit loss it may incur.

1.4.2. Expenses

Expenses are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or the incurring of liabilities that result in decreases in net assets.

They include both the expenses from exchange transactions and expenses from non exchange transactions.

Expenses from exchange transactions arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the entity. They are valued at the original invoice amount. Furthermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are recognised in the statement of financial performance.

Expenses from non exchange transactions relate to transfers to beneficiaries and can be of three types:

entitlements, transfers under agreement and discretionary grants, contributions and donations. Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation or an agreement has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised

as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expense.

1.5. CONTINGENT ASSETS AND LIABILITIES

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1.5.1. Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

1.5.2. Contingent liabilities

A contingent liability is either a possible obligation of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation where it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

A contingent liability also arises in the rare circumstances where a present obligation exists but cannot be measured with sufficient reliability.

Contingent liabilities are not recognised in the accounts. They are disclosed unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

1.6. FUND CAPITAL

The EDF member states provide contributions to the Fund for the implementation of EDF programmes as laid down in the Internal Agreement of each EDF. According to the applicable legal basis the capital calls, i.e. the requests for funding for a given year N, are decided by a Council Decision in year N-1, with the funds to be received clearly assigned to specified future periods.

The contributions meet the criteria of contribution from owners (EAR 1) and are thus treated as fund capital in the EDF financial statements. The fund capital represents the total amount of contributions to

be received from the EDF members states. As the uncalled fund capital is openly deducted from the total fund capital (see Statement of Changes in Net Assets), only the called fund capital is recognised in the Balance Sheet.

As the agreed contributions are assigned to specified reporting periods, with the EDF’s legal claim against the EDF member states arising only in these periods, any amounts received in advance are recognised as deferred capital contributions under payables rather than as called capital.

1.7. CO-FINANCING

Co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and they are presented as payables to Member States, non-Member States and others. The

EDF is required to use the contributions to deliver services to third parties or is otherwise required to return the assets (the contributions received). The outstanding payables relating to co-financing agreements represent the co-financing contributions received less the expenses incurred related to the project. The effect on net assets is nil.

Expenses relating to co-financing projects are recognised as they are incurred. The corresponding amount of contributions is recognised as operating revenue and the effect on the economic result of the year is nil.

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2. NOTES TO THE BALANCE SHEET

ASSETS

2.1. FINANCIAL ASSETS

A financial asset is any asset that is:

(a) Cash;

(b) An equity instrument of another entity;

(c) A contractual right: to either receive cash or another financial asset from another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or

(d) A contract that will or may be settled in the entity’s own equity instruments.

Financial assets are classified in the following categories:'financial assets at amortised costs', ‘financial assets at fair value through surplus or deficit’ and ‘financial assets at fair value through net assets/equity'. The classification of the financial instruments is determined at initial recognition and re- evaluated at each balance sheet date.

The financial assets of the EDF comprise financial assets at FVSD and loans and are as follows:

EUR million

31.12.2025 31.12.2024

Non-current

Financial assets at fair value through surplus or deficit (FVSD) 92 112

Loans 24 16

116 128

Current

Loans 1 5

1 5

Total 117 132

The EUR 92 million of financial assets at FVSD relate to equity investments in the following areas:

— Renewable sustainable energy via Climate Investor One, ElectriFI and the Global Energy

Efficiency and Renewable Energy Fund (GEEREF);

— Promoting inclusive smallholder and rural SME finance via the ABC FUND;

— Financial inclusion in Uganda via the aBi Finance; and

— Creating jobs and sustainable growth in Africa via the Boost Africa intitiative.

The EUR 24 million of non-current loans and EUR 1 milllion of current loans concern two main areas: sustainable agriculture via the AgriFI and electricity access and generation from sustainable energy sources via the ElectriFI investment Facility.

2.2. PRE-FINANCING

Many contracts provide for payments of advances before the commencement of works, delivery of supplies or the provision of services. Sometimes the payment schedules of contracts foresee payments based on progress reports. Pre-financing is normally paid in the currency of the country or territory where the project is executed.

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The timing of use of pre-financing governs whether it is disclosed as a current or a non-current pre-financing. The use is defined by the project's underlying agreement. Any use due within twelve months after the reporting date are disclosed as current pre-financing. As many of the EDF projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus

some pre-financing amounts are shown as non-current assets.

EUR million

Note Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Non-current pre-financing 2.2.1 – 382 110 492 500

Current pre-financing 2.2.2 – 50 481 532 742

Total – 432 591 1 023 1 242

The decrease in total pre-financing by EUR 219 million is mainly explained by the reduction in pre- financing paid to beneficiaries under the 11th EDF, which declined from EUR 737 million in 2024 to EUR

591 million in 2025. This development reflects the maturity of the 11th EDF and the resulting decrease in the number of open contracts.

Following the entry into force of the sunset clause at the end of 2020, no new financing agreements can be concluded under the 11th EDF as from 1 January 2021. However, specific contracts based on existing financing agreements may still be signed. As a result, the number of newly signed contracts has

gradually declined, from 452 in 2023 to 181 in 2024 and to 21 in 2025.

Pre-financing related to the 10th EDF decreased from EUR 560 million in 2024 to EUR 432 million in 2025. This decrease is in line with the normal implementation cycle of the EDF and reflects the progressive closure of programmes.

Out of the non-current pre-financing, EUR 373 million (EUR 393 million in 2024) relates to the open pre- financing for two contracts under the EU-Africa Infrastructure Trust Fund (AITF). The aim of this Trust

Fund is to provide financial support with grants to infrastructure projects alongside long-term financing

made available by project financiers. The provision of such grant funds leverages the provision of long- term financing by participating finance institutions. At the time of the signature of the contracts, the Trust Fund’s type of actions was considered as adequately covered by the agreement (no template was yet available for financial instruments, nor did the Regulation mention this type of instrument). Consequently, payments made under these agreements were registered as pre-financing and not as a financial instrument component. Due to the long-term nature of the operations implemented by the Trust

Fund, the annual clearing of the AITF’s old pre-financing is very limited and spreads out over the years. Therefore, to better reflect the project conditions, EUR 373 million of the open pre-financing was re- classified to long term while EUR 54 million corresponds to expenses accrued at year-end.

2.2.1. Non-current pre-financing by management mode

EUR million

31.12.2025 31.12.2024

Direct Management

Implemented by:

Commission 19 –

EU executive agencies – 1

EU delegations 1 2

20 3

Indirect Management

Implemented by :

EIB and EIF 388 402

International organisations 67 65

Private-law bodies with a public service mission 5 7

Public-law bodies 12 13

Third countries – 10

472 497

Total 492 500

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2.2.2. Current pre-financing

EUR million

Ninth EDF 10th EDF 11th EDF 31.12.2025 31.12.2024

Pre-financing (gross) 3 313 2 649 2 965 3 763

Cleared via cut-off (3) (263) (2 168) (2 433) (3 022)

Total – 50 481 532 742

2.2.3. Current pre-financing by management mode

EUR million

31.12.2025 31.12.2024

Direct Management

Implemented by:

Commission 40 37

EU executive agencies – 2

EU delegations 21 47

61 86

Indirect Management

Implemented by :

EIB and EIF 62 62

International organisations 248 388

Private-law bodies with a public service mission 50 71

Public-law bodies 79 77

Third countries 29 56

EU bodies and Public Private Partnership 2 1

470 655

Total 532 742

2.2.4. Guarantees received in respect of pre-financing

Guarantees are held to secure pre-financing and are released when the final claim under a project is paid.

EUR million

31.12.2025 31.12.2024

Guarantees for pre-financing 13 19

The EUR 13 million comprises guarantees intended to secure pre-financing paid under direct management, with the EDF being the beneficiary of the guarantee (see Note 4.1). However, most of pre- financing is paid under the indirect management mode, where the beneficiary of the guarantee is not the EDF but the contracting authority. In 2025, the total value of such guarantees amounted to EUR 309

million.

2.3. TRUST FUND CONTRIBUTIONS

This heading represents the amount paid as contributions to the EU Trust Fund for Africa and the Bêkou

EU Trust Fund. The contributions are net of the costs incurred by the trust funds and attributable to the EDF.

The trust fund contributions are implemented by the EDF under the direct management mode.

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EUR million

Net contribution at

31.12.2024 Contributions paid in 2025

Allocation of TF's net expenses 2025

Net contribution at 31.12.2025

Africa 165 – (91) 74

Bêkou 23 – (10) 13

Total 188 – (101) 87

The decrease compared to the previous year reflects the absence of additional contributions in 2025. Consequently, the balance was driven solely by the utilisation of existing contributions to cover expenses incurred during the year.

This development is consistent with the winding-down of both Trust Funds, which reached the end of

their implementation period on 31 December 2025. As from 1 January 2026, the Trust Funds entered their liquidation phase, during which no new operational activities are undertaken and expenditure is

limited to the validation of final reports, the settlement of outstanding balances and the recovery of amounts from beneficiaries.

2.4. EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES

Exchange transactions are transactions in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange. Non-exchange transactions are transactions in which an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

2.4.1. Non-current exchange receivables

As at 31.12.2025, the EDF had EUR 5 million of long-term exchange receivables comprising mainly deferred charges arising from several financial instruments.

2.4.2. Current non-exchange recoverables and exchange receivables

EUR million

Note 31.12.2025 31.12.2024 Recoverables from non-exchange transactions 2.4.2.1 27 24

Receivables from exchange transactions 2.4.2.2 10 12

Total 37 37

2.4.2.1. Recoverables from non-exchange transactions

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Customers 1 45 16 62 52

Public bodies 3 15 6 23 19

Third states – 2 4 6 16

Write down (4) (51) (9) (64) (63)

Total – 11 16 27 24

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2.4.2.2. Receivables from exchange transactions

EUR million

Ninth EDF 10th

EDF

11th

EDF 31.12.2025 31.12.2024

Accrued income - - 1 2 2

Inter-EDF accounts (207) 168 39 – –

Other – 4 5 9 11

Total (207) 172 45 10 12

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF; this leads to operations between the various EDFs, which are balanced out in the inter-EDF accounts between the

various EDF balance sheets.

The heading ‘other’ comprises mainly receivables deriving from financial instruments. Out of the EUR 9 million other receivables, an amount of EUR 4 million relates to a receivable from the GEEREF and an amount of EUR 5 million relates to a receivable from Climate Investor One.

2.5. CASH AND CASH EQUIVALENTS2

Cash and cash equivalents are financial instruments at amortised cost and include cash at hand, deposits held at call or at short notice with banks (such as current accounts and savings accounts), and other short-term highly liquid investments with original maturities of three months or less.

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Special accounts

Central banks – – 98 98 285

– – 98 98 285

Current accounts

Commercial banks – – 105 105 49

Cash belonging to financial instruments – – 82 82 77

– – 187 187 126

Total – – 286 286 411

The decrease of EUR 125 million in cash and cash equivalents is mainly driven by the reduction in cash reserves held in central banks. This decline in the cash position mostly results from payments made to

cover expenses and advances exceeding the contributions received during the year. Notably, called contributions fell from EUR 1 200 million in 2024 to EUR 800 million in 2025. Additionally, Member States

received a refund of EUR 6.3 million from the 9th EDF for the first instalment of 2025, while the UK requested that its contributions for the second instalment of 2025 amounting to EUR 15 million be offset against their outstanding share in the 10th and 11th EDFs (see Note 2.9.1).

LIABILITIES

2.6. FINANCIAL LIABILITIES

A financial liability is any liability that is:

2 In accordance with Article 53 of the Financial Regulation applicable to the 11th European Development Fund, the treasury is presented in the balance sheet of the 11th

EDF. The nature of the various bank accounts is outlined in Chapter 5, Financial Risk Management.

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(a) A contractual obligation: to deliver cash or another financial asset to another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or

(b) A contract that will or may be settled in the entity’s own equity instruments.

Financial liabilities are classified in the following categories: 'financial liabilities at fair value through surplus or deficit', 'other financial liabilities measured at amortised cost' or financial guarantee contract liabilities.

EUR million

Note 31.12.2025 31.12.2024

Non-Current

Financial guarantee liability 2.6.1 1 1

Current

Financial provisions 2.6.2 – 2

Total 1 3

2.6.1. Financial guarantee liability

These provisions represent the estimated losses that will be incurred in relation to the guarantees given under different financial instruments, where entrusted entities are empowered to issue guarantees in

their own name but on behalf of, and at the risk of, the EDF. The financial risk of the EDF linked to the guarantees is capped and financial assets are gradually provisioned to cover for the future guarantee calls.

EUR million

Ninth EDF 10th EDF 11th EDF 31.12.2025 31.12.2024

Financial guarantee liability – – 1 1 1

The amount of EUR 1 million represents the estimated loss in relation to the guarantee given under the Euritz financial instrument (see Note 4.2.1).

2.6.2. Provisions

These provisions represent the estimated credit losses that will be incurred in relation to the loans given under different financial instruments. These provisions represent the estimated losses that will be

incurred in relation to the guarantees given under different financial instruments, where entrusted entities are empowered to issue guarantees in their own name but on behalf of, and at the risk of, the EDF. The financial risk of the EDF linked to the guarantees is capped and financial assets are gradually provisioned to cover for the future guarantee calls.

EUR million

Ninth EDF 10th EDF 11th EDF 31.12.2025 31.12.2024

Current financial provisions – – – – 2

2.7. PAYABLES

Payables are liabilities to pay for goods or services that have been received or supplied and - unlike

accrued charges - have already been invoiced or formally agreed with the supplier. Payables can relate to

both exchange transactions (such as the purchase of goods and services) and non-exchange transactions (e.g. cost claims from beneficiaries of grants, pre-financing or other EU funding).

Annual accounts of the European Development Fund 2025

34

EUR million

Note Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Current payables 2.7.1 - 10 93 104 150

Sundry payables 2.7.2 - 6 78 83 105

Total - 16 171 187 256

2.7.1. Current payables

EUR million

Ninth EDF 10th

EDF

11th

EDF 31.12.2025 31.12.2024

Suppliers – 7 64 71 56

Third states – (1) 8 7 29

Public bodies – 4 20 24 66

Institutions and Agencies – – 2 2 –

Total – 10 93 104 150

Payables largely comprise cost statements received by the EDF in respect of grants provided to the beneficiaries. They are recorded at the moment when the cost statement is received and for the full amount of the cost statement. Following an eligibility check, only the eligible amounts are paid to the beneficiaries. At year-end, the outstanding cost claims are analysed and the estimated eligible amounts related to those cost claims are recognised in the statement of financial performance. The estimated non-

eligible amounts are shown under ‘Other current payables’.

The decrease in payables is attributed to a lower volume of invoices received that remained outstanding

at year-end.

2.7.2. Sundry payables

EUR million

Note Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Co-financing payables 2.7.2.1 – 6 22 27 28

Deferred capital contributions 2.7.2.2 – – 51 51 64

Other sundry payables – – 5 5 12

Total – 6 77 83 105

2.7.2.1. Co-financing payables

Co-financing payables represent funds received by the EDF in respect of the co-financing agreements. The EDF is required to use these contributions to deliver agreed services to third parties and return the unused funds to the contributors. Timing of the use of the co-financing amounts determines whether it is disclosed as current or non-current.

At the year-end a case-by-case assessment of all co-financing payables is performed and all amounts that are unlikely to be used in the following 12 months are considered non-current.

EUR million

Eighth

EDF

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Current co-financing payables – – 6 22 27 28

Annual accounts of the European Development Fund 2025

35

2.7.2.2. Deferred capital contributions

An amount of EUR 1.2 million of deferred capital contributions relates to a refund to Member

States and the United Kingdom from decommitted or unused funds from projects under the

Ninth EDF (see Note 2.9.1). The Member States agreed for the refund to be offset against the

contributions from the 11th EDF during the first call for contributions in 2026.

In addition to the refund, an amount of EUR 49 million relates to the 1st instalment of 2026

paid in advance by the United Kingdom, Portugal, Hungary and Estonia. Of this amount, EUR

44 million entirely relates to the contribution from the United Kingdom. According to Article

152 of the Withdrawal Agreement, the United Kingdom remains party to the EDF until the

closure of the 11th EDF and all previous unclosed EDFs and assumes the same obligations as

the Member States in this respect (see Note 2.9.1).

2.8. ACCRUED CHARGES

Accruals are liabilities to pay for goods or services that have been received or supplied but - unlike payables - have not yet been invoiced or formally agreed with the supplier. The calculation of accruals is based on the open amount of budgetary commitments at year-end. The portion of the estimated accrued charges relating to pre-financing paid has been recorded as a reduction of the pre-financing amounts.

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Accrued charges – 34 661 695 774

Accrued charges comprise estimated operating expenses for on-going or completed contracts without validated cost claims where the eligible expenses incurred by beneficiaries were estimated using the best

available information at the time of preparing the financial statements. It is noted that information that arise in the normal course of business, such as contract extensions signed after the reporting date, is not systematically considered, and the potential impact of these activities on the accrued charges cannot be reliably estimated. The portion of the estimated accrued charges that relates to pre financing paid has been recorded as a reduction of the pre-financing amounts (see Note 2.2).

The decrease in accrued charges of EUR 79 million is explained by the reduction in the number of contracts for which charges had to be estimated and accrued. This decrease is in line with the life cycle of

the EDF and the underlying number of open contracts.

NET ASSETS

2.9. FUND CAPITAL

The EDF Member States provide contributions to the Fund for the implementation of EDF programmes as

laid down in the Internal Agreement of each EDF. According to the applicable legal basis the capital calls, i.e. the requests for funding for a given year N, are decided by a Council Decision in year N-1, with the funds to be received clearly assigned to specified future periods.

The contributions meet the criteria of contribution from owners (EAR 1) and are thus treated as fund capital in the EDF financial statements. The fund capital represents the total amount of contributions to be received from the EDF members states. As the uncalled fund capital is deducted from the total fund capital (see Statement of Changes in Net Assets), only the called fund capital is recognised in the Balance

Sheet.

As the agreed contributions are assigned to specified reporting periods, with the EDF’s legal claim against the EDF member states arising only in these periods, any amounts received in advance are recognised as deferred capital contributions under Payables rather than as called capital.

Annual accounts of the European Development Fund 2025

36

2.9.1. Called fund capital – active EDFs

EUR million

Ninth EDF 10th EDF 11th EDF Total

Fund capital 10 435 20 819 29 290 60 544

Uncalled fund capital - - (4 840) (4 840)

Called fund capital 31.12.2024 10 435 20 819 24 449 55 704

Fund capital 10 434 20 816 29 278 60 528

Uncalled fund capital - - (4 040) (4 040)

Called fund capital 31.12.2025 10 434 20 816 25 237 56 488

The uncalled funds represent amounts not yet called from Member States. The called fund capital represents the contributions which have been called by the EDF and transferred to the treasury accounts

by the Member States (see below 2.9.2).

By means of Council Decision (EU) 2025/2324, the Member States' contributions set out in the Internal Agreements of the Ninth EDF were reduced by an amount of EUR 1.2 million from funds decommitted from this EDF. Refunds arising from this reduction have been compensated against additional calls for funds under the 11th EDF. In fact, the refund will be used against the first instalment of 2026 (see Note 2.7.2).

While the United Kingdom remains party to the EDF until the closure of all programmes, in accordance

with Article 153 of the Withdrawal Agreement, its share of uncommitted and decommitted funds from the Ninth and 10th EDF cannot be reused. In 2025, the UK requested that its second instalment for the year be compensated using its outstanding share in the reserve of the 10th and 11th EDFs. As a result, the fund capital of the 10th and 11th EDFs was reduced by EUR 15 million.

2.9.2. Called and uncalled fund capital by Member States and the UK EUR million

Contributions 11th EDF % Uncalled capital

31.12.2024

Capital called

in 2025

Uncalled capital

31.12.2025 Austria 2.40 116 (19) 97

Belgium 3.25 157 (26) 131

Bulgaria 0.22 11 (2) 9

Croatia 0.23 11 (2) 9

Cyprus 0.11 5 (1) 5

Czech Republic 0.80 39 (6) 32

Denmark 1.98 96 (16) 80

Estonia 0.09 4 (1) 3

Finland 1.51 73 (12) 61

France 17.81 862 (143) 720

Germany 20.58 996 (165) 831

Greece 1.51 73 (12) 61

Hungary 0.61 30 (5) 25

Ireland 0.94 46 (8) 38

Italy 12.53 606 (100) 506

Latvia 0.12 6 (1) 5

Lithuania 0.18 9 (1) 7

Luxembourg 0.26 12 (2) 10

Malta 0.04 2 (0) 2

Netherlands 4.78 231 (38) 193

Poland 2.01 97 (16) 81

Portugal 1.20 58 (10) 48

Romania 0.72 35 (6) 29

Slovakia 0.38 18 (3) 15

Slovenia 0.22 11 (2) 9

Annual accounts of the European Development Fund 2025

37

Spain 7.93 384 (63) 320

Sweden 2.94 142 (24) 119

United Kingdom 14.68 710 (117) 593

Total 100.00 4 840 (800) 4 040

Since the capital of the Ninth and 10th EDFs has been called up and received in its entirety in previous years, in 2025, an amount of EUR 800 million has been called which relates entirely to the 11th EDF.

Called capital decreased from EUR 1 200 million in 2024 to EUR 800 million in 2025.

2.9.3. Called fund capital transfers between active EDFs

EUR million

Ninth EDF 10th

EDF

11th

EDF Total

Balance at 31.12.2023 (509) (120) 628 –

Transfer of amounts to the 10th EDF performance reserve from previous EDFs

(1) 1 – –

Transfer of amounts to the 11th EDF performance reserve from previous EDFs

– (68) 68 –

Balance at 31.12.2024 (510) (187) 696 –

Transfer of amounts to the 10th EDF performance reserve

from previous EDFs – – – –

Transfer of amounts to the 11th EDF performance reserve from previous EDFs

– – – –

Balance at 31.12.2025 (510) (187) 696 –

This heading includes the resources transferred between the active EDFs.

Since the entry into force of the Cotonou Agreement, all the unspent funds in previous active EDFs are

transferred to the most recently opened EDF after de-commitment. The resources transferred from other EDFs increase the appropriations of the receiving fund and reduce the appropriations of the fund of origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only under specific conditions set out in the Internal Agreements.

Annual accounts of the European Development Fund 2025

38

3. NOTES TO THE STATEMENT OF FINANCIAL

PERFORMANCE

REVENUE

EUR million

Note 2025 2024 Revenue from non-exchange transactions 3.1 12 41

Revenue from exchange transactions 3.2 28 90

Total 40 131

3.1. REVENUE FROM NON-EXCHANGE TRANSACTIONS

Revenue from non-exchange transactions relates to transactions where the transferor provides resources to the recipient entity without the recipient entity providing approximately equal value directly in

exchange. The heading mainly includes amounts received from the Commission during the year and recoveries of operational expenses.

EUR million

Note Ninth EDF 10th

EDF

11th

EDF 2025 2024

Recovery of expenses 1 4 5 11 24

Co-financing revenue 3.1.1 – 1 – 1 17

Total 1 5 5 12 41

Non-exchange revenue can be broken down by management mode as follows:

EUR million

2025 2024

Direct Management

Implemented by:

Commission 1 1

Executive agencies 1 2

EU delegations 4 4

6 7

Indirect Management

Implemented by :

Third countries 4 31

International organisations 1 3

Private law bodies with a public service mission 1 –

6 34 Total 12 41

3.1.1. Co-financing revenue

The co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and as such should not affect the statement of financial performance when received.

The contributions remain under liabilities (see Note 2.7.2.1) until the conditions attached to the donated funds are met, i.e. eligible expenses are incurred (see Note 3.5). The corresponding amount is then recognised in the statement of financial performance as non-exchange revenue from co-financing. Consequently, the effect on the economic result of the year is zero.

Annual accounts of the European Development Fund 2025

39

3.2. REVENUE FROM EXCHANGE TRANSACTIONS

EUR million

Ninth EDF 10th

EDF

11th

EDF 2025 2024

Financial revenue – – 8 8 19

Other revenue – 1 19 20 71

Total – 2 26 28 90

The EUR 8 million under the heading ‘Financial revenue’ mainly consists of accrued interest on unpaid recovery orders, interest on pre-financing, interest generated on balances held with central and commerical banks and revenue from financial instruments.

‘Other revenue’ relates mainly to foreign exchange gains. The corresponding foreign exchange losses are

recorded under ‘Other expenses’ (see Note 3.7).

EXPENSES

3.3. EXPENSES IMPLEMENTED BY OTHER ENTITIES

EUR million

Ninth EDF 10th

EDF

11th

EDF 2025 2024

Technical assistance expenses – – 4 4 4

The amount of EUR 4 million relate to technical assistance incurred by several financial instruments.

3.4. AID INSTRUMENTS

EUR million

Ninth EDF 10th

EDF 11th EDF 2025 2024

Programmable aid 2 6 459 467 630

Intra-ACP projects – 85 331 416 497

Emergency aid – 1 48 50 (13)

Other Aid programmes 5 – – 5 –

Institutional support – (9) 14 4 4

Contributions to Trust Funds – – 101 101 118

Total 8 83 953 1 043 1 237

EDF operational expenditure covers various aid instruments and takes different forms depending on how payments are made and managed.

In 2025, operational expenditure decreased by EUR 194 million, primarily due to a reduction in expenses under the 11th EDF, which fell from EUR 1 145 million in 2024 to EUR 953 million in 2025. This decrease reflects the lifecycle of the EDFs as they progressively move towards closure. The 11th EDF reached its final stage following the entry into force of the sunset clause on 31 December 2020, which set a cut-off date for new commitments. While no new financing decisions can be adopted, the implementation of

ongoing projects continues until their completion, resulting in gradually declining expenditure.

Similarly, expenses under the 10th EDF reflect the advanced stage of implementation and the progressive closure of programmes. The closure of the 10th EDF is progressing well, with the majority of contracts

already closed and the remaining contracts undergoing the final operational and financial closure steps, including evaluations, audits and recoveries. The negative amounts under the 10th EDF relating to institutional support arise from the reversal of 2024 accruals, which exceeded the actual expenses

Annual accounts of the European Development Fund 2025

40

incurred in 2025. They relate to the contract ‘Institutional Support to the ACP Secretariat’, initially

scheduled to end in December 2024 and extended until 15 September 2025. Due to delays related to the renovation and sale of the ACP House, the planned activities could not be fully implemented, resulting in a decommitment of EUR 10.7 million.

In 2025, expenses for Intra-ACP projects were impacted by a EUR 23 million gain as a result of the reversal of a 2024 accrual related to one project reflecting updated implementation information received from the implementing partner.

The 9th EDF is currently in the final stage of closure, with only a limited number of contracts still ongoing.

Overall, 578 contracts were closed between February 2025 and January 2026 across the three open EDFs, contributing to the reduction in operational expenditure.

3.5. CO-FINANCING EXPENSES

EUR million

Ninth EDF 10th

EDF

11th

EDF 2025 2024

Co-financing – 1 – 1 17

Included under this heading are the expenses incurred on co-financing projects in 2025. It should be noted that the expenses incurred include estimated amounts related to the cut-off exercise (and consequently reversals of the estimated amounts related to last year).

In line with the accounting rules on co-financing, the incurred amounts did not have any impact on the

EDF’s result for the year because they were recognised both in the co-financing expenses and in the co-

financing revenue (see also Note 3.1.1).

AID INSTRUMENTS AND CO-FINANCING EXPENSES BY MANAGEMENT TYPE

EUR million

2025 2024

Direct Management

Implemented by:

Commission 32 17

EU executive agencies 2 3

Trust Funds – 118

EU delegations 103 148

137 286

Indirect Management

Implemented by:

EIB and EIF 130 84

International organisations 354 287

Private-law bodies with a public service mission 88 156

Public-law bodies 55 126

Third countries 278 314

EU bodies with Public Private Partnership 1 –

906 967

Total 1 044 1 254

Annual accounts of the European Development Fund 2025

41

3.6. FINANCE COSTS

EUR million

Ninth

EDF

10th

EDF

11th

EDF 2025 2024

Net impairment losses on loans and receivables (2) 1 4 3 (1)

Loss on financial assets or liabilities at FVSD – 2 31 33 3

Fee subsidy – – 4 4 2

Total (2) 3 39 40 3

Net impairment losses on loans and receivables comprise impairment losses on financial instruments and estimated expenses on irrecoverable amounts arising from ageing recovery orders (over 2 years), bankruptcies and waivers.

The EUR 33 million of financial expenses for financial assets at FVSD relates mainly to exchange differences, interest and fair value changes for several financial instruments.

The amount of EUR 4 million under the heading ‘Fee subsidy’ relates to expenses incurred under the Kulima financial instrument.

3.7. OTHER EXPENSES

Included under this heading are expenses of administrative nature such as external non IT services, communications and publications, training costs etc.

EUR million

Ninth

EDF

10th

EDF

11th

EDF 2025 2024

Administrative and IT expenses - 1 7 8 43

Realised losses on trade debtors 1 – – 1 4

Exchange rate losses – 3 31 34 63

Exchange rate losses on financial instruments – – 3 3 1

Total 1 5 40 46 110

The heading Administrative and IT expenses’ includes amounts that are based on the EDF internal agreement with the Commission to cover the administrative expenditure incurred by both the

headquarters and the delegations when managing the EDF programmes.

In 2025, the administrative expenses were impacted by the reversal of a 2024 accrual related to staff expense funded by the EDF. As a result, the reported staff expense amounts to EUR 1.3 million instead of

EUR 36 million actually incurred in 2025.

Annual accounts of the European Development Fund 2025

42

4. CONTINGENT ASSETS & LIABILITIES AND

OTHER SIGNIFICANT DISCLOSURES

4.1. CONTINGENT ASSETS

Contingent assets are possible assets that arise from past events, and whose existence will only be

confirmed by the occurrence or non-occurrence of one or more uncertain future events that are not wholly within the control of the entity.

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Pre-financing guarantees – – 13 13 19

Pre-financing guarantees are requested in certain cases from beneficiaries that are not Member States when making advance payments.

At the end of 2025, pre-financing guarantees amounted to EUR 13 million compared with EUR 19 million in 2024. This is in line with the winding down of the EDF and the gradual closure of contracts.

For contracts managed under indirect management, the guarantees belong to a contracting authority

other than the EDF and they are therefore not disclosed by the EDF.

4.2. CONTINGENT LIABILITIES

Contingent liabilities are either possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, or present obligations arising from past events where the outflow of resources is not probable or the amount cannot be measured reliably.

4.2.1. Guarantees given

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Guarantees given – – 29 29 26

The above table shows the extent of the exposure of the EDF to possible future payments linked to

guarantees given to the EIB group or to other financial institutions. The amounts are presented net of financial provisions or financial liabilities recognised for those programmes.

The amount of EUR 29 million relates to guarantees under the following financial instruments: EUR 8 million under the Euritz financial instrument, EUR 10 million under the KULIMA FUND and another EUR 11 million under the ZAMBIA agriculture value chain facility.

4.2.2. Contingent liabilities relating to legal cases

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Pending legal cases – 9 7 16 7

At the end of 2025, there were only two pending cases, totalling EUR 16 million.

Annual accounts of the European Development Fund 2025

43

4.3. OTHER SIGNIFICANT DISCLOSURES

4.3.1. Outstanding commitments not yet expensed

The amount disclosed below is the budgetary RAL ('Reste à Liquider') less related amounts that have been included as expenses in the statement of financial performance. The budgetary RAL is an amount representing the commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multiannual programmes.

EUR million

Ninth

EDF

10th

EDF

11th

EDF 31.12.2025 31.12.2024

Outstanding commitments not yet expensed

16 106 1 533 1 654 2 701

The decrease in the RAL is largely driven by the decrease in budgetary RAL which totalled EUR 2

697 million at the end of 2025 (2024: EUR 3 812 million). This is in line with the life cycle of the EDF and is also related to the evolution of the number of open contracts (see Note 2.2).

Annual accounts of the European Development Fund 2025

44

5. FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EDF relate to the treasury operations carried out by the Commission on behalf of the EDF in order to implement its resources.

5.1. RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES

The rules and principles for the management of the treasury operations are laid down in the 11th EDF

Financial Regulation and in the Internal Agreement.

As a result of the above regulation, the following main principles apply:

(a) The EDF contributions are paid by Member States in special accounts opened with the bank of issue of each Member State or the financial institution designated by it. The amounts of the contributions shall remain in those special accounts until the payments of EDF need to be made.

(b) EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in EUR and in other currencies.

(c) Bank accounts opened by the Commission on behalf of the EDF may not be overdrawn.

In addition to the special accounts, other bank accounts are opened by the Commission in the name of the EDF, with financial institutions (central banks and commercial banks), for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.

Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line

with the Financial Regulation, the Commission’s internal control standards, and audit principles.

A written set of guidelines and procedures regulate the management of the treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. These guidelines and procedures cover the different areas of operation, and compliance with the guidelines and procedures is checked regularly.

Annual accounts of the European Development Fund 2025

45

5.2. CURRENCY RISK

Exposure of the EDF to currency risk at year-end – net position

EUR million

31.12.2025 31.12.2024

USD EUR Other Total USD EUR Other Total

Financial assets

Financial assets at amortised cost 15 5 5 25 10 4 7 21

Financial assets at FVSD 37 54 1 92 42 61 9 112

Receivables 5 4 9 6 5 – 11

Cash and cash equivalents 6 280 – 286 11 400 – 411

63 343 6 412 69 470 16 555

Financial liabilities

Financial provisions and guarantee liability – (5) – (5) – (3) – (3)

– (5) – (5) – (3) – (3)

Total 63 338 6 407 69 467 16 552

All contributions are held in EUR, and other currencies are purchased only when they are needed for the execution of payments. As a result, the EDF's treasury operations are not exposed to currency risk.

Annual accounts of the European Development Fund 2025

46

5.3. INTEREST RATE RISK

The EDF does not borrow money and consequently it is not exposed to interest rate risk.

Interest is accrued on balances it holds in its different bank accounts. The Commission, on behalf of the EDF, has therefore put in place measures to ensure that interest earned regularly reflects market interest rates as well as their possible fluctuation.

Contributions to the EDF budget are credited by each Member State to a special account opened with the financial institution designated by it. To address the risk of negative remuneration, which existed a couple

of years ago, cash management procedures are in place to minimise balances kept on the accounts concerned. In addition, in accordance with Council Regulation (EU) 2016/888, any negative remuneration on these accounts is borne by the relevant Member State.

Overnight balances held in commercial bank accounts are remunerated on a daily basis. The remuneration of balances on such accounts is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts, the interest calculation is linked to a market reference rate and is adjusted to reflect any fluctuations in this rate. As a result, no risk is taken

by the EDF that its balances could be remunerated at rates lower than market rates.

5.4. CREDIT RISK (COUNTERPARTY RISK)

Maximum credit risk exposure: For financial assets, the reported amounts are net carrying amounts and represent the EDF’s exposure to credit risk at the end of the reporting period.

EUR million

31.12.2025 31.12.2024

Financial assets

Loans 25 21

Cash and cash equivalents 286 411

Exchange receivables* 9 11

Guarantees given

Financial guarantee contracts 13 12

Total at 31.12.2025 333 454

* Excluding deferred charges

Financial instrument loans: credit quality

EUR million

31.12.2025

Stage 1 Stage 2 Stage 3 POCI Total

Credit rating Premium and high grade – – – – –

Upper medium grade – – – – –

Lower medium grade – – – – –

Non-investment grade and default grade 23 4 7 – 33

Gross carrying amount 23 4 7 – 33

Minus loss allowance 2 1 5 – 8

Net carrying amount 21 3 2 – 25

Annual accounts of the European Development Fund 2025

47

Cash and cash equivalents: credit quality

EUR million

31.12.2025 31.12.2024

Credit rating Premium and high grade 266 314

Upper medium grade 15 91

Lower medium grade 5 6

Non-investment grade and default grade – –

Gross carrying amount 286 411

Minus loss allowance - -

Net carrying amount 286 411

Receivables: credit quality

EUR million

31.12.2025

Not due

Past due Past due Past

due

Past

due Total

0-30

days 31-90 days

91 days

- 1 year

> 1

year Gross carrying amount 9 – – – – 9

Minus loss allowance – – – – – –

Net carrying amount 9 – – – – 9

Financial assets at FVSD: credit quality

In 2025 the financial assets at FVSD included in these financial statements relate to equity investments that are not subject to credit risk (see Note 2.1).

5.5. LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

The finance liabilities and payables under this heading are disclosed by the carrying amounts from the

balance sheet.

EUR million

< 1 year 1-5 years > 5 years Total

Financial liabilities at 31.12.2025 187 0 – 187

Financial liabilities at 31.12.2024 256 0 – 256

Budget principles applied to the EDF ensure that overall cash resources for the budgetary period are always sufficient for the execution of payments. Indeed the total Member States' contributions equal the overall amount of payment appropriations for the relevant budgetary period.

However, Member States’ contributions to the EDF are paid in three instalments per year, while payments are subject to seasonality.

In order to ensure that treasury resources are always sufficient to cover the payments to be executed in

any given month, information on the treasury situation is regularly exchanged between the Commission's treasury and the relevant spending departments.

In addition to the above, in the context of the EDF's treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the EDF's bank accounts, on a daily basis.

Annual accounts of the European Development Fund 2025

48

6. RELATED PARTY DISCLOSURES

The related parties of the EDF are the EUTF Bêkou- and EUTF Africa and the European Commission. Transactions between these entities take place as part of the normal operations of the EDF, and therefore no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

The EDF has no separate management since it is managed by the Commission. The entitlements of the key management of the EU, including the Commission, have been disclosed in the consolidated annual accounts of the European Union under heading 7.2 ‘Key management entitlements’.

7. EVENTS AFTER THE BALANCE SHEET DATE

At the date of signature of these accounts, no material issues had come to the attention of or were

reported to the Accounting Officer of the EDF that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above.

Annual accounts of the European Development Fund 2025

49

8. RECONCILIATION OF ECONOMIC RESULT AND

BUDGET RESULT

The economic result of the year is calculated based on accrual accounting principles. The budget result is however based on cash accounting rules. As the economic result and the budget result both cover the same underlying operational transactions, it is a useful control to ensure that they are reconcilable. The

table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items. The notes to the table provide additional information on the nature of the key reconciling items.

EUR million

2025 2024

ECONOMIC RESULT OF THE YEAR (1 094) (1 240)

Revenue

Entitlements not affecting the budget result (5) (25)

Entitlements established in current year but not yet collected (10) (4)

Entitlements established in previous years and collected in current year 13 18

Revenue decreasing consumption 44 38

Accrued revenue (net) (25) (98)

Other – –

Expenses

Expenses of the current year not yet paid 10 65

Expenses of previous years paid in the current year (48) (176)

Net effect of pre-financing 730 1 147

Accrued expenses (net) (509) (1 070)

Other

BUDGET RESULT OF THE YEAR (893) (1 345)

8.1. RECONCILING ITEMS - REVENUE

The budgetary revenue of a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years.

The entitlements not affecting the budget result are recorded in the economic result but from a budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves

and cannot be recommitted without a Council decision.

The entitlements established in the current year but not yet collected are to be deducted from the

economic result for reconciliation purposes, as they do not form part of budgetary revenue. However, the entitlements established in previous years and collected in the current year must be added to the economic result for reconciliation purposes.

The net effect of pre-financing line refers to the clearing of pre-financing with amounts recovered from the beneficiaries. These cash receipts represent budgetary revenue but have no impact on the economic result and must therefore be added for reconciliation purposes.

The net accrued revenue mainly consists of accruals made for year-end cut-off purposes. Only the net

effect, i.e. the accrued revenue of the current year less the reversal of accrued revenue of the previous year, is taken into consideration.

8.2. RECONCILING ITEMS – EXPENDITURE

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Expenses of the current year not yet paid are to be added for reconciliation purposes as they are included in the economic result but do not form part of budget expenditure. However, the expenses of previous years paid in the current year must be deducted from the economic result for reconciliation purposes as they are part of the current year's budget expenditure but have either no effect on the

economic result or they decrease the expenses in the event of corrections.

Thecash receipts from payment cancellations do not affect the economic result although they do affect the budget result.

The net effect of pre-financing is the combination of the new pre-financing amounts paid in the current year (recognised as budget expenditure of the year) and the clearing of pre-financing paid in the current year or previous years through the acceptance of eligible costs. The latter represents an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had

already been considered as a budget expenditure at the time of its payment.

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is taken into consideration.

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PART I.2

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS BÊKOU AND EU TRUST

FUND AFRICA

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FINANCIAL STATEMENTS OF THE BÊKOU

EU TRUST FUND 2025

It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to add-up.

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BACKGROUND INFORMATION

General background on Union Trust Funds

Establishment

In accordance with Articles 238 and 239 of the Financial Regulation applicable to the general budget of the Union (EU FR)3 and Article 35 of the Financial Regulation applicable to the 11th European

Development Fund (EDF FR)4, the European Commission may establish Union Trust Funds for external actions (‘EU Trust Funds/EUTFs’). The Union Trust Funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.

Union Trust Funds are established by the European Commission by a decision after consultation or

approval of the European Parliament and the Council. This decision includes the constitutive agreement

with other donors.

Union Trust Funds are only established and implemented subject to the following conditions:

— There is added value of the Union intervention: the objectives of Union Trust Funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at

national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union;

— Union Trust Funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions;

— Union Trust Funds do not duplicate other existing funding channels or similar instruments without providing any additionality;

— The objectives of Union Trust Funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:

— The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic's exit

from crisis and its reconstruction efforts. Established on 15 July 2014;

— The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014;

— The EUTF AFRICA, a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015;

— The EUTF COLOMBIA, which supports the implementation of the peace agreement in the early recovery and stabilisation post conflict. Established on 12 December 2016.

Mission

The EUTF Bêkou, was established, with the aim of promoting the stabilisation and reconstruction of the Central African Republic (CAR). Its main objective, as set out in the Constitutive Agreement, is “to provide consistent, targeted aid for the resilience of vulnerable groups and support for all aspects of the Central African Republic's exit from the crisis and reconstruction, to coordinate actions over the short,

medium and long term and to help neighbouring countries cope with the consequences of the crisis”.

Main operational activities

The Union Trust Fund pools together resources from different donors to finance programmes on the basis of agreed objectives. Since its creation in July 2014, the EUTF Bêkou has adopted 22 programmes and

3 Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules

applicable to the general budget of the Union (recast). 4 Council Regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development

Fund, and repealing Regulation (EU) 2015/323.

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has reached more than 2.5 million beneficiaries. The programmes are to assist the Central African

Republic (CAR) and its population in the aftermath of the 2013 crisis. More specifically, the EUTF Bêkou aims to ensure access to basic services (mainly health, water and sanitation), support economic recovery and job creation, and promote social cohesion and reconciliation.

Governance

The management of the EUTF Bêkou is ensured by the European Commission, which also acts as the

secretariat of its two governing bodies – the Trust Fund Board and the Operational Committee. The Trust Fund Board and the Operational Committee of the EUTF Bêkou are composed of representatives of the donors, of the Commission, of the European Parliament, a representative of the Central African Republic’s authorities and observers. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union Trust Fund.

The main task of the Board is to establish and review the overall strategy of the Trust Fund. The

Operational Board is responsible for the selection of the actions financed by the Fund and supervises their

implementation. It also approves the annual accounts and the annual reports on the activities financed by

the Trust Fund.

Sources of financing

The EUTF Bêkou is financed through contributions from donors.

Annual accounts

Basis for preparation

The legal framework and the deadlines for the preparation of the annual accounts are set by the “Agreement establishing the European Union Trust Fund for the Central African Republic, ‘The Bêkou EU Trust Fund”, and its internal rules’ (‘Constitutive Agreement’). As per this Constitutive Agreement, the

annual accounts are prepared in accordance with the rules adopted by the Accounting Officer of the Commission (EU Accounting Rules, EAR), which are based on internationally accepted accounting standards for the public sector (IPSAS).

Accounting Officer

The Accounting Officer of the Commission serves as the Accounting Officer of the Union Trust Funds. The

Accounting Officer is responsible for laying down accounting procedures and chart of accounts common to all Union Trust Funds. The Commission’s Internal Auditor, OLAF and the Court of Auditors exercise the same powers over Union Trust Funds as they do in respect of other actions carried out by the Commission. The Union Trust Funds are also subject to an independent external audit every year.

Composition of the annual accounts

The annual accounts cover the period from 1 January to 31 December and comprise the financial

statements and the reports on the implementation of the budget. While the financial statements and the complementary notes are prepared on an accrual accounting basis, the budget implementation reports are primarily based on movements of cash.

Process from provisional accounts to discharge

The annual accounts are subject to independent external audit. The provisional annual accounts prepared

by the Accounting Officer are transmitted, by the 15th of February of the following year, to the Operational Committee who then transmits them to the audit company selected by the entity following a tender procedure. Following the audit, the Accounting Officer prepares the final annual accounts and submits them to the Operational Committee for approval (Article 8.3.4(c)).

The annual accounts of the EUTF Bêkou are consolidated in the annual accounts of the European

Development Fund.

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Operational highlights

Achievements of the year

The EU launched, in July 2014, its first ever Trust Fund, named Bêkou (meaning hope in the Sango

language) to assist the Central African Republic and its population in the aftermath of the 2013 crisis. The EUTF Bêkou aims to ensure access to basic services (mainly health and water and sanitation), support rural development and economic recovery, and promote reconciliation. Since its creation, the EUTF Bêkou has financed 22 programmes divided in 125 projects and has reached more than half of the country’s population.

The Central African Republic remains a fragile state from many points of view, particularly in terms of governance and local capacity.

The security situation has gradually improved. However, the sub-region remains affected by the

instability caused by the conflicts in Sudan, Democratic Republic of Congo (DRC) and Chad. This situation is causing refugee flows to the CAR, exacerbating the food insecurity.

In 2025, the Central African economy was characterised by high inflation and shortages. However, the situation in the country is gradually improving based on the National Development Plan (NDP 2024-

2028), which is a roadmap for the social and economic transformation of the CAR. This plan is gradually being put in place. This is demonstrated by the successes of the Donors’ Round Table held in Casablanca in September 2025.

2025 was also marked by the grouped general elections in December (presidential, municipal, regional and legislative) with the logistical support of MINUSCA (Mission Multidimensionnelle intégrée des Nations Unies pour la Stabilisation en République Centrafricaine) and the financial support of the EU (electoral

roll, National Elections Agency). The relationship with the EU remains cordial and stable.

The Fund’s termination phase – characterised by closures and decommitments with audits and

evaluations remaining until 2026 – is started with the end of the operational implementation of the last projects. It should be stressed that the continuity of actions will be preserved (Health and Education in particular), as far as possible, through NDICI projects, because of the lessons learned during the implementation of the Fund, in consultation with the Government and the technical and financial partners in line with the National Development Plan.

Key achievements in specific focus areas

Key achievements of 2025 presented below reflect the main specific objectives/areas of intervention of the Trust Fund.

In the area of access to services, 21 drillings were rehabilitated, improving access to Water, Hygiene and Sanitation (EHA) services by an additional 10 500 people in 2025, bringing the total to 1 197 087

additional beneficiaries since the beginning of the Fund.

In the area of social cohesion, 1 450 women and girls benefited from economic empowerment activities, all under the DEVRUR II project implemented by Enabel in 2025. Of these, 865 received financial management training, 575 received training to get a job and 10 were supported to start their income- generating activity (AGR). This brings the number of women and girls participating in socioeconomic empowerment activities to 174 850 over the duration of the Fund.

In the area of supporting economic and productive sectors’ recovery, 3 770 people benefited from

technical and vocational training, all in the ‘Agropoles’ established by the DEVRUR II project, bringing the total number of people who benefited from skills development activities thanks to Bêkou funding to 121 900. In addition, 32 people found a job, 23 started an entrepreneurial project and 17 set up an AGR in 2025 thanks to the support of the DEVRUR project.

In addition, Enabel also created 4 114 THIMO (Travaux à Haute Intensité de Main-d'œuvre) jobs in 2025 which enabled the finalisation of the last works for the construction of ‘Agropoles’ and trained 58 last staff

(administrative, technical and trainers), bringing the total number of administrative staff or service

providers whose capacities were reinforced by the Fund to 20 675.

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Budget and budget implementation

By the end of 2025, the contributions to EUTF Bêkou amounted to over EUR 310 million, as in the previous year 2024. In addition to this amount, there were EUR 2.3 million for other income (interest and recovery orders cashed). The Trust fund finalised the commitments and contracting of all received contributions on 31 December 2021, with the exception of funds reserved for monitoring, evaluation, audit and communication that can still be contracted after this date.

In 2025, 5 contracts were ongoing for a total budget around EUR 43.9 million including 3 operational projects (DEVRUR II Enabel, PAPEUR Rural & WASH PEPEV).

Impact of the activities in the financial statements

In the financial statements, the impact of the above-mentioned activities is most visible when looking at:

— Pre-financing: decreased by kEUR 2 183 as a result of the winding down of the Trust Fund and

the conclusion of operating projects in 2025. As the Trust Fund reached the end of its implementation period on 31 December 2025, all operational contracts came to an end, leading to increased clearance of pre-financing balances. The remaining balance relates to projects for which the final financial reports had not yet been received at year-end.

— Financial liabilities: decreased by kEUR 10 676 mainly due to the absence of cashed contributions during the year.

— Operating expenses: increased by kEUR 3 914, mainly due to higher actual and accrued costs

recognised at project closure, the application of higher Trust Fund implementation and eligibility rates, and the finalisation of several projects following the end of the Trust Fund’s implementation period.

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BALANCE SHEET

EUR '000

31.12.2025 31.12.2024

NON-CURRENT ASSETS

Pre-financing – –

– –

CURRENT ASSETS

Pre-financing 436 2 619

Exchange receivables and non-exchange recoverables 1 496 2 267

Cash and cash equivalents 14 498 23 465

16 430 28 350

TOTAL ASSETS 16 430 28 350

NON-CURRENT LIABILITIES

Financial liabilities (13 431) (24 108)

(13 431) (24 108)

CURRENT LIABILITIES

Payables (1 927) (2 536)

Accrued charges (1 072) (1 707)

(2 998) (4 243)

TOTAL LIABILITIES (16 430) (28 350)

NET ASSETS – –

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STATEMENT OF FINANCIAL PERFORMANCE

EUR '000

2025 2024 REVENUE

Revenue from non-exchange transactions

Revenue from donations 10 676 6 894

Recovery of expenses 448 183

11 125 7 076

Revenue from exchange transactions

Financial revenue 400 884

400 884

Total revenue 11 525 7 961

EXPENSES

Operating expenses (10 224) (6 310)

Finance costs (2) (166)

Other expenses (1 300) (1 485)

Total expenses (11 525) (7 961)

ECONOMIC RESULT OF THE YEAR – –

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CASHFLOW STATEMENT

EUR '000

2025 2024

Economic result of the year – –

(Increase)/decrease in pre-financing 2 183 1 126 (Increase)/decrease in exchange receivables and non-exchange recoverables

771 1 196

Increase/(decrease) in financial liabilities (10 676) (6 894)

Increase/(decrease) in payables (609) 2 536

Increase/(decrease) in accrued charges (635) (2 919)

NET CASHFLOW (8 967) (4 955)

Net increase/(decrease) in cash and cash equivalents (8 967) (4 955)

Cash and cash equivalents at the beginning of the year 23 465 28 420

Cash and cash equivalents at year-end 14 498 23 465

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FINANCIAL STATEMENTS OF THE EUTF

AFRICA 2025

It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to add-up.

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BACKGROUND INFORMATION ON THE EUTF AFRICA

General background on Union Trust Funds

Establishment

In accordance with Articles 238 and 239 of the Financial Regulation applicable to the general budget of the Union (EU FR)5 and Article 35 of the Financial Regulation applicable to the 11th European

Development Fund (EDF FR)6, the European Commission may establish Union Trust Funds for external actions (‘EU Trust funds/EUTFs’). The Union Trust Funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.

Union Trust Funds are established by the European Commission by a decision after consultation or

approval of the European Parliament and the Council. This decision includes the constitutive agreement

with other donors.

Union Trust funds are only established and implemented subject to the following conditions:

— There is added value of the Union intervention: the objectives of Union Trust Funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at

national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union;

— Union Trust Funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions;

— Union Trust Funds do not duplicate other existing funding channels or similar instruments without providing any additionality;

— The objectives of Union Trust Funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:

— The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic's exit

from crisis and its reconstruction efforts. Established on 15 July 2014;

— The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014;

— The EUTF AFRICA, a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015;

— The EUTF COLOMBIA, which supports the implementation of the peace agreement in the early recovery and stabilisation post conflict. Established on 12 December 2016.

Mission

The main objectives of the EUTF Africa are to support all aspects of stability and contribute to better migration management as well as addressing the root causes of destabilisation, forced displacement and irregular migration, in particular by promoting resilience, economic and equal opportunities, security and development and addressing human rights abuses.

Main operational activities

The Union Trust Fund pools together resources from different donors to finance an action on the basis of agreed objectives. EUTF Africa operates in three main geographic areas, namely the Sahel region and Lake Chad area, the Horn of Africa and the North of Africa. The neighbouring countries of the eligible

countries may benefit, on a case by case basis, from the Trust Fund's projects. The Trust Fund is

5 Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the

Union (recast). 6 Council regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU)

2015/323.

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62

established for a limited period, in order to provide a short and medium-term response to the challenges

of the regions.

Governance

The management of the EUTF Africa is ensured by the European Commission, which also acts as the secretariat of its two governing bodies – the Trust Fund Board and the Operational Committee. The Trust Fund Board and the Operational Committee of the EUTF Africa are composed of representatives of the

donors and of the Commission, as well as representatives of non-contributing EU Member States, authorities of eligible countries' and regional organisations as observers. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union Trust Fund.

The main task of the Board is to establish and review the overall strategy of the Trust Fund. The

Operational Board is responsible for the selection of the actions financed by the Fund and supervises their

implementation. It also approves the annual accounts and the annual reports on the activities financed by

the Trust Fund.

Sources of financing

The EUTF Africa is financed through contributions from donors.

Basis for preparation

The legal framework and the deadlines for the preparation of the annual accounts are set by the ‘Agreement establishing the European Union emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa and its internal rules’ (‘Constitutive Agreement’). As per this Constitutive Agreement, the annual accounts are prepared in accordance with the rules adopted by the Accounting Officer of the Commission (EU Accounting Rules, EAR), which are

based on internationally accepted accounting standards for the public sector (IPSAS).

Accounting Officer

Based on the Constitutive Agreement, the Accounting Officer of the Commission serves as the Accounting Officer of the Trust Fund.

Composition of the annual accounts

The annual accounts cover the period from 1 January to 31 December and comprise the financial

statements and the reports on the implementation of the budget. While the financial statements and the complementary notes are prepared on an accrual accounting basis, the budget implementation reports are primarily based on movements of cash.

Process from provisional accounts to discharge

The annual accounts are subject to independent external audit. The provisional annual accounts prepared

by the Accounting Officer are transmitted, by the 15th of February of the following year, to the Operational Committee who then transmits them to the audit company selected by the entity following a tender procedure. Following the audit, the Accounting Officer prepares the final annual accounts and submits them to the Operational Committee for approval.

The annual accounts of the EUTF Africa are consolidated in the annual accounts of the European

Development Fund.

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Operational highlights

Achievements of the year

In line with the end of the contracting period on 31 December 2021, as of January 2022 the EU Trust

Fund for Africa has not funded any new financial commitments or budgetary top-ups. Financial commitments related to administrative activities such as audits, evaluations, monitoring and communication activities are the only ones that have been contracted. The EUTF Africa programmes continued to be implemented up to end 2025. The EUTF will enter in its closure phase as from 1 January 2026.

Throughout 2025, the EUTF for Africa further demonstrated that it is a flexible and effective implementation tool, facilitating policy dialogue with African partner countries, applying innovative approaches, and producing tangible results across the three regions (Sahel and Lake Chad, Horn of Africa and North of Africa).

In 2025, the Horn of Africa (HoA) region remains one of the most acutely affected areas in the world, grappling with the compounding effects of large-scale armed conflict, persistent drought resulting from climate change, mass displacement, and a deepening humanitarian emergency.

Against this complex regional backdrop, the EUTF continued to have a meaningful impact articulated through its four Strategic Objectives (SO). While the final year of implementation naturally saw a reduction in the number of active projects and indicators, the EUTF sustained targeted actions to address these specific challenges.

Through initiatives such as ILED in Somalia, the EUTF expanded economic and employment opportunities (in line with Strategic Objective 1) by supporting income generating activities, skills development, and

job creation, contributing to broader livelihood efforts.

In the challenging Sudanese context, projects such as STARS MDTE and RDPP SD continued to deliver

essential social services in education and healthcare, alongside food security assistance, thereby strengthening community resilience (in line with Strategic Objective 2).

The PROTECT project in Sudan strengthened migration management (Strategic Objective 3) by protecting people fleeing conflict through assistance to migrants in transit, refugees, asylum seekers, and internally displaced persons in shelters with food and non-food items. It also enhanced the capacity of civil society

organisations and shelter staff to support survivors of gender-based violence and trafficking and to prevent sexual exploitation and abuse.

In the area of governance and conflict prevention (Strategic Objective 4), the STABILITY project in the Tigray Region for example supported community recovery by training religious leaders to help communities heal from the trauma of the recent war

With the completion of the EUTF, programmes in the HoA region have delivered significant cumulative

results over the last 10 years. Over the portfolio lifetime, EUTF-funded interventions have created or

supported over 150,000 jobs (EUTF indicator 1.1) and assisted approximately 750,000 individuals in developing income-generating activities (EUTF indicator 1.3), including substantial support to refugee populations. Just under 15,000 micro, small, and medium enterprises have been created or supported (EUTF indicator 1.2). In the health sector, EUTF programmes have delivered more than 11 million health- related services (EUTF indicator 2.2) and improved access to health services for 3.7 million people (EUTF indicator 2.9). Nutrition assistance has reached 3 million individuals (EUTF indicator 2.3), and nearly

195,000 migrants and displaced persons have received critical assistance and protection while migration management was improved. Peace-building initiatives have engaged over 1.39 million participants in conflict prevention and human rights activities. These results highlight both the scale of delivery achieved under the EUTF and the continued relevance of such interventions in a context where needs remain high and structural challenges persist.

In 2025, the Sahel and Lake Chad (SLC) region continued to face high levels of instability, driven by persistent armed conflict, deepening political fragmentation, climate shocks, and a deepening

humanitarian crisis.

As most activities under the EUTF SLC projects were completed by end of 2024, only minimal achievements can be reported for 2025.

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For the Strategic Objective 1 (greater economic and employment opportunities) the programme

“Acceleration in the Sahel” continued to support access to long term financing for entrepreneurs and very small and medium-sized enterprises (SMSEs) in West Africa. The project has achieved its objectives in terms of the number of jobs created entrepreneurs and SMSEs supported.

Under the Strategic Objective 4 (improved governance and conflict prevention) the project «Programme d’appui au renforcement du système d’information de l’état civil au Sénégal” aiming to support the strengthening of the civil registration information system and the consolidation of a national biometric

identity file in Senegal showed some results in 2025 with the rehabilitation of governmental infrastructures supported to strengthen governance and the provision of equipment with the infrastructure of two town halls supported to strengthen governance.

Over the programme's lifetime, EUTF-funded interventions have supported more than 839,927 individuals in developing income-generating activities (EUTF indicator 1.3), a large part in Ghana (GrEEn programme7) and significant numbers in Mali, Niger, Chad and Burkina Faso; they provided technical and vocational education and training (TVET) and skills development to over 240,000 beneficiaries (EUTF

indicator 1.4) in all countries of the SLC window, thanks to nearly 50 programmes, among which Développer l’Emploi au Sénégal8, INTEGRA9 in Ghana, ARCHIPELAGO10 or GrEEn11.

Peacebuilding and conflict prevention activities have engaged 7.1 million participants (EUTF indicator 4.3), most notably in Burkina Faso thanks to PEV12 and PDU13, but also in Niger (PDU, PAIERA14 and SHIMODU15), 21,000 individuals have been trained in migration management and protection in all countries of the Window (EUTF indicator 3.7). Food security-related assistance has reached 3.6 million people (EUTF indicator 2.4), in particular in Burkina Faso, Mali, Nigeria and Chad, and nutrition assistance

has benefited 2.8 million individuals in Burkina Faso, Senegal, Mali, Cameroon and Niger (EUTF indicator 2.3). These achievements represent a significant contribution to resilience and stability across the region, even as the humanitarian context remains exceptionally challenging and the need for continued international engagement becomes ever more critical.

The North Africa (NoA) region continued to face intertwined geopolitical, socioeconomic, and environmental challenges that further influenced migration dynamics. North African countries remain key

points of origin, transit, and destination for migrants, with several also hosting substantial refugee populations.

As of May 202516, out of the 4.94 billion committed by EUTF for Africa, the NoA region accounts for EUR 905 million, channelled through 118 contracts (90 operational and 28 technical support). These interventions contributed to achieve tangible results in the North of Africa from 2017 to May 2025. Considering the EUTF Strategic Objectives, the NoA window focuses on SO3 "improved migration management in countries of origin, transit and destination” across four strategic priorities. Under the

Strategic Priority 1 (Protection of Vulnerable Migrants, Asylum seekers and Refugees) EUTF interventions expanded protection and community stabilisation by implementing 64 contracts that rehabilitated or constructed nearly 1,600 infrastructures. Through Strategic Priority 3 (Support to Labour Migration) funding amounting to EUR 35 million supported labour migration governance by strengthening 23 institutions, developing 19 national strategies and enabling legal mobility for over 7,000 individuals across the NoA region.

Overall, despite the complex environment, our EUTF partners reported improving the access of 5.49

million people to basic social services, delivering 2.78 million basic social services and providing post- return assistance to 4,510 returning migrants. In addition, awareness raising efforts continued with 10.4 million potential migrants reached by resilience and basic rights campaigns and 27 688 beneficiaries participating in professional trainings.

7 T05-EUTF-SAH-GH-02. 8 T05-EUTF-SAH-SN-04. 9 T05-EUTF-SAH-GN-01. 10 T05-EUTF-SAH-REG-15. 11 T05-EUTF-SAH-GH-02. 12 T05- T05-EUTF-SAH-BF-08. 13 T05-EUTF-SAH-REG-18. 14 T05-EUTF-SAH-NE-08. 15 T05-EUTF-SAH-NE-10. 16 Data from NoA MLS Report (covering period from 2017 to 2025).

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Budget and budget implementation

In 202517, no new program or budgetary top-up took place in any of the three regions of the EUTF for Africa, in line with the end of the contracting period on 31 December 2021. The total amount committed for operational and administrative expenditure since the beginning of the EUTF for Africa amounts to EUR 5 053.56 million. The amount of approved operational programmes since the beginning of the EUTF Africa amounts to EUR 1 810 million for the Horn of Africa region; EUR 2 217.8 million for the Sahel and Lake Chad region and EUR 907.3 million for the North of Africa region.

37 new contracts for a total amount of EUR 139 562 266 were contracted in 2025, considering net committed amount and no de-commitments. These contracts were only related to administrative activities (audit, evaluation, communication, monitoring), as operational programmes or activities cannot be funded any longer from 31 December 2021.

The payments in 2025 reached EUR 84.32 million, which was EUR 78.68 million lower than in 2024. Payments are lower in 2025 due to several projects reaching the end of their implementation period.

Impact of the activities in the financial statements

In the financial statements, the impact of the above mentioned activities is most visible when looking at:

— Pre-financing: decreased by kEUR 107 330 as a result of the winding down of the Trust Fund and the conclusion of operating projects in 2025. As the Trust Fund reached the end of its implementation period on 31 December 2025, all operational contracts came to an end, leading to increased clearance of pre-financing balances. The remaining balance relates to projects for which the final financial reports had not yet been received at year-end;

— Financial liabilities: decreased by kEUR 138 236 mainly due to the absence of cashed

contributions during the year;

— Operating expenses: decreased by kEUR 38 674 as a result of the winding down of the Trust Fund which led to a reduction in the number of open contracts and thus to lower expenses.

17 Data from NoA MLS Report (covering period from 2017 to 2025).

Annual accounts of the European Development Fund 2025

66

BALANCE SHEET

EUR '000

31.12.2025 31.12.2024

NON-CURRENT ASSETS

Financial Assets 3 014 3 950

Pre-financing 123 –

3 137 3 950

CURRENT ASSETS

Pre-financing 24 436 131 889

Exchange receivables and non-exchange recoverables 16 651 24 314

Cash and cash equivalents 120 097 187 539

161 185 343 742

TOTAL ASSETS 164 322 347 691

NON-CURRENT LIABILITIES

Financial liabilities (113 103) (251 339)

(113 103) (251 339)

CURRENT LIABILITIES

Payables (14 500) (13 774)

Accrued charges (36 719) (82 578)

(51 219) (96 352)

TOTAL LIABILITIES (164 322) (347 691)

NET ASSETS – –

Annual accounts of the European Development Fund 2025

67

STATEMENT OF FINANCIAL PERFORMANCE

EUR '000

2025 2024

REVENUE

Revenue from non-exchange transactions

Revenue from donations 138 236 169 603

Recovery of expenses 532 245

138 768 169 848

Revenue from exchange transactions

Financial revenue 3 087 6 690

Other exchange revenue 10 546 13 551

13 634 20 240

Total revenue 152 402 190 089

EXPENSES

Operating expenses (123 195) (161 869)

Finance cost (971) (28)

Other expenses (28 235) (28 191)

Total expenses (152 402) (190 089)

ECONOMIC RESULT OF THE YEAR – –

Annual accounts of the European Development Fund 2025

68

CASHFLOW STATEMENT

EUR '000

2025 2024

Economic result of the year – –

Operating activities

(Increase)/decrease in pre-financing 107 329 64 732

(Increase)/decrease in exchange receivables and non-exchange recoverables 7 662 (1 917)

Increase/(decrease) in financial liabilities (138 236) (13 216)

Increase/(decrease) in payables 726 (486)

Increase/(decrease) in accrued charges (45 859) (39 126)

Investing activities

Increase/decrease in non-derivative financial assets at fair value through

surplus or deficit 936 (0)

NET CASHFLOW (67 442) 9 986

Net increase/(decrease) in cash and cash equivalents (67 442) 9 986

Cash and cash equivalents at the beginning of the year 187 539 177 553

Cash and cash equivalents at year-end 120 097 187 539

Annual accounts of the European Development Fund 2025

69

PART I.3

CONSOLIDATED FINANCIAL STATEMENTS

OF THE EDF AND THE EU TRUST FUNDS

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up.

Annual accounts of the European Development Fund 2025

70

CONSOLIDATED BALANCE SHEET

EUR million

31.12.2025 31.12.2024 NON-CURRENT ASSETS

Financial assets 119 131

Pre-financing 492 500

Exchange receivables 5 5

616 637

CURRENT ASSETS

Financial assets 1 5

Pre-financing 556 876

Exchange receivables and non-exchange recoverables 56 63

Cash and cash equivalents 420 622

1 034 1 566

TOTAL ASSETS 1 649 2 203

NON-CURRENT LIABILITIES

Financial liabilities (40) (88)

(40) (88)

CURRENT LIABILITIES

Provisions (0) (2)

Payables (204) (272)

Accrued charges and deferred income (733) (858)

(936) (1 132)

TOTAL LIABILITIES (976) (1 220)

NET ASSETS 673 983

FUNDS & RESERVES

Called fund capital - active EDFs 56 488 55 704

Called fund capital from closed EDFs carried forward 2 252 2 252

Economic result carried forward from previous years (56 973) (55 733)

Economic result of the year (1 094) (1 240)

NET ASSETS 673 983

Annual accounts of the European Development Fund 2025

71

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

EUR million

2025 2024 REVENUE

Revenue from non-exchange transactions

Recovery activities 13 42

Revenue from trust funds donations 48 59

60 100

Revenue from exchange transactions

Financial revenue 11 26

Other revenue 31 85

42 111

Total Revenue 102 211

EXPENSES

Aid instruments (942) (1 119)

Expenses implemented by other entities (4) (4)

Expenses implemented by trust funds (133) (168)

Co-financing expenses (1) (17)

Finance costs (41) (3)

Other expenses (75) (140)

Total Expenses (1 196) (1 451)

ECONOMIC RESULT OF THE YEAR (1 094) (1 240)

Annual accounts of the European Development Fund 2025

72

CONSOLIDATED CASH FLOW STATEMENT

EUR million

2025 2024 Economic result of the year (1 094) (1 240)

Operating activities

Capital increase - contributions 784 1 138

(Increase)/decrease in trust funds contributions – –

(Increase)/decrease in pre-financing 328 352

(Increase)/decrease in exchange receivables and non-exchange recoverables 8 (13)

Increase/(decrease) in provisions (2) 2

Increase/(decrease) in financial liabilities (48) 3

Increase/(decrease) in payables (68) (134)

Increase/(decrease) in accrued charges and deferred income (126) (252)

Other non-cash movements – -

Investing activities

(Increase)/decrease in non-derivative financial assets at fair value through surplus or deficit

16 (42)

NET CASHFLOW (201) (185)

Net increase/(decrease) in cash and cash equivalents (201) (185)

Cash and cash equivalents at the beginning of the year 622 807

Cash and cash equivalents at year-end 420 622

Annual accounts of the European Development Fund 2025

73

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

EUR million

Fund capital -

active EDFs

(A)

Uncalled funds -

active EDFs (B)

Called fund

capital - active

EDFs (C) = (A)-

(B)

Cumulative

Reserves (D)

Called fund

capital from

closed EDFs

carried

forward (E)

Total Net

Assets

(C)+(D)+(E)+

(F)

BALANCE AS AT 31.12.2023 60 607 6 040 54 566 (55 733) 2 252 1 086

Capital increase - contributions (62) (1 200) 1 138 – – 1 138

Economic result of the year – – – (1 240) – (1 240)

BALANCE AS AT 31.12.2024 60 544 4 840 55 704 (56 973) 2 252 983

Capital increase - contributions (16) (800) 784 – – 784

Economic result of the year – – – (1 094) – (1 094)

BALANCE AS AT 31.12.2025 60 528 4 040 56 488 (58 067) 2 252 673

Annual accounts of the European Development Fund 2025

74

PART I.4

EDF REPORT ON FINANCIAL

IMPLEMENTATION

Annual accounts of the European Development Fund 2025

75

CONTENTS

1. BACKGROUND ........................................................................................ 76 Previous EDFs .......................................................................................................... 76 10th and 11th EDF ................................................................................................... 77

2. FINANCIAL IMPLEMENTATION ................................................................... 78 FINANCIAL OUTTURN ............................................................................................... 78 RESOURCES ............................................................................................................ 82 OPERATIONAL EXPENDITURE AND SPECIFIC PROGRAMMES .......................................... 83

3. GLOSSARY ............................................................................................. 89

Annual accounts of the European Development Fund 2025

76

1. BACKGROUND

Launched in 1959, the EDF is the main instrument for providing EU aid for development cooperation to the African, Caribbean and Pacific (ACP) states and overseas countries and territories (OCTs). Its primary objective is to reduce and ultimately eradicate poverty.

The EDF is established by an Internal Agreement of the representatives of the Member States and managed by a specific committee. The EDF resources are ‘ad hoc’ contributions from the EU Member States, which decide on an overall amount that will be allocated to the fund (over a period of five years). In addition to these contributions, it is also possible for Member States to enter into co-financing

arrangements or to make voluntary financial contributions to the EDF. The European Commission is responsible for the financial implementation of the operations carried out with EDF resources. The EIB manages the Investment Facility.

The EDF is a fund operating based on multiannuality. Each EDF is concluded for a period of around five

years and is governed by its own financial regulation. The Internal Agreement establishing the last EDF, the 11th EDF (2014-2020), came into force on 1 March 2015. Since 2021, the cooperation with the ACP countries is included in the Neighbourhood, Development and International Cooperation Instrument

(NDICI). However, projects that were already ongoing, funded under the EDF, will continue to be implemented, under the respective EDF legal basis.

This report is produced in accordance with Article 39 of the Financial Regulation of 11th EDF18 . It provides information on the revenue and expenditure operations of the EDF, with the focus on important events that had a significant impact on financial implementation in 2025.

Given that there are no ongoing operations under previous EDFs19 , this report includes figures only for

the 10th and 11th EDFs.

Previous EDFs

6TH AND 7TH EDF

The 6th EDF was closed in 2006 and the 7th EDF was closed in 2008.

In accordance with article 1(2)(b) of the Internal Agreement of the 9th EDF, balances and decommitments of previous EDFs have been transferred to the 9th EDF.

8TH AND 9TH EDF

2021 marked the financial and operational closure of the Eighth EDF for a total amount of expenditure of EUR 10 374 million. The Commission announced the closure of the eight EDF to the Member States in a

communication that was presented to the Council in October 2021.

All eight EDF activities have now been completed, and all checks and controls have been performed. All contracts and financial decisions have also been closed in the EDF accounts. All recovery orders, which were still open after the operational closure, were cashed or waived with the exception of four recovery orders being followed by the Commission’s Legal Service. In line with Commission Decision C(2003)19044, these recovery orders were transferred to the ninth EDF.

The closure of the ninth EDF is progressing well. There are still 4 contracts open, out of which 2

concern audit and evaluations in Southern Sudan (Council Decision 2011/315/EU). These actions were decided after the ninth EDF sunset clause and will reach their conclusion within the specified timeframe, contributing to the finalisation of activities and projects associated with the ninth EDF. The full closure of the ninth EDF can only be accomplished once all contracts come to an end and following the completion of their evaluations and audits.

From 2015 to 2025, the Commission carried out seven refunds of 8th/9thEDF credits for a total amount

of EUR 1925.1920 million. A balance of EUR 1.2 million was refunded in January 202621 as part of the

payment of the first instalment of Member State contributions to the EDF for the year 2026.

18 COUNCIL REGULATION (EU) 2018/1877. 19 Except for operations in South Sudan.

Annual accounts of the European Development Fund 2025

77

10th and 11th EDF

The ACP-EC Partnership Agreement (also known as the Cotonou Agreement) was signed on 23 June 2000 in Cotonou by the Member States of the European Community and the ACP States. It entered into force

on 1 April 2003 (establishing the 9th EDF).The Cotonou Agreement was amended twice, firstly by the agreement signed in Luxembourg on 25 June 2005 (establishing the 10th EDF) and secondly by the agreement signed in Ouagadougou on 22 June 2010 (establishing the 11th EDF).

The EU Council Decision of 27 November 2001 (2001/822/EC) on the association of the overseas countries and territories (OCT) with the European Union entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Decision 2007/249/EC).

The Internal Agreement on the financing of Community aid under the Multiannual Financial Framework

for the period 2014-2020 in accordance with the revised Cotonou Agreement, adopted by the representatives of the governments of the Member States of the European Community on August 2013,

entered into force on March 2015.

Under the Cotonou Agreement, for the second period (2008-2013), the 10th EDF had an overall budget of EUR 22 682 million. Of this amount:

— EUR 21 966 million was allocated to the ACP countries;

— EUR 286 million to the OCT; and

— EUR 430 million to the Commission as support expenditure for programming and implementation of the EDF.

The amount for the ACP countries is divided as follows:

— EUR 17 766 million to national and regional indicative programmes;

— EUR 2 700 million to intra-ACP and intra-regional cooperation; and

— EUR 1 500 million to Investment Facilities.

Notably, an increased share of the budget was devoted to regional programmes, thereby emphasising the importance of regional economic integration as the basic framework for national and local development. An innovation in the 10th EDF was the creation of ‘incentive amounts’ for each country.

Under the Cotonou Agreement, the third period (2014-2020) of Community aid to the ACP States and OCTs is funded by the 11th EDF for an amount of EUR 30 506 million, of which:

— EUR 29 089 million is allocated to the ACP countries in accordance with Article 1.2(a) and Article 2(d) of the Internal Agreement, of which EUR 27 955 million was managed by the European

Commission;

— EUR 364.5 million is allocated to the OCTs in accordance with Article 1.2(a) and Article 3.1 of the Internal Agreement, of which 359.5 million was managed by the European Commission; and

— EUR 1 052.5 million is for the Commission to finance the costs arising from the programming and implementation of 11th EDF resources, in accordance with Article 1.2(a) of the Internal Agreement.

20 1.402,57 million bridging facility (Council Decision 2015/0246), EUR 200 million ( Council Decision 2017/1206), EUR 223 million ( Council Decision 2020/1708)

EUR 43 million (Council Decision 2021/1941),EUR 42.5 million(Council Decision 2022/2242), EUR 7.8 million (Council Decision 2023/2586) and 6.3 million (Council

Decision 2024/2906) 21 Council Decision (EU) 2025/22324.

Annual accounts of the European Development Fund 2025

78

2. FINANCIAL IMPLEMENTATION

FINANCIAL OUTTURN

EVOLUTION OF 10th EDF APPROPRIATIONS

10th EDF

EVOLUTION OF APPROPRIATIONS: 31 December 2025

ANALYSIS OF CREDITS PER INSTRUMENT

(EUR million)

INSTRUMENT

INITIAL

APPROPRIATIO

N

INCREASES/DECREAS

ES IN CUMULATIVE

RESOURCES AT

31 DECEMBER 2024

INCREASE OR

DECREASE IN

RESOURCES IN

2025

Note

s

CURRENT

LEVEL

APPROPRIATIO

N

Co-financing 0 202 (9) 193

AC

P

Regular MS Contributions 21.326 (710) (86) 20.530

SUB TOTAL ACP 21.326 (508) (95) 20.723

OC

T

Regular MS Contributions 0 236 (1) 236

SUB TOTAL OCT 0 236 (1) 236

TOTAL 10th EDF 21.326 (272) (95) 20.959

Annual accounts of the European Development Fund 2025

79

EVOLUTION OF 11th EDF APPROPRIATIONS

11th EDF

EVOLUTION OF APPROPRIATIONS: 31 December 2025

ANALYSIS OF CREDITS PER INSTRUMENT

(EUR million)

INSTRUMENT

INITIAL

APPROPRIATIO

N

INCREASES/DECREASE

S IN CUMULATIVE

RESOURCES AT

31 DECEMBER 2024

INCREASE OR

DECREASE IN

RESOURCES

IN 2025

Note

s

CURRENT

LEVEL

APPROPRIATIO

N

Co-financing 0 91 91

ACP

EC Internal SLA 0 1 1

Regular MS Contributions 30.060 (855) 74 29.279

SUB TOTAL ACP 30.060 (763) 29.372

Co-financing 0 0 0

OC

T

EC Internal SLA 0 0 0

Regular MS Contributions 0 354 1 354

SUB TOTAL OCT 0 354 354

TOTAL 11th EDF 30.060 (409) 75 29.726

Annual accounts of the European Development Fund 2025

80

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 10TH EDF

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2025

CLASS OF AID

ACP + PTOM - 10 th EDF

(EUR million)

CREDITS

DECISIONS ASSIGNED FUNDS PAYMENTS

AGGREG. ANNUAL % AGGREG. ANNUAL % AGGREG. ANNUA

L %

(1) (2) (2) : (1) (3) (3) : (2) (4) (4) : (3)

Regular MS Contributions

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL

ALLOCATIONS 12.247 12.245 (23) 100% 12.231 (24) 100% 12.204 3 100%

SUB TOTAL: B ENVELOPE - NATIONAL

ALLOCATIONS 1.960 1.960 0 100% 1.960 0 100% 1.960 0 100%

SUB TOTAL: FOOD SECURITY 341 481 (0) 141% 471 (12) 98% 407 52 87%

SUB TOTAL: IMPLEMENTATION COSTS

AND INTERESTS REVENUES 526 526 100% 526 0 100% 522 99%

SUB TOTAL: INTRA-ACP ALLOCATIONS 3.550 3.538 (42) 100% 3.535 (26) 100% 3.492 0 99%

SUB TOTAL: REGIONAL ALLOCATIONS 1.905 1.760 (3) 92% 1.755 (0) 100% 1.704 9 97%

Co-financing

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL

ALLOCATIONS 178 175 (0) 99% 175 (0) 100% 175 0 100%

SUB TOTAL: IMPLEMENTATION COSTS

AND INTERESTS REVENUES 5 5 110% 5 100% 5 100%

SUB TOTAL: INTRA-ACP ALLOCATIONS 11 11 100% 11 100% 11 100%

Regular MS Contributions

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL

ALLOCATIONS 182 181 (1) 100% 180 0 99% 172 96%

SUB TOTAL: B ENVELOPE - NATIONAL

ALLOCATIONS 14 14 100% 14 100% 14 100%

SUB TOTAL: IMPLEMENTATION COSTS

AND INTERESTS REVENUES 5 5 100% 5 100% 5 100%

SUB TOTAL: REGIONAL ALLOCATIONS 34 34 0 100% 34 0 99% 34 100%

TOTAL: ACP+OCT (INCL.

RESERVES) (A+B) 20.959 20.937 (69)

100

% 20.902 (62) 100% 20.705 65 99%

Annual accounts of the European Development Fund 2025

81

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 11TH EDF

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2025 CLASS OF AID

ACP + PTOM - 11 th EDF

(EUR million)

CREDITS

DECISIONS ASSIGNED FUNDS PAYMENTS

AGGREG. ANNUAL % AGGREG. ANNUAL % AGGREG. ANNUAL %

(1) (2) (2) : (1) (3) (3) : (2) (4) (4) : (3)

Regular MS Contributions

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS

14.977 14.915 (217) 100% 14.696 (107) 99% 13.280 452 90%

SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS

1.053 1.053 (2) 100% 1.052 0 100% 1.027 4 98%

SUB TOTAL: BRIDGING FACILITY

0

SUB TOTAL: FOOD SECURITY

112 112 0 100% 112 0 100% 50 7 44%

SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES

1.076 1.062 (2) 99% 1.059 (1) 100% 1.008 41 95%

SUB TOTAL: INTRA-ACP ALLOCATIONS

3.938 3.846 (13) 98% 3.910 (24) 102% 3.635 120 93%

SUB TOTAL: REGIONAL ALLOCATIONS

7.135 7.114 (54) 100% 7.051 (31) 99% 6.415 196 91%

Co-financing

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS

46 45 (0) 98% 45 (0) 100% 43 97%

SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES

4 4 100% 4 100% 4 100%

SUB TOTAL: INTRA-ACP ALLOCATIONS

33 33 0 100% 33 0 100% 32 3 100%

SUB TOTAL: REGIONAL ALLOCATIONS

10 10 4 100% 10 4 100% 9 3 95%

Non-mobilisable reserve

Reserves

SUB TOTAL: NON- MOBILISABLE RESERVE 10TH EDF

287

SUB TOTAL: NON- MOBILISABLE RESERVE 11TH EDF

699

EC Internal SLA

Reserves

SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS

1 1 52% 1 100% 1 100%

Regular MS Contributions

Allocations

SUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS

211 210 (1) 100% 193 (0) 92% 193 100%

SUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS

12 12 0 100% 12 0 100% 12 100%

SUB TOTAL: BRIDGING FACILITY

0

SUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES

7 7 0 100% 6 0 95% 6 0 98%

SUB TOTAL: REGIONAL ALLOCATIONS

102 102 0 100% 102 0 99% 85 1 83%

Non-mobilisable reserve

Reserves

SUB TOTAL: NON- MOBILISABLE RESERVE 10TH EDF

19

SUB TOTAL: NON- MOBILISABLE RESERVE 11TH EDF

3

TOTAL: ACP+OCT (INCL. RESERVES) (A+B)

29.726 28.525 (285) 96% 28.284 (160) 99% 25.800 828 91%

Annual accounts of the European Development Fund 2025

82

RESOURCES

Nature of Revenue

The main recources of the EDF is the Member States contributions. Three times per year, the European

Commission and the European Investment Bank call the Member States to contribute to the EDF. The amount of the contributions called each year reflects the amount of payment to be covered during the year.

Overview of contributions by Member State

0,0

2.000,0

4.000,0

6.000,0

8.000,0

10.000,0

12.000,0

DE FR UK IT SP NL BE SE AT PL DK FI GR PT IE CZ RO HU SK LU HR SI BG LT LV CY EE MT

MEMBER STATES & United Kingdom

EDF contributions 2011-2025

10th 11th EDF called

11th EDF uncalled

Annual accounts of the European Development Fund 2025

83

OPERATIONAL EXPENDITURE AND SPECIFIC PROGRAMMES

Nature of Expenditure

The amount available under the multiannual financial framework consists of 3% allocated to Commission for support expenditure and 97% allocated to the implementation of EDF projects. Amounts are set by

each Internal Agreement and can be increased by voluntary contributions and income yielded from operations.

Breakdown of Committed, Contracted and Paid amount per nature of expenditure:

OPERATIONAL IMPLEMENTATION IMPLEMENTATION COSTS AND

INTERESTS REVENUES

(10th and 11th EDF) 2025

CREDITS

DECISIONS ASSIGNED FUNDS PAYMENTS

AGGREG. ANNUAL % AGGREG. ANNUAL % AGGREG. ANNUAL %

(1) (2) (2) : (1) (3) (3) : (2) (4) (4) : (3)

IMPLEMENTATION COSTS AND INTERESTS

REVENUES 10th + 11th EDF 1.622 1.608 (2) 99,1% 1.605 (1) 99,8% 1.550 41 96,6%

OPERATIONAL IMPLEMENTATION (A+B) 10th +

11th EDF 50.685 49.461 (353) 97,6% 49.186 (222) 99,4% 46.506 893 94,5%

91,0%

92,0%

93,0%

94,0%

95,0%

96,0%

97,0%

98,0%

99,0%

100,0%

101,0%

Commitment rate Contract rate Payment rate

Implementation rate (%) for the 10th and 11th EDF

Administrative Operational

Annual accounts of the European Development Fund 2025

84

Breakdown of committed, contracted and paid amount per region and country

EDF CUMULATIVE ACCOUNTS AT 31 DECEMBER 2025 BY COUNTRY % APPR

10th + 11 th EDF TOTAL 10th and 11th EDF (EUR in million)

Cumulative 2025 Appropriations Decisions % of Appr

Assigned funds

% of Appr

Payments % of Appr

A C

P

General/administrative envelope/interests

1.629 1.610 99% 1.612 99% 1.547 95%

Reserve/Not distributed by country 3.540 2.553 72% 2.553 72% 2.553 72%

All ACP countries 5.169 4.163 81% 4.165 81% 4.100 79%

Angola 346 345 100% 344 99% 330 95%

Benin 732 731 100% 730 100% 702 96%

Botswana 126 126 100% 126 100% 126 100%

Burkina Faso 1.277 1.277 100% 1.274 100% 1.264 99%

Burundi 564 564 100% 562 100% 550 97%

Cameroon 520 520 100% 519 100% 492 95%

Cape Verde 144 144 100% 144 100% 144 100%

Comoros 77 77 100% 76 98% 75 97%

Congo (Brazzaville) 163 163 100% 161 99% 156 96%

Congo (Democratic Republic of) 1.401 1.399 100% 1.385 99% 1.317 94%

Ivory Coast 702 702 100% 700 100% 690 98%

Djibouti 175 175 100% 173 99% 165 94%

Eritrea 195 195 100% 195 100% 165 85%

Ethiopia 1.596 1.596 100% 1.592 100% 1.425 89%

Gabon 33 31 95% 31 94% 31 94%

Gambia 302 302 100% 300 99% 291 96%

Ghana 784 784 100% 781 100% 741 94%

Guinea Bissau 184 184 100% 182 99% 180 98%

Guinea (Conakry) 500 500 100% 495 99% 444 89%

Mauritius 82 82 100% 82 100% 82 100%

Kenya 853 840 98% 839 98% 784 92%

Lesotho 247 246 100% 246 99% 215 87%

Liberia 485 485 100% 483 99% 456 94%

Madagascar 774 774 100% 754 97% 685 89%

Malawi 1.018 1.015 100% 1.007 99% 932 92%

Mali 1.295 1.295 100% 1.291 100% 1.257 97%

Mauritania 343 341 100% 340 99% 333 97%

Mozambique 1.431 1.424 100% 1.413 99% 1.240 87%

Namibia 187 186 100% 185 99% 177 95%

Niger 1.261 1.256 100% 1.254 99% 1.251 99%

Nigeria 1.085 1.085 100% 1.085 100% 1.050 97%

Uganda 928 912 98% 905 98% 851 92%

Central African Republic 609 609 100% 608 100% 595 98%

Rwanda 831 831 100% 831 100% 828 100%

Sao Tome and Principe 55 55 100% 53 98% 51 93%

Senegal 662 662 100% 659 100% 637 96%

Seychelles 22 22 100% 22 100% 22 100%

Sierra Leone 652 652 100% 650 100% 634 97%

Somalia 896 895 100% 893 100% 892 100%

Sudan 298 298 100% 298 100% 298 100%

South Sudan 91 91 100% 91 100% 91 100%

Eswatini (Swaziland) 121 121 100% 121 100% 115 95%

Annual accounts of the European Development Fund 2025

85

Tanzania 1.171 1.171 100% 1.160 99% 1.102 94%

Chad 930 926 99% 910 98% 841 90%

Togo 373 373 100% 373 100% 370 99%

Zambia 825 825 100% 814 99% 734 89%

Zimbabwe 461 461 100% 459 100% 457 99%

* Total Africa 27.809 27.748 100% 27.598 99% 26.268 94%

Antigua and Barbuda 15 15 100% 15 100% 15 98%

Barbados 22 22 100% 22 100% 21 98%

Belize 42 42 100% 41 96% 37 87%

Dominica 40 40 100% 40 100% 40 100%

Grenada 20 20 100% 20 100% 20 100%

Guyana 79 79 100% 78 99% 77 98%

Haïti 995 991 100% 923 93% 822 83%

Jamaica 235 235 100% 233 99% 226 96%

Dominican Republic 281 281 100% 279 99% 279 99%

Saint Lucia 32 32 100% 32 100% 32 100%

Saint Kitts and Nevis 6 6 100% 6 99% 6 99%

Saint Vincent and the Grenadines 26 26 99% 26 99% 24 92%

Suriname 27 26 96% 26 96% 26 96%

Trinidad and Tobago 28 28 100% 28 99% 28 99%

* Total Caribbean 1.850 1.845 100% 1.769 96% 1.653 89%

Fiji 48 48 100% 48 100% 48 100%

Cook Islands 5 5 100% 5 100% 5 100%

Solomon Islands 66 66 100% 66 100% 66 100%

Kiribati 42 42 99% 41 98% 41 97%

Marshall Island 17 17 100% 17 100% 17 100%

Micronesia 23 22 97% 22 97% 18 78%

Nauru 4 4 100% 4 100% 4 100%

Niue 3 3 100% 3 100% 3 100%

Palau 4 4 100% 4 100% 4 100%

Papua New Guinea 239 239 100% 233 98% 227 95%

Western Samoa 67 66 99% 66 99% 66 99%

Timor Leste 166 166 100% 166 100% 161 97%

Tonga 28 28 100% 28 100% 28 100%

Tuvalu 13 13 100% 13 100% 13 100%

Vanuatu 55 55 100% 54 99% 53 97%

* Total Pacific 779 777 100% 770 99% 752 97%

Intra ACP Allocations 7.967 7.862 99% 7.908 99% 7.473 94%

PALOP 59 59 100% 58 99% 58 98%

Southern Africa Region FED 10 129 129 100% 129 100% 127 98%

Central Africa region 546 543 100% 539 99% 451 83%

Eastern Africa region and Australia 2.989 2.981 100% 2.960 99% 2.650 89%

Western Africa Region 1.919 1.918 100% 1.901 99% 1.737 91%

Caribbean Region 533 527 99% 522 98% 439 82%

Pacific Region 322 318 99% 298 93% 259 81%

* Total regional cooperation ACP 14.464 14.338 99% 14.316 99% 13.195 91%

ACP 50.070,99

48.871,60 98%

48.617,47

97%

45.968,94 92%

O C

T

Reserve/Not distributed by country/territory

34 12 34% 11 33% 11 33%

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86

All OCT countries 34 12 34% 11 33% 11 33%

Anguilla 27 27 100% 27 100% 27 100%

Falklands Islands 10 10 100% 10 100% 10 100%

Pitcairn Islands 5 5 100% 5 100% 5 100%

Turks and Caicos Islands 32 32 100% 32 100% 32 100%

British Virgin Islands 2 2 100% 2 100% 2 100%

Montserrat 33 33 100% 33 100% 33 100%

Saint Helena 38 38 100% 38 100% 38 100%

* Total British OCT 146 146 100% 146 100% 146 100%

Netherlands Antilles 38 37 98% 20 54% 20 54%

Netherlands Antilles - Bonaire 4 4 98% 4 98% 4 98%

Netherlands Antilles - Saba 3 3 100% 3 100% 3 100%

Netherlands Antilles - Sint-Eustatius 2 2 100% 2 100% 2 100%

Aruba 21 21 98% 21 98% 21 98%

Sint Maarten 14 14 100% 13 95% 5 39%

* Total Dutch OCT 83 82 99% 64 77% 56 68%

Wallis and Futuna Islands 39 38 99% 37 95% 29 76%

Mayotte 29 29 100% 29 100% 29 100%

New Caledonia 50 50 100% 50 100% 50 100%

French Polynesia 49 49 100% 49 100% 49 100%

Saint Pierre and Miquelon 47 47 100% 47 100% 47 100%

* Total French OCT 214 213 100% 212 99% 204 96%

region 137 137 100% 136 99% 119 87%

* Total regional cooperation OCT 137 137 100% 136 99% 119 87%

OCT 613,69

589,78 96%

569,00

93%

536,59 87%

TOTAL: ACP+OCT

50.684,68

49.461,38 98%

49.186,47

97%

46.505,53 92%

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Breakdown of Committed, Contracted and Paid amount by spending area for the 11th EDF

11TH EDF Breakdown of committed, contracted and paid amount by spending area (DAC sector codes)

(EUR million)

Sector Committed Contracted Paid Social infrastructure and services

110-Education 1.177,56 1.162,86 1.067,50

120-Health 2.125,44 2.519,13 2.370,49

130-Population policies/programmes and reproductive health 352,44 49,94 43,95

140-Water and sanitation 785,55 861,63 632,91

150-Government and civil society 5.700,30 5.940,90 5.772,26

160-Other social infrastructure and services 964,74 1.403,10 1.643,11

Social infrastructure and services TOTAL 11.106,04 11.937,55 11.530,22

Economic infrastructure and services

210-Transport and storage 1.401,54 2.091,05 1.378,12

220-Communications 140,58 147,05 137,97

230-Energy 2.011,97 2.049,24 1.474,99

240-Banking and financial services 484,68 533,73 503,53

250-Business and other services 339,92 329,60 288,28

Economic infrastructure and services TOTAL 4.378,70 5.150,66 3.782,88

Production sectors

310-Agriculture, forestry and fishing 3.317,10 3.144,49 2.649,43

320-Industry, mineral resources and mining, construction 632,36 525,39 384,77

330-Trade and tourism 502,26 434,74 338,86

Production sectors TOTAL 4.451,72 4.104,61 3.373,06

Multisector/Cross-cutting

410-General environmental protection 984,89 843,66 756,56

430-Other multisector 3.881,80 2.617,61 1.947,95

Multisector/Cross-cutting TOTAL 4.866,68 3.461,26 2.704,51

Commodity aid and general programme assistance

510-General budget support 3.113,40 3.176,31 2.531,91

520-Developmental food assistance 611,90 390,58 365,68

Commodity aid and general programme assistance TOTAL 3.725,30 3.566,89 2.897,59

Action relating to debt

600-Action relating to debt 183,00 183,00 183,00

Action relating to debt TOTAL 183,00 183,00 183,00

Humanitarian aid

720-Emergency response 743,62 452,44 447,63

730-Reconstruction relief and rehabilitation 137,53 65,06 42,39

740-Disaster preparedness 72,49 110,12 101,07

Humanitarian aid TOTAL 953,63 627,61 591,09

Administrative costs of donors / Unallocated / Unspecified

910-Administrative costs of donors 993,19 948,32 896,03

998-Unallocated / Unspecified 183,74 41,61 27,23

N/A-Not Available 245,98 1,57 1,15

Administrative costs of donors / Unallocated / Unspecified TOTAL 1.422,91 991,50 924,42

GRAND TOTAL OF 11TH EDF 31.087,97 30.023,09 25.986,75

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Evolution of cumulative Committed, Contracted and Paid amount by spending area for the 11th

EDF

- 1.000,00 2.000,00 3.000,00 4.000,00 5.000,00 6.000,00 7.000,00 8.000,00 9.000,00

10.000,00 11.000,00

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

EUR million

Financial Year

Cumulative Committed amounts per year for each sector for the 11 EDF

Social infrastructure and services

Economic infrastructure and services

Production sectors

Multisector/Cross-cutting

Commodity aid and general programme assistance

Action relating to debt

Humanitarian aid

Other : Administrative costs of donors / Unallocated / Unspecified

N/A-Not Available

-

1.500,00

3.000,00

4.500,00

6.000,00

7.500,00

9.000,00

10.500,00

12.000,00

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

EUR million

Financial Year

Cumulative Contracted amounts per year for each sector for the 11 EDF Social infrastructure and services

Economic infrastructure and services

Production sectors

Multisector/Cross-cutting

Commodity aid and general programme assistance

Humanitarian aid

Other : Administrative costs of donors / Unallocated / Unspecified

N/A-Not Available

Action relating to debt

-

1.000,00

2.000,00

3.000,00

4.000,00

5.000,00

6.000,00

7.000,00

8.000,00

9.000,00

10.000,00

11.000,00

12.000,00

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

EUR million

Financial Year

Cumulative Paid amounts per year for each sector for the 11 EDF Social infrastructure and services

Economic infrastructure and services

Production sectors

Multisector/Cross-cutting

Commodity aid and general programme assistance

Humanitarian aid

Other : Administrative costs of donors / Unallocated / Unspecified Action relating to debt

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3. GLOSSARY

Administrative appropriations

Appropriations to cover the running costs of the entities (staff, buildings, office equipment).

Adopted budget

Draft budget becomes the adopted budget as soon as approved by the budgetary authority.

Amending budget

Decision adopted during the budget year to amend (increase, decrease, transfer) aspects of the adopted budget of that year.

Appropriations

Budget funding.

The budget forecasts both commitments (legal pledges to provide finance) and payments (cash or bank transfers to the beneficiaries). Appropriations for commitments and payments often differ — differentiated appropriations — because multiannual programmes and projects are usually fully committed in the year they are decided and are paid over the years as the implementation of the programme and project progresses.

Assigned revenue

Revenue dedicated to finance specific items of expenditure.

Budget result

The difference between income received and amounts paid, including adjustments for carry-overs, cancellations and exchange rate differences.

For agencies, the resulting amount will have to be reimbursed to the funding authority.

Budget implementation

Consumption of the budget through expenditure and revenue operations.

Budget item / Budget line / Budget position

Revenue and expenditure are shown in the budget structure in accordance with a binding nomenclature, which reflects the nature and purpose of each item, as imposed by the budgetary authority. The

individual headings (title, chapter, article or item) provide a formal description of the nomenclature.

Budgetary commitment

Operation by which the authorising officer responsible reserves the budget appropriations necessary to cover for subsequent payments to honour legal commitments.

Cancellation of appropriations

Appropriations which have not been used by the end of the financial year and which cannot be carried over, shall be cancelled.

Carryover of appropriations

Exception to the principle of annuality in so far as appropriations that could not be used in a given budget

year may, under strict conditions, be exceptionally carried over for use during the following year.

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90

Commitment appropriations

Commitment appropriations cover the total value of legal obligations (contracts, grant agreements or decisions) that could be signed in the current financial year.

De-commitment

Operation whereby the authorising officer responsible cancels wholly or partly the reservation of appropriations previously made by means of a budgetary commitment.

Differentiated appropriations

Differentiated appropriations are used to finance multiannual operations; they cover, for the current financial year, the total cost of the legal obligations entered into for operations whose implementation extends over more than one financial year.

Economic result

Impact on the balance sheet of expenditure and revenue based on accrual accounting rules.

Entitlements established

Right to collect income from a debtor as recognised through the issuing of a recovery order.

Exchange rate difference

The difference resulting from currency exchange rates applied to the transactions concerning countries outside the euro area, or from the revaluation of assets and liabilities in foreign currencies at the date of the accounts.

Expenditure

Term used to describe spending the budget from all types of funds sources.

Grants

Direct financial contributions from the budget to third-party beneficiaries, engaged in activities that serve Union policies.

Lapsing appropriations

Unused appropriations to be cancelled at the end of the financial year. Lapsing means the cancellation of all or part of the authorisation to make expenditures and/or incur liabilities, as represented by an appropriation.

For joint undertakings (and EIT), as specified in their Financial Rules, any unused appropriations may be entered in the estimate of revenue and expenditure of up to the following three financial years (the so- called "N+3" rule). Hence, lapsing appropriations for JUs can be re-activated until financial year "N+3".

Legal basis / basic act

The legal act adopted by the legislative authority (usually the Council and European Parliament) specifying the objective of a Union spending programme, the purpose of the appropriations, the rules for intervention, expiry date and the relevant financial rules to serve as a legal basis for the implementation

of the spending programme.

Legal commitment

The act whereby the Authorising Officer enters into an obligation towards third parties which results in a

charge for the Union budget.

Common forms of legal commitments are contracts in the case of procurement, grant agreements and grant decisions.

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91

Non-differentiated appropriations

Appropriations which meet annual needs and must therefore be committed during the budget year. Only amounts qualifying for automatic carryover can be disbursed in the following year. Non-differentiated appropriations which have not been used, i.e. committed, by the end of the year, are cancelled (unless, exceptionally, permission is given by a Commission decision for a non-automatic carryover). Non- differentiated appropriations apply to administrative expenditure and commitment appropriations equal payment appropriations.

Operational appropriations

Operational appropriations finance the different policies, mainly in the form of grants or procurement.

Outstanding commitments

Outstanding commitments (or RAL, from the French ‘reste à liquider’) are defined as the amount of

appropriations committed that have not yet been paid. They stem directly from the existence of multiannual programmes and the dissociation between commitment and payment appropriations.

Payment appropriations

Payment appropriations cover expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years.

RAL (Reste à liquider)

Amount remaining to be paid on a budgetary commitment at a given moment. Cf. Outstanding commitments

Surplus

Positive difference between revenue and expenditure, which has to be returned to the funding authority.

Cf. Budget result

Transfer between budget lines

Transfers between budget lines imply the relocation of appropriations from one budget line to another, in the course of the financial year, and thereby they constitute an exception to the budgetary principle of specification.

Annual accounts of the European Development Fund 2025

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PART II

ANNUAL REPORT ON IMPLEMENTATION -

FUNDS MANAGED BY THE EUROPEAN

INVESTMENT BANK

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93

EUROPEAN INVESTMENT BANK

B O A R D O F D I R E C T O R S

INVESTMENT FACILITY

FINANCIAL STATEMENTS

AS AT 31 DECEMBER 2025

(1) Independent auditor’s report

(2) Statement of financial position

(3) Statement of profit or loss and other comprehensive income

(4) Statement of changes in contributors’ resources

(5) Statement of cash flows

(6) Notes to the financial statements

ORG.: E CONFIDENTIAL

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94

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2025

(in EUR’000)

Notes 31.12.2025 31.12.2024

ASSETS

Cash and cash equivalents 5 1,665,129 1,638,604

Amounts receivable from contributors 9/16 - 7,482

Treasury financial assets 10 - -

Derivative financial instruments 6 7,819 783

Loans and advances 7.1 1,063,511 1,498,048

Shares and other variable yield securities 8 745,934 834,621

Other assets 11 36,833 -

Total assets 3,519,226 3,979,538

LIABILITIES AND CONTRIBUTORS' RESOURCES

LIABILITIES

Derivative financial instruments 6 411 39,210

Deferred income 12 44,845 47,725

Provisions for loan commitments 13 17,585 18,320

Amounts owed to third parties 14 658,146 566,083

Other liabilities 15 3,044 3,289

Total liabilities 724,031 674,627

Contributors' resources 16/17 2,795,195 3,304,911

Total liabilities and contributors' resources

3,519,226 3,979,538

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2025

(in EUR’000)

Notes

From 01.01.2025 From 01.01.2024

to 31.12.2025 to 31.12.2024

Interest and similar income* 19 116,470 156,601

Interest and similar expenses 19 -1,700 -1,805

Net interest and similar income 114,770 154,796

Fee and commission income 20 4,103 20

Fee and commission expenses 20 -88 -212

Net fee and commission income 4,015 -192

Fair value change of derivative financial instruments 6 45,836 -94,192

Net result on shares and other variable yield securities 21 24,877 -34,096

Net result on loans and advances measured at FVTPL 7.1 -6,948 -5,436

Net foreign exchange result 22 -90,703 81,907

Net result on financial operations -26,938 -51,817

Change in impairment on loans and advances, net of reversals 7.2 8,915 12,145

Change in provisions for loan commitments, net of reversals 13 735 718

General administrative expenses 23 -19,942 -24,794

Profit for the year 81,555 90,856

Total comprehensive income profit for the year 81,555 90,856

* For the year ended 31 December 2025, Interest and similar income includes EUR 109.7 million (2024: EUR 144.3 million) calculated on assets held at amortised cost based on the effective interest method.

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STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES

FOR THE YEAR ENDED 31 DECEMBER 2025

(in EUR’000)

Contribution

called Available Reflows

Retained earnings

Total

At 1 January 2025 Notes 3,721,695 -897,690 480,906 3,304,911

Member States contributions called during the year 16 - - - -

Available Reflows in relation to year 2024 17 - -591,271 - -591,271

Profit for the year 2025 - - 81,555 81,555

Changes in contributors’ resources - -591,271 81,555 -509,716

At 31 December 2025 3,721,695 -1,488,961 562,461 2,795,195

Contribution

called Available Reflows

Retained earnings

Total

At 1 January 2024 3,721,695 -587,913 390,050 3,523,832

Member States contribution called during the year 16 - - - -

Available Reflows in relation to year 2023 17 - -309,777 - -309,777

Profit for the year 2024 - - 90,856 90,856

Changes in contributors’ resources - -309,777 90,856 -218,921

At 31 December 2024 3,721,695 -897,690 480,906 3,304,911

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97

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2025

(in EUR’000)

Notes From

01.01.2025 to 31.12.2025

From 01.01.2024 to

31.12.2024

OPERATING ACTIVITIES

Profit for the year * 81,555 90,856

Adjustments made for:

Net result on shares and other variable yield securities -5,176 52,265

Change in impairment on loans and advances, net of reversals 7.2 -8,915 -12,145

Net result on loans and advances measured at FVTPL 7 6,948 5,436

Change in accrued interest and amortised cost on loans and advances -3,776 -2,229

Net change in provisions for loan commitments, net of reversals -735 -718

Fair value changes on derivatives 13 -45,836 94,192

Change in deferred income 12 -2,880 -790

Effect of exchange rate changes on loans 95,552 -78,744

Effect of exchange rate changes on shares and other variable yield securities 58,444 -23,199

Effect of exchange rate changes on cash held 11,405 -5,282

Profit / (loss) on operating activities before changes in operating assets and liabilities 186,586 119,642

Loan disbursements 7 -106,653 -101,394

Repayments of loans 7 398,998 371,568

Change in accrued interest on cash and cash equivalents 5 -2,331 -646

Shares and other variable yield securities disbursements 8 -51,701 -69,392

Net proceeds from shares and other variable yield securities 90,480 23,033

Dividends received 21 18,573 16,548

Decrease in other assets - 616

(Decrease) in other liabilities -245 -49

(Decrease) in amounts payable to the European Investment Bank -44,913 -985

Net cash flows (used in) / from operating activities 488,794 358,941

FINANCING ACTIVITIES

Amounts received from Member States with regard to interest subsidies and technical assistance

7,482 286,800

Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance

-108,597 -68,256

Contributions paid out on behalf of Member States -347,418 -309,777

Net cash flows from financing activities -448,533 -91,233

Net increase in cash and cash equivalents 40,261 267,708

Summary statement of cash flows:

Cash and cash equivalents at the beginning of financial year 1,633,830 1,371,404

Net cash flows (used in) / from:

Operating activities 488,794 358,941

Financing activities -448,533 -91,233

Effects of exchange rate changes on cash and cash equivalents -11,405 -5,282

Cash and cash equivalents at the end of financial year 1,662,686 1,633,830

Cash and cash equivalents are composed of:

Cash in hand 5 146,087 212,466

Term deposits (excluding accrued interest) 5 556,329 304,538

Commercial papers 5 960,270 1,116,826

1,662,686 1,633,830

* Profit for the year includes, interest received amounted to EUR 109.8 million (2024: EUR 149.1 million), and interest paid amounted to EUR 1.8 million (2024: EUR 1.9 million).

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Notes to the financial statements as at 31 December 2025

1 General information

The Investment Facility (“the Facility” or “IF”) has been established within the framework of the Cotonou Agreement (the “Agreement”)

on co-operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the “ACP States”)

and the European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010. The Samoa Agreement,

replacing the Cotonou Agreement as the new framework for cooperation between the European Union and the Organisation of African,

Caribbean, and Pacific States (OACPS) (Council Decision (EU) 2023/2862 of 30 October 2023), was signed on 15 November 2023, and

entered into force on 1 January 2024. It succeeds the Cotonou Agreement, which had governed relations between the EU and ACP

states since 2000. This transition ensures continuity of partnerships while addressing contemporary global challenges.

The Facility is not a separate legal entity and the European Investment Bank (“EIB” or “the Bank”) manages the contributions on behalf

of the Member States (“Donors”) in accordance with the terms of the Agreement and acts as an administrator of the Facility.

The duration of the Facility is not determined. The 11th EDF Internal Agreement remains in force (pursuant to Article 14(3) thereof) so

long as is necessary for all the operations financed under the ACP-EU Partnership Agreement, the Overseas Association Decision and

the multi-annual financial framework to be fully executed.

Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute with the amounts allocated

to finance the IF and grants for the financing of the interest subsidies as provided for under the multi-annual financial frameworks (First

Financial Protocol covering the period 2000 - 2007 and referred to as the 9th European Development Fund (EDF), Second Financial

Protocol covering the period 2008 - 2013 and referred to as the 10th EDF and the Third Financial Protocol covering the period 2014 -

2020 referred to as the 11th EDF). The EIB is entrusted with the management of:

(iv) the Facility, a EUR 3,685.5 million risk-bearing revolving fund geared to fostering private sector investment in ACP States of which EUR 48.5 million are allocated to Overseas Countries and territories (“OCT countries”);

(v) grants for the financing of interest subsidies worth max. EUR 1,220.85 million for ACP States and max. EUR 8.5 million for OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”).

On 23 December 2020, the Council decided for the extension of the Investment Facility commitment period by at least six months.

Following the extension, the Bank approved operations in line with its Mandate until 30 June 2021 (Council Decision 2020/2233 of 23

December 2020 concerning the commitment of the funds stemming from reflows under the ACP Investment Facility from operations

under the 9th, 10th and 11th EDF - L 437/188, 28.12.2020).

The EU and ACP sides agreed to amend the decision on transitional measures in order to extend the application of the provisions of the

ACP-EU Partnership Agreement until 31 December 2023, or until the entry into force of the new Agreement or the provisional

application between the Union and the ACP States of the new Agreement, whichever comes first (Decision No 2/2019 of the ACP EU

Committee of Ambassadors to adopt transitional measures pursuant to Article 95(4) of the ACP EU Partnership Agreement which was

subsequently amended by the Decision No 3/2021 of the ACP-EU Committee of Ambassadors of 26 November 2021 to amend, the

Decision No 970/2022 of the ACP-EU Committee of Ambassadors of 16 June 2022 and the Decision 2/2023 of the ACP-EU Committee

of Ambassadors of 25 October 2023).

The NDICI - Global Europe Regulation, which entered into force on 14 June 2021 (Regulation (EU) 2021/947 of 9 June 2021), provides

the primary legal basis for EU assistance outside the EU in 2021-2027, and the governance for the Bank’s new institutional mandate for

operations outside the European Union, including the ACP region. This includes the integration of the current extra-budgetary EDF into

the EU budget. The NDICI Regulation provides the legal basis for the Commission to entrust future EU mandates to the EIB for its

activity outside the EU. It will also provide the external investment framework for the Union to cooperate with partner institutions through

grants or guarantees from the EU budget.

Going forward, reflows from the IF shall be deployed within the NDICI framework through a combination of a dedicated ACP private

sector window under the European Fund for Sustainable Development (EFSD+) and a Trust Fund. On 15 February 2023, a transfer

agreement between the EIB and the European Commission was signed (“Transfer Agreement”). The purpose of this agreement is the

transfer of the funds stemming from reflows, under the Facility, as they become available, in accordance with decision (EU) 2020/2233

(“ACP IF Reflows”) and Decision (EU) 2021/1764 (“OCT IF Reflows”, and together with ACP IF Reflows, the “Reflows”). For more details

please refer to the Note 2.4.6 and Note 17.

The present financial statements cover the period from 1 January 2025 to 31 December 2025.

On a proposal from the Management Committee, the Board of Directors adopted the Financial Statements on 25 March 2026 and

authorised their submission to the Board of Governors for approval by 24 April 2026.

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99

2 Material accounting policies

2.1 Basis of preparation – Statement of compliance

The financial statements have been prepared on a going concern basis, which assumes that the Facility will be able to meet all monies

payables under any operations for the foreseeable future, and in accordance with International Financial Reporting Standards (IFRS) as

issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union (hereafter referred to as “IFRS”

Accounting Standards). The financial statements as at 31 December 2025 include the statement of financial position, the statement of

profit or loss and other comprehensive income, statement of changes in contributors’ resources, the statement of cash flows, and the

notes.

2.2 Significant accounting judgments, assumptions and estimates

The preparation of financial statements requires making estimates and assumptions that affect reported income, expenses, assets,

liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgment are inherent in the

formation of estimates. Actual results in the future could differ from such estimates and the differences may be material to the financial

statements. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision estimates are recognized prospectively.

The most significant use of judgments and estimates is as follows:

▪ Fair value of financial instruments

Where the fair values of financial instruments recorded on the balance sheet cannot be derived from active markets, they are

determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from

observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The

valuations are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as

described and disclosed in

Notes 2.4.2 and 4.

▪ Impairment losses on loans and advances

The expected credit loss (“ECL”) measurement requires management to apply significant judgments, in particular, the assessment of a

significant increase in credit risk since initial recognition, the incorporation of forward looking information and further the estimation of

the amount and timing of future cash flows and collateral values when determining impairment losses. These estimates are driven by a

number of factors, which can result in significant changes to the timing and amount of allowance for credit loss to be recognised (Note

2.4.2). Relevant assumptions on the effects on impairment resulting from the general context of uncertainty and the turbulence which

occurred in 2024 and carried on in 2025 are detailed under Note 2.4.2.2 and Note 3.2.3.7.

▪ Valuation of unquoted equity investments

Valuation of unquoted equity investments is normally based on one of the following:

- recent arm’s length market transactions;

- current fair value of another instrument that is substantially the same;

- the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics;

- adjusted net assets method; or

- other valuation models.

The determination of the cash flows and discount factors for unquoted equity investments requires significant estimation. The Facility

calibrates the valuation techniques periodically and tests them for validity using either price from observable current market transactions

in the same instrument or from other available observable market data.

▪ Consolidation of entities in which the Facility holds interest

The EIB made judgements that none of the entities in which it holds interest, are controlled by the Facility. This is due to the fact that in

all such entities, either the General Partner or the Fund Manager or the Management Board have the sole responsibility for the

management and control of the activities and affairs of the partnership and have the power and authority to do all things necessary to

carry out the purpose and objectives of the partnership complying with the investment and policy guidelines.

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100

2.3 Changes in accounting standards

Except for the changes below, the Facility has consistently applied the accounting policies set out in Note 2.4 to all periods presented in

these financial statements. The Facility has adopted the following new standards and amendments to standards.

New and amended standards adopted by the Facility

The following amendments to existing standards, became effective for the Facility’s financial statements as of 1 January 2025:

• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability.

The amendments listed above did not have any material impact on the Facility’s financial statements.

New standards, amendments, and interpretations not yet adopted by the Facility

As at 31 December 2025, the following amendments to existing Standards had been issued but were not mandatory for annual reporting

periods ending on 31 December 2025:

Amendments to existing Standards endorsed by the EU, and which are effective for annual periods beginning on or after 1 January

2026:

• Amendments to the Classification and Measurement of Financial Instruments (amendments to IFRS 1, IFRS 7, IFRS 9 and IAS 7);

• Annual Improvements Volume 11;

• Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7.

New standards and amendments to existing Standards not yet endorsed by the EU:

• IFRS 18 Presentation and Disclosure in Financial Statements;

• IFRS 19 Subsidiaries without Public Accountability: Disclosures;

At the date of authorisation of the financial statements none of the above listed standards or amendments to existing standards have

been adopted early by the Facility and no interpretations have been issued that are applicable and need to be taken into consideration

by the Facility at either reporting date. Management anticipates that all relevant pronouncements will be adopted for the first period

beginning on or after the effective date of the pronouncement, and that there will be not any material impact on the Facility’s financial

statements.

2.4 Summary of material accounting policies

The statement of financial position represents assets and liabilities in decreasing order of liquidity and does not distinguish between

current and non-current items.

2.4.1 Foreign currency translation

The Facility uses the Euro (EUR) for presenting its financial statements, which is also the functional currency. Except as otherwise

indicated, financial information presented in EUR has been rounded to the nearest thousand.

Foreign currency transactions are translated, at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in currencies other than Euro are translated into Euro at the exchange rate prevailing at the

statement of financial position date. The gain or loss arising from such translation is recorded in the statement of profit or loss and other

comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the

dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange

rates at the date when the fair value was determined.

Exchange differences arising on the settlement of transactions at rates different from those at the date of the transaction, and unrealised

foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognised in the statement of profit or

loss and other comprehensive income.

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2.4.2 Financial assets other than derivatives

Non-derivative financial instruments are initially recognised using the settlement date basis.

Classification and measurement

Financial assets

On initial recognition, a financial asset is classified as measured at amortised cost (“AC”) or fair value through P&L (“FVTPL”) and a

financial liability is classified as measured at AC or FVTPL.

Under IFRS 9, classification starts with determining whether the financial asset shall be considered as a debt or equity instrument.

IFRS 9 refers to the definitions in IAS 32 Financial Instruments: Presentation.

Debt instruments are those instruments that meet the definition of a financial liability from the counterparty’s perspective, loans and debt

securities including bonds, notes or certificates issued by structured entities, government or corporates.

A debt instrument is classified at AC if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI criteria).

The above requirements should be applied to an entire financial asset, even if it contains an embedded derivative.

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not

contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Equity instruments are measured

at FVTPL.

On initial recognition of an equity investment that is not held for trading, the Facility may irrevocably elect to present subsequent

changes in other comprehensive income. This election is made on an investment-by-investment basis.

All other financial assets are classified as measured at FVTPL.

Business model assessment

The EIB, as a manager of the Facility, makes an assessment of the objective of a business model in which a debt instrument is held at a

portfolio level because this best reflects the way the business is managed and information is provided to management. The information

considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management´s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Facility’s management;

- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; and

- the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectation about future sales activity.

However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Facility stated

objective for managing the financial assets is achieved and how cash flows are realised.

The business model for the Impact Financing Envelope direct loan operations has been described and disclosed in Note 25.

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Solely payment of principal and interests (“SPPI”) criteria

For the purpose of this assessment, ‘principal’ is defined as the fair value of the debt instrument on initial recognition. ‘Interest’ is defined

as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular

period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the contractual terms of the instrument

are considered. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount

of contractual cash flows such that it would not meet this condition.

Derecognition

The Facility derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or the rights to

receive the contractual cash flow are transferred in a transaction in which either the Facility transfers the risks and rewards of ownership

of the financial asset or it retains substantially all of the risks and rewards of ownership but does not retain control of the financial asset.

On derecognition of a financial asset or financial liability (Note 2.4.4), the difference between the carrying amount of the asset or liability

(or the carrying amount allocated to the portion of the asset or liability derecognised) and the sum of (i) the consideration received or

paid and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss except

for the cumulative gains or losses recognised in other comprehensive income for equity investments measured at fair value through

other comprehensive income which are transferred to the reserve fund rather than profit or loss on disposal.

In the context of IBOR reform, the Facility’s assessment of whether a change to an amortised cost financial instrument is substantial, is

made after applying the practical expedient introduced by IBOR reform Phase 2. As per the amendments issued by the IASB, the

Facility does not derecognise a financial instrument, which contractual cash flows are modified as a direct consequence from the reform

and the change is economically equivalent to the previous basis for determining the contractual cash flows (i.e., the basis immediately

before the change).

Reclassification

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Facility changes its business

model for managing financial assets.

Modification

A financial asset measured at amortised cost is considered modified when its contractual cash flows are renegotiated or otherwise

modified. Renegotiation or modification may or may not lead to derecognition of the old and recognition of the new financial instrument.

A substantial contractual modification on the cash flows of a financial asset measured at amortised cost which results in the

derecognition of the financial asset, leads to the recognition of the new financial asset at its fair value, and the recording of the

modification gain or loss impact in the consolidated income statement under “Result on financial operations”.

A contractual modification is deemed substantial if the discounted present value of the cash flows under the revised terms (discounted

using the original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the

original financial asset. Qualitative factors such as a change in the currency on which the financial asset is denominated and conversion

features are also considered.

In the context of IBOR reform, the Facility’s assessment of whether a change to an amortised cost financial instrument is substantial, is

made after applying the practical expedient introduced by IBOR reform Phase 2. The Facility updates the effective interest rate, without

modifying the carrying amount of the financial instrument if the basis for determining the contractual cash flows of the financial

instrument, measured at amortised cost, changes as a direct consequence from the reform and if the change is economically equivalent

to the previous basis (i.e., the basis immediately before the change).

Measurement of fair values of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Facility has access

at that date.

When applicable, the EIB on behalf of the Facility measures the fair value of an instrument using the quoted price in an active market for

that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to

provide pricing information on an on-going basis.

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Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from

active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to

these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in

establishing fair values. The chosen valuation technique incorporates all the factors that market participants would take into account in

pricing a transaction.

These valuation techniques may include net present value and discounted cash flow models, comparison to similar instruments for

which market observable prices exist, Black-Scholes and polynomial option pricing models and other valuation models. Assumptions

and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads used in estimating discount rates,

bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the

asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Bank uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like

interest rate and currency swaps that use only observable market data and require limited expert judgement and estimation. Observable

prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and simple

over the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for

expert judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable

market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general

conditions in the financial markets.

For more complex instruments, the Bank uses its own valuation models, which are developed from recognised valuation models. Some

or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are

estimated based on assumptions. Example of instruments involving significant unobservable inputs includes certain loans and

guarantees for which there is no active market. Valuation models that employ significant unobservable inputs require a higher degree of

management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required

for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument

being valued, determination of probability or counterparty default and prepayments and selection of appropriate discount rates.

The Facility measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the

measurements:

- Level 1: inputs that are unadjusted quoted market prices in active markets for identical instruments to which the Facility has access.

- Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

- Level 3: inputs that are not observable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The Facility recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change

has occurred.

Impairment on financial assets

IFRS 9 is based on a forward-looking expected credit loss (“ECL”) model. The EIB has established a framework to calculate “expected

credit loss” conditional on the state of the macro-economy. It involves the construction of point-in-time (“PIT”) credit risk parameters

(Probability of default – “PD” and Loss given default – “LGD”) based on a systematic factor (credit cycle) that is driven by the macro-

economy and projected via macroeconomic forecasts or scenarios. The final ECL is a probability weighted average of the respective

macro-economic scenario ECLs. This forward-looking impairment model is applied to financial assets measured at AC, to financial

guarantee contracts, as well as to off-balance sheet commitments.

Under IFRS 9, loss allowances are measured on either of the following bases:

- 12-month ECL’s: these are the ECLs that result from possible default events within the 12 months after the reporting date; and

- Lifetime ECL’s: these are the ECLs that result from all possible default events over the expected life of a financial instrument.

The IFRS 9 Standard sets out a “three-stage” model for impairment based on changes in credit quality since initial recognition. Financial

instruments are classified in Stage 1 except for those instruments for which significant increase in credit risk (“SICR”) since initial

recognition is identified. This includes both quantitative and qualitative information and analysis, based on the Bank’s expertise,

including forward-looking information.

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Purchased or originated credit-impaired assets (“POCI”) are the financial assets which are, from the moment of initial recognition,

deemed to be classified as Stage 3. For POCI financial assets, the cumulative changes in lifetime ECL since initial recognition are

recognised in the statement of profit or loss.

The Bank’s assessment of the IFRS9 staging is based on a sequential approach which is using counterparty or instrument specific

information consistent to internal Early Warning Signals (“EWS”), Non-performing exposures (“NPE”) and forbearance guidelines and

procedures.

The EIB considers that the existing forward-looking ECL model is deemed sufficiently robust to factor in extreme economic events,

which have been directly captured through the macroeconomic projections and the PD terms structures.

If significant increase in credit risk has occurred, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-

impaired. If the financial instrument is credit-impaired, the financial instrument is then moved to Stage 3.

To identify Stage 3 exposures, the Bank determines whether or not there is objective evidence of a non-performing exposure. A financial

asset is considered to be in default when the borrower is unlikely to pay its credit obligations to the Facility in full, without recourse by

the Facility or the borrower is past due more than 90 days on any material credit obligation to the Facility.

In this respect, a financial asset is considered impaired when it is determined that it is probable that the Facility will not be able to collect

all amounts due according to the original contractual terms or an equivalent value. Individual credit exposures are evaluated based upon

the borrower’s characteristics, overall financial condition, resources and payment record, the prospects for support from any financially

responsible guarantors and, where applicable, the realisable value of any collateral.

All impaired claims are reviewed and analysed at least semi-annually. Any subsequent changes to the amounts and timing of the

expected future cash flows compared to the prior estimates will result in a change in the provision for credit losses and be charged or

credited to the income statement. An allowance for impairment is reversed only when the credit quality has improved such that there is

reasonable assurance of timely collection of principal and interest in accordance with the original contractual terms of the claim

agreement. A write- off is made when all or part of a claim is deemed uncollectible or forgiven. Write-offs are charged against previously

established impairments or directly to the income statement and reduce the principal amount of a claim. Recoveries in part or in full of

amounts previously written- off are credited to the income statement. Financial assets that are written-off could still be subject to

enforcement activities in order to comply with the Bank's procedures for recovery of amounts due.

Measuring ECL – Inputs, Assumptions and Techniques

Lifetime ECL measurement applies to Stage 2 and Stage 3 assets, while 12-month ECL measurement applies to Stage 1 assets.

The expected credit losses were calculated based on the following variables:

- Credit rating and PIT Probability of default (“PD”),

- PIT Loss Given default (“LGD”),

- Exposure at default (“EAD”).

The credit rating of a counterpart is determined at a certain date, using score-sheet models tailored to the various categories of

counterparties and exposures.

Each credit rating is mapped to a specific PD that represents the likelihood of a counterpart defaulting on its financial obligation, either

over the next 12 months, or over the remaining lifetime of the obligation. Hence, ratings are primary input into the determination of the

PIT term structure of PD for exposures. The EIB collects performance and default information about the Facility’s credit risk exposures.

The collected data are segmented by type of industry and by type of region. Different industries and regions reacting in a homogenous

manner to credit cycles are analysed together.

The EIB employs statistical models to analyse the data collected and generate estimates of the remaining lifetime PD of exposures and

how these are expected to change because of the passage of time and given specific macro-economic scenarios.

The LGD represents the EIB’s expectation of the ratio of the loss on an exposure due to the default of a counterparty to the amount

outstanding at default. LGD can be also defined as “1 - Recovery Rate”. LGD estimates are determined mainly by geography and by

type of counterparty, with five main exposure classes: Sovereigns, Public Institutions, Financial Institutions, Corporate and Project

Finance. LGD values can be further adjusted based on the product and contract specific features of the exposure.

The EIB incorporates PIT and forward-looking information into both its assessment of whether the credit risk of an instrument has

increased significantly since its initial recognition and its measurement of expected credit losses.

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For the measurement of ECL, the EIB has developed a conditional modelling approach, called the PIT PD model, for calculating PD

term structures involving:

- the definition of an economically reasonable link function between the credit cycle and macroeconomic variables, and

- a set of three macro-economic scenarios (one baseline and two scenarios reflecting downturn and upturn in the economy) with multi-year potential realisation for the GDP and their associated likelihoods.

To generate macroeconomic scenarios, the EIB uses a macro semi-structural multi-country and multi-equation model of the global

economy with country specific blocks. The central / baseline scenario is designed to be consistent with the most recent European

Commission forecasts. The positive and negative scenarios are designed around the central scenario by deploying of the multi-

country/multi-equation model. The scenarios are derived by shocking the GDP, which is the key measure of economic activity. The

shocks to real GDP are calibrated to replicate the observed volatility of the variable. Also expert judgment is applied, when appropriate,

to refine the size and persistency of GDP shocks. As a result, shocks are determined together with a decay function to determine the

impact of the shocks over time. Probabilities attached to each scenario are defined reflecting market (volatility) indicators and internally

developed indicators/trackers deployed in a consistent manner over time to capture uncertainty.

The EIB’s PIT PD and PIT LGD models use the same projected values of the credit cycle as the main input under different

macroeconomic scenarios. The credit cycle is calculated from an external rating agency’s downgrade rates and the projections of

annual growth rates of real GDP as well as the spread between long and short-term interest rates.

The EAD represents the expected exposure in the event of a default and is based on the current exposure to the counterparty and

potential changes to the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross

carrying amount. For lending commitments and financial guarantees, the EAD includes the amount drawn.

2.4.2.1 Cash and cash equivalents

The Facility defines cash and cash equivalents as current accounts, short-term deposits or commercial papers with maturities of three

months or less. Cash and cash equivalents are carried at AC in the statement of financial position.

2.4.2.2 Treasury financial assets

Treasury financial assets comprise quoted and unquoted bonds with the intention of holding them to maturity, and commercial papers

with maturities of more than three months and are consequently classified at AC.

Those bonds and commercial papers are initially measured at cost, which is the fair value plus any directly attributable transaction cost.

The difference between entry price and redemption value is amortised in accordance with the effective interest method over the

remaining life of the instrument.

2.4.2.3 Loans and advances

The loan and advances portfolio may consist of debt instruments such as loans and debt securities including bonds, notes or certificates

issued by structured entities with the intention of holding them to maturity and to collect the contractual cash flows.

Loans and advances include:

- Loans and advances measured at AC

- Loans and advances mandatorily measured at FVTPL.

Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. Undisbursed parts of

loans are recorded in the off-balance at their nominal value. Loans passing the SPPI test are initially recorded at cost (their net

disbursed amounts), which is the fair value of the cash given to originate the loan, including any transaction costs, and are subsequently

measured at AC using the effective interest rate method.

Debt securities are recognised in the assets of the Facility when cash is advanced to the issuer and can take the form of a contractually

linked or single tranche debt instrument. Undisbursed parts of debt securities are recorded in the off-balance at their nominal value.

Debt securities are initially measured at cost, which is the fair value plus any directly attributable transaction cost, and are subsequently

measured at AC using the effective interest rate method. The difference between entry price and redemption value is amortised in

accordance with the effective interest method over the remaining life of the instrument.

The impairment policy on loans and advances is described under Note 2.4.2.

Loans and advances not fulfilling business model or the SPPI criterion are mandatorily measured at FVTPL. The fair value

measurement technique used is based on a discounted cash flow technique or liquidation value.

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For the impact of the IBOR reform on remeasurement of loans and advances at amortised cost, please refer to the dedicated

paragraphs in Note 2.4.2 – Classification and Measurement / Modification.

2.4.2.4 Shares and other variable yield securities

There are two types of equity investments at the Facility: (i) direct equity investments and (ii) venture capital funds. The shares and

other variable yield securities are initially recognised at fair value plus transactions costs. Subsequently changes in fair value, including

foreign currency translation gains and losses, are recognised in the statement of profit or loss and other comprehensive income under

the caption net result on shares and other variable yield securities.

The undrawn but committed part of these investments is recorded as consolidated off-balance sheet commitments at their nominal

value.

Measurement of fair values of financial instruments

The fair value is determined by applying the aggregated net asset value (‘NAV’) method (thereby assuming that, despite the absence of

readily ascertainable market value, NAV is the best estimate of the fair value). For unquoted investment, when the fair value cannot be

derived from active markets, the fair value is determined by applying recognised valuation techniques (Note 4.2.1).

The attributable NAV is adjusted for events occurring between the date of the latest available NAV and the balance sheet date to the

extent that such adjustment is considered to be material by the Management Committee. Material adjustments are amended until the

Board of Directors adopt the Financial Statements for the year. In that respect, following the general context of uncertainty, various risks

building up as a result of the Russian invasion of Ukraine and the volatility observed in terms of performance, the Bank enhanced its

valuation techniques to estimate any adjustment on the fair value of the equity investments for the NAVs not reported by the fund

managers at the reporting date of the Facility financial statements.

For specific investments where NAVs cannot readily be determined, other guidelines for example the International Private Equity and

Venture Capital Valuation (‘IPEV’) Guidelines, as published by the IPEV Board might be used and more detailed monitoring and review

will be required. In accordance with this method, the funds are internally classified into three categories:

- Category I – funds that have adopted the fair value requirements of IFRS 13 or IPEV Guidelines for which a specific review is performed to ensure that the NAV is a reliable estimate of fair value;

- Category II – funds that have adopted other valuation guidelines (such as the former 2001 EVCA) or standards that can be considered to be in line with IFRS 13, for which an equivalent NAV can be calculated; and

- Category III – funds that have not adopted the fair value requirements of IFRS 13 or any other valuation guidelines in line with IFRS 13.

Significant influence assessment

The participations acquired by the Facility typically represent investments in private equity or venture capital funds. According to industry

practice, such investments are generally investments jointly subscribed by a number of investors, none of whom is in a position to

individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in

a governing body of such fund does not in principle entitle such investor to influence the day-to-day operations of the fund. In addition,

individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on

dividends or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders

agreement governing the rights and obligations of the management and all shareholders of the fund. The shareholders’ agreement also

generally prevents individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel

or obtaining privileged access to essential technical information. The Facility’s investments are executed in line with the above stated

industry practice, ensuring that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10

and IAS 28 over any of these investments, including those investments in which the Facility holds over 20 % of the voting rights.

2.4.3 Financial guarantees

Financial guarantee contracts are contracts that require the Facility to make specified payments to reimburse the holder for a loss it

incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantees are accounted for under IFRS 9 – Financial Instruments, either as “Derivatives” or as “Financial Guarantees”,

depending on their features and characteristics as defined by IFRS 9.

The accounting policy for derivatives is disclosed under Note 2.4.5.

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Financial guarantees are initially recognised in the statement of financial position under “Provisions for guarantees issued” at fair value

plus transaction costs that are directly attributable to the issuance of the financial guarantees. At initial recognition the obligation to pay

corresponds to the Net Present Value (NPV) of expected premium inflows or the initial expected loss.

Subsequent to initial recognition, financial guarantees are measured at the higher of:

- The amount of the loss allowance as determined under IFRS 9; and

- The premium initially recognised less income recognised in accordance with the principles of IFRS 15.

Any increase or decrease in the net liability (as measured per IFRS 9) relating to financial guarantees other than the payment of

guarantee calls is recognised in the statement of profit or loss and other comprehensive income under “Change in provisions for

guarantees”.

The premium received is recognised in the statement of profit or loss and other comprehensive income in “Fee and commission income”

on the basis of an amortisation schedule in accordance with IFRS 15 over the life of the financial guarantee.

2.4.4 Financial liabilities other than derivatives

Classification and measurement

Financial liabilities

A financial liability is measured at amortised cost except for financial liabilities:

- are mandatorily measured at fair value through profit or loss (e.g. derivative liabilities); and

- that are designated as measured at fair value through profit or loss.

The Facility derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

2.4.5 Derivative financial instruments

Derivative financial instruments include cross currency swaps, cross currency interest rate swaps and short-term currency swaps (“FX

swaps”).

Derivative financial instruments are initially recognised using the trade date basis.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into

currency forward contract with a view to hedge its currency positions, denominated in actively traded currencies other than the Euro, in

order to offset any gain or loss caused by foreign exchange rate fluctuations.

All derivatives are measured at FVTPL and are reported as derivative financial instruments. Fair values are derived primarily from

discounted cash-flow models, option-pricing models and from third party quotes.

Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is

negative. Changes in the fair value of derivative financial instruments are shown in the statement of profit or loss and other

comprehensive income under “Fair value change of derivative financial instruments”.

Under IFRS 9, bifurcation requirements regarding embedded derivatives have been eliminated for financial assets or financial liabilities

and therefore, the hybrid contract is treated as a whole for classification of financial assets or financial liability accordingly.

2.4.6 Contributions

Contributions from Member States are recognised as receivables in the statement of financial position on the date of the Council

Decision fixing the financial contribution to be paid by the Member States to the Facility.

The Member States contributions meet the following conditions and are consequently classified as equity:

- as defined in the contribution agreement, they entitle the Member States to decide on the utilisation of the Facility’s net assets in the events of the Facility’s liquidation;

- they are in the class of instruments that is subordinated to all other classes of instruments;

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- all financial instruments in the class of instruments that are subordinated to all other classes of instruments have identical features;

- the instrument does not include any features that would require classification as a liability; and

- the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Facility over the life of the instrument.

Contributions are classified and measured at AC in the financial statements.

Member States Contributions paid out represent Available Reflows paid out to the EC and the UK. As per the Transfer Agreement, as of

year 2024 and until 31 December 2027, not later than 31 March of each year, the EIB shall report, in writing, the amount of available

ACP IF Reflows, and the amount of available OCT IF Reflows, accumulated respectively as of 31 December of the preceding year (the

“Report on Available Reflows”). The Report on Available Reflows shall distinguish between the Reflows that are to be transferred to the

Commission (ACP and OCT Reflows), and the Reflows that are to be transferred to the United Kingdom (“UK”). Available Reflows are

recognised in the statement of financial position when corresponding payment request is sent to the Facility.

2.4.7 Interest and similar income

Interest on loans originated by the Facility is recorded in the statement of profit or loss and other comprehensive income (‘Interest and

similar income’) and in the statement of financial position (‘Loans and advances’) on an accrual basis using the effective interest rate,

which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the net

carrying amount of the loan. Once the recorded value of a loan has been reduced due to impairment, interest income continues to be

recognised using the original effective interest rate applied to the new carrying amount.

Interest on the POCI loans is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’)

and in the statement of financial position (‘Loans and advances’) on an accrual basis using the credit- adjusted effective interest rate

through the whole life of the loan, which is the rate that exactly discounts estimated future cash payments or receipts through the

expected life of the loan to the amortised cost of the loan.

Interest subsidies received for the Facility’s resources are deferred and recognised as an adjustment to the effective yield, being

recorded under “Interest and similar income” in the income statement over the period from disbursement to repayment of the subsidised

loan.

Commitment fees are deferred and recognised in income using the effective interest method over the period from disbursement to

repayment of the related loan, and are presented in the statement of profit or loss and other comprehensive income within interest and

similar income.

2.4.8 Interest subsidies and technical assistance

As part of its activity, the Facility manages interest subsidies and technical assistance (“TA”) on behalf of the Member States.

The part of the Member States contributions allocated to the payment of interest subsidies and TA is not accounted for in the Facility’s

contributors’ resources but is classified as amounts owed to third parties. The Facility operates the disbursement to the final

beneficiaries and then decreases the amounts owed to third parties.

When amounts contributed with regard to interest subsidies and TA are not fully granted, they are reclassified as contribution to the

Facility.

2.4.9 Interest income on cash and cash equivalents

Interest income on cash and cash equivalents is recognised in the statement of profit or loss and other comprehensive income of the

Facility on an accrual basis.

2.4.10 Fees, commissions and dividends

Fees received in respect of services provided over a period of time are recognised as income as the services are provided, while fees

that are earned on the execution of a significant act are recognised as income when the significant act has been completed. These fees

are presented in the statement of profit or loss and other comprehensive income within fee and commission income.

Dividends relating to shares and other variable yield securities are recognised when declared and presented in the statement of profit or

loss and other comprehensive income within net realised gains on shares and other variable yield securities.

2.4.11 Taxation

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The Protocol on the Privileges and Immunities of the European Union, appended to the treaty on the European Union and the treaty of

the functioning of the European Union, stipulates that the assets, revenues and other property of the Institutions of the Union are

exempt from all direct taxes.

3 Risk Management

This note presents information about the Facility’s exposure to and its management and control of credit and financial risks, in particular

the primary risks associated with its use of financial instruments. These are:

- credit risk – the risk of loss resulting from client or counterparty default and arising on credit exposure in all forms, including settlement risk22;

- liquidity risk – the risk that an entity is not able to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses;

- market risk – the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.

3.1 Risk management organisation

The EIB adapts the IF`s risk management framework on an ongoing basis.

The Group Risk and Compliance Directorate (“GR&C“) of the EIB independently identifies, assesses, monitors and reports the risks to

which the Facility is exposed. Within a framework whereby the segregation of duties is preserved, the GR&C is independent of the Front

Office and provides second opinion on all proposals made by the Front Office having risk implications.

At EIB level, the Group Chief Risk Officer (“GCRO”) reports on Group Risks to the EIB Management Committee (“MC“) under the

oversight of the MC member in charge of risk. The GCRO has direct access to the Risk Policy Committee and can write directly to and

communicate with the EIB Board of Directors on any matter of his/her field of attribution.

3.2 Credit risk

Credit risk is the potential loss that could result from client or counterparty default and arising on credit exposure in all forms, including

settlement.

3.2.1 Credit risk policy

In carrying out the credit analysis on loan counterparts, the EIB assesses the credit risk and expected loss with a view to quantify and

price the risk. The EIB has developed an Internal Rating Methodology (“IRM”) to determine the Internal Ratings of its credit-relevant

borrower/guarantor counterparts. The methodology is tailored for each major credit counterpart type (e.g. Corporates, Financial

Institutions, etc.). Taking into consideration both, Best Banking Practice applicable to the EIB and the principles set under the Capital

Requirements Regulation (CRR), all counterparts that are material to the credit profile of a specific transaction are classified into internal

rating categories using the IRM for the specific counterpart type. Each counterpart is assigned an Internal Rating reflecting its PD

following an in-depth analysis of the counterpart’s business and financial risk profile and its country risk operating context. Expert

adjustments are made when necessary under the consideration of the legal entities’ parental or government support, and the final rating

allows for overrides to reflect information (e.g. market pricing) not considered in the model.

The credit assessment of project finance and other structured limited recourse operations uses credit risk tools relevant for the sector,

focused mainly on cash flow availability and debt service capacity. These tools include the analysis of projects’ contractual framework,

counterpart’s analysis and cash flow simulations. Similarly to corporates and financial institutions, each project is assigned an internal

risk rating. Finally, Non-EU sovereigns are rated by the Economics Department based on a statistical model.

All Internal Ratings are monitored over loan life, and periodically updated.

In order to mitigate credit risk the EIB uses, where appropriate and on a case by case basis, various credit enhancements including

amongst others counterparty or project related securities, guarantees and contractual clauses depending of the nature of the borrower

and type of operation.

The Facility does not use any credit derivatives to mitigate credit risk.

22 Settlement risk is defined as the risk of potential losses due to transactions which remain unsettled after their due delivery date and/or due to transactions that are settled later than the applicable market standard. Due to the nature of the Facilty’s operations, the most relevant instruments affected by settlement risk are those derivatives entered into by the Bank which imply an exchange of foreign currencies. Settlement risk management is covered in the Financial Risk Guidelines.

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3.2.2 Maximum exposure to credit risk without taking into account any collateral and other credit enhancements

The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including

derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral.

Maximum exposure (in EUR’000) 31.12.2025 31.12.2024

ASSETS

Cash and cash equivalents 1,665,129 1,638,604

Amounts receivable from contributors - 7,482

Derivative financial instruments 7,819 783

Loans and advances 1,063,511 1,498,048

Other assets 36,833 -

Total 2,773,292 3,144,917

Provisions for loan commitments -17,585 -18,320

OFF BALANCE SHEET

Contingent liabilities

- Issued Guarantees - -

Commitments

- Undisbursed loans 354,187 676,229

- Non-issued guarantees 2,500 2,500

Total off balance sheet 356,687 678,729

Total credit exposure 3,112,394 3,805,326

3.2.3 Credit risk on loans and advances

3.2.3.1 Credit risk measurement for loans and advances

Loans and advances or guarantees undertaken by the Facility benefit from a comprehensive risk assessment and quantification of

expected loss estimates that are reflected in a Loan Grading (“LG”). Operations under the IFE (as described in Note 25), with the

exception of intermediated loans, are subject to the general Mandate Risk Principles as envisaged in the EIB credit and equity risk

guidelines. LGs are established according to generally accepted criteria, based on the quality of the borrower, the maturity of the loan,

the type of guarantee and, where appropriate, the guarantor.

The loan grading system comprises the methodologies, processes, databases and IT systems supporting the assessment of credit risk

in lending operations and the quantification of expected loss estimates. It summarises a large amount of information with the purpose of

offering a relative ranking of loans’ credit risks. LGs reflect the present value of the estimated level of the “expected loss”, this being the

product of the Probability of Default of the main obligors, the Exposure at Default and the loss severity in the case of default. LGs are

used for the following purposes:

- as an aid to a finer and more quantitative assessment of lending risks;

- as an indicator of credit risk variations for the purposes of prioritising monitoring efforts;

- as a description of the loan’s portfolio quality at any given date; and

- as an input in risk-pricing decisions.

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The following factors are used to determine an LG:

i) The borrower’s creditworthiness: Risk Management independently reviews borrowers and assesses their

creditworthiness based on internal methodologies and external data. In line with the Basel III Internal Ratings Based

Approach chosen, the Bank has developed an internal rating methodology (IRM) to determine the internal ratings of

borrowers and guarantors. This is based on a set of scoring sheets specific to defined counterparty types.

ii) The default correlation: it quantifies the chances of simultaneous financial difficulties arising for both the borrower and

the guarantor. The higher the correlation between the borrower and the guarantor’s default probabilities, the lower the

value of the guarantee and therefore the lower (worse) the LG.

iii) The value of guarantee instruments and of securities: this value is assessed on the basis of the combination of the

issuer’s creditworthiness and the type of instrument used.

iv) The applicable recovery rate: being the amount assumed to be recovered following a default by the relevant counterpart

expressed as a percentage of the relevant loan exposure.

v) The contractual framework: a sound contractual framework will add to the loan’s quality and enhance its LG.

vi) The duration of the loan or, more generally, the cash-flows of the loan: all else being equal, the longer the loan, the

higher the risk of incurring difficulties in the servicing of the loan.

A loan’s expected loss is computed by combining the six elements above. Depending on the level of the expected loss, a loan is

assigned to one of the following LG classes listed below:

“A” Prime quality loans:

“A0” comprising EU sovereign "risks” that is loans granted to, or fully, explicitly and unconditionally guaranteed by Member States

where no repayment difficulties are expected, i.e. expected loss of 0% (based on the Bank’s preferred creditor status and statutory

protection which are deemed to assure a full recovery of the Bank’s assets upon maturity) as well as loans with a comprehensive

EU or MS guarantee.

“A+” comprising loans granted to (or guaranteed by) entities other than EU Member States in respect of which there is no or only

limited expectation of deterioration in quality over their term.

“B” High quality loans: these represent an asset class with which the Bank feels comfortable, although a minor deterioration is not ruled

out in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring.

“C” Good quality loans: an example could be "single-signature" (unsecured) loans to solid corporates (e.g. equivalent internal rating of

Baa1/BBB+), with a reasonable maturity and adequate protective clauses.

“D” This grading class represents (aside from loans initially approved at this level) the borderline exposure that have a risk profile

generally accepted by the Bank. This watershed in loan grading is more precisely determined by the sub-classifications D+ and D-.

“E” This LG category includes loans with a risk profile greater than generally accepted. It also includes loans which in the course of

their lives have experienced severe problems and their sliding into a situation of loss cannot be excluded. For this reason, the

loans are subject to close and high monitoring. The sub-classes E+ and E- differentiate the intensity of this special monitoring

process, with those operations graded E- being in a position where there is a strong possibility that debt service cannot be

maintained on a timely basis and therefore some form of debt restructuring is required, possibly leading to an impairment loss.

“F” F (fail) denotes loans representing unacceptable risks. F- graded loans can only arise out of outstanding transactions that have

experienced unforeseen, exceptional and dramatic adverse circumstances after signature. All operations where there is a loss of

principal to the Facility are graded F and a specific provision is applied.

The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described

above.

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3.2.3.2 Analysis of lending credit risk exposure

The following table shows the maximum exposure (net carrying amount) to credit risk on loans and advances signed (disbursed and

undisbursed) by nature of borrower taking into account guarantees provided by guarantors:

At 31.12.2025 Guaranteed Not guaranteed Total % of Total disbursed

in EUR’000

Financial institutions 37,020 590,941 627,961 59%

Corporates 117,547 125,812 243,359 23%

Public authorities - - - 0%

States - 192,191 192,191 18%

Total disbursed 154,567 908,944 1,063,511 100%

Undisbursed 19,023 317,579 336,602

Total disbursed and undisbursed

173,590 1,226,523 1,400,113

At 31.12.2024 Guaranteed Not guaranteed Total % of Total disbursed

in EUR’000

Financial institutions 45,015 879,963 924,978 62%

Corporates 164,680 193,836 358,516 24%

Public authorities - - - 0%

States - 214,554 214,554 14%

Total disbursed 209,695 1,288,353 1,498,048 100%

Undisbursed 42,259 615,650 657,909

Total disbursed and undisbursed

251,954 1,904,003 2,155,957

Portfolio Management and Monitoring Directorate is tasked with the responsibility of performing borrower and guarantor monitoring, as

well as project-related financial and contractual monitoring. Thus, the creditworthiness of the Facility’s loans, borrowers and guarantors

are continually monitored, at least annually but more frequently on an as-needed basis and as a function of credit events taking place. In

particular, Portfolio Management and Monitoring Directorate reviews if contractual rights are met and, in case of a rating deterioration

and/or contractual default, remedy action is taken. Mitigation measures are pursued, whenever necessary in accordance with the credit

risk guidelines. Also, in case of renewals of bank guarantees received for its loans, it is ensured that these are replaced or action is

taken in a timely manner.

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3.2.3.3 Credit quality analysis per type of borrower

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2025 and 31 December 2024 by the

Loan Grading applications, based on the exposure signed (disbursed and undisbursed):

At 31.12.2025 High Grade

Standard Grade

Min. Accept.

Risk High Risk No grading* Total % of Total

in EUR’000

A to B- C D+ D- and below

Borrower Financial institutions 327,807 10,542 90,260 250,875 - 679,484 48%

Corporates 32,538 1,696 - 131,661 109,628 275,523 20%

Public authorities - - - - - - 0%

States - 948 14,223 429,935 - 445,106 32%

Total 360,345 13,186 104,483 812,471 109,628 1,400,113 100%

*Loan operations measured at FVTPL.

At 31.12.2024 High Grade

Standard Grade

Min. Accept.

Risk High Risk No grading* Total % of Total

in EUR’000

A to B- C D+ D- and below

Borrower Financial institutions 234,681 299,526 218,172 387,621 - 1,140,000 53%

Corporates 41,934 3,318 - 189,403 195,031 429,686 20%

Public institutions - - - - - - 0%

States 51,820 2,929 22,375 509,147 - 586,271 27%

Total 328,435 305,773 240,547 1,086,171 195,031 2,155,957 100%

*Loan operations measured at FVTPL.

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3.2.3.4 Risk concentrations of loans and advances

3.2.3.4.1 Geographical analysis

Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000):

Country of borrower 31.12.2025 31.12.2024

Kenya 170,406 246,455

Egypt 146,658 224,074

Barbados 111,951 67,426

Ethiopia 109,593 117,954

Zambia 76,553 84,336

Nigeria 70,645 119,847

Mauritius 62,459 86,850

Cameroon 48,915 58,577

Rwanda 43,013 67,061

Uganda 28,936 37,062

Zimbabwe 24,124 35,885

Regional-ACP 24,317 75,060

Togo 22,566 91,324

Senegal 17,710 18,052

Congo (Democratic Republic) 16,513 23,820

New Caledonia 15,760 21,166

Tanzania 9,462 16,233

Benin 8,702 16,208

Mauritania 6,123 8,717

Guinea 6,076 10,337

Ivory Coast 4,934 7,440

Dominican Republic 4,850 11,006

Madagascar 4,815 9,122

Seychelles 4,731 5,018

Eswatini 4,660 5,673

Saint Lucia 4,253 4,864

Mali 3,730 5,707

Cayman Islands 2,983 5,588

Malawi 2,255 3,586

Cape Verde 1,696 3,318

Micronesia 1,536 2,062

Mozambique 1,048 3,126

Burkina Faso 887 2,348

French Polynesia 590 1,193

Samoa 61 198

Ghana - 1,304

Haiti - 51

Total 1,063,511 1,498,048

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3.2.3.4.2 Industry sector analysis

The table below analyses the Facility’s loan portfolio by industry sector of the borrower. Operations which are first disbursed to a

financial intermediary before being disbursed to the final beneficiary are reported under ”Tertiary and other” (in EUR’000):

Industry sector of borrower 31.12.2025 31.12.2024

Financial Services 627,960 924,947

Public Administration 192,191 214,554

Electricity 137,746 170,632

Chemicals 54,806 81,046

Regulated Networks 14,571 5,441

Business Services, IT and Media 10,920 33,926

Pharmaceuticals and Medical Equipment 8,305 13,227

Investment Goods 6,057 7,244

Metals and Mining 5,175 7,157

Consumer Goods and Retail 3,499 -

Waste Recuperation and Recycling 2,281 3,041

Healthcare - 36,833

Total 1,063,511 1,498,048

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3.2.3.5 Credit risk exposure for each internal risk rating

The EIB uses an internal rating methodology in line with the Internal ratings based approach under Basel III. The majority of the

Facility’s counterparties have been assigned an internal rating according to this methodology. The table below shows a breakdown of

the Facility’s loan portfolio by the better of the borrower’s or guarantor’s internal ratings, where available. In cases where an internal

rating is not available, the external rating has been used for this analysis.

The table shows both the exposures signed (disbursed and undisbursed) and the risk-weighted exposures, based on an internal

methodology that the Facility uses for limit management.

2025

in EUR’000 Moody’s

equiv. grade

12-month ECL

Lifetime ECL not

credit- impaired

Lifetime ECL credit-

impaired FVTPL Total

Loans and advances at AC

Internal Rating 1 - minimal credit risk Aaa - 30,258 - - 30,258

Internal Rating 2 - very low credit risk Aa1 - Aa3 111,954 - - - 111,954

Internal Rating 3 - low credit risk A1 - A3 8,704 - - - 8,704

Internal Rating 4 - moderate credit risk Baa1 - Baa3 163,126 - 2,281 - 165,407

Internal Rating 5 - financially weak counterpart Ba1 - Ba3 42,793 4,794 - - 47,587

Internal Rating 6 - high credit risk B1 - B3 319,758 54,209 - - 373,967

Internal Rating 7 - very high credit risk below Caa1 38,565 216,042 - - 254,607

Internal Rating 8 - counterpart in default below Caa1 but in default

- - 15,553 - 15,553

Loans and advances at FVTPL - - - 148,669 148,669

Loss allowance and FV adjustment -7,186 -13,764 -2,471 -69,774 -93,195

Carrying amount of loans and advances 677,714 291,539 15,363 78,895 1,063,511

Loan commitments

Internal Rating 2 - very low credit risk Aa1 - Aa3 24,971 - - - 24,971

Internal Rating 4 - moderate credit risk Baa1 - Baa3 - - - - -

Internal Rating 5 - financially weak counterpart Ba1 - Ba3 - - - - -

Internal Rating 6 - high credit risk B1 - B3 11,397 254,999 - - 266,396

Internal Rating 7 - very high credit risk below Caa1 12,500 19,582 - - 32,082

Internal Rating 8 - counterpart in default below Caa1 but in default

- - - - -

No internal rating* - - - - -

Loans and advances at FVTPL - - - 30,738 30,738

Loss allowance and FV adjustment -566 -17,019 - - -17,585

Carrying amount of loan commitments 48,302 257,562 - 30,738 336,602

* Agency agreements for which there are no underlying counterparts at reporting date.

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3.2.3.5 Credit risk exposure for each internal risk rating (continued)

2024

in EUR’000 Moody’s

equiv. grade

12-month ECL

Lifetime ECL not

credit- impaired

Lifetime ECL credit-

impaired FVTPL Total

Loans and advances at AC

Internal Rating 1 - minimal credit risk Aaa - 38,896 - - 38,896

Internal Rating 2 - very low credit risk Aa1 - Aa3 67,436 - - - 67,436

Internal Rating 3 - low credit risk A1 - A3 10,501 - - - 10,501

Internal Rating 4 - moderate credit risk Baa1 - Baa3 246,650 - 3,041 - 249,691

Internal Rating 5 - financially weak counterpart Ba1 - Ba3 66,050 - - - 66,050

Internal Rating 6 - high credit risk B1 - B3 588,657 29,996 16,233 - 634,886

Internal Rating 7 - very high credit risk below Caa1 74,924 229,726 - - 304,650

Internal Rating 8 - counterpart in default below Caa1 but in default

- - 22,307 - 22,307

Loans and advances at FVTPL - - - 200,677 200,677

Loss allowance and FV adjustment -9,675 -12,576 -12,431 -62,364 -97,046

Carrying amount of loans and advances 1,044,543 286,042 29,150 138,313 1,498,048

Loan commitments

Internal Rating 2 - very low credit risk Aa1 - Aa3 86,796 - - - 86,796

Internal Rating 4 - moderate credit risk Baa1 - Baa3 10,000 - - - 10,000

Internal Rating 5 - financially weak counterpart Ba1 - Ba3 81,500 - - - 81,500

Internal Rating 6 - high credit risk B1 - B3 20,000 270,990 - - 290,990

Internal Rating 7 - very high credit risk below Caa1 12,500 11,329 - - 23,829

Internal Rating 8 - counterpart in default below Caa1 but in default

- - 111,000 - 111,000

No internal rating* 15,445 - - - 15,445

Loans and advances at FVTPL - - - 56,669 56,669

Loss allowance and FV adjustment -1,491 -16,829 - - -18,320

Carrying amount of loan commitments 224,750 265,490 111,000 56,669 657,909

* Agency agreements for which there are no underlying counterparts at reporting date.

The EIB continually monitors events affecting its borrowers and guarantors. In particular, the EIB is assessing on a case by case basis its contractual rights in case of rating deterioration and is seeking mitigating measures. It is also closely following the renewals of bank guarantees received for its loans to ensure that these are replaced or action is taken in a timely manner if need be.

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3.2.3.6 Arrears on loans and impairments

Amounts in arrears are identified, monitored and reported according to the procedures defined into the Bank wide “Finance Monitoring

Guidelines and Procedures”. These procedures are in line with best banking practices and are adopted for all loans managed by the

EIB.

The monitoring process is structured in order to make sure that (i) potential arrears are detected and reported to the services in charge

with minimum delay; (ii) critical cases are promptly escalated to the right operational and decision level; (iii) regular reporting to the

Facility management is provided on the overall status. The arrears and impairments on loans and advances can be analysed as follows (in EUR’000):

Loans and advances Loans and advances

31.12.2025 31.12.2024

Carrying amount 1,063,511 1,498,048

Lifetime ECL credit- impaired

Gross amount 15,553 22,307

Impairment- loss allowance -2,471 -12,431

Carrying amount of lifetime ECL credit-impaired 13,082 9,876

Past due but not credit- impaired

Past due comprises

0-30 days 201 229

30-90 days - 26

90-180 days - -

more than 180 days - 25

Carrying amount past due but not credit- impaired 201 280

Carrying amount neither past due nor credit- impaired 1,050,228 1,487,892

Total carrying amount loans and advances 1,063,511 1,498,048

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3.2.3.7 Sensitivity on ECL to future economic conditions (in EUR’000)

The ECL is sensitive to judgments and assumptions made regarding formulation of forward-looking scenarios. The EIB performs a

sensitivity analysis on the ECL recognised on material classes of its assets.

The forecasts of future economic conditions (via macroeconomic scenarios) are inputs to forecasting model producing conditional risk

parameters, which are an input to loss allowance calculation.

The scenarios are derived shocking GDP, which is the key measurement of economic activity. The shocks to real GDP are calibrated to

replicate the past volatility of the variable. In addition, expert judgment is applied, when appropriate, to refine the size and persistency of

GDP shocks. As a result, shocks are determined together with a decay function to determine the impact of the shocks over time.

Probabilities attached to each scenario are defined reflecting market (volatility) indicators and internally developed indicators/trackers

consistently deployed over time to capture uncertainty. The weighting of positive and negative shocks depends on the balance of risks in

the economy, negative and positive shocks with a probability of 40% and 5% respectively, were applied on quarterly projections in the

last exercise.

The table below shows the loss allowance on loans and advances under Stage 1 and 2. Each forward-looking scenario (e.g. baseline,

positive and negative) was weighted 100% instead of applying scenario probability weights across the three scenarios.

2025

(in EUR’000) Positive Baseline Negative

Gross exposure 1,306,210 1,306,210 1,306,210

Loss allowance 29,944 31,693 33,605

2024

(in EUR’000) Positive Baseline Negative

Gross exposure 1,851,153 1,851,153 1,851,153

Loss allowance 28,883 30,301 31,819

3.2.3.8 Loan renegotiation and forbearance

The EIB considers loans to be forborne loans (i.e. loans, debt securities and loan commitments) in respect of which forbearance

measures have been extended. Forbearance measures consist of “concessions” that the EIB decides to make towards an obligor who is

considered unable to comply with the contractual debt service terms and conditions due to its financial difficulties, in order to enable the

obligor to service the debt or to refinance, totally or partially, the contract. Exposures shall be treated as forborne if a concession has

been made, irrespective of whether any amount is past-due, or the exposure is classified as defaulted. Exposures shall not be treated

as forborne when the obligor is not in financial difficulties.

In the normal course of business, the deterioration of the loans in question would have been detected via the provisions of the Bank’s

guidelines and procedures and would have been monitored before renegotiation. Once renegotiated, the EIB would continue to closely

monitor these loans. In the case of the financial instrument would be credit impaired it will be moved to Stage 3. The loan will be

monitored regularly in line with the Bank’s framework.

Forbearance measures and practices undertaken by the EIB as part of its restructuring activities during the reporting period include, but

are not limited to, extension of maturities, deferral of capital only, deferral of capital and interest, waiver of material covenants and

capitalisation of arrears.

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3.2.3.8 Loan renegotiation and forbearance (continued)

Operations subject to forbearance measures are reported as such in the table below:

in EUR’000 31.12.2025 31.12.2024

Performing

Non- Performing Performing

Non- Performing

Number of contracts subject to forbearance practices 1 9 3 7

Carrying values (incl. interest and amounts in arrears) 9,569 71,509 60,223 35,718

ECL allowance recognised 106 45,760 622 11,156

Interest income in respect of forborne contracts 687 1,601 3,353 1,717

Forbearance measures

in EUR’000 31.12.2024 Extension of

maturities

Deferral of capital and

interest

Breach of material financial

covenants

Other

Contractual repayment, termination and/or write

off

31.12.2025

Financial institutions

22,382 - - -9,643 - -1,460 11,279

Corporates 73,559 13,767 6,580 4,154 - -28,261 69,799

Total 95,941 13,767 6,580 -5,489 - -29,721 81,078

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3.2.4 Credit risk on cash and cash equivalents

Available funds are invested in accordance with the Facility’s schedule of contractual disbursement obligations. As of 31 December

2025, and 31 December 2024, investments were in the form of bank deposits, certificates of deposit and commercial papers.

The authorized entities have a rating similar to the short-term and long-term ratings required for the EIB’s own treasury placements. In

case of different ratings being granted by more than one credit rating agency, the lowest rating governs. The maximum authorized limit

for each authorised bank is currently EUR 50,000,000 (fifty million euro). An exception to this rule has been granted to Societe Generale

S. A. where the Facility has its operational cash accounts. The short-term credit limit for Societe Generale S. A. as at 31 December 2025

and 31 December 2024 amounts to EUR 110,000,000 (one hundred and ten million euro). The increased limit applies to the sum of the

cash held at the operational cash accounts and the instruments issued by this counterpart and held by the treasury portfolio.

All investments have been done with authorised entities with a maximum tenor of three months from value date. All credit exposure limit

breaches have been reported to the mandators. As at 31 December 2025 and as at 31 December 2024 all term deposits, commercial

papers and cash in hand held by the treasury portfolio of the Facility had a minimum rating of at least P-2 (Moody’s equivalent) at

settlement day.

The following table shows the situation of cash and cash equivalents including accrued interest (in EUR’000):

Minimum short-term rating

Minimum long-term rating 31.12.2025 31.12.2024

(Moody’s term) (Moody’s term)

P-1 Aaa 210,685 13% 124,532 8%

P-1 Aa1 113,868 7% 173,639 11%

P-1 Aa2 99,792 6% - 0%

P-1 Aa3 - 0% 149,239 9%

P-1 A1 475,191 28% 309,342 19%

P-1 A2 444,741 26% 280,035 17%

P-1 A3 176,036 11% 367,211 22%

P-2 A3 144,816 9% 154,829 9%

P-2 Baa1 - 0% 79,777 5%

Total 1,665,129 100% 1,638,604 100%

3.2.5 Credit risk on derivatives

3.2.5.1 Credit risk policy of derivatives

The credit risk with respect to derivatives is represented by the loss which a given party would incur where the other counterparty to the

deal would be unable to honour its contractual obligations. The credit risk associated with derivatives varies according to a number of

factors (such as interest and exchange rates) and generally corresponds to only a small portion of their notional value.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into

currency forward contracts, with a view to hedge its currency positions denominated in actively traded currencies other than the Euro. All

the swaps are executed by the EIB with an external counterpart. The swaps are arranged by the same Master Swap Agreements and

Credit Support Annexes signed between the EIB and its external counterparts.

3.2.5.2 Credit risk measurement for derivatives

All the swaps executed by the EIB that are related to the Facility are treated within the same contractual framework and methodologies

applied for the derivatives negotiated by the EIB for its own purposes. In particular, eligibility of swap counterparts is determined by the

EIB based on the same eligibility conditions applied for its general swap purposes.

The EIB measures the credit risk exposure related to swaps and derivatives transactions using the Current Unsecured Exposure and

Potential Future Exposure approach for reporting and limit monitoring. These metrics fully include the derivatives related to the

Investment Facility.

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122

The Facility enters into foreign exchange short-term currency swaps (“FX swaps”) contracts in order to hedge currency risk on loan

disbursements in currencies other than EUR. FX swaps have a maturity of maximum three months and are regularly rolled-over. The

notional amount of FX swaps stood at EUR1,060.0 million as at 31 December 2025 against EUR 1,330.0 million as at 31 December

2024. The fair value of FX swaps amounts to EUR 6.0 million as at 31 December 2025 against EUR -38.9 million as at

31 December 2024.

The Facility enters into cross currency swaps contracts in order to hedge currency risk on loan disbursements in currencies other than

EUR. Cross currency swaps have a long-term maturity. The notional amount of FX swaps stood at EUR22.9 million as at

31 December 2025 against EUR 33.1 million as at 31 December 2024. The fair value of FX swaps amounts to EUR 1.4 million as at

31 December 2025 against EUR 0.5 million as at 31 December 2024.

3.2.6 Credit risk on treasury financial assets

The treasury portfolio entirely composed of commercial papers issued by sub-sovereigns, banks and non-bank entities maturity of more

than three months. EU Member States, their agencies, banks and non-bank entities are eligible issuers. The maximum authorized limit

for each authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible

depending on liquidity requirements. There were no treasury financial assets as at 31 December 2024 and 31 December 2025.

Annual accounts of the European Development Fund 2025

123

3.3 Liquidity risk

Liquidity risk refers to an entity’s ability to fund increases in assets and meet obligations as they come due, without incurring

unacceptable losses. It can be further split into funding liquidity risk and market liquidity risk.

Funding liquidity risk is connected to the risk that an entity will not be able to refinance the asset side of its balance sheet and to meet

payment obligations in full, out of readily available liquidity resources. Market liquidity risk is the volatility observed in the economic value

of, or in the income derived from, an entity’s positions due to its potential inability to execute a transaction serving to offset, eliminate or

reduce such outstanding positions at reasonable market prices.

3.3.1 Liquidity risk management

The Facility has been primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s

operations. In line with the Council Decision 2020/2233, reflows from the ACP IF shall be deployed within the NDICI framework.

However, the availability of those reflows to be transferred is conditional to sustaining an adequate level of liquidity under the IF.

The Facility manages its funding liquidity risk primarily by planning its net liquidity needs. To further minimize the liquidity risk, the Facility

maintains a liquidity reserve sufficient to cover at any PIT forecasted cash disbursements, as communicated periodically by the EIB’s

Lending Department. Funds are invested on the money market and bond markets in the form of interbank deposits and other short-term

financial instruments by taking into consideration the Facility’s cash disbursement obligations. The Facility’s liquid assets are managed

by the Bank’s Treasury Department with a view to maintain appropriate liquidity to enable the Facility to meet its obligations.

It is worth highlighting that capital is managed solely from a liquidity perspective, as described above.

In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the

investment of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore,

the authorisation of counterparts and limits for treasury investments, as well as the monitoring of such limits, are the responsibility of the

Bank’s GR&C.

3.3.2 Liquidity risk measurement

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the

balance sheet date and the contractual maturity date (based on undiscounted cash flows).

In terms of non-derivative financial liabilities, the Facility holds commitments in the form of undisbursed portions of credit under signed

loan agreements, of undisbursed portions of signed capital subscription/investment agreements, of loan guarantees granted, or of

committed interest subsidies and TA.

Loans under the IF have a disbursement deadline. However, disbursements are made at times and in amounts reflecting the progress of

underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence

their disbursement schedule is subject to a significant degree of uncertainty.

Capital investments become due when and as soon as equity fund managers issue valid calls for capital, reflecting the progress in their

investment activities. The drawdown period is usually of 3 years, with frequent prolongation by one or two years. Some disbursement

commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s

liquidity may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.

Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding

is reduced alongside the repayment schedule of guaranteed loans.

Committed interest subsidies’ cash outflows occur in the case of subsidized loans financed by the Bank’s own resources. The reported

“Outflows for committed interest subsidies” represent only commitments related to these loans rather than the total amount of committed

undisbursed interest subsidies. As in the case of loans, their disbursement schedule is uncertain.

Committed TA “gross nominal outflow” in the “Maturity profile of non-derivative financial liabilities” table refers to the total undisbursed

portion of signed TA contracts. The disbursement time pattern is subject to a significant degree of uncertainty. Cash outflows classified in

the “3 months or less” bucket represent the amount of outstanding invoices received by the reporting date.

Commitments for non-derivative financial liabilities for which there is no defined contractual maturity date are classified under “Maturity

Undefined”. Commitments, for which there is a recorded cash disbursement request at the reporting date, are classified under the

relevant time bucket.

In terms of derivative financial liabilities, the maturity profile represents the contractual undiscounted gross cash flows of swap contracts

including cross currency swaps (CCS), cross currency interest rate swaps (CCIRS), short-term currency swaps and interest rate swaps.

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Maturity profile of non-derivative financial liabilities 3 months or less

More than 3 months to 1 year

More than 1 year to 5

years

More than 5 years

Maturity Undefined

Gross nominal outflow

in EUR’000 as at 31.12.2025

Outflows for committed but undisbursed loans 122,352 - - - 231,835 354,187

Outflows for committed investment funds and share subscription

165 - - - 184,676 184,841

Others (signed non-issued guarantees, issued guarantees) - - - - 2,500 2,500

Outflows for committed interest subsidies - - - - 239,148 239,148

Outflows for amounts owed to the EIB 3,199 19,942 - - - 23,141

Outflows for amounts owed to the EC - 243,853 - - - 243,853

Outflows for committed TA 844 - - - 10,465 11,309

Total 126,560 263,795 - - 668,624 1,058,979

Maturity profile of non-derivative financial liabilities 3 months or less

More than 3 months to 1 year

More than 1 year to 5

years

More than 5 years

Maturity Undefined

Gross nominal outflow

in EUR’000 as at 31.12.2024

Outflows for committed but undisbursed loans 80,913 20,208 - - 575,108 676,229

Outflows for committed investment funds and share subscription

4,190 - - - 233,696 237,886

Others (signed non-issued guarantees, issued guarantees) - - - - 2,500 2,500

Outflows for committed interest subsidies - - - - 334,754 334,754

Outflows for committed TA 1,859 - - - 18,341 20,200

Total 86,962 20,208 - - 1,164,399 1,271,569

Maturity profile of derivative financial liabilities 3 months or less

More than 3 months to 1

year

More than 1 year to 5

years

More than 5 years

Gross nominal

inflow/outflow in EUR’000 as at 31.12.2025

CCS and CCIRS – Inflows 131 10,242 13,126 - 23,499

CCS and CCIRS – Outflows -81 -10,451 -13,026 - -23,558

Short-term currency swaps – Inflows 1,060,000 - - - 1,060,000

Short-term currency swaps – Outflows -1,056,455 - - - -1,056,455

Total 3,595 -209 100 - 3,486

Maturity profile of derivative financial liabilities 3 months or less

More than 3 months to 1

year

More than 1 year to 5

years

More than 5 years

Gross nominal

inflow/outflow in EUR’000 as at 31.12.2024

CCS and CCIRS – Inflows 157 10,405 22,613 832 34,007

CCS and CCIRS – Outflows -87 -12,310 -24,852 -899 -38,148

Short-term currency swaps – Inflows 1,330,000 - - - 1,330,000

Short-term currency swaps – Outflows -1,371,666 - - - -1,371,666

Total -41,596 -1,905 -2,239 -67 -45,807

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125

3.3.3 Long term financial assets and liabilities

The following table sets out the non-derivative financial assets and financial liabilities expected to be recovered or settled more than 12

months after the reporting date.

in EUR’000 31.12.2025 31.12.2024

Financial assets:

Loans and advances 1,126,057 1,551,776

Shares and other variable yield securities 745,934 834,621

Total 1,871,991 2,386,397

Financial liabilities:

Amount owed to third parties* 797 534,569

Provisions for loan commitments 17,585 18,320

Total 18,382 552,889

* The amounts owed to third parties are including the Interest subsidies and TA not yet disbursed owed to Member States, where the maturity is mainly undefined.

3.4 Market risk

Market risk represents the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates

will affect an entity’s income or the value of its holdings in financial instruments.

3.4.1 Interest rate risk

Interest rate risk arises from the volatility in the economic value of, or in the income derived from, interest rate bearing positions due to

adverse movements in interest rates.

The Facility is not directly impacted by the fluctuation of its economic value or to pricing mismatches between different assets, liabilities

and hedge instruments because it does not have interest rate bearing liabilities. The Facility measures its interest rate risk, on an annual

basis, by applying EBA standardised shock scenarios23 that show the impacts on both the economic value of equity and the net interest

income from adverse movements in interest rates.

Interest rate risk on the Economic Value of Equity

To determine the net present value (“NPV“) of the loans and hedging swaps cash flows denominated in EUR, the Facility uses the

EURIBOR 3-month curve. The NPV of the loans’ cash flows denominated in non-EUR currencies is determined by using the EURIBOR

3-month curve adjusted with the cross-currency basis spread for the respective currency. For those non-EUR currencies for which a

reliable and sufficiently complete discount curve is not available, either the EUR or USD discount curve is used instead.

As at 31 December 2025, the worst impact of the EBA supervisory outlier test scenarios would reduce the economic value of equity by

EUR 60.2 million (2024: EUR 81.0 million).

Interest rate risk on the Earnings

It quantifies the amount of net interest income that would change during the forthcoming 12 months if all interest rate curves would

decrease by two percentage points and if no existing commitments are effectively being disbursed. With the positions in place as of 31

December 2025, the net interest income would decrease by EUR 33.3 million (2024: EUR 34.7 million) if interest rates were to decrease

by 200 basis points.

For enriching the analysis of the net interest income’s sensitivity, the net interest income would increase by EUR 33.7 million (2024:

EUR 35.1 million) if interest rates were to increase by 200 basis points.

23 EBA/RTS/2022/10.

Annual accounts of the European Development Fund 2025

126

3.4.2 Foreign exchange risk

Foreign exchange (“FX”) risk is the risk to the economic value or to the income derived from the IF’s positions due to adverse

movements of FX rates.

Given a reference accounting currency (EUR for the IF), the Facility is exposed to FX risk whenever there is a currency mismatch

between assets, liabilities and hedging instruments.

3.4.2.1 Foreign exchange risk and treasury assets

The IF’s treasury assets are denominated in either EUR or USD.

FX risk is hedged by means of FX spot or forward transactions, FX swaps or cross-currency swaps. The EIB’s Treasury Department

can, where deemed necessary and appropriate, use any other instrument, in line with the Bank’s policy, that provide protection against

market risks incurred in connection with the IF’s financial activities.

3.4.2.2 Foreign exchange risk and operations financed or guaranteed by the IF

Member States’ IF contributions are received in EUR. The operations financed or guaranteed by the IF as well as interest subsidies can

be denominated in EUR, USD or any other authorised currency.

A foreign exchange risk exposure (against the EUR reference currency) arises whenever transactions denominated in currencies other

than the EUR are left un-hedged. The IF’s foreign exchange risk hedging guidelines are set out below.

3.4.2.2.1. Hedging of operations denominated in USD

The FX risk generated by IF operations denominated in USD shall be covered on an aggregated basis via the use of EUR/USD FX

swaps, rolled over and adjusted in terms of amount on a periodic basis. The use of FX swaps serves a dual purpose. On one side the

necessary liquidity for new disbursements (loans and equity) is generated and on the other side an FX macro hedge is maintained.

At the beginning of each period, the cash flows to be received or paid in USD during the next period shall be estimated on the basis of

planned or expected reflows/disbursements. Subsequently, the maturing FX swaps shall be rolled over, their amount being adjusted to

cover at least the USD liquidity needs projected over the next period.

On a monthly basis, the USD FX position shall be hedged, if exceeding the relevant limits, by means of a spot or forward operation.

Within a roll-over period, unexpected USD liquidity deficits shall be covered by means of ad hoc FX swap operations while liquidity

surpluses shall either be invested in treasury assets or converted into EUR if occurred from an increase of the FX position.

3.4.2.2.2. Hedging of operations denominated in currencies other than EUR or USD

IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with the

same financial profile as the underlying loan, provided that a swap market is operational.

IF has operations denominated in currencies for which hedging possibilities are either not available or available at a high cost. These

operations are denominated in local currencies (“LCs“) but settled in EUR or USD. IF’s financial risk framework, which was approved by

the IF Committee on 22 January 2015, offers the possibility to hedge the FX exposure in LCs, that exhibit a significant positive

correlation with the USD, synthetically via USD-denominated derivatives. The LCs hedged synthetically with USD-denominated

derivatives are reported in the table in section 3.4.2.2.3 below under item “Local currencies (under synthetic hedge)”, while the LCs not

hedged synthetically with the USD are reported in the same table under item “Local currencies (not under synthetic hedge)”.

In addition, for loans denominated in currencies other than EUR, USD or currencies for which hedging through cross-currency swap

contracts is not possible, the IF charges an additional interest component called “FX premium” to mitigate the risk of potential local

currency depreciation.

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127

3.4.2.2.3 Foreign exchange position (in EUR’000)

The tables of this note show the IF’s foreign exchange position.

The foreign exchange position is presented in the tables below in accordance with the IF’s Risk Policies (as described in the IF’s

financial risk framework). The FX position as per Risk Policies is based on accounting figures and defined as the balance between

selected assets and liabilities. The assets and liabilities defined in the FX position as per Risk Policies are selected to ensure that the

earnings will only be converted into the reporting currency (EUR) when received.

The fair value change on shares and other variable yield securities are included in the FX position as per Risk Policies, as well as

impairments on loans and advances. Derivatives included in the FX position as per Risk Policies are considered at their nominal value

instead of their fair value, in order to be aligned with the retained value of the assets, considered also at their nominal value adjusted by

the impairment for loans.

In the tables below, the remaining part of the assets and liabilities, which includes mainly interest accruals on loans, derivatives and

subsidies, are presented under “FX position excluded from Risk Policies”.

As at 31 December 2025 Assets and liabilities Commitments and

contingent liabilities

Currencies FX position as per

Risk Policies FX position excluded

from Risk Policies Balance sheet FX

position

USD 1,294 -31,642 -30,348 164,405

Local currencies (under synthetic hedge)*

TZS - - - -

DOP 4,775 82 4,857 -

Local currencies (not under synthetic hedge)*

BWP, HTG, JMD, KES, MUR, MZN, NGN, RWF, UGX, XOF, ZAR, ZMW

146,528 -2,514 144,014 -

Total non-EUR currencies 152,597 -34,074 118,523 164,405

EUR 2,676,672 2,676,672 636,494

Total EUR and non-EUR 152,597 2,642,598 2,795,195 800,899

* See section 3.4.2.2.2 for explanations on synthetic hedge.

Annual accounts of the European Development Fund 2025

128

3.4.2.2.3 Foreign exchange position (in EUR’000) (continued)

As at 31 December 2024 Assets and liabilities Commitments and

contingent liabilities

Currencies FX position as per

Risk Policies FX position excluded

from Risk Policies Balance sheet FX

position

USD -45,774 -21,740 -67,514 235,603

Local currencies (under synthetic hedge)*

DOP 10,884 133 11,017 -

KES, RWF, UGX, HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR

225,877 -3,763 222,114

-

Total non-EUR currencies 190,987 -25,370 165,617 235,603

EUR - 3,139,294 3,139,294 1,043,860

Total EUR and non-EUR 190,987 3,113,924 3,304,911 1,279,463

* See section 3.4.2.2.2 for explanations on synthetic hedge.

3.4.2.3 Foreign exchange sensitivity analysis

As at 31 December 2025 a 10% depreciation of EUR versus all non EUR currencies would result in an increase of the contributors’

resources and profit amounting to EUR 13.2 million (31 December 2024: EUR 18.4 million). A 10% appreciation of the EUR versus all

non EUR currencies would result in a decrease of the contributors’ resources and profit amounting to EUR -10.8 million (31 December

2024:

EUR -15.1 million).

Annual accounts of the European Development Fund 2025

129

3.4.2.4 Conversion rates

The following conversion rates were used for establishing the balance sheet at 31 December 2025 and 31 December 2024:

31 December 2025 31 December 2024

Non-EU currencies

Botswana Pula (BWP) 16.18 14.49

Dominican Republic Pesos (DOP) 73.78 63.09

Fiji Dollars (FJD) 2.62 2.38

Haitian Gourde (HTG) 153.14 135.09

Jamaican Dollar (JMD) 185.35 161.15

Kenya Shillings (KES) 151.20 133.69

Mauritania Ouguiyas (MRU) 46.70 41.30

Mauritius Rupees (MUR) 54.08 48.56

Mozambican Metical (MZN) 74.22 65.65

Nigerian Naira (NGN) 1,693.57 1,591.68

Rwanda Francs (RWF) 1,698.60 1,419.85

Tanzania Shillings (TZS) 2,862.12 2,490.24

Uganda Shillings (UGX) 4,240.00 3,812.00

United States Dollars (USD) 1.18 1.04

Franc CFA Francs (XAF/XOF) 655.96 655.96

South Africa Rand (ZAR) 19.44 19.62

Zambia Kvacha (ZMW) 25.98 28.87

3.4.3 Equity price risk

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity

prices and/or the value of equity investments.

The IF is exposed to equity price risk via its investments in direct equity and venture capital funds.

The value of non-listed equity positions is not readily available for the purpose of monitoring and control on a continuous basis. For such

positions, the best indications available include prices derived from any relevant valuation techniques.

The effect on the Facility’s contributors’ resources (as a result of a change in the fair value of the equity instruments portfolio) due to a

+/-10% change in the value of individual direct equity and venture capital investments, with all other variables held constant, is

EUR 74.6 million and EUR -74.6 million respectively as at 31 December 2025 (EUR 83.5 million and EUR -83.5 million respectively as

at 31 December 2024).

Annual accounts of the European Development Fund 2025

130

4 Fair values of financial instruments

4.1 Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value

hierarchy. These do not include fair value information for financial assets and financial liabilities measured at AC as the carrying amount is a

reasonable approximation of fair value.

At 31 December 2025 Carrying amount Fair value

in EUR’000

Derivativ e

financial instrume

nts

Shares and

other variable

yield securitie

s

Cash, loans

and advance

s

Treasury financial

assets

Other financial assets/li abilities

Total Level 1 Level 2 Level 3 Total

Financial assets mandatorily measured at FVTPL

Derivative financial instruments 7,819 - - - - 7,819 - 7,819 - 7,819

Venture Capital Fund - 550,528 - - - 550,528 - - 550,528 550,528

Direct Equity Investments - 195,406 - - - 195,406 - - 195,406 195,406

Loans and advances - - 77,287 - - 77,287 - - 77,287 77,287

Total financial assets mandatorily measured at FVTPL

7,819 745,934 77,287 - - 831,040 - 7,819 823,221 831,040

Financial assets measured at AC

Cash and cash equivalents - - 1,665,12 9

- - 1,665,12 9

89,790 1,575,33 9

- 1,665,12 9

Loans and advances - - 986,224 - - 986,224 - 953,612 - 953,612

Amounts receivable from contributors - - - - - - - - - -

Treasury financial assets - - - - - - - - - -

Other assets - - - - 36,833 36,833 - - - -

Total financial assets measured at AC

- - 2,651,35 3

- 36,833 2,688,18 6

89,790 2,528,95 1

- 2,618,74 1

Total financial assets 7,819 745,934 2,728,64 0

- 36,833 3,519,22 6

Financial liabilities measured at FVTPL

Derivative financial instruments -411 - - - - -411 - -411 - -411

Total financial liabilities measured at FVTPL

-411 - - - - -411 - -411 - -411

Financial liabilities at AC

Provisions for loan commitments - - - - -17,585 -17,585

Amounts owed to third parties - - - - -658,146 -658,146

Other liabilities - - - - -3,044 -3,044 Total financial liabilities measured at AC

- - - - -678,775 -678,775

Total financial liabilities -411 - - - -678,775 -679,186

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131

4 Fair values of financial instruments (continued)

4.1 Accounting classifications and fair values (continued)

As at 31 December 2024 Carrying amount Fair value

in EUR’000

Derivativ e

financial instrume

nts

Shares and

other variable

yield securitie

s

Cash, loans

and advance

s

Treasury financial

assets

Other financial assets/li abilities

Total Level 1 Level 2 Level 3 Total

Financial assets mandatorily measured at FVTPL

Derivative financial instruments 783 - - - - 783 - 783 - 783

Venture Capital Fund - 655,817 - - - 655,817 - - 655,817 655,817

Direct Equity Investment - 178,804 - - - 178,804 - - 178,804 178,804

Loans and advances - - 136,983 - - 136,983 - - 136,983 136,983

Total financial assets mandatorily measured at FVTPL

783 834,621 136,983 - - 972,387 - 783 971,604 972,387

Financial assets at AC

Cash and cash equivalents - - 1,638,60 4

- - 1,638,60 4

- 1,638,60 4

- 1,638,60 4

Loans and advances - - 1,361,06 5

- - 1,361,06 5

- 1,321,71 5

- 1,321,71 5

Amounts receivable from contributors - - 7,482 - - 7,482 - - - -

Treasury financial assets - - - - - - - - - -

Other assets - - - - - - - - - -

Total financial assets measured at AC

- - 3,007,15 1

- - 3,007,15 1

- 2,960,31 9

- 2,960,31 9

Total financial assets 783 834,621 3,144,13 4

- - 3,979,53 8

Financial liabilities mandatorily measured at FVTPL

Derivative financial instruments -39,210 - - - - -39,210 - -39,210 - -39,210

Total financial liabilities measured at FVTPL

-39,210 - - - - -39,210 - -39,210 - -39,210

Financial liabilities at AC

Provisions for loan commitments - - - - -18,320 -18,320

Amounts owed to third parties - - - - -566,083 -566,083

Other liabilities - - - - -3,289 -3,289 Total financial liabilities measured at AC

- - - - -587,692 -587,692

Total financial liabilities -39,210 - - - -587,692 -626,902

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132

4.2 Measurement of fair values

4.2.1 Valuation techniques and significant unobservable inputs

The table below sets out information about the valuation techniques and significant unobservable inputs used in measuring financial

instruments, categorised as Level 2 and 3 in the fair value hierarchy:

Valuation technique Significant unobservable inputs

Relationship of

unobservable inputs to

fair value measurement

Financial instruments carried at fair value

Derivative

financial

instruments

Discounted cash flow: Future cash flows are

estimated based on forward exchange/interest

rates (from observable forward exchange rates

and yield curves at the end of the reporting

period) and contract forward/interest rates,

discounted at a rate that reflects the credit risk of

various counterparties.

Curves used in estimation and

discounting of cashflows are

calibrated to market data, and the

swaps in the portfolio have maturities

that do not exceed the longest tenor

available in the inputs. Therefore,

there are no unobservable inputs.

Not applicable.

Venture

Capital Fund

(VCF)

Adjusted net assets method: The fair value is

determined by applying either the Facility’s

percentage ownership in the underlying vehicle

to the net asset value reflected in the most

recent report adjusted for cash flows or, where

available, the precise share value at the same

date, submitted by the respective Fund Manager.

In order to bridge the interval between the last

available Net assets value (NAV) and the year-

end reporting, a subsequent event review

procedure is performed and if necessary the

reported NAV is adjusted.

Adjustment for time elapsed between

the last reporting date of the VCF

and the measurement date, taking

into account: operating expenses and

management fees, subsequent

changes in the fair value of the VCF’s

underlying assets, additional

liabilities incurred, market changes or

other economic condition changes.

The longer the period

between the fair value

measurement date and

the last reporting date of

the VCF, the higher the

adjustment for time

elapsed.

Direct Equity

(DE)

Investment

Adjusted net assets. Adjustment for time elapsed between

the last reporting date of the investee

and the measurement date, taking

into account: operating expenses,

subsequent changes in the fair value

of the investee’s underlying assets,

additional liabilities incurred, market

changes or other economic condition

changes, capital increase,

sale/change of control.

The higher the

marketability discount, the

lower the fair value.

Discount for lack of marketability

(liquidity) determined by reference to

previous transaction prices for similar

equities in the country/region,

ranging from 5 to 30%.

Loans at fair

value (IFE)

For going concern borrowers: Discounted cash

flow using contractual/expected future cash flows

discounted with appropriate risk-adjusted

discount rate that captures the risk inherent to

the loan (including credit risk of the borrower).

The discount rate is compared/assessed with

any relevant market benchmark.

For borrowers not going concern: Net assets

approach (liquidation value approach).

Components of the discount rate to

reflect the credit risk of borrower

compared to the risk-free market

rates.

The higher the discount

rate the lower the fair

value

Annual accounts of the European Development Fund 2025

133

Valuation techniques and significant unobservable inputs (continued)

Valuation technique Significant unobservable inputs

Relationship of

unobservable inputs to

fair value measurement

Financial instruments not carried at fair value

Loans and

advances

Discounted cash flows: The valuation model

uses adjusted discounted cash flow method

considering the particular features of the

instruments as time and risk of future cashflows.

Not applicable. Not applicable.

Treasury

financial

assets

Discounted cash flows. Not applicable. Not applicable.

With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives as at 31 December 2025 and 2024,

namely:

- Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR -17.5k as at 31 December 2025 and to EUR -2.8k as at 31 December 2024.

- Debit valuation adjustments (DVA), reflecting own credit risk on derivative transactions, amounting to EUR +1.3k as at 31 December 2025 and EUR +3.6k as at 31 December 2024.

Annual accounts of the European Development Fund 2025

134

4.2.2 Transfers between Level 1 and 2

The Facility’s policy is to recognise the transfers between Levels as of the date of the event or change in circumstances that caused the

transfer.

In 2025 and 2024 the Facility did not make transfers from Level 1 to 2 or Level 2 to 1 of the fair value hierarchy.

4.2.3 Level 3 fair values

Reconciliation of Level 3 fair values

The following tables present the changes in Level 3 instruments for the year ended 31 December 2025 and 31 December 2024:

in EUR'000 Shares and other

variable yield securities

Loans and advances

Total

Balance as at 1 January 2025 834,621 136,983 971,604

Gains or losses included in profit or loss: Derecognition of fair value adjustment due to Sales / Exits 15,848 - 15,848

Net fair value change 6,787 -6,948 -161

Total 22,635 -6,948 15,687

Disbursements 51,701 17,812 69,513

Repayments -89,352 -28,712 -118,064

Interest capitalised - 835 835

Sales / Exits -15,227 - -15,227

Guarantee call - -36,833 -36,833

Foreign exchange rates differences -58,444 -5,850 -64,294

Balance as at 31 December 2025 745,934 77,287 823,221

in EUR'000

Shares and other variable yield

securities

Loans and advances

Total

Balance as at 1 January 2024 820,713 124,323 945,036

Gains or losses included in profit or loss: Derecognition of fair value adjustment due to Sales / Exits 14,051 - 14,051

Net fair value change on shares and other variable yield securities -45,698 -5,436 -51,134

Total -31,647 -5,436 -37,083

Disbursements 69,392 15,888 85,280

Repayments -21,413 -3,185 -24,598

Interest capitalised - 2,243 2,243

Sales / Exits -25,623 - -25,623

Foreign exchange rates differences 23,199 3,150 26,349

Balance as at 31 December 2024 834,621 136,983 971,604

In 2025 and 2024 the Facility did not make transfers out or to Level 3 of the fair value hierarchy.

Annual accounts of the European Development Fund 2025

135

Sensitivity analysis

The effects on the Facility’s contributors’ resources, and statement of profit or loss and other comprehensive income due to a +/- 10%

change in the value of direct equity and venture capital investments, with all other variables held constant is EUR 74.6 million and EUR -

74.6 million, respectively as at 31 December 2025 (EUR 83.5 million and EUR - 83.5 million, respectively as at 31 December 2024).

5 Cash and cash equivalents

The cash and cash equivalents are composed of:

in EUR'000 31.12.2025 31.12.2024

Cash in hand 146,087 212,466

Term deposits 556,329 304,538

Commercial papers 960,270 1,116,826

Cash and cash equivalents in the cash flow statement 1,662,686 1,633,830

Accrued interest 2,443 4,774

Cash and cash equivalents in the statement of financial position 1,665,129 1,638,604

6 Derivative financial instruments

The main components of derivative financial instruments, classified as held for trading, are as follows:

As at 31 December 2025 Fair Value Notional amount

in EUR'000 Assets Liabilities

Cross currency swaps 1,829 -411 22,896

FX swaps 5,990 - 1,060,000

Total derivative financial instruments 7,819 -411 1,082,896

As at 31 December 2024 Fair Value Notional amount

in EUR'000 Assets Liabilities

Cross currency interest rate swaps 783 -268 33,073

FX swaps - -38,942 1,330,000

Total derivative financial instruments 783 -39,210 1,363,073

Annual accounts of the European Development Fund 2025

136

7 Loans and advances

7.1 Loans and advances

The following table shows the reconciliation from the opening to the closing balance of loans and advances:

in EUR'000 Global loans* Senior loans

Subordinated loans

Total

Nominal of loans at AC as at 1 January 2025 995,328 387,349 - 1,382,677

Disbursements 18,913 69,928 - 88,841

Write offs - - - -

Repayments -303,792 -66,494 - -370,286

Interest capitalised - - - -

Foreign exchange rates differences -69,811 -30,899 - -100,710

Nominal of loans at AC as at 31 December 2025 640,638 359,884 - 1,000,522

Impairment - loss allowance as at 1 January 2025 -17,386 -17,125 - -34,511

Net changes of the 12 month ECL 690 766 - 1,456

Net changes of lifetime ECL not credit-impaired -896 -808 - -1,704

Lifetime ECL credit-impaired - - - -

Reversal of lifetime ECL credit-impaired 4,248 4,915 - 9,163

Write offs - - - -

Foreign exchange rates differences 1,145 1,030 - 2,175

Impairment - loss allowance as at 31 December 2025 -12,199 -11,222 - -23,421

Loans and advances at AC as at 31 December 2025 628,439 348,662 - 977,101

Nominal of loans at FVTPL as at 1 January 2025 1,080 116,688 79,620 197,388

Disbursements - 3,631 14,181 17,812

Interest capitalised - - 835 835

Repayments - -28,712 - -28,712

Guarantee call - - -36,833 -36,833

Write offs - - - -

Foreign exchange rates differences - -4,042 -2,363 -6,405

Nominal of loans at FVTPL as at 31 December 2025 1,080 87,565 55,440 144,085

Fair value adjustment as at 1 January 2025 -1,080 -34,395 -24,930 -60,405

Net FV change - -1,029 -5,919 -6,948

Foreign exchange rates differences - 438 117 555

Fair value adjustment as at 31 December 2025 -1,080 -34,986 -30,732 -66,798

Loans and advances at FVTPL as at 31 December 2025 - 52,579 24,708 77,287

Amortised Cost -2,614 -3,290 - -5,904

Interest 7,209 7,256 562 15,027

Loans and advances as at 31 December 2025 633,034 405,207 25,270 1,063,511

* Including agency agreements

Annual accounts of the European Development Fund 2025

137

7 Loans and advances (continued) 7.1 Loans and advances (continued)

In EUR'000 Global loans* Senior loans Subordinated

loans Total

Nominal of loans at AC as at 1 January 2024 1,098,121 495,337 - 1,593,458

Disbursements 68,519 16,987 - 85,506

Write offs -4,945 - - -4,945

Repayments -226,719 -141,664 - -368,383

Foreign exchange rates differences 60,352 16,689 - 77,041

Nominal of loans at AC as at 31 December 2024 995,328 387,349 - 1,382,677

Impairment - loss allowance as at 1 January 2024 -32,398 -17,199 - -49,597

Net changes of the 12 month ECL 2,081 124 - 2,205

Net changes of lifetime ECL not credit-impaired 7,071 5,567 - 12,638

Lifetime ECL credit-impaired -581 -5,205 - -5,786

Reversal of lifetime ECL credit-impaired 2,796 292 - 3,088

Write offs 4,945 - - 4,945

Foreign exchange rates differences -1,300 -704 - -2,004

Impairment - loss allowance as at 31 December 2024 -17,386 -17,125 - -34,511

Loans and advances at AC as at 31 December 2024 977,942 370,224 - 1,348,166

Nominal of loans at FVTPL as at 1 January 2024 1,080 106,576 70,453 178,109

Disbursements - 7,851 8,037 15,888

Interest capitalised - 1,675 568 2,243

Repayments - -3,185 - -3,185

Foreign exchange rates differences - 3,771 562 4,333

Nominal of loans at FVTPL as at 31 December 2024 1,080 116,688 79,620 197,388

Fair value adjustment as at 1 January 2024 -1,080 -34,983 -17,723 -53,786

Net FV change - 1,724 -7,160 -5,436

Foreign exchange rates differences - -1,136 -47 -1,183

Fair value adjustment as at 31 December 2024 -1,080 -34,395 -24,930 -60,405

Loans and advances at FVTPL as at 31 December 2024 - 82,293 54,690 136,983

Amortised Cost -3,079 -3,681 - -6,760

Interest 10,766 8,429 464 19,659

Loans and advances as at 31 December 2024 985,629 457,265 55,154 1,498,048

* Including agency agreements

Annual accounts of the European Development Fund 2025

138

7.2 Impairment on loans and advances – Loss allowances

2025

Lifetime ECL

in EUR'000

12-month ECL Lifetime ECL not

credit-impaired Lifetime ECL

credit-impaired Total

Loans and advances at AC

Balance as at 1 January 2025 9,675 12,576 12,260 34,511

Transfer to 12-month ECL - - - -

Transfer to lifetime ECL not credit-impaired -575 1,598 -38 985

Transfer to lifetime ECL credit-impaired - - - -

Net measurement of loss allowance 71 143 -9,013 -8,799

New financial assets originated or purchased 8 - - 8

Financial assets that have been derecognised -961 -35 -113 -1,109

Write offs - - - -

Foreign exchange rates differences -1,032 -518 -625 -2,175

Balance as at 31 December 2025 7,186 13,764 2,471 23,421

2024

Lifetime ECL

in EUR'000

12-month ECL Lifetime ECL not

credit-impaired Lifetime ECL

credit-impaired Total

Loans and advances at AC

Balance as at 1 January 2024 10,964 24,674 13,959 49,597

Transfer to 12-month ECL 2,271 -9,511 - -7,240

Transfer to lifetime ECL not credit-impaired -288 948 - 660

Transfer to lifetime ECL credit-impaired - -1,428 5,786 4,358

Net measurement of loss allowance -3,160 -2,394 -3,088 -8,642

New financial assets originated or purchased - - - -

Financial assets that have been derecognised -1,028 -253 - -1,281

Write offs - - -4,945 -4,945

Foreign exchange rates differences 916 540 548 2,004

Balance as at 31 December 2024 9,675 12,576 12,260 34,511

Annual accounts of the European Development Fund 2025

139

8 Shares and other variable yield securities

The following table show reconciliation from the opening to the closing balance of the Equity investments:

in EUR'000 Venture Capital

Funds Direct Equity Investments

Total

Cost as at 1 January 2025 663,881 93,835 757,716

Reclassification - - -

Disbursements 51,701 - 51,701

Repayments -87,319 -2,033 -89,352

Sales / Exits -11,227 -4,000 -15,227

Foreign exchange rates differences -57,991 -2,287 -60,278

Cost as at 31 December 2025 559,045 85,515 644,560

Unrealised gains and losses as at 1 January 2025 -8,064 84,969 76,905

Reclassification - - -

Net change in unrealised gains and losses -16,118 22,905 6,787

Derecognition of fair value adjustment due to Sales / Exits 11,534 4,314 15,848

Foreign exchange rates differences 4,131 -2,297 1,834

Unrealised gains and losses as at 31 December 2025 -8,517 109,891 101,374

Shares and other variable yield securities as at 31 December 2025 550,528 195,406 745,934

in EUR'000 Venture Capital

Funds Direct Equity Investments

Total

Cost as at 1 January 2024 633,347 73,455 706,802

Reclassification* -25,059 25,059 -

Disbursements 69,392 - 69,392

Repayments / sales -21,181 -232 -21,413

Sales / Exits -22,992 -2,631 -25,623

Foreign exchange rates differences 30,374 -1,816 28,558

Cost as at 31 December 2024 663,881 93,835 757,716

Unrealised gains and losses as at 1 January 2024 59,695 54,216 113,911

Reclassification* -395 395 -

Net change in unrealised gains and losses -77,795 32,097 -45,698

Derecognition of fair value adjustment due to Sales / Exits 11,202 2,849 14,051

Foreign exchange rates differences -771 -4,588 -5,359

Unrealised gains and losses as at 31 December 2024 -8,064 84,969 76,905

Shares and other variable yield securities as at 31 December 2024 655,817 178,804 834,621

Annual accounts of the European Development Fund 2025

140

9 Amounts receivable from contributors

There were no receivables from contributors, which are entirely composed of Member States contributions called but not paid for 2025

(2024: EUR 7.5 million) receivable from contributors

10 Treasury financial assets

The treasury portfolio is composed of quoted bonds which have a remaining maturity of less than three months at reporting date. There

were no treasury financial assets either in 2025 or in 2024.

11 Other assets

The main components of other assets are as follows:

in EUR'000 31.12.2025 31.12.2024

Amount receivable from the EIB - -

Guarantee call receivable 36,833 -

Total other assets 36,833 -

12 Deferred income

The main components of deferred income are as follows:

in EUR'000 31.12.2025 31.12.2024

Deferred interest subsidies 44,718 46,461

Deferred commissions on loans and advances 127 1,264

Total deferred income 44,845 47,725

Annual accounts of the European Development Fund 2025

141

13 Provisions for loan commitments

The following tables show the reconciliation from the opening to the closing balance of the loss allowance for undisbursed loans (loan

commitments):

2025

in EUR'000 12-month ECL Lifetime ECL not

credit-impaired Lifetime ECL

credit-impaired Total

Loan commitments

Balance as at 1 January 1,491 16,829 - 18,320

Net measurement of loss allowance -659 190 - -469

Financial assets that have been derecognised -266 - - -266

Balance as at 31 December 566 17,019 - 17,585

2024

in EUR'000 12-month ECL Lifetime ECL not

credit-impaired Lifetime ECL

credit-impaired Total

Loans commitments

Balance as at 1 January 2,715 16,323 - 19,038

Transfer to 12-month ECL 13 -279 - -266

Transfer to lifetime ECL not credit-impaired -853 15,386 - 14,533

Net measurement of loss allowance 761 -1,330 - -569

Financial assets that have been derecognised -1,145 -13,271 - -14,416

Balance as at 31 December 1,491 16,829 - 18,320

14 Amounts owed to third parties

The main components of amounts owed to third parties are as follows:

in EUR'000 31.12.2025 31.12.2024

Net general administrative expenses payable to the EIB 19,942 24,794

Other amounts payable to the EIB 3,199 43,260

Interest subsidies and TA not yet disbursed owed to Member States 391,152 498,029

Available Reflows payable to the European Commission* 243,853 -

Total amounts owed to third parties 658,146 566,083

Annual accounts of the European Development Fund 2025

142

15 Other liabilities

The main components of other liabilities are as follows:

in EUR'000 31.12.2025 31.12.2024

Loan repayments received in advance 3,044 3,289

Total other liabilities 3,044 3,289

16 Member States Contribution called (in EUR’000)

Member States Contribution to the Facility

Contribution to interest subsidies and technical assistance

Total Contributed Called and not paid

Austria 94,677 45,267 139,944 -

Belgium 138,169 26,952 165,121 -

Bulgaria 2,660 28,898 31,558 -

Croatia 1,126 173,578 174,704 -

Cyprus 1,566 4,528 6,094 -

Czech Republic 9,697 3,028 12,725 -

Denmark 77,279 5,108 82,387 -

Estonia 992 5,141 6,133 -

Finland 55,115 66,602 121,717 -

France 818,754 196,514 1,015,268 -

Germany 823,467 43,762 867,229 -

Greece 50,271 3,672 53,943 -

Hungary 9,230 2,422 11,652 -

Ireland 27,921 18,598 46,519 -

Italy 470,233 38,318 508,551 -

Latvia 1,364 7,630 8,994 -

Lithuania 2,248 105,253 107,501 -

Luxembourg 10,395 1,242 11,637 -

Malta 526 2,273 2,799 -

Netherlands 187,913 10,236 198,149 -

Poland 24,591 16,732 41,323 -

Portugal 39,250 12,058 51,308 -

Romania 7,734 5,701 13,435 -

Slovakia 4,231 2,293 6,524 -

Slovenia 3,137 2,717 5,854 -

Spain 250,314 28,943 279,257 -

Sweden 102,760 29,704 132,464 -

United Kingdom 506,075 150,826 656,901 -

Total as at 31 December 2025 3,721,695 1,037,996 4,759,691 -

Total as at 31 December 2024 3,721,695 1,037,996 4,759,691 7,482

Annual accounts of the European Development Fund 2025

143

17 Available Reflows

in EUR'000 European Commission

UK Total ACP OCT Total

Available Reflows in relation to year 2021 251,000 7,000 258,000 44,386 302,386

Available Reflows in relation to year 2022 236,883 6,732 243,615 41,912 285,527

Available Reflows in relation to year 2023 257,152 7,154 264,306 45,471 309,777

Available Reflows in relation to year 2024 498,818 5,663 504,481 86,790 591,271

Total Available Reflows as at 31 December 2025 1,243,853 26,549 1,270,402 218,559 1,488,961

Total Available Reflows as at 31 December 2024 745,035 20,886 765,921 131,769 897,690

As per the Transfer Agreement, as of year 2024 and until 31 December 2027, the Facility shall inform the EC and the UK annually of the

Available Reflows. The available amounts shall be transferred to the EC and the UK upon receipt of the debit note. The above table

presents the split of Available Reflows by year. For Available Reflows payable please refer to the Note 14.

18 Commitments and contingent liabilities

in EUR'000 31.12.2025 31.12.2024

Commitments

Undisbursed loans 354,187 676,229

Undisbursed commitment in respect of shares and other variable yield securities 184,841 237,886

Interest subsidies and technical assistance 259,371 362,848

Contingent liabilities

Signed non-issued guarantees 2,500 2,500

Total commitments and contingent liabilities 800,899 1,279,463

19 Interest and similar income and expenses

The main components of interest and similar income are as follows:

in EUR'000 From 01.01.2025 From 01.01.2024

to 31.12.2025 to 31.12.2024

Cash and cash equivalents 38,549 56,083

Loans and advances 67,751 90,034

Interest subsidies 10,170 10,484

Total interest and similar income 116,470 156,601

The main components of interest and similar expenses are as follows:

in EUR'000 From 01.01. 2025 From 01.01. 2024

to 31.12.2025 to 31.12.2024

Derivative financial instruments -1,700 -1,805

Total interest and similar expenses -1,700 -1,805

Annual accounts of the European Development Fund 2025

144

20 Fee and commission income and expenses

The main components of fee and commission income are as follows:

in EUR'000 From 01.01.2025 From 01.01.2024

to 31.12.2025 to 31.12.2024

Fee and commission on loans and advances 4,070 -

Fee and commission on financial guarantees 33 20

Total fee and commission income 4,103 20

The main component of fee and commission expenses is as follows:

in EUR'000 From 01.01.2025 From 01.01.2024

to 31.12.2025 to 31.12.2024

Commission paid to third parties with regard to shares and other variable yield securities -88 -212

Total fee and commission expenses -88 -212

21 Net result on shares and other variable yield securities

The main components of the net result on shares and other variable yield securities are as follows:

in EUR'000 From 01.01.2025 From 01.01.2024

to 31.12.2025 to 31.12.2024

Net proceeds -483 -4,946

Dividend income 18,573 16,548

Net fair value change 6,787 -45,698

Net result on shares and other variable yield securities 24,877 -34,096

22 Net foreign exchange results

The main components of the net foreign exchange results are as follows:

in EUR'000 From 01.01.2025

to 31.12.2025 From 01.01.2024

to 31.12.2024

FX positions revaluation Cash and cash equivalents -11,405 6,821

Derivative financial instruments 108,761 -773

Loans and advances -108,386 78,744

Shares and other variable yield securities -58,444 23,199

Other 3,345 -2,231

Total FX positions revaluation -66,129 105,760

Realised results on FX swaps (cost of hedging) -24,574 -23,853

Net foreign exchange result -90,703 81,907

23 General administrative expenses

General administrative expenses represent the actual costs incurred by the EIB for managing the Facility less income generated from

standard appraisal fees directly charged by the EIB to clients of the Facility.

As at 31 December 2025 total general administrative expense amounted to EUR -19.9 million (31 December 2024: EUR -24.8 million).

Annual accounts of the European Development Fund 2025

145

24 Involvement with unconsolidated structured entities (in EUR’000)

Definition of a structured entity

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls

the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:

- Restricted activities;

- A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities,

provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and

rewards associated with the assets of the structured entity to investors;

- Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;

- Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks

(tranches).

Unconsolidated structured entities

The term 'unconsolidated structured entities' refers to all structured entities that are not controlled by the Facility and includes interests

in structured entities that are not consolidated.

Definition of Interests in structured entities:

IFRS 12 defines "interests" broadly to include any contractual or non-contractual involvement that exposes the reporting entity to

variability in returns from the performance of the entity. Examples of such interests include the holding of equity interests and other

forms of involvement such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other

entity. IFRS 12 states that a reporting entity does not necessarily have an interest in another entity solely because of a typical customer

supplier relationship.

The table below describes the types of structured entities that the Facility does not consolidate but in which it holds an interest.

Type of

structured entity

Nature and purpose Interest held by the Facility

Project Finance -

lending to Special

Purposes Vehicles

(“SPV”)

Project Finance Transactions (PF Operations) are transactions where the

Facility relies for the servicing of its debt on a borrower whose sole or

main source of revenue is generated by a single or limited number of

assets being financed by such debt or other pre-existing assets

contractually linked to the project. PF operations are often financed

through SPV.

Net disbursed amounts;

Interest income.

Venture capital

operations

The Facility finances venture capital and investment funds. Venture capital

and investment funds pool and manage money from investors seeking

private equity stakes in small and medium-size enterprises with strong

growth potential as well as financing infrastructure projects.

Investments in units/shares issued

by the venture capital entity;

Dividends received as dividend

income.

The table below shows the carrying amounts of unconsolidated structured entities in which the Facility has an interest at the reporting

date, as well as the Facility's maximum exposure to loss in relation to those entities. The maximum exposure to loss includes the

carrying amounts and the related undisbursed commitments.

31.12.2025 31.12.2024

Type of structured entity Caption Carrying amount

Maximum exposure to

loss

Carrying amount

Maximum exposure to

loss

Venture capital funds Shares and other variable yield securities

550,528 550,528 655,817 667,832

Total 550,528 550,528 655,817 667,832

No support is provided to structured entities by the Facility beyond the respective financing.

Annual accounts of the European Development Fund 2025

146

25 Impact financing envelope (in EUR’000)

In June 2013 the ACP-EU Joint Ministerial Council approved the new financial protocol for the 11th European Development Fund (EDF),

covering the period 2014-2020.

A new EUR 500m endowment was agreed for the Investment Facility, the so called ‘impact financing envelope’ or “IFE”, enabling the

Facility to support projects that promise a particularly high development impact whilst bearing the greater risks inherent in such

investments. This envelope presents new possibilities for enhancing the Facility’s private sector lending through investments in the

following instruments:

Social impact equity funds - promoted by an emerging population of private equity fund managers who put the alleviation of social or

environmental issues at the core of their funds' investment strategy but still target sustainability at the levels of both the fund and its

investee companies.

Loans to financial intermediaries - (e.g. microfinance institutions, local banks and credit unions) operating in ACP countries in which

the EIB cannot consider financing - in particular in local currency - under the existing credit risk guidelines, e.g. due to either high

country risks, currency volatility or lack of pricing benchmarks. The main objective of such loans is to fund projects with a high

developmental impact, especially in the field of support to micro and small enterprises (MSEs) and agriculture, which generally do not

qualify for IF financing.

Risk sharing facilitating instruments - which take the form of first loss guarantees ("first loss pieces") that facilitate risk sharing

operations of the EIB with local financial intermediaries (mainly commercial banks) for the benefit of underserved SMEs and small

projects that meet the Impact Financing Criteria in situations where a market gap has been identified in relation to the access of

SMEs/small projects to finance. The first loss pieces would be structured as a counter-guarantee in favour of senior guarantee tranches

funded by the EIB - under the Investment Facility - and by other International Financial Institutions/Development Financial Institutions,

thus generating a substantial leverage effect.

Direct financing - through debt (i.e. loans) or equity instruments in projects with sound and experienced promoters and high

developmental impacts, but that will, however, also entail higher expectations of losses and difficulties to recover the investment (equity

type risk with higher than usual expectation of losses). The EIB applies strict selection and eligibility criteria for this instrument, as these

projects, notwithstanding their high developmental impact, would not be able to meet acceptable financing criteria (i.e. low expectation

of recovering the investment or offsetting the losses through interest rates /equity returns).

The IFE also allows diversification into new sectors, such as health and education, agriculture and food security, and the development of

new and innovative risk-sharing instruments. In 2016, the IFE financing capacity was increased to EUR 800 million by making the IFE

partially revolving.

From a financial and accounting perspective the IFE forms part of the IF portfolio and is accounted for in the overall IF annual financial

statements.

Annual accounts of the European Development Fund 2025

147

25 Impact financing envelope (in EUR’000) (continued)

The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset:

Type of IFE investment

Caption Measurement

Gross carrying

amount as at

31.12.2025

Loss allowance / FV adj. amount as

at 31.12.2025

Carrying amount as

at 31.12.2025

Undisburse d amount

as at 31.12.2025

OFF BS ECL adj. amount

as at 31.12.2025

Loans to financial intermediaries

Loans and advances AC 33,388 -1,135 32,253 5,000 -352

Direct loan operations Loans and advances FVTPL 87,723 -68,525 19,198 30,738 -

Social impact equity funds

Shares and other variable yield securities

FVTPL 132,348 -17,966 114,382 21,438 -

Direct equity participations

Shares and other variable yield securities

FVTPL 53,994 82,626 136,620 14 -

Total 307,453 -5,000 302,453 57,190 -352

* For details, please refer to section subsequent measurement of Note 2.4.3.

Type of IFE investment

Caption Measurement

Gross carrying

amount as at

31.12.2024

Loss allowance/FV

adj. amount as at 31.12.2024

Carrying amount as

at 31.12.2024

Undisburse d amount

as at 31.12.2024

OFF BS ECL adj. amount

as at 31.12.2024

Loans to financial intermediaries

Loans and advances AC 59,209 - 59,209 5,000 -225

Direct loan operations Loans and advances FVTPL 158,880 - 158,880 56,669 -

Social impact equity funds

Shares and other variable yield securities

FVTPL 134,595 -1,559 133,036 34,686 -

Direct equity participations

Shares and other variable yield securities

FVTPL 59,843 61,686 121,529 14 -

Total 412,527 60,127 472,654 96,369 -225

* For details, please refer to section subsequent measurement of Note 2.4.3. The EIB is applying the General Mandate Risk Principles to IFE direct loan operations (excluding Loans to financial intermediaries), as envisaged in the EIB’s Credit and Equity Risk Guidelines, and to monitor and report the risk associated with the IFE direct loan operations on the basis of their fair value. According to the methodology, the Bank performs a Qualitative Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations.

Annual accounts of the European Development Fund 2025

148

26 Related party disclosures

The Facility has identified EIB as a related party in the context of IAS 24, as EIB has been mandated by the EU Member States to

manage the Facility in accordance with the provisions of the applicable legal framework, including the monitoring of its operations until

full reimbursement and provides key management personnel services (EIB Management Committee and EIB Audit Committee). In this

regard, EIB is entitled to recover its actual costs incurred for managing the Facility less income generated from standard appraisal fees

directly charged by the EIB to clients of the Facility. For more details on the remuneration please refer to the Note 23.

27 Subsequent events

There have been no material events after the balance sheet date that would require adjustment of, or disclosure in, the financial

statements as at 31 December 2025.