Emergency funds needed to save EU student exchange scheme

The EU's flagship student exchange programme is among several EU projects facing bankruptcy.

According to Alain Lamassoure, chairman of the European Parliament's budget committee, it and the research and innovation programmes would face a cash flow crisis within weeks.

Meanwhile, the European Social Fund had been "insolvent since the beginning of the month and cannot make repayments to member states," the French deputy said Tuesday.

The popular Erasmus scheme, which funds exchange years for university students, has been used by over 2.2 million students since it was launched in 1987 and manages an annual budget worth €450 million.

However, Fiorilli played down fears that students would suffer from the cash-flow crisis, insisting that all payments to students for January-September had already been made and 70 percent of payments for September-December as well.

He refused to comment on Lamassoure's claim of a €10 billion hole in the EU's finances, instead accusing member states of failing to live up to their promise to implement a 'Growth and Jobs' pact at the June EU summit. "If you're not going to support an SAB then you're not supporting growth," he said.

A supplementary amending budget would still require the backing of government ministers and the European Parliament. Failure to reach agreement will mean that the 2012 budget will carry into next year on a month-by-month basis.

The revelations come as MEPs are expected to defy demands by member states to cut the EU budget for 2013.

The budget committee is set to back the Commission's budget programme worth €138 billion, a €9 billion increase on 2012, which included a package of €49 billion in structural funds and €9 billion earmarked for research and development.

Helga Trupel, the budget spokesperson for the Greens/EFA group, told EUobserver that the Council's plans risked "derailing crucial EU programmes, like Erasmus and European Social Fund programmes, which have already been committed to."

The cuts plans were "totally at odds with the commitment of EU member states to tackle youth unemployment and strengthen social cohesion," she added.

However, most EU governments want the EU budget rise to be limited to 2.79 percent, with Germany, France and the UK among seven countries demanding a budget freeze.

Janusz Lewandowski, EU budget commissioner, last week described member states' position as "an absolute contradiction", commenting that the EU would "not be able to have a suitable policy on employment and competitiveness without structural funds and rural development funds."

Attention will then shift to the Strasbourg plenary session in three weeks, where the Parliament will adopt its final position.