# Official Journal C 177/19 J

| | ISSN 1725-2423 |
| --- | --- |
| Official Journal
  of the European Union | C 177 |
| | |
| English edition | Information and Notices | Volume 4819 July 2005 |

ISSN 1725-2423

Official Journal

of the European Union

C 177

English edition

Information and Notices

Volume 4819 July 2005

---

| Notice No | Contents | page |
| --- | --- | --- |
| | I   Information |
| | Council |
| 2005/C 177/1 | Council opinion of 8 March 2005 on the updated stability programme of Spain, 2004-2008 | 1 |
| 2005/C 177/2 | Council opinion of 8 March 2005 on the updated convergence programme of Cyprus, 2004-2008 | 4 |
| 2005/C 177/3 | Council opinion of 8 March 2005 on the updated convergence programme of Latvia, 2004-2007 | 7 |
| 2005/C 177/4 | Council opinion of 8 March 2005 on the updated convergence programme of Lithuania, 2004-2007 | 10 |
| 2005/C 177/5 | Council opinion of 8 March 2005 on the updated convergence programme of Hungary, 2004-2008 | 13 |
| 2005/C 177/6 | Council opinion of 8 March 2005 on the updated convergence programme of Slovenia, 2004-2007 | 17 |
| 2005/C 177/7 | Council opinion of 8 March 2005 on the updated convergence programme of the United Kingdom, 2003/04 to 2009/10 | 19 |
| | Commission |
| 2005/C 177/8 | Euro exchange rates | 22 |
| 2005/C 177/9 | Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty — Cases where the Commission raises no objections (
  1
  ) | 23 |
| 2005/C 177/0 | Prior notification of a concentration (Case COMP/M.3870 — Carlyle/Otor) — Candidate case for simplified procedure (
  1
  ) | 25 |
| 2005/C 177/1 | Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty — Cases where the Commission raises no objections (
  1
  ) | 26 |
| 2005/C 177/2 | Publication of an application for registration pursuant to Article 6(2) of Regulation (EEC) No 2081/92 on the protection of geographical indications and designations of origin | 28 |
| 2005/C 177/3 | Non-opposition to a notified concentration (Case COMP/M.3789 — Johnson Controls/Robert Bosch/Delphi SLI) (
  1
  ) | 33 |
| 2005/C 177/4 | Non-opposition to a notified concentration (Case COMP/M.3809 — Siemens/Flender) (
  1
  ) | 33 |

Notice No

Contents

page

I   Information

Council

2005/C 177/1

Council opinion of 8 March 2005 on the updated stability programme of Spain, 2004-2008

1

2005/C 177/2

Council opinion of 8 March 2005 on the updated convergence programme of Cyprus, 2004-2008

4

2005/C 177/3

Council opinion of 8 March 2005 on the updated convergence programme of Latvia, 2004-2007

7

2005/C 177/4

Council opinion of 8 March 2005 on the updated convergence programme of Lithuania, 2004-2007

10

2005/C 177/5

Council opinion of 8 March 2005 on the updated convergence programme of Hungary, 2004-2008

13

2005/C 177/6

Council opinion of 8 March 2005 on the updated convergence programme of Slovenia, 2004-2007

17

2005/C 177/7

Council opinion of 8 March 2005 on the updated convergence programme of the United Kingdom, 2003/04 to 2009/10

19

Commission

2005/C 177/8

Euro exchange rates

22

2005/C 177/9

Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty — Cases where the Commission raises no objections (
  1
  )

1

23

2005/C 177/0

Prior notification of a concentration (Case COMP/M.3870 — Carlyle/Otor) — Candidate case for simplified procedure (
  1
  )

1

25

2005/C 177/1

Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty — Cases where the Commission raises no objections (
  1
  )

1

26

2005/C 177/2

Publication of an application for registration pursuant to Article 6(2) of Regulation (EEC) No 2081/92 on the protection of geographical indications and designations of origin

28

2005/C 177/3

Non-opposition to a notified concentration (Case COMP/M.3789 — Johnson Controls/Robert Bosch/Delphi SLI) (
  1
  )

1

33

2005/C 177/4

Non-opposition to a notified concentration (Case COMP/M.3809 — Siemens/Flender) (
  1
  )

1

33

| | III   Notices |
| --- | --- |
| | Commission |
| 2005/C 177/5 | Call for proposals for indirect RTD actions under the specific programme for research, technological development and demonstration: Integrating and strengthening the European Research Area — Thematic sub-priority area: Global Change and Ecosystems — Call identifier: FP6-2005-Global-4 | 34 |

III   Notices

Commission

2005/C 177/5

Call for proposals for indirect RTD actions under the specific programme for research, technological development and demonstration: Integrating and strengthening the European Research Area — Thematic sub-priority area: Global Change and Ecosystems — Call identifier: FP6-2005-Global-4

34

| | |
| --- | --- |
| | (1)   Text with EEA relevance |

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(1)   Text with EEA relevance

1

| EN | |
| --- | --- |

EN

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I Information

Council

| 19.7.2005 | EN | Official Journal of the European Union | C 177/1 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/1

---

COUNCIL OPINION

of 8 March 2005

on the updated stability programme of Spain, 2004-2008

(2005/C 177/01)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated stability programme of Spain, which covers the period 2004-2008. The programme complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. However, the updated programme was presented three weeks beyond the 1 December deadline set in the code of conduct. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated stability programme of Spain, which covers the period 2004-2008. The programme complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. However, the updated programme was presented three weeks beyond the 1 December deadline set in the code of conduct.

| (2) | The macroeconomic scenario underlying the programme envisages real GDP growth to pick up from 2,6 % in 2004 to 2,9 % in 2005 and to average 3,0 % over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect rather favourable growth assumptions. The update also considers a ‘moderate scenario’ that projects annual GDP growth of 2,4 % in 2005 and 2,5 % thereafter. While the baseline scenario can be considered as relatively optimistic, the moderate growth scenario is on the low side. The programme's projections for inflation (based on the GDP deflator) appear realistic, but still remain relatively high thus posing risk to competitiveness. |
| --- | --- |

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth to pick up from 2,6 % in 2004 to 2,9 % in 2005 and to average 3,0 % over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect rather favourable growth assumptions. The update also considers a ‘moderate scenario’ that projects annual GDP growth of 2,4 % in 2005 and 2,5 % thereafter. While the baseline scenario can be considered as relatively optimistic, the moderate growth scenario is on the low side. The programme's projections for inflation (based on the GDP deflator) appear realistic, but still remain relatively high thus posing risk to competitiveness.

| (3) | According to the update, the general principle guiding fiscal policy is that of budgetary stability over the full economic cycle. This general principle could lead to budgetary deficits in the event of a cyclical slowdown, although the update does not target any deficit positions between 2005 and 2008 after the temporary deficit recorded in 2004, which reflected the impact of accounting adjustments. The update targets small, but rising surpluses; from 0,1 % of GDP in 2005 to 0,4 % of GDP at the end of the projection period. Since interest payments are expected to decrease only slightly over the programme period, the primary surplus is projected to remain fairly stable at around 2

  % of GDP. While the targets for the general government balance are broadly the same as in the previous update, the targeted primary surpluses are slightly less ambitious, which reflects higher interest payments projected in the 2003 update. Based on trend GDP calculated by the Commission services (2) from the projected growth rates in the update, and after netting out the effect of the 2004 one-off accounting adjustments, the cyclically-adjusted budget balance remains between 0,2 % and 0,5 % of GDP throughout the programme period. |
| --- | --- |

(3)

Formula

| (4) | The risks to the budgetary projections in the programme appear broadly balanced. In particular, although growth assumptions are somewhat favourable, the risk of sizeable deviations from the programme's objectives appears limited. |
| --- | --- |

(4)

The risks to the budgetary projections in the programme appear broadly balanced. In particular, although growth assumptions are somewhat favourable, the risk of sizeable deviations from the programme's objectives appears limited.

| (5) | In view of this risk assessment, the budgetary stance in the programme is sufficient to maintain the Stability and Growth Pact's medium-term objective of a position of close-to-balance throughout the programme period (with a temporary deviation in 2004 related to the one-off accounting adjustments). It also provides a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations over the period covered in the update. |
| --- | --- |

(5)

In view of this risk assessment, the budgetary stance in the programme is sufficient to maintain the Stability and Growth Pact's medium-term objective of a position of close-to-balance throughout the programme period (with a temporary deviation in 2004 related to the one-off accounting adjustments). It also provides a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations over the period covered in the update.

| (6) | The debt ratio is estimated to have declined to 49,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to further decline by 9 percentage points over the programme period, mainly on account of primary surpluses above 2 % of GDP. |
| --- | --- |

(6)

The debt ratio is estimated to have declined to 49,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to further decline by 9 percentage points over the programme period, mainly on account of primary surpluses above 2 % of GDP.

| (7) | The budgetary strategy outlined in the programme puts Spain in a relatively favourable position with regard to long-term sustainability of the public finances, in spite of the projected budgetary costs of an ageing population. However, given the risks surrounding such long-term expenditure projections and the large increase of pension expenditure projected in the very long term, current policies need to be supplemented by measures to prevent the emergence of unsustainable trends in public finances in the long run, in particular through a comprehensive reform of the pension system in line with the recommendations of the multi-partisan agreement ‘Pacto de Toledo’. |
| --- | --- |

(7)

The budgetary strategy outlined in the programme puts Spain in a relatively favourable position with regard to long-term sustainability of the public finances, in spite of the projected budgetary costs of an ageing population. However, given the risks surrounding such long-term expenditure projections and the large increase of pension expenditure projected in the very long term, current policies need to be supplemented by measures to prevent the emergence of unsustainable trends in public finances in the long run, in particular through a comprehensive reform of the pension system in line with the recommendations of the multi-partisan agreement ‘Pacto de Toledo’.

| (8) | Overall, the economic policies outlined in the update are partly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, as regards the recommended reform of the public pension system to ensure the long-term viability of the system has not been implemented yet. |
| --- | --- |

(8)

Overall, the economic policies outlined in the update are partly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, as regards the recommended reform of the public pension system to ensure the long-term viability of the system has not been implemented yet.

In view of the above assessment, the Council is of the opinion that Spain should adopt measures to prevent the emergence of unsustainable trends in public finances in the long run, in particular through a major reform of the pension system.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 | 2008 |
| --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | SP Dec 2004 | 2,6 | 2,9 | 3,0 | 3,0 | 3,0 |
| COM Oct 2004 | 2,6 | 2,6 | 2,7 | n.a. | n.a. |
| SP Jan 2004 | 3,0 | 3,0 | 3,0 | 3,0 | n.a. |
| HICP inflation (4)

  (%) | SP Dec 2004 | 3,8 | 3,7 | 3,5 | 3,2 | 2,8 |
| COM Oct 2004 | 3,1 | 2,9 | 2,5 | n.a. | n.a. |
| SP Jan 2004 | 2,9 | 2,6 | 2,6 | 2,6 | n.a. |
| General government balance
  (% of GDP) | SP Dec 2004 | – 0,8 | 0,1 | 0,2 | 0,4 | 0,4 |
| COM Oct 2004 | – 0,6 | – 0,1 | 0,0 | n.a. | n.a. |
| SP Jan 2004 | 0,0 | 0,1 | 0,2 | 0,3 | n.a. |
| Primary balance
  (% of GDP) | SP Dec 2004 | 1,5 | 2,2 | 2,2 | 2,3 | 2,3 |
| COM Oct 2004 | 1,7 | 2,1 | 2,0 | n.a. | n.a. |
| SP Jan 2004 | 2,6 | 2,5 | 2,6 | 2,6 | n.a. |
| Cyclically-adjusted balance
  (% of GDP) | SP Dec 2004 (3) | – 0,7 | 0,2 | 0,3 | 0,5 | 0,4 |
| COM Oct 2004 | – 0,7 | – 0,1 | 0,0 | n.a. | n.a. |
| SP Jan 2004 (3) | 0,1 | 0,1 | 0,2 | 0,3 | n.a. |
| Government gross debt
  (% of GDP) | SP Dec 2004 | 49,1 | 46,7 | 44,3 | 42,0 | 40,0 |
| COM Oct 2004 | 48,2 | 45,5 | 42,9 | n.a. | n.a. |
| SP Jan 2004 | 46,6 | 47,7 | 45,7 | 43,8 | n.a. |
| Stability programme (SP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations |

2004

2005

2006

2007

2008

Real GDP

(% change)

SP Dec 2004

2,6

2,9

3,0

3,0

3,0

COM Oct 2004

2,6

2,6

2,7

n.a.

n.a.

SP Jan 2004

3,0

3,0

3,0

3,0

n.a.

HICP inflation (4)

(%)

SP Dec 2004

3,8

3,7

3,5

3,2

2,8

COM Oct 2004

3,1

2,9

2,5

n.a.

n.a.

SP Jan 2004

2,9

2,6

2,6

2,6

n.a.

General government balance

(% of GDP)

SP Dec 2004

– 0,8

0,1

0,2

0,4

0,4

COM Oct 2004

– 0,6

– 0,1

0,0

n.a.

n.a.

SP Jan 2004

0,0

0,1

0,2

0,3

n.a.

Primary balance

(% of GDP)

SP Dec 2004

1,5

2,2

2,2

2,3

2,3

COM Oct 2004

1,7

2,1

2,0

n.a.

n.a.

SP Jan 2004

2,6

2,5

2,6

2,6

n.a.

Cyclically-adjusted balance

(% of GDP)

SP Dec 2004 (3)

– 0,7

0,2

0,3

0,5

0,4

COM Oct 2004

– 0,7

– 0,1

0,0

n.a.

n.a.

SP Jan 2004 (3)

0,1

0,1

0,2

0,3

n.a.

Government gross debt

(% of GDP)

SP Dec 2004

49,1

46,7

44,3

42,0

40,0

COM Oct 2004

48,2

45,5

42,9

n.a.

n.a.

SP Jan 2004

46,6

47,7

45,7

43,8

n.a.

Stability programme (SP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

(1)  OJ L 209, 2.8.1997, p. 1.

(2)  The commonly agreed methodology based on the production function approach is not yet applied to Spain, pending the resolution of estimation problems. Therefore, cyclically-adjusted balances are calculated based on the Hodrick-Prescott filter methodology.

(3)  The commonly agreed methodology based on the production function approach is not yet applied to Spain, pending the resolution of estimation problems. Therefore, cyclically-adjusted balances are calculated by Commission services based on the Hodrick-Prescott filter methodology from the information provided in the programme.

(4)  Inflation based on the GDP deflator for the stability programmes.

Sources:

Stability programme (SP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/4 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/4

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COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of Cyprus, 2004-2008

(2005/C 177/02)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated convergence programme of Cyprus, which covers the period 2004 to 2008. The programme complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated convergence programme of Cyprus, which covers the period 2004 to 2008. The programme complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’.

| (2) | The programme contains four different scenarios for the macroeconomic and budgetary projections: a ‘central’ scenario, an ‘upper’ scenario, ‘lower’ scenario and ‘higher interest rate’ scenario. The so-called ‘central’ scenario is considered as the reference scenario for assessing budgetary projections because, on the basis of currently available information, it seems to reflect plausible growth assumptions. It projects real GDP growth to pick up from 3,6 % in 2004 to 4,3 % on average over the rest of the programme period. The programme's projections for inflation also appear realistic. |
| --- | --- |

(2)

The programme contains four different scenarios for the macroeconomic and budgetary projections: a ‘central’ scenario, an ‘upper’ scenario, ‘lower’ scenario and ‘higher interest rate’ scenario. The so-called ‘central’ scenario is considered as the reference scenario for assessing budgetary projections because, on the basis of currently available information, it seems to reflect plausible growth assumptions. It projects real GDP growth to pick up from 3,6 % in 2004 to 4,3 % on average over the rest of the programme period. The programme's projections for inflation also appear realistic.

| (3) | On 5 July 2004, the Council decided that an excessive deficit existed in Cyprus and recommended that this be corrected by 2005. The update aims at reducing the government deficit to below the 3 % of GDP reference value in 2005, in line with the Council recommendation under Article 104(7). Compared to the May 2004 convergence programme the update maintains the deficit target for 2005 but sharpens the targets after 2005. It foresees the general government deficit to sharply decline from 4,8 % of GDP in 2004 to 2,9 % in 2005 and to decline more gradually thereafter, to 0,9 % in 2008. Since interest expenditures are projected to remain constant at around 3,5 % of GDP the path of the primary balance is similar to that of the overall balance, improving from - 1,3 % in 2004 to 2,5 % at the end of the programme period. To this end, the update envisages a series of mostly structural measures to restrain expenditure and to increase revenue. Expenditure limits contribute 2,3 percentage points to the overall deficit reduction of almost 4 percentage points of GDP over the period 2004-2008. The adjustment path reflects the government commitment to improve public finances with the intention of early adoption of the euro. This is the main factor behind the frontloading of the fiscal adjustment which would reduce the general government budget deficit by 1,9 percentage points of GDP in 2005. |
| --- | --- |

(3)

On 5 July 2004, the Council decided that an excessive deficit existed in Cyprus and recommended that this be corrected by 2005. The update aims at reducing the government deficit to below the 3 % of GDP reference value in 2005, in line with the Council recommendation under Article 104(7). Compared to the May 2004 convergence programme the update maintains the deficit target for 2005 but sharpens the targets after 2005. It foresees the general government deficit to sharply decline from 4,8 % of GDP in 2004 to 2,9 % in 2005 and to decline more gradually thereafter, to 0,9 % in 2008. Since interest expenditures are projected to remain constant at around 3,5 % of GDP the path of the primary balance is similar to that of the overall balance, improving from - 1,3 % in 2004 to 2,5 % at the end of the programme period. To this end, the update envisages a series of mostly structural measures to restrain expenditure and to increase revenue. Expenditure limits contribute 2,3 percentage points to the overall deficit reduction of almost 4 percentage points of GDP over the period 2004-2008. The adjustment path reflects the government commitment to improve public finances with the intention of early adoption of the euro. This is the main factor behind the frontloading of the fiscal adjustment which would reduce the general government budget deficit by 1,9 percentage points of GDP in 2005.

| (4) | The risks to the budgetary projections in the update appear broadly balanced. In particular, the main downside macroeconomic risks are the economic outlook in the US and the EU (notably the UK and Germany, main tourist source countries), tensions in the Middle East, and oil price developments (2). The update further indicates that several planned measures for 2005 onward are to be ‘studied’ further, which leaves some uncertainty. On the other hand, the estimated deficit outcome for 2004 has been better than expected. This positive result was achieved despite delays in a number of consolidation measures originally planned for 2004. These are now to be implemented in 2005, the budgetary impact of which is prudently considered as a safety margin for 2005 in case of e.g. delays in other measures, to keep the target of 2,9 % of GDP as an ‘upper limit’ while at the same time expenditure is to be kept under strict control. Although expenditure overruns were a main problem in the past, the consolidation measures now emphasize structural expenditure control, especially on government consumption. In addition, several of the planned measures for 2005 have now been successfully negotiated with the social partners. The Commission services autumn 2004 forecast projected a deficit of 3,0 % of GDP for 2005, given a slightly lower GDP growth forecast for that year. However, the update reiterates that ‘additional measures’ will be taken if lower growth would risk leading to a higher deficit in 2005. All this would facilitate the adjustment to 2,9 % of GDP for 2005. All in all, the planned deficit reduction for 2005 looks challenging but increasingly feasible. For the period 2006-2007 the adjustment path is slightly tightened to reach lower deficits compared to the previous May 2004 programme. However, it is not clear how this tightening will be achieved, given that the planned measures and GDP growth path have broadly remained the same. The adjustment path has to be underpinned by measures of a permanent nature. |
| --- | --- |

(4)

The risks to the budgetary projections in the update appear broadly balanced. In particular, the main downside macroeconomic risks are the economic outlook in the US and the EU (notably the UK and Germany, main tourist source countries), tensions in the Middle East, and oil price developments (2). The update further indicates that several planned measures for 2005 onward are to be ‘studied’ further, which leaves some uncertainty. On the other hand, the estimated deficit outcome for 2004 has been better than expected. This positive result was achieved despite delays in a number of consolidation measures originally planned for 2004. These are now to be implemented in 2005, the budgetary impact of which is prudently considered as a safety margin for 2005 in case of e.g. delays in other measures, to keep the target of 2,9 % of GDP as an ‘upper limit’ while at the same time expenditure is to be kept under strict control. Although expenditure overruns were a main problem in the past, the consolidation measures now emphasize structural expenditure control, especially on government consumption. In addition, several of the planned measures for 2005 have now been successfully negotiated with the social partners. The Commission services autumn 2004 forecast projected a deficit of 3,0 % of GDP for 2005, given a slightly lower GDP growth forecast for that year. However, the update reiterates that ‘additional measures’ will be taken if lower growth would risk leading to a higher deficit in 2005. All this would facilitate the adjustment to 2,9 % of GDP for 2005. All in all, the planned deficit reduction for 2005 looks challenging but increasingly feasible. For the period 2006-2007 the adjustment path is slightly tightened to reach lower deficits compared to the previous May 2004 programme. However, it is not clear how this tightening will be achieved, given that the planned measures and GDP growth path have broadly remained the same. The adjustment path has to be underpinned by measures of a permanent nature.

| (5) | In view of this risk assessment, the budgetary stance in the programme seems sufficient to reduce the deficit to below 3 % of GDP by 2005 and seems to provide a sufficient safety margin against breaching this threshold with normal macroeconomic fluctuations from 2006 onward. It is however not sufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved within the programme period. |
| --- | --- |

(5)

In view of this risk assessment, the budgetary stance in the programme seems sufficient to reduce the deficit to below 3 % of GDP by 2005 and seems to provide a sufficient safety margin against breaching this threshold with normal macroeconomic fluctuations from 2006 onward. It is however not sufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved within the programme period.

| (6) | The debt ratio is estimated to have reached 74,9 % of GDP in 2004, above the 60 % of GDP Treaty reference value. The programme projects the debt ratio to decline by almost 17 percentage points over the programme period. The evolution of the debt ratio is partly driven by debt-reducing stock-flow adjustments linked to the gradual phasing out of sinking funds, the accumulation of which had earlier on led to debt-increasing stock flow adjustments. |
| --- | --- |

(6)

The debt ratio is estimated to have reached 74,9 % of GDP in 2004, above the 60 % of GDP Treaty reference value. The programme projects the debt ratio to decline by almost 17 percentage points over the programme period. The evolution of the debt ratio is partly driven by debt-reducing stock-flow adjustments linked to the gradual phasing out of sinking funds, the accumulation of which had earlier on led to debt-increasing stock flow adjustments.

| (7) | Cyprus presents some risks with regard to long-term sustainability of the public finances, reflected by the projected budgetary costs of an ageing population. The strategy outlined in the update is mainly based on the budgetary consolidation in the next few years and additional reforms of pension and health care system to be implemented in the future. It is imperative to pursue the reform process in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term. |
| --- | --- |

(7)

Cyprus presents some risks with regard to long-term sustainability of the public finances, reflected by the projected budgetary costs of an ageing population. The strategy outlined in the update is mainly based on the budgetary consolidation in the next few years and additional reforms of pension and health care system to be implemented in the future. It is imperative to pursue the reform process in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term.

| (8) | The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, the fiscal consolidation programme aims to reduce the general government deficit within a multi-annual framework. The fiscal consolidation measures both on the expenditure and revenue side are mostly of a structural nature, and there is still some uncertainty surrounding the implementation of some of the planned consolidation measures. The deficit objective path, particularly for 2005, is ambitious but does not look implausible. |
| --- | --- |

(8)

The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, the fiscal consolidation programme aims to reduce the general government deficit within a multi-annual framework. The fiscal consolidation measures both on the expenditure and revenue side are mostly of a structural nature, and there is still some uncertainty surrounding the implementation of some of the planned consolidation measures. The deficit objective path, particularly for 2005, is ambitious but does not look implausible.

In view of the above assessment and in the light of the recommendations made by the Council under Article (104(7), the Council is of the opinion that Cyprus should:

| (i) | implement with vigour the measures envisaged in the updated convergence programme to bring the deficit below 3 % of GDP by 2005 and ensure through measures of a permanent nature that budgetary consolidation towards the medium term budgetary position of close to balance or in surplus is sustained after the excessive deficit has been corrected; |
| --- | --- |

(i)

implement with vigour the measures envisaged in the updated convergence programme to bring the deficit below 3 % of GDP by 2005 and ensure through measures of a permanent nature that budgetary consolidation towards the medium term budgetary position of close to balance or in surplus is sustained after the excessive deficit has been corrected;

| (ii) | ensure that the debt ratio will start to decline from 2005 onward; and |
| --- | --- |

(ii)

ensure that the debt ratio will start to decline from 2005 onward; and

| (iii) | pursue the reform process in the pension and health care system in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term. |
| --- | --- |

(iii)

pursue the reform process in the pension and health care system in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 | 2008 |
| --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP Dec2004 | 3,6 | 4,0 | 4,4 | 4,5 | 4,5 |
| COM Nov 2004 | 3,5 | 3,9 | 4,2 | n.a. | n.a. |
| CP May 2004 | 3,5 | 4,3 | 4,4 | 4,5 | n.a. |
| CPI inflation
  (%) | CP Dec2004 | 2,1 | 2,6 | 2,2 | 2,1 | 2,0 |
| COM Nov 2004 | 2,4 | 2,2 | 2,1 | n.a. | n.a. |
| CP May2004 | 2,0 | 2,0 | 2,0 | 2,0 | n.a. |
| General government balance
  (% of GDP) | CP Dec2004 | – 4,8 | – 2,9 | – 1,7 | – 1,5 | – 0,9 |
| COM Nov 2004 | – 5,2 | – 3,0 | – 2,4 | n.a. | n.a. |
| CPMay2004 | – 5,2 | – 2,9 | – 2,2 | – 1,6 | n.a. |
| Primary balance
  (% of GDP) | CP Dec2004 | – 1,3 | 0,7 | 1,8 | 2,0 | 2,5 |
| COM Nov 2004 | – 1,8 | 0,5 | 1,1 | n.a. | n.a. |
| CP May2004 | – 1,6 | 0,7 | 1,4 | 2,0 | n.a. |
| Government gross debt
  (% of GDP) | CP Dec2004 | 74,9 | 71,9 | 69,2 | 65,7 | 58,1 |
| COM Nov 2004 | 72,6 | 72,4 | 69,4 | n.a. | n.a. |
| CP May2004 | 75,2 | 74,8 | 71,5 | 68,4 | n.a. |
| Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations |

2004

2005

2006

2007

2008

Real GDP

(% change)

CP Dec2004

3,6

4,0

4,4

4,5

4,5

COM Nov 2004

3,5

3,9

4,2

n.a.

n.a.

CP May 2004

3,5

4,3

4,4

4,5

n.a.

CPI inflation

(%)

CP Dec2004

2,1

2,6

2,2

2,1

2,0

COM Nov 2004

2,4

2,2

2,1

n.a.

n.a.

CP May2004

2,0

2,0

2,0

2,0

n.a.

General government balance

(% of GDP)

CP Dec2004

– 4,8

– 2,9

– 1,7

– 1,5

– 0,9

COM Nov 2004

– 5,2

– 3,0

– 2,4

n.a.

n.a.

CPMay2004

– 5,2

– 2,9

– 2,2

– 1,6

n.a.

Primary balance

(% of GDP)

CP Dec2004

– 1,3

0,7

1,8

2,0

2,5

COM Nov 2004

– 1,8

0,5

1,1

n.a.

n.a.

CP May2004

– 1,6

0,7

1,4

2,0

n.a.

Government gross debt

(% of GDP)

CP Dec2004

74,9

71,9

69,2

65,7

58,1

COM Nov 2004

72,6

72,4

69,4

n.a.

n.a.

CP May2004

75,2

74,8

71,5

68,4

n.a.

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website:

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  It should also be noted that future economic developments in Cyprus remain subject to unusual uncertainty: In case of reunification, the economic situation of the entire island would fundamentally shift.

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/7 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/7

---

COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of Latvia, 2004-2007

(2005/C 177/03)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated convergence programme of Latvia, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. However, the ESA95 classification of data on the composition of the general government revenue and expenditure needs to be improved. Accordingly, Latvia is invited to achieve compliance with the requirements of the code of conduct. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated convergence programme of Latvia, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. However, the ESA95 classification of data on the composition of the general government revenue and expenditure needs to be improved. Accordingly, Latvia is invited to achieve compliance with the requirements of the code of conduct.

| (2) | The macroeconomic scenario underlying the programme envisages real GDP growth, estimated at 8,1 % in 2004, remaining strong over the rest of the programme period, averaging 6,6 % per year. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation appear slightly on the low side. |
| --- | --- |

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth, estimated at 8,1 % in 2004, remaining strong over the rest of the programme period, averaging 6,6 % per year. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation appear slightly on the low side.

| (3) | The programme update aims at keeping the deficit below the 3 % of GDP reference value in each programme year with the general government budget deficit gradually falling from an estimated 1,7 % of GDP in 2004 to 1,4 % of GDP in 2007. In 2005 both revenue and expenditure ratios increase sharply, linked to EU accession. Thereafter, the medium-term adjustment in public finances is based on a reduction of both the revenue and the expenditure ratios. The primary expenditure ratio falls mainly through lower ratios of transfers and subsidies while at the same time allowing for an increase in the investment ratio. The revenue ratio falls through tax reductions, mainly on income, lowering the tax burden moderately. |
| --- | --- |

(3)

The programme update aims at keeping the deficit below the 3 % of GDP reference value in each programme year with the general government budget deficit gradually falling from an estimated 1,7 % of GDP in 2004 to 1,4 % of GDP in 2007. In 2005 both revenue and expenditure ratios increase sharply, linked to EU accession. Thereafter, the medium-term adjustment in public finances is based on a reduction of both the revenue and the expenditure ratios. The primary expenditure ratio falls mainly through lower ratios of transfers and subsidies while at the same time allowing for an increase in the investment ratio. The revenue ratio falls through tax reductions, mainly on income, lowering the tax burden moderately.

| (4) | The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, assumptions about the tax intensity of economic activity seem somewhat pessimistic, suggesting that revenues could be better than expected. On the other hand, given the commitment of expenditures predicated on EU funding, the achievement of the deficit targets is conditional on the receipt of such funds in government revenues. Tight expenditure discipline (including in managing partly EU-funded projects) might be difficult given weaknesses in administrative capacity. |
| --- | --- |

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, assumptions about the tax intensity of economic activity seem somewhat pessimistic, suggesting that revenues could be better than expected. On the other hand, given the commitment of expenditures predicated on EU funding, the achievement of the deficit targets is conditional on the receipt of such funds in government revenues. Tight expenditure discipline (including in managing partly EU-funded projects) might be difficult given weaknesses in administrative capacity.

| (5) | In view of this risk assessment, the budgetary stance in the programme is insufficient to achieve the close to balance or surplus medium-term objective of the Stability and Growth Pact within the programme period. Furthermore, it may provide insufficient margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations. However, it is sufficient to maintain the debt-to-GDP ratio at a very low level. |
| --- | --- |

(5)

In view of this risk assessment, the budgetary stance in the programme is insufficient to achieve the close to balance or surplus medium-term objective of the Stability and Growth Pact within the programme period. Furthermore, it may provide insufficient margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations. However, it is sufficient to maintain the debt-to-GDP ratio at a very low level.

| (6) | The debt ratio is estimated at 14,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The slight increase in the debt ratio over the programme period, to 15,0 % of GDP in 2007, mainly results from persisting deficits, substantially offset by nominal GDP growth. |
| --- | --- |

(6)

The debt ratio is estimated at 14,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The slight increase in the debt ratio over the programme period, to 15,0 % of GDP in 2007, mainly results from persisting deficits, substantially offset by nominal GDP growth.

| (7) | The budgetary strategy outlined in the programme puts Latvia in a relatively favourable position with regard to long-term sustainability of the public finances, despite the projected budgetary costs of an ageing population. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillar, and the accumulation of assets in the funded pension scheme will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and on the budgetary impact of the pension reform. Reforms in the field of health and long-term care could, however, involve higher expenditures. A risk to sustainability may emerge in the long run. Latvia's relatively low tax ratio should, however, ease the accommodation of any such sustainability gap that may arise. |
| --- | --- |

(7)

The budgetary strategy outlined in the programme puts Latvia in a relatively favourable position with regard to long-term sustainability of the public finances, despite the projected budgetary costs of an ageing population. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillar, and the accumulation of assets in the funded pension scheme will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and on the budgetary impact of the pension reform. Reforms in the field of health and long-term care could, however, involve higher expenditures. A risk to sustainability may emerge in the long run. Latvia's relatively low tax ratio should, however, ease the accommodation of any such sustainability gap that may arise.

| (8) | The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines (BEPGs) in the area of public finances. Under the challenge to address the sizable current account deficit, Latvia was recommended to reduce the general government deficit in a credible and sustainable way within a multi-annual framework. In the light of the narrowing current account deficit foreseen in the programme, the lower-than-projected budget deficit in 2004 and the consolidation path foreseen in the update are in line with the recommendation of the BEPGs. However, this assessment is conditional on the favourable development of the external balance and is thus subject to further monitoring. Furthermore, as was pointed out in the Council Opinion on the programme of last May, assessment of the appropriate fiscal position is also dependent on demand pressures in the economy, even if it is difficult to determine the country's position in the business cycle; the assessment is also therefore conditional on macroeconomic policy being appropriate to consolidating the moderation in inflation from its recent peak. |
| --- | --- |

(8)

The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines (BEPGs) in the area of public finances. Under the challenge to address the sizable current account deficit, Latvia was recommended to reduce the general government deficit in a credible and sustainable way within a multi-annual framework. In the light of the narrowing current account deficit foreseen in the programme, the lower-than-projected budget deficit in 2004 and the consolidation path foreseen in the update are in line with the recommendation of the BEPGs. However, this assessment is conditional on the favourable development of the external balance and is thus subject to further monitoring. Furthermore, as was pointed out in the Council Opinion on the programme of last May, assessment of the appropriate fiscal position is also dependent on demand pressures in the economy, even if it is difficult to determine the country's position in the business cycle; the assessment is also therefore conditional on macroeconomic policy being appropriate to consolidating the moderation in inflation from its recent peak.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 |
| --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP Dec 2004 | 8,1 | 6,7 | 6,5 | 6,5 |
| COM Oct 2004 | 7,5 | 6,7 | 6,7 | n.a. |
| CP May 2004 | 6,7 | 6,7 | 6,5 | 6,5 |
| CPI inflation (2)

  (%) | CP Dec 2004 | 6,2 | 4,3 | 3,0 | 3,0 |
| COM Oct 2004 | 6,8 | 4,7 | 3,5 | n.a. |
| CP May 2004 | 4,5 | 3,7 | 3,0 | 3,0 |
| General government balance
  (% of GDP) | CP Dec 2004 | – 1,7 | – 1,6 | – 1,5 | – 1,4 |
| COM Oct 2004 | – 2,0 | – 2,8 | – 2,9 | n.a. |
| CP May 2004 | – 2,1 | – 2,2 | – 2,0 | – 2,0 |
| Primary balance
  (% of GDP) | CP Dec 2004 | – 0,9 | – 0,9 | – 0,8 | – 0,7 |
| COM Oct 2004 | – 1,2 | – 2,0 | – 2,0 | n.a. |
| CP May 2004 | – 1,2 | – 1,3 | – 1,2 | – 1,2 |
| Government gross debt
  (% of GDP) | CP Dec 2004 | 14,2 | 14,5 | 15,8 | 15,0 |
| COM Oct 2004 | 14,6 | 15,4 | 16,6 | n.a. |
| CP May 2004 | 16,2 | 16,8 | 17,3 | 17,7 |
| Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations |

2004

2005

2006

2007

Real GDP

(% change)

CP Dec 2004

8,1

6,7

6,5

6,5

COM Oct 2004

7,5

6,7

6,7

n.a.

CP May 2004

6,7

6,7

6,5

6,5

CPI inflation (2)

(%)

CP Dec 2004

6,2

4,3

3,0

3,0

COM Oct 2004

6,8

4,7

3,5

n.a.

CP May 2004

4,5

3,7

3,0

3,0

General government balance

(% of GDP)

CP Dec 2004

– 1,7

– 1,6

– 1,5

– 1,4

COM Oct 2004

– 2,0

– 2,8

– 2,9

n.a.

CP May 2004

– 2,1

– 2,2

– 2,0

– 2,0

Primary balance

(% of GDP)

CP Dec 2004

– 0,9

– 0,9

– 0,8

– 0,7

COM Oct 2004

– 1,2

– 2,0

– 2,0

n.a.

CP May 2004

– 1,2

– 1,3

– 1,2

– 1,2

Government gross debt

(% of GDP)

CP Dec 2004

14,2

14,5

15,8

15,0

COM Oct 2004

14,6

15,4

16,6

n.a.

CP May 2004

16,2

16,8

17,3

17,7

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  The programme presents only CPI inflation projections and not HICP.

Sources:

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/10 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/10

---

COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of Lithuania, 2004-2007

(2005/C 177/04)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated convergence programme of Lithuania, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Some required data related to external assumptions are not available and also some optional data are not provided, although this does not make more difficult the programme's evaluation. Accordingly, Lithuania is invited to achieve compliance with the data requirements of the code of conduct. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated convergence programme of Lithuania, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Some required data related to external assumptions are not available and also some optional data are not provided, although this does not make more difficult the programme's evaluation. Accordingly, Lithuania is invited to achieve compliance with the data requirements of the code of conduct.

| (2) | The macroeconomic scenario underlying the programme envisages real GDP growth to decelerate from 6,5 % in 2004 to 6,2 % on average over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation also appear realistic, although the projection for 2006 appears on the low side. |
| --- | --- |

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth to decelerate from 6,5 % in 2004 to 6,2 % on average over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation also appear realistic, although the projection for 2006 appears on the low side.

| (3) | The key objective of the medium-term fiscal strategy defined in the programme is the approximation to a cyclically balanced general government budget. The programme foresees the general government deficit to remain at 2,5 % of GDP in 2005 and to decline gradually thereafter to 1,5 % in 2007. The primary deficit is expected to improve marginally from 1,5 % of GDP in 2004 to 1,4 % in 2005, decreasing gradually afterwards to 0,5 % in 2007. Consolidation is planned to be mainly achieved by an increase in the revenue ratio from a low base, with the expenditure side also contributing from 2005. Revenues are expected to increase from 33 % of GDP in 2004 to 34,5 % in 2007, after peaking in 2006. Expenditure is foreseen to initially increase from 35,5 % of GDP in 2004 to 36,9 % in 2005, decreasing gradually to 36 % in 2007. A significant programme of public investment is being implemented, which lifts public investment from 3,4 % of GDP in 2004 to 5 % in 2007, resulting in an average public investment ratio over the programme period of about 4,6 % of GDP, against an EU-average of 2,4 % of GDP in 2004. When compared to the May 2004 programme, the deficit outcome for 2004 is estimated to have been lower than budgeted. The targets for 2005-2007 are maintained, despite a considerable downward revision of GDP growth. |
| --- | --- |

(3)

The key objective of the medium-term fiscal strategy defined in the programme is the approximation to a cyclically balanced general government budget. The programme foresees the general government deficit to remain at 2,5 % of GDP in 2005 and to decline gradually thereafter to 1,5 % in 2007. The primary deficit is expected to improve marginally from 1,5 % of GDP in 2004 to 1,4 % in 2005, decreasing gradually afterwards to 0,5 % in 2007. Consolidation is planned to be mainly achieved by an increase in the revenue ratio from a low base, with the expenditure side also contributing from 2005. Revenues are expected to increase from 33 % of GDP in 2004 to 34,5 % in 2007, after peaking in 2006. Expenditure is foreseen to initially increase from 35,5 % of GDP in 2004 to 36,9 % in 2005, decreasing gradually to 36 % in 2007. A significant programme of public investment is being implemented, which lifts public investment from 3,4 % of GDP in 2004 to 5 % in 2007, resulting in an average public investment ratio over the programme period of about 4,6 % of GDP, against an EU-average of 2,4 % of GDP in 2004. When compared to the May 2004 programme, the deficit outcome for 2004 is estimated to have been lower than budgeted. The targets for 2005-2007 are maintained, despite a considerable downward revision of GDP growth.

| (4) | The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, the government has shown a good track record in meeting the fiscal targets in recent years. The new growth assumptions are cautious and downside macroeconomic risks seem limited. The main risk to the fiscal projections stems from the uncertainty about the application of budgetary measures announced in the programme. In particular, the tax revenue target for 2005 might be difficult to achieve if compensatory measures for the abolition of the turnover tax were not introduced. A failure to execute foreseen measures constraining expenditure overruns could threaten the budgetary targets over the programme's period. Other risks stem from the relatively uncertain costs of the pension reform, the high outstanding contingent liabilities, budget arrears, outstanding liabilities related to the savings and real estate restitution obligations and spending related to the decommissioning of the Ignalina nuclear power plant. |
| --- | --- |

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, the government has shown a good track record in meeting the fiscal targets in recent years. The new growth assumptions are cautious and downside macroeconomic risks seem limited. The main risk to the fiscal projections stems from the uncertainty about the application of budgetary measures announced in the programme. In particular, the tax revenue target for 2005 might be difficult to achieve if compensatory measures for the abolition of the turnover tax were not introduced. A failure to execute foreseen measures constraining expenditure overruns could threaten the budgetary targets over the programme's period. Other risks stem from the relatively uncertain costs of the pension reform, the high outstanding contingent liabilities, budget arrears, outstanding liabilities related to the savings and real estate restitution obligations and spending related to the decommissioning of the Ignalina nuclear power plant.

| (5) | In the light of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations throughout the programme period, particularly in 2005. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved. Against the background of the strong economic performance and the large current account deficit, a prudent budgetary policy is needed, also in view of preventing potential risks of overheating. |
| --- | --- |

(5)

In the light of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations throughout the programme period, particularly in 2005. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved. Against the background of the strong economic performance and the large current account deficit, a prudent budgetary policy is needed, also in view of preventing potential risks of overheating.

| (6) | The debt ratio is estimated to have reached 20,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to remain at the same level in 2007, after peaking at 20,9 % in 2005. |
| --- | --- |

(6)

The debt ratio is estimated to have reached 20,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to remain at the same level in 2007, after peaking at 20,9 % in 2005.

| (7) | Lithuania appears to be in a relatively favourable position with regard to long-term sustainability of the public finances, of which the projected budgetary costs of an ageing population is an important element. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillars will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and the long-term budgetary impact of the pension reform. Nevertheless, risks related to the costs of the pension reform should be monitored. In addition, reform measures in the field of health-care could involve higher expenditures. However, Lithuania has a relatively low tax ratio: the sustainability gap that arises in the long-run could be addressed by raising it. |
| --- | --- |

(7)

Lithuania appears to be in a relatively favourable position with regard to long-term sustainability of the public finances, of which the projected budgetary costs of an ageing population is an important element. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillars will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and the long-term budgetary impact of the pension reform. Nevertheless, risks related to the costs of the pension reform should be monitored. In addition, reform measures in the field of health-care could involve higher expenditures. However, Lithuania has a relatively low tax ratio: the sustainability gap that arises in the long-run could be addressed by raising it.

| (8) | Overall, the economic policies outlined in the update are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. There are measures to use better-than-projected revenues and savings in budgeted EU co-financing for deficit reduction and limit expenditure overruns. The announced measures are not extended to savings made in items unrelated to EU co-financing. |
| --- | --- |

(8)

Overall, the economic policies outlined in the update are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. There are measures to use better-than-projected revenues and savings in budgeted EU co-financing for deficit reduction and limit expenditure overruns. The announced measures are not extended to savings made in items unrelated to EU co-financing.

In view of the above assessment, the Council is of the opinion that Lithuania should:

| i) | timely implement the tax measures announced by the Government in the convergence program (real estate tax, vehicle tax) to make further progress towards a close to balance budgetary position. This is necessary particularly in order to manage domestic demand pressures, which are currently fuelled by strong credit growth, and thereby prevent a deterioration of the current account deficit and acceleration of underlying inflation. |
| --- | --- |

i)

timely implement the tax measures announced by the Government in the convergence program (real estate tax, vehicle tax) to make further progress towards a close to balance budgetary position. This is necessary particularly in order to manage domestic demand pressures, which are currently fuelled by strong credit growth, and thereby prevent a deterioration of the current account deficit and acceleration of underlying inflation.

| ii) | implement strictly the budget for 2005 in order to reduce the risk of breaching the 3 % reference value; and |
| --- | --- |

ii)

implement strictly the budget for 2005 in order to reduce the risk of breaching the 3 % reference value; and

| iii) | use better-than-projected or additional revenues and unused expenditure items for deficit reduction. |
| --- | --- |

iii)

use better-than-projected or additional revenues and unused expenditure items for deficit reduction.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 |
| --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP January 2005 | 6,5 | 6,5 | 6,2 | 6,0 |
| COM October 2004 | 7,1 | 6,4 | 5,9 | n.a. |
| CP May 2004 | 7,0 | 7,3 | 6,6 | 6,3 |
| HICP (2) inflation
  (%) | CP January 2005 | 1,2 | 2,9 | 2,5 | 2,9 |
| COM October 2004 | 1,2 | 2,9 | 2,8 | n.a. |
| CP May 2004 | 0,9 | 2,0 | 2,1 | 2,5 |
| General government balance
  (% of GDP) | CP January 2005 | – 2,5 | – 2,5 | – 1,8 | – 1,5 |
| COM October 2004 | – 2,6 | – 2,5 | – 1,9 | n.a. |
| CP May 2004 | – 2,7 | – 2,5 | – 1,8 | – 1,5 |
| Primary balance
  (% of GDP) | CP January 2005 | – 1,5 | – 1,4 | – 0,8 | – 0,5 |
| COM October 2004 | – 1,4 | – 1,4 | – 0,9 | – 0,5 |
| CP May 2004 | – 1,3 | – 1,2 | – 0,6 | – 0,4 |
| Government gross debt
  (% of GDP) | CP January 2005 | 20,1 | 20,9 | 20,3 | 20,1 |
| COM October 2004 | 21,1 | 21,7 | 21,3 | n.a. |
| CP May 2004 | 22,4 | 22,2 | 21,4 | 21,0 |
| Convergence programme (CP); Commission services economic forecasts (COM) |

2004

2005

2006

2007

Real GDP

(% change)

CP January 2005

6,5

6,5

6,2

6,0

COM October 2004

7,1

6,4

5,9

n.a.

CP May 2004

7,0

7,3

6,6

6,3

HICP (2) inflation

(%)

CP January 2005

1,2

2,9

2,5

2,9

COM October 2004

1,2

2,9

2,8

n.a.

CP May 2004

0,9

2,0

2,1

2,5

General government balance

(% of GDP)

CP January 2005

– 2,5

– 2,5

– 1,8

– 1,5

COM October 2004

– 2,6

– 2,5

– 1,9

n.a.

CP May 2004

– 2,7

– 2,5

– 1,8

– 1,5

Primary balance

(% of GDP)

CP January 2005

– 1,5

– 1,4

– 0,8

– 0,5

COM October 2004

– 1,4

– 1,4

– 0,9

– 0,5

CP May 2004

– 1,3

– 1,2

– 0,6

– 0,4

Government gross debt

(% of GDP)

CP January 2005

20,1

20,9

20,3

20,1

COM October 2004

21,1

21,7

21,3

n.a.

CP May 2004

22,4

22,2

21,4

21,0

Convergence programme (CP); Commission services economic forecasts (COM)

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  CPI inflation for convergence programme data

Sources:

Convergence programme (CP); Commission services economic forecasts (COM)

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/13 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/13

---

COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of Hungary, 2004-2008

(2005/C 177/05)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 8 March 2005 the Council examined the updated convergence programme of Hungary, which covers the period 2004 to 2008. The programme complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. While it contains all the compulsory data (2), one optional figure (long-term health care expenditure) is missing.

The macroeconomic scenario underlying the update envisages real GDP growth to gradually increase from 3,9 % in 2004 to 4,6 % until the end of the programme period. On the basis of currently available information, this scenario seems to reflect somewhat favourable growth assumptions. The update's projections for inflation appear broadly realistic.

On 5 July 2004, the Council decided that an excessive deficit existed in Hungary and recommended that this be corrected by 2008. The update foresees the following deficit path: 4,4 % of GDP in 2004, 3,6 % in 2005, 2,9 % in 2006, 2,2 % in 2007 and 1,6 % of GDP in 2008. These figures are consistent with the decision by Eurostat of 23 September 2004, which allows a temporary reclassification until the March 2007 fiscal notification of second pillar pension funds inside the general government. The Hungarian authorities decided to avail themselves of this possibility and presented the general government deficit figures excluding the second pillar burden created by the 1998 pension reform (3). The update keeps the target date for the correction of the excessive deficit. After the estimated consolidation of 0,9 percentage point of GDP in 2004, the update projects an annual adjustment of some 0,6-0,7 percentage point for the remaining years. The update bases its consolidation strategy on a reduction of the expenditure ratio, underpinned by structural reforms, coupled with a more moderate decline in the revenue ratio. The most pronounced expenditure reduction would be carried out in 2005, mainly based on a 0,5 percentage point decline in the interest burden and a 1,7 percentage point reduction of public investment expenditure. The drop in public investment expenditure would be compensated by an increased recourse to PPP projects. The foreseen timeframe and quantification of the outer years' expenditure-reducing measures are not presented in a sufficiently detailed fashion. The adjustment path of the primary deficit would be similar to the general government deficit reduction path. The primary deficit would turn into a slight surplus in 2008 (including the burden of the pension reform).

The adjustment path described in the programme and in particular the deficit target for 2005 followed by a further adjustment of 2 percentage points of GDP can be considered appropriate to correct the excessive deficit by 2008 provided that it is backed by sufficient measures. However, the final target of 2,8 % of GDP (including the burden of the pension reform) only leaves a small safety margin, which might be reduced further because of a change in the starting position as there are still some uncertainties linked to the outcome of the 2004 budget (4). The budgetary projections in the programme appear to be on the upside: (i) As suggested by the Commission services Autumn 2004 forecast, the deficit targets for 2005 and 2006 seem to be subject to upward risks. For 2005, this takes into account that the Government has established an ‘emergency’ reserve package of 0,5 % of GDP against a possible overshooting of the 2005 target. While the existence of this reserve is welcome, the amount allocated to it seems insufficient, in view of the risks surrounding the Budget 2005. Furthermore, there are concerns that freeing of these reserves could occur too early in the year, thereby reducing the incentives for a rigorous implementation of the 2005 budget. Missing the 2005 and 2006 targets would put increased pressure on the adjustment in the years 2007 and 2008. (ii) Expenditure cuts are subject to risks since the reform measures included in the 2005 budget are not embedded in a comprehensive reform strategy. (iii) There are also concerns about the attainment of the expenditure and revenue targets, since the objectives set in previous years were missed by a large margin. Moreover, any possible cut in VAT rates in the framework of the ongoing tax reforms could increase the risk to revenues even if the intention was to compensate it by an increase in other rates; its timing would therefore require careful consideration and it would need to be made conditional upon the full achievement of deficit targets. (iv) There could also be a risk from the fact that VAT refunds related to economic activities in 2004 have been delayed, but the authorities have committed to accelerate these refunds so that they will not burden the 2005 budget. On the other hand, this strengthened control on VAT refunds initiated end-2004 might also contribute to a reduction of the expected shortfall of VAT revenues, which constitutes a downward risk.

In view of this assessment, there is a risk that the budgetary outcomes could be worse than projected in the update. Therefore, although the adjustment path contained in the programme and in particular the deficit target for 2005 followed by a further adjustment of 2 percentage points of GDP can be considered appropriate to correct the excessive deficit by 2008, the fiscal stance in the programme does not appear to be sufficient to implement this path and therefore may not ensure that the deficit is reduced to below 3 % of GDP by 2008. In order to make the adjustment path credible additional measures would be needed. In particular, it is paramount to meet the new 2005 target. In view of the above assessment, additional measures of at least Formula a percentage point of GDP would be appropriate.

The debt ratio is estimated to be 56,7 % of GDP in 2004 (it would reach 59,9 % of GDP including the burden of the pension reform, just below the 60 % of GDP Treaty reference value). The programme projects the debt ratio to decline by about 7 percentage points over the programme period. Risks to the debt ratio correspond to those for the deficit projections.

With regard to the long-term sustainability of the public finances, Hungary appears to be at some risk on grounds of the projected budgetary costs of an ageing population. Risks are in part related to the uncertainty regarding the long-term budgetary trends due to the lack of information on health-care expenditure projections. The strategy outlined in the programme is mainly based on the budgetary consolidation in the next few years and additional reform measures to be implemented in the future. The reformed pension system, including the introduction of the funded second pillar, contributes consistently to reducing the budgetary impact of ageing and to reducing risks of unsustainable public finances. However, it is important to pursue other reforms, particularly in the field of the health-care as well as to resolutely implement the planned budgetary consolidation in the medium-term.

The economic policies outlined in the programme are partly consistent with the country-specific broad economic policy guidelines in the area of public finances. The general government deficit was to be reduced ‘in a credible and sustainable way within a multi-annual framework in line with the decisions to be taken by the Council in the context of the budgetary surveillance exercise’. Although Hungary did implement a fiscal adjustment in 2004, it has not complied with the 104(7) recommendations of the Council of 5 July 2004 under the excessive deficit procedure, as decided by the Council on 18 January 2005 based on Article 104(8) of the Treaty.

In view of the above assessment and in the light of the recommendations made by the Council under Article 104(7) on 8 March 2005, the Council is of the opinion that Hungary should:

| (i) | take action in a medium-term framework in order to bring the deficit including the burden of the pension reform below 3 % of GDP by 2008 in a credible and sustainable manner, in particular through additional measures to achieve the deficit target for 2005 and a subsequent adjustment of 2 percentage points of GDP to correct the excessive deficit by 2008 and by seizing every opportunity to accelerate the fiscal adjustment; |
| --- | --- |

(i)

take action in a medium-term framework in order to bring the deficit including the burden of the pension reform below 3 % of GDP by 2008 in a credible and sustainable manner, in particular through additional measures to achieve the deficit target for 2005 and a subsequent adjustment of 2 percentage points of GDP to correct the excessive deficit by 2008 and by seizing every opportunity to accelerate the fiscal adjustment;

| (ii) | make the timing and implementation of any tax cuts conditional upon the achievement of the deficit targets of the convergence programme update submitted in December 2004; |
| --- | --- |

(ii)

make the timing and implementation of any tax cuts conditional upon the achievement of the deficit targets of the convergence programme update submitted in December 2004;

| (iii) | progress with the envisaged reforms of the public administration, health and education systems as committed also with a view to improving the long-term sustainability of the public finances. |
| --- | --- |

(iii)

progress with the envisaged reforms of the public administration, health and education systems as committed also with a view to improving the long-term sustainability of the public finances.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 | 2008 |
| --- | --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP Dec. 2004 | 3,9 | 4,0 | 4,2 | 4,3 | 4,6 |
| COM | 3,9 | 3,7 | 3,8 | n.a. | n.a. |
| CP May 2004 | 3,3-3,5 | 3,5-4,0 | cca.4 | 4-4,5 | 4,5-5,0 |
| HICP inflation
  (%) | CP Dec. 2004 | 6,8 | 4,5 | 4,0 | 3,5 | 3,0 |
| COM | 6,9 | 4,6 | 4,2 | n.a. | n.a. |
| CP May 2004 | cca.6.5 | cca.4.5 | cca.4 | cca.3.5 | cca.3 |
| General government balance
  (% of GDP) | CP Dec. 2004 (5) | – 4,4 | – 3,6 | – 2,9 | – 2,2 | – 1,6 |
| With pension reform (6) | – 5,3 | – 4,7 | – 4,1 | – 3,4 | – 2,8 |
| COM (7) | – 5,5 | – 5,2 | – 4,7 | n.a. | n.a. |
| CP May 2004 (8) | – 4,6 | – 4,1 | – 3,6 | – 3,1 | – 2,7 |
| Primary balance
  (% of GDP) | CP Dec. 2004 (5) | – 0,4 | 0,0 | 0,2 | 0,6 | 1,0 |
| With pension reform (6) | – 1,1 | – 0,9 | – 0,7 | – 0,3 | 0,1 |
| COM (7) | – 1,1 | – 1,2 | – 1,1 | n.a. | n.a. |
| CP May 2004 (8) | – 0,5 | – 0,2 | 0,1 | 0,3 | 0,4 |
| Government gross debt
  (% of GDP) | CP Dec. 2004 (5) | 56,7 | 55,5 | 53,0 | 50,6 | 48,3 |
| With pension reform (6) | 59,9 | 58,6 | 56,8 | 54,9 | 53,2 |
| COM (7) | 59,7 | 59,5 | 58,9 | n.a. | n.a. |
| CP May 2004 (8) | 59,4 | 57,9 | 56,8 | 55,6 | 53,7 |
| Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations. |

2004

2005

2006

2007

2008

Real GDP

(% change)

CP Dec. 2004

3,9

4,0

4,2

4,3

4,6

COM

3,9

3,7

3,8

n.a.

n.a.

CP May 2004

3,3-3,5

3,5-4,0

cca.4

4-4,5

4,5-5,0

HICP inflation

(%)

CP Dec. 2004

6,8

4,5

4,0

3,5

3,0

COM

6,9

4,6

4,2

n.a.

n.a.

CP May 2004

cca.6.5

cca.4.5

cca.4

cca.3.5

cca.3

General government balance

(% of GDP)

CP Dec. 2004 (5)

– 4,4

– 3,6

– 2,9

– 2,2

– 1,6

With pension reform (6)

– 5,3

– 4,7

– 4,1

– 3,4

– 2,8

COM (7)

– 5,5

– 5,2

– 4,7

n.a.

n.a.

CP May 2004 (8)

– 4,6

– 4,1

– 3,6

– 3,1

– 2,7

Primary balance

(% of GDP)

CP Dec. 2004 (5)

– 0,4

0,0

0,2

0,6

1,0

With pension reform (6)

– 1,1

– 0,9

– 0,7

– 0,3

0,1

COM (7)

– 1,1

– 1,2

– 1,1

n.a.

n.a.

CP May 2004 (8)

– 0,5

– 0,2

0,1

0,3

0,4

Government gross debt

(% of GDP)

CP Dec. 2004 (5)

56,7

55,5

53,0

50,6

48,3

With pension reform (6)

59,9

58,6

56,8

54,9

53,2

COM (7)

59,7

59,5

58,9

n.a.

n.a.

CP May 2004 (8)

59,4

57,9

56,8

55,6

53,7

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1.

(2)  The primary balance is not calculated according to the conventional definition.

(3)  Including the pension reform burden, the general government deficit path would be 5,3 %, 4,7 %, 4,1 %, 3,4 % and 2,8 % of GDP between 2004 and 2008.

(4)  There are accounting uncertainties related to agricultural subsidy payments which could reduce the difference between the cash based and the accrual based deficit, thereby increasing the accrual based deficit in 2004. If the refunds of VAT are accelerated, as was indicated by the Hungarian authorities, they might increase the deficit of 2004 by almost 0,7 percentage points.

(5)  The Hungarian authorities decided to use the transitional period granted by Eurostat to classify the second pillar pension funds inside the government sector. Compared to the May 2004 programme, this lowers the yearly figures for the government deficit by 0.9-1.2 percentage point between 2004 and 2008. The transitional period ends with the March 2007 notification.

(6)  These figures are not adjusted, i.e. they include the burden of the pension reform. They are presented for the sake of comparison with the previous programme and with the Commission services autumn 2004 forecast, and given that the 2007 and 2008 target will not benefit from this re-classification of the second pillar pension funds.

(7)  These Commission forecasts are non-adjusted figures, i.e. including the burden of the pension reform.

(8)  These figures included in the May 2004 Convergence programme of Hungary include the pension reform burden.

Sources:

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations.

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/17 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/17

---

COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of Slovenia, 2004-2007

(2005/C 177/06)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated convergence programme of Slovenia, which covers the period 2004 to 2007. The programme partly complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. Government accounts do not fully abide by ESA95 standards evidenced in the high share of ‘other’ revenue and expenditure as percentage of GDP. Therefore, Slovenia is invited to achieve full compliance with the data requirements. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated convergence programme of Slovenia, which covers the period 2004 to 2007. The programme partly complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. Government accounts do not fully abide by ESA95 standards evidenced in the high share of ‘other’ revenue and expenditure as percentage of GDP. Therefore, Slovenia is invited to achieve full compliance with the data requirements.

| (2) | On the basis of currently available information, the macroeconomic scenario underlying the programme seems to reflect plausible growth assumptions. It envisages real GDP growth, estimated at 4,0 % in 2004, to continue growing at around that level throughout the rest of the programme period. The projections for inflation appear attainable but risks remain. |
| --- | --- |

(2)

On the basis of currently available information, the macroeconomic scenario underlying the programme seems to reflect plausible growth assumptions. It envisages real GDP growth, estimated at 4,0 % in 2004, to continue growing at around that level throughout the rest of the programme period. The projections for inflation appear attainable but risks remain.

| (3) | The budgetary strategy underlying the programme aims at achieving sound public finances as defined by a budgetary position of close-to-balance, but not during the programme period. The programme envisages a gradual reduction of the general government deficit over the period covered, consistent with a sustained cut in the expenditure share as percentage of GDP. The revenue ratio, after falling steadily until 2006, rebounds towards the end of the programme period in view of the net positive budgetary impact of EU membership. According to the adjustment path, the deficit halves over the next four years, reaching just above 1 % in 2007. Compared with the previous programme, the current update broadly confirms the planned adjustment against a slightly more favourable macroeconomic scenario. |
| --- | --- |

(3)

The budgetary strategy underlying the programme aims at achieving sound public finances as defined by a budgetary position of close-to-balance, but not during the programme period. The programme envisages a gradual reduction of the general government deficit over the period covered, consistent with a sustained cut in the expenditure share as percentage of GDP. The revenue ratio, after falling steadily until 2006, rebounds towards the end of the programme period in view of the net positive budgetary impact of EU membership. According to the adjustment path, the deficit halves over the next four years, reaching just above 1 % in 2007. Compared with the previous programme, the current update broadly confirms the planned adjustment against a slightly more favourable macroeconomic scenario.

| (4) | The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, a plausible macroeconomic scenario supports the deficit targets. Furthermore, it is at the government's discretion to refuse claims for further expenditure to safeguard the deficit target should it be threatened by unfavourable conditions, in the manner exercised in 2004. In addition, the yearly loss of VAT revenue at 0,3 % of GDP budgeted for 2005-2007 may be overestimated, rendering the tax revenue projections overly cautious. On the other hand, the level of direct tax revenues after the adopted tax reform could be uncertain. At the same time, the outcome for 2007 is partly due to the new EU financial perspective 2007-2013, anticipating a significant rise in the net budgetary inflows from the EU budget. Moreover, there is a risk of expenditure overruns, particularly regarding pension outlays should the review of the current pension indexation formula, announced for 2006, lead to a loosening of the parameters. |
| --- | --- |

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, a plausible macroeconomic scenario supports the deficit targets. Furthermore, it is at the government's discretion to refuse claims for further expenditure to safeguard the deficit target should it be threatened by unfavourable conditions, in the manner exercised in 2004. In addition, the yearly loss of VAT revenue at 0,3 % of GDP budgeted for 2005-2007 may be overestimated, rendering the tax revenue projections overly cautious. On the other hand, the level of direct tax revenues after the adopted tax reform could be uncertain. At the same time, the outcome for 2007 is partly due to the new EU financial perspective 2007-2013, anticipating a significant rise in the net budgetary inflows from the EU budget. Moreover, there is a risk of expenditure overruns, particularly regarding pension outlays should the review of the current pension indexation formula, announced for 2006, lead to a loosening of the parameters.

| (5) | In view of this risk assessment, the budgetary stance in the programme may not provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations except for the final year of the programme. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close-to-balance is achieved by 2007. |
| --- | --- |

(5)

In view of this risk assessment, the budgetary stance in the programme may not provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations except for the final year of the programme. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close-to-balance is achieved by 2007.

| (6) | Gross government debt is relatively low: the debt ratio is estimated to have reached 30,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value, and to attain 29,7 % by 2007. |
| --- | --- |

(6)

Gross government debt is relatively low: the debt ratio is estimated to have reached 30,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value, and to attain 29,7 % by 2007.

| (7) | Slovenia appears to be at some risk with regard to the long-term sustainability of the public finances, of which the projected budgetary cost of an ageing population is an important element. The ongoing pension reform has had a positive budgetary impact but the projected increase in pension expenditure beyond 2020 remains very high. In addition, despite the introduction of some rationalisation measures of the health-care system in 2004, a further, substantial reform of the health-care system would contribute to the improvement of the long-term sustainability of the public finances. |
| --- | --- |

(7)

Slovenia appears to be at some risk with regard to the long-term sustainability of the public finances, of which the projected budgetary cost of an ageing population is an important element. The ongoing pension reform has had a positive budgetary impact but the projected increase in pension expenditure beyond 2020 remains very high. In addition, despite the introduction of some rationalisation measures of the health-care system in 2004, a further, substantial reform of the health-care system would contribute to the improvement of the long-term sustainability of the public finances.

In view of the above assessment, the Council is of the opinion that Slovenia should:

| (i) | seize all opportunities to accelerate the reduction of the general government deficit; |
| --- | --- |

(i)

seize all opportunities to accelerate the reduction of the general government deficit;

| (ii) | undertake further measures to improve the long-term sustainability of the public finances, including the reforms of the pension and health-care systems. |
| --- | --- |

(ii)

undertake further measures to improve the long-term sustainability of the public finances, including the reforms of the pension and health-care systems.

Comparison of key macroeconomic and budgetary projections

| | 2004 | 2005 | 2006 | 2007 |
| --- | --- | --- | --- | --- |
| Real GDP
  (% change) | CP January 2005 | 4,0 | 3,8 | 3,9 | 4,0 |
| COM October 2004 | 4,0 | 3,6 | 3,8 | n.a. |
| CP May 2004 | 3,6 | 3,7 | 3,8 | 3,9 |
| HICP inflation
  (%) | CP January 2005 (2) | 3,6 | 3,0 | 2,7 | 2,6 |
| COM October 2004 | 3,9 | 3,4 | 3,0 | n.a. |
| CP May 2004 (2) | 3,3 | 3,0 | 2,7 | 2,6 |
| General government balance
  (% of GDP) | CP January 2005 | – 2,1 | – 2,1 | – 1,8 | – 1,1 |
| COM October 2004 | – 2,3 | – 2,2 | – 1,9 | n.a. |
| CP May 2004 | – 1,9 | – 1,8 | – 1,5 | – 0,9 |
| Primary balance
  (% of GDP) | CP January 2005 | – 0,3 | – 0,4 | – 0,2 | 0,4 |
| COM October 2004 | – 0,3 | – 0,2 | – 0,1 | n.a. |
| CP May 2004 | – 0,3 | – 0,4 | – 0,2 | 0,4 |
| Government gross debt
  (% of GDP) | CP January 2005 | 30,2 | 30,7 | 30,9 | 29,7 |
| COM October 2004 | 30,9 | 30,8 | 30,6 | n.a. |
| CP May 2004 | 29,1 | 29,5 | 29,4 | 28,4 |
| Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM) |

2004

2005

2006

2007

Real GDP

(% change)

CP January 2005

4,0

3,8

3,9

4,0

COM October 2004

4,0

3,6

3,8

n.a.

CP May 2004

3,6

3,7

3,8

3,9

HICP inflation

(%)

CP January 2005 (2)

3,6

3,0

2,7

2,6

COM October 2004

3,9

3,4

3,0

n.a.

CP May 2004 (2)

3,3

3,0

2,7

2,6

General government balance

(% of GDP)

CP January 2005

– 2,1

– 2,1

– 1,8

– 1,1

COM October 2004

– 2,3

– 2,2

– 1,9

n.a.

CP May 2004

– 1,9

– 1,8

– 1,5

– 0,9

Primary balance

(% of GDP)

CP January 2005

– 0,3

– 0,4

– 0,2

0,4

COM October 2004

– 0,3

– 0,2

– 0,1

n.a.

CP May 2004

– 0,3

– 0,4

– 0,2

0,4

Government gross debt

(% of GDP)

CP January 2005

30,2

30,7

30,9

29,7

COM October 2004

30,9

30,8

30,6

n.a.

CP May 2004

29,1

29,5

29,4

28,4

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM)

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website:

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  CPI inflation for the convergence programme

Sources:

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM)

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/19 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/19

---

COUNCIL OPINION

of 8 March 2005

on the updated convergence programme of the United Kingdom, 2003/04 to 2009/10

(2005/C 177/07)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| (1) | On 8 March 2005 the Council examined the updated convergence programme of the United Kingdom, which covers the period 2003/04 to 2009/10. The programme complies partly with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Data relating to total expenditure and revenues, while based on ESA95 components, use differing aggregation methods to the harmonised measure; balances are not affected (2). The update also continues to treat the receipts from the sale of the UMTS spectrum as an annual income stream, rather than as the sale of an asset. Accordingly, the United Kingdom is invited to achieve full compliance with the data requirements. |
| --- | --- |

(1)

On 8 March 2005 the Council examined the updated convergence programme of the United Kingdom, which covers the period 2003/04 to 2009/10. The programme complies partly with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Data relating to total expenditure and revenues, while based on ESA95 components, use differing aggregation methods to the harmonised measure; balances are not affected (2). The update also continues to treat the receipts from the sale of the UMTS spectrum as an annual income stream, rather than as the sale of an asset. Accordingly, the United Kingdom is invited to achieve full compliance with the data requirements.

| (2) | The programme contains two different scenarios for the macroeconomic and budgetary projections: a central macroeconomic scenario; and a lower growth scenario based on an assumption of trend growth a quarter-percentage point weaker than in the central forecast; the latter underlies the public finance projections. The lower growth scenario is thus considered as the reference for assessing budgetary projections, and reflects broadly plausible assumptions. The scenario envisages real GDP growth in 2005 of 3 %, only slightly lower than the growth of 3

  % in 2004, before slowing to 2

  % by 2007/08. On the basis of currently available information, GDP growth in 2005 could be slower than that forecast. However, over the medium term, the trend growth assumption underlying the public finance projections is likely to prove a cautious estimate. The programme's projections for inflation also appear realistic. |
| --- | --- |

(2)

Formula

Formula

| (3) | The UK's fiscal policy framework is based on two domestic fiscal policy rules for the public sector: the ‘golden rule’, which aims to ensure that, over the course of the economic cycle, the government borrows only to finance net investment, and not to fund current expenditure; and the ‘sustainable investment rule’, which aims to keep public sector net debt at ‘a stable and prudent level’ below 40 % of GDP over the cycle. Within this framework, the updated programme projects a reduction in the deficit from an estimated 3,2 % of GDP in financial year 2003/04 to below the 3 % reference value in 2004/05 (the financial year being the reference period for assessing the UK's public finances under the Stability and Growth Pact). Thereafter the update projects a further gradual reduction in the deficit over the medium term, to a level of 1,7 % in 2008/09. The expenditure ratio continues to increase, in line with the government's policy priorities, but the expected increase in the revenue ratio would, if realised, lead to an overall improvement in the general government balance. Within the overall level of expenditure, a significant programme of public investment is being implemented, which aims to lift general government net investment from 1,9 % of GDP in 2004/05 to 2,4 % in 2007/08. Relative to the 2003 update, deficit projections for both this financial year and next have been revised upwards; beyond 2005/06, however, the medium-term projections contained in the update represent a slightly more rapid consolidation of the public finances than those in the previous update. |
| --- | --- |

(3)

The UK's fiscal policy framework is based on two domestic fiscal policy rules for the public sector: the ‘golden rule’, which aims to ensure that, over the course of the economic cycle, the government borrows only to finance net investment, and not to fund current expenditure; and the ‘sustainable investment rule’, which aims to keep public sector net debt at ‘a stable and prudent level’ below 40 % of GDP over the cycle. Within this framework, the updated programme projects a reduction in the deficit from an estimated 3,2 % of GDP in financial year 2003/04 to below the 3 % reference value in 2004/05 (the financial year being the reference period for assessing the UK's public finances under the Stability and Growth Pact). Thereafter the update projects a further gradual reduction in the deficit over the medium term, to a level of 1,7 % in 2008/09. The expenditure ratio continues to increase, in line with the government's policy priorities, but the expected increase in the revenue ratio would, if realised, lead to an overall improvement in the general government balance. Within the overall level of expenditure, a significant programme of public investment is being implemented, which aims to lift general government net investment from 1,9 % of GDP in 2004/05 to 2,4 % in 2007/08. Relative to the 2003 update, deficit projections for both this financial year and next have been revised upwards; beyond 2005/06, however, the medium-term projections contained in the update represent a slightly more rapid consolidation of the public finances than those in the previous update.

| (4) | There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. In both the short and medium terms, risks are present regarding the extent to which the recovery in corporation tax continues. Especially in the period of slower projected expenditure growth from 2006/07, government departments will need to adjust to tighter budgets, and thus might make use of accumulated unspent balances. From 2006/07, however, negative risks are countered by the relatively cautious macroeconomic projections. |
| --- | --- |

(4)

There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. In both the short and medium terms, risks are present regarding the extent to which the recovery in corporation tax continues. Especially in the period of slower projected expenditure growth from 2006/07, government departments will need to adjust to tighter budgets, and thus might make use of accumulated unspent balances. From 2006/07, however, negative risks are countered by the relatively cautious macroeconomic projections.

| (5) | In view of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with historical macroeconomic fluctuations at any point during the projection period. However, given the decreased volatility of the UK economy in recent years and the cautious approach on the growth assumptions underlying the public finance projections, the risk appears small in the outer years. It is insufficient to ensure that the Stability and Growth Pact's medium-term objective of budgetary position close to balance is achieved by 2009/10. At the same time, however, it has to be noted that the debt ratio is relatively low and the projected balances are affected by the implementation of the above-mentioned significant programme of public investment. |
| --- | --- |

(5)

In view of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with historical macroeconomic fluctuations at any point during the projection period. However, given the decreased volatility of the UK economy in recent years and the cautious approach on the growth assumptions underlying the public finance projections, the risk appears small in the outer years. It is insufficient to ensure that the Stability and Growth Pact's medium-term objective of budgetary position close to balance is achieved by 2009/10. At the same time, however, it has to be noted that the debt ratio is relatively low and the projected balances are affected by the implementation of the above-mentioned significant programme of public investment.

| (6) | The gross debt ratio is estimated to have reached 39,5 % of GDP in 2003/04, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to increase modestly by less than two percentage points over the period to 2009/10. |
| --- | --- |

(6)

The gross debt ratio is estimated to have reached 39,5 % of GDP in 2003/04, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to increase modestly by less than two percentage points over the period to 2009/10.

| (7) | The UK appears to be in a relatively favourable position with regard to the long-term sustainability of the public finances, despite the projected budgetary cost of an ageing population. The relatively low debt-to-GDP ratio and the strong emphasis that the UK authorities have placed, in existing policies, on long-term sustainability of the public finances are positive in this regard. Higher age-related expenditures cannot be excluded as there is a possibility of insufficient provision of private pensions which might have implications for the public finances, but the authorities are introducing the Pension Protection Fund, from April 2005, to protect members of private defined-benefit schemes where the sponsoring firm becomes insolvent and there are insufficient assets in the scheme to meet its liabilities. These measures are welcome, though their effectiveness is yet to be tested. The UK's relatively low tax ratio should ease the accommodation of any imbalances that may arise in the longer term. |
| --- | --- |

(7)

The UK appears to be in a relatively favourable position with regard to the long-term sustainability of the public finances, despite the projected budgetary cost of an ageing population. The relatively low debt-to-GDP ratio and the strong emphasis that the UK authorities have placed, in existing policies, on long-term sustainability of the public finances are positive in this regard. Higher age-related expenditures cannot be excluded as there is a possibility of insufficient provision of private pensions which might have implications for the public finances, but the authorities are introducing the Pension Protection Fund, from April 2005, to protect members of private defined-benefit schemes where the sponsoring firm becomes insolvent and there are insufficient assets in the scheme to meet its liabilities. These measures are welcome, though their effectiveness is yet to be tested. The UK's relatively low tax ratio should ease the accommodation of any imbalances that may arise in the longer term.

| (8) | The economic policies outlined in the programme are partly consistent with the country-specific recommendation on the public finances addressed to the UK in the 2004 update of the BEPGs, namely that the UK was recommended ‘in endeavouring to avoid the occurrence of an excessive deficit, to improve the cyclically-adjusted position to consolidate the public finances, consistent with a budgetary position of close to balance or in surplus in the medium term’. There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. Moreover, the planned slight expansionary stance in 2005/06 and the fiscal stance over the medium term are not fully in line with the recommendation in the BEPGs. |
| --- | --- |

(8)

The economic policies outlined in the programme are partly consistent with the country-specific recommendation on the public finances addressed to the UK in the 2004 update of the BEPGs, namely that the UK was recommended ‘in endeavouring to avoid the occurrence of an excessive deficit, to improve the cyclically-adjusted position to consolidate the public finances, consistent with a budgetary position of close to balance or in surplus in the medium term’. There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. Moreover, the planned slight expansionary stance in 2005/06 and the fiscal stance over the medium term are not fully in line with the recommendation in the BEPGs.

In view of the above assessment, the Council is of the opinion that the United Kingdom should

| (i) | ensure that the deficit is below 3 % of GDP in line with plans, and |
| --- | --- |

(i)

ensure that the deficit is below 3 % of GDP in line with plans, and

| (ii) | improve the cyclically-adjusted position to ensure that a budgetary position close to balance or in surplus is achieved and maintained over the medium term. |
| --- | --- |

(ii)

improve the cyclically-adjusted position to ensure that a budgetary position close to balance or in surplus is achieved and maintained over the medium term.

Comparison of key macroeconomic and budgetary projections

| 1. | Headline macroeconomic forecast |
| --- | --- |

1.

2004

2005

2006

2007

2008

Real GDP — headline forecast

(% change)

CP 12/2004

3Formula

3–3Formula

2Formula–3

2Formula–2Formula

n.a.

COM

3,3

2,8

2,8

n.a.

n.a.

CP 12/2003

3–3Formula

3–3Formula

2Formula–3

n.a.

n.a.

HICP inflation

(%)

CP 12/2004

1Formula

1Formula

2

2

n.a.

COM

1,4

1,9

2,0

n.a.

n.a.

CP 12/2003

1Formula

2

2

n.a.

n.a.

| 2. | Macroeconomic forecast underlying the public finances |
| --- | --- |

2.

2004/05

2005/06

2006/07

2007/08

2008/09

Real GDP — public finances (4)

(% change)

CP 12/2004

3Formula

3

2Formula

2Formula

2Formula

COM (5)

3,3

2,8

2,8

n.a.

n.a.

CP 12/2003

3Formula

2Formula

2Formula

2Formula

2Formula

HICP inflation

(%)

CP 12/2004

1Formula

1Formula

2

2

2

COM (5)

1,4

1,9

2,0

n.a.

n.a.

CP 12/2003

1Formula

2

2

2

2

General government balance (6)

(% of GDP)

CP 12/2004

– 2,9

– 2,8

– 2,3

– 2,1

– 1,7

COM (5)

– 2,8

– 2,6

– 2,4

n.a.

n.a.

CP 12/2003

– 2,7

– 2,5

– 2,2

– 2,1

– 1,9

Primary balance (7)

(% of GDP)

CP 12/2004

– 0,9

– 0,7

– 0,2

– 0,1

n.a.

COM (5)

– 0,9

– 0,6

– 0,4

n.a.

n.a.

CP 12/2003

– 0,5

– 0,4

n.a.

n.a.

n.a.

Cyclically-adjusted balance

(% of GDP)

CP 12/2004 (3)

– 2,8

– 2,9

– 2,3

– 2,0

– 1,6

COM (5)

– 2,7

– 2,4

– 2,1

n.a.

n.a.

CP 12/2003 (3)

– 2,4

– 2,4

– 2,2

– 2,0

– 1,8

Government gross debt

(% of GDP)

CP 12/2004

40,9

41,8

42,4

42,8

42,8

COM (5)

40,4

40,9

41,2

n.a.

n.a.

CP 12/2003

40,2

40,8

41,1

41,4

41,5

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website:

http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm

(2)  The UK authorities provided helpful explanations of the data in technical discussions with the Commission. Had these technical explanations been referred to in the update, the programme would have been considered to be broadly compliant with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’.

(3)  Commission services calculations on the basis of the information in the programme.

(4)  GDP forecast underlying the authorities' projections for the public finances; based on an estimate of trend growth one-quarter percentage point below the authorities' central view.

(5)  Commission data are on a calendar year basis (for example, calendar year 2004 corresponds to financial year 2004/05).

(6)  The UK authorities include, in their projections for the general government balance, annual receipts of around £1.0 billion from the sale of UMTS licences in 2000. Adjusting for this, to bring the projections onto an EDP basis, has the effect of subtracting around 0.1pp from the balance (i.e. increasing the deficit) in each year. All data shown in this table are given after this adjustment, made by the Commission services, to the data in the update.

(7)  The authorities provide primary balances excluding net interest rather than only interest payments as done by the Commission. Figures shown are as recalculated by the Commission services, based on the data reported in Table 4.4 of the programme update.

Sources:

Convergence programme (CP); Commission services autumn 2004 economic forecasts (COM); Commission services calculations

---

Commission

| 19.7.2005 | EN | Official Journal of the European Union | C 177/22 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/22

---

Euro exchange rates (1)

18 July 2005

(2005/C 177/08)

1 euro=

| | Currency | Exchange rate |
| --- | --- | --- |
| USD | US dollar | 1,2054 |
| JPY | Japanese yen | 135,29 |
| DKK | Danish krone | 7,4604 |
| GBP | Pound sterling | 0,68995 |
| SEK | Swedish krona | 9,373 |
| CHF | Swiss franc | 1,5601 |
| ISK | Iceland króna | 78,65 |
| NOK | Norwegian krone | 7,9515 |
| BGN | Bulgarian lev | 1,956 |
| CYP | Cyprus pound | 0,5738 |
| CZK | Czech koruna | 30,158 |
| EEK | Estonian kroon | 15,6466 |
| HUF | Hungarian forint | 246,48 |
| LTL | Lithuanian litas | 3,4528 |
| LVL | Latvian lats | 0,6961 |
| MTL | Maltese lira | 0,4293 |
| PLN | Polish zloty | 4,1141 |
| RON | Romanian leu | 3,5605 |
| SIT | Slovenian tolar | 239,48 |
| SKK | Slovak koruna | 38,989 |
| TRY | Turkish lira | 1,6089 |
| AUD | Australian dollar | 1,6108 |
| CAD | Canadian dollar | 1,469 |
| HKD | Hong Kong dollar | 9,3736 |
| NZD | New Zealand dollar | 1,7904 |
| SGD | Singapore dollar | 2,0354 |
| KRW | South Korean won | 1 247,29 |
| ZAR | South African rand | 8,0343 |
| CNY | Chinese yuan renminbi | 9,9765 |
| HRK | Croatian kuna | 7,303 |
| IDR | Indonesian rupiah | 11 818,95 |
| MYR | Malaysian ringgit | 4,5805 |
| PHP | Philippine peso | 66,99 |
| RUB | Russian rouble | 34,577 |
| THB | Thai baht | 50,398 |

Currency

Exchange rate

USD

US dollar

1,2054

JPY

Japanese yen

135,29

DKK

Danish krone

7,4604

GBP

Pound sterling

0,68995

SEK

Swedish krona

9,373

CHF

Swiss franc

1,5601

ISK

Iceland króna

78,65

NOK

Norwegian krone

7,9515

BGN

Bulgarian lev

1,956

CYP

Cyprus pound

0,5738

CZK

Czech koruna

30,158

EEK

Estonian kroon

15,6466

HUF

Hungarian forint

246,48

LTL

Lithuanian litas

3,4528

LVL

Latvian lats

0,6961

MTL

Maltese lira

0,4293

PLN

Polish zloty

4,1141

RON

Romanian leu

3,5605

SIT

Slovenian tolar

239,48

SKK

Slovak koruna

38,989

TRY

Turkish lira

1,6089

AUD

Australian dollar

1,6108

CAD

Canadian dollar

1,469

HKD

Hong Kong dollar

9,3736

NZD

New Zealand dollar

1,7904

SGD

Singapore dollar

2,0354

KRW

South Korean won

1 247,29

ZAR

South African rand

8,0343

CNY

Chinese yuan renminbi

9,9765

HRK

Croatian kuna

7,303

IDR

Indonesian rupiah

11 818,95

MYR

Malaysian ringgit

4,5805

PHP

Philippine peso

66,99

RUB

Russian rouble

34,577

THB

Thai baht

50,398

---

(1)

Source: reference exchange rate published by the ECB.

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/23 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/23

---

Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty

Cases where the Commission raises no objections

(2005/C 177/09)

(Text with EEA relevance)

Date of adoption of the decision:

Member State: Italy (Tuscany)

Aid No: N 7/2004

Title: Assistance for fisheries.

Objective: Aid for the fisheries and aquaculture sector.

Legal basis:

Legge regionale del 23 dicembre 2003.

Budget: EUR 4,39 million

Duration: Three years

Rate of aid/amount: The rates laid down in Regulation (EC) No 2792/1999.

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: Greece

Aid No: N 105/2004

Title: Amendments to TANEO risk capital fund

Objective: Fund of funds aimed at investing with private sector investors, in new venture capital funds, which in turn will invest in new economy SMEs, preferably at their start-up or early stage

Legal basis: Ν.2843/2000 (ΦΕΚ, τεύχος Α' αρ. 219) περί εκσυγχρονισμού των χρηματιστηριακών συναλλαγών, εισαγωγή εταιριών επενδύσεων στην ποντοπόρο ναυτιλία στο Χρηματιστήριο Αξιών Αθηνών και άλλων

ΑΡΘΡΟ 28 (όπως τροποποιήθηκε από το άρθρο 8 του Ν.2992/2002 (ΦΕΚ, τεύχος Α' αρ. 54) περί ενίσχυσης της κεφαλαιαγοράς, ανάπτυξης της επιχειρηματικότητας και άλλων διατάξεων)

Budget: EUR 45 million

Duration: Until 2016

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption of the decision:

Member State: Italy

Aid No: N 180/2004

Title: R&D support to investments in certain sectors (meta-distretti) in Regione Lombardia

Objective: The scheme amends the original N 311/2003 aid scheme and extends its scope by (1) adding a new industrial sector (Information and Communication technology, ICT) and (2) covering a larger number of beneficiaries — initially limited to SMEs — which now include public/private consortia of SMEs, large enterprises, Universities, EU research bodies and national foundations

Legal basis:

Legge regionale del 24.03.2003 n. 3 art. 2, comma 5 ‘Modifiche a leggi regionali in material di organizzazione, sviluppo economico, territorio e seervizi alla persona’

Budget: The total budget of the scheme will presumably be of EUR 90 to 110 million.

Aid intensity or amount: For fundamental research: max. 100 %; for industrial research: max. 50 %; for pre-competitive development: max 25 %; for study costs preparatory to industrial research: max 75 %, for studies preparatory to pre-competitive development activities: max. 50 %.

The aid intensity can be increased by max: 10 percentage points, as the aid is to be given to SMEs; 5 percentage points, as the aid is to be given to enterprises in 87(3)(c) assisted Areas; 25 percentage points where the project also involves effective cross-border cooperation and where its results are widely disseminated; 15 percentage points if the research project is in accordance with the objectives of a specific project or programme undertaken as part of the Community's current framework programme for R&D; 10 percentage points in case the project involves effective cross-border cooperation between independent partners and cooperation projects reflecting point 5.10.4. of the R&D framework.

Altogether, including top-ups, not exceeding 75 % for industrial research and 50 % for pre-competitive development

Duration: The scheme has a maximum duration of 10 years.

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: Netherlands

Case No: N 222/2004

Title: Single Opportunity Scheme and demonstration projects

Objective: To stimulate energy transition experiments and innovative energy demonstration projects

Legal basis:

Kaderwet EZ-subsidies (Staatsblad 1997, 638)

Budget: EUR 225 million

Intensity or amount: Up to 50 %

Duration: 10 years for demonstration projects and 5 years for transition experiments

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/25 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/25

---

Prior notification of a concentration

(Case COMP/M.3870 — Carlyle/Otor)

Candidate case for simplified procedure

(2005/C 177/10)

(Text with EEA relevance)

| 1. | On 11 July 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertakings Carlyle Luxembourg Holding 1 Sarl and Carlyle Luxembourg Holding 2 Sarl (together ‘Carlyle funds’, Luxembourg) controlled by the Carlyle Group (‘Carlyle’, United States) acquire within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of the undertaking Otor Finance (‘Otor’, France) by way of conversion of bonds into shares. |
| --- | --- |

1.

On 11 July 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertakings Carlyle Luxembourg Holding 1 Sarl and Carlyle Luxembourg Holding 2 Sarl (together ‘Carlyle funds’, Luxembourg) controlled by the Carlyle Group (‘Carlyle’, United States) acquire within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of the undertaking Otor Finance (‘Otor’, France) by way of conversion of bonds into shares.

| 2. | The business activities of the undertakings concerned are:






  — | for Carlyle funds: investment funds, |
| --- | --- | --- |

2.

The business activities of the undertakings concerned are:

—

for Carlyle funds: investment funds,

| — | for Carlyle: investment group, |
| --- | --- |

—

for Carlyle: investment group,

| — | for Otor: corrugated paper and board for packaging. |
| --- | --- |

—

for Otor: corrugated paper and board for packaging.

| 3. | On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice. |
| --- | --- |

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

| 4. | The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.
  Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference number COMP/M.3870 — Carlyle/Otor, to the following address:





  European Commission |
| --- | --- |
| Directorate-General for Competition |
| Merger Registry |
| J-70 |
| B-1049 Brussels |

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference number COMP/M.3870 — Carlyle/Otor, to the following address:

European Commission

Directorate-General for Competition

Merger Registry

J-70

B-1049 Brussels

---

(1)  OJ L 24, 29.1.2004, p. 1.

(2)  OJ C 56, 5.3.2005, p. 32.

---

| 19.7.2005 | EN | Official Journal of the European Union | C 177/26 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/26

---

Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty

Cases where the Commission raises no objections

(2005/C 177/11)

(Text with EEA relevance)

Date of adoption:

Member State: Germany

Aid No: N 3/04

Title: R&D Programme ‘WING’

Objective: To support R&D projects in the field of new materials

Legal basis:

Haushaltsgesetz, Einzelplan 30, Kapitel 3006

Budget: EUR 85 million per year

Intensity or amount:

| | for fundamental research: max. 100 %; |
| --- | --- |

for fundamental research: max. 100 %;

| | for industrial research: max. 50 %; |
| --- | --- |

for industrial research: max. 50 %;

| | for precompetitive development: max. 25 %; |
| --- | --- |

for precompetitive development: max. 25 %;

| | plus additional 10 %-points for SMEs; |
| --- | --- |

plus additional 10 %-points for SMEs;

| | plus additional 10 %-points regional bonus; |
| --- | --- |

plus additional 10 %-points regional bonus;

| | plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework; |
| --- | --- |

plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework;

| | altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development |
| --- | --- |

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

Duration: until 31.12.2008

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: Germany

Aid No: N 32/04

Title: Aid Programme ‘Aid for the use of renewable energies’

Objective: More efficient generation and use of energy as well as energy saving, climate protection

Legal basis:

Richtlinie des BMU zur Förderung von Maßnahmen zur Nutzung erneuerbarer Energien i.V.m. Haushaltsgesetz des Bundes

Budget: Max. EUR 40 million per year for enterprises

Intensity or amount: Up to 40 % of eligible costs

Duration: until 31.12.2006

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: The Netherlands

Case No: N 101/2004

Title: EOS Energy Research

Objective: To support national and international Research and Development projects in the field of energy research.

Legal basis:

Kaderwet EZ subsidies (Staatsblad 1997, 638)

Budget: EUR 106 million

Intensity or amount: 50 % to 100 %

Duration: 10 years

Other information: Annual report

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: Germany (Berlin)

Aid No: N 574/03

Title: R&D Programme ‘ProFit’

Objective: To support R&D projects carried out in Berlin and consequently support structural change in its economy

Legal basis:

§§ 23 und 44 Landeshaushaltsordnung Berlin i.V.m. Programmrichtlinien

Budget: EUR 10 million per year

Intensity or amount:

| | for fundamental research: max. 100 %; |
| --- | --- |

for fundamental research: max. 100 %;

| | for industrial research: max. 50 %; |
| --- | --- |

for industrial research: max. 50 %;

| | for precompetitive development: max. 25 %; |
| --- | --- |

for precompetitive development: max. 25 %;

| | plus additional 10 %-points for SMEs; |
| --- | --- |

plus additional 10 %-points for SMEs;

| | plus additional 5 %-points regional bonus; |
| --- | --- |

plus additional 5 %-points regional bonus;

| | plus additional 10 %-points pursuant to point 5.10.4. b) R&D-framework; |
| --- | --- |

plus additional 10 %-points pursuant to point 5.10.4. b) R&D-framework;

| | altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development |
| --- | --- |

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

Duration: until 31.12.2006

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

Date of adoption:

Member State: Germany

Aid No: N 602/03

Title: R&D Programme ‘Microsystems’

Objective: To support R&D projects in the field of Microsystems

Legal basis:

Haushaltsgesetz, Einzelplan 30, Kapitel 3006

Budget: EUR 53 to 60 million per year

Intensity or amount:

| | for fundamental research: max. 100 %; |
| --- | --- |

for fundamental research: max. 100 %;

| | for industrial research: max. 50 %; |
| --- | --- |

for industrial research: max. 50 %;

| | for precompetitive development: max. 25 %; |
| --- | --- |

for precompetitive development: max. 25 %;

| | plus additional 10 %-points for SMEs; |
| --- | --- |

plus additional 10 %-points for SMEs;

| | plus additional 10 %-points regional bonus; |
| --- | --- |

plus additional 10 %-points regional bonus;

| | plus additional 15 %-points pursuant to point 5.10.3 first subparagraph; |
| --- | --- |

plus additional 15 %-points pursuant to point 5.10.3 first subparagraph;

| | plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework; |
| --- | --- |

plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework;

| | altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development |
| --- | --- |

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

Duration: until 31.12.2009

The authentic text(s) of the decision, from which all confidential information has been removed, can be found at:

http://europa.eu.int/comm/secretariat_general/sgb/state_aids/

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/28 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/28

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Publication of an application for registration pursuant to Article 6(2) of Regulation (EEC) No 2081/92 on the protection of geographical indications and designations of origin

(2005/C 177/12)

This publication confers the right to object to the application pursuant to Articles 7 and 12d of the abovementioned Regulation. Any objection to this application must be submitted via the competent authority in a Member State, in a WTO member country or in a third country recognized in accordance with Article 12(3) within a time limit of six months from the date of this publication. The arguments for publication are set out below, in particular under 4.6, and are considered to justify the application within the meaning of Regulation (EEC) No 2081/92.

SUMMARY

COUNCIL REGULATION (EEC) No 2081/92

‘ANTEQUERA’

No CE: ES/00327/26.11.2003

PDO (X) PGI ( )

This note is a summary produced for information. For full details, interested parties and in particular the producers of the products covered by the PDO and the PGI in question are invited to consult the full version of the specifications at national services and associations or at the competent services of the European Commission (1).

1.   Responsible department in the Member State:

| Name: | Subdirección General de Sistemas de Calidad Diferenciada. Dirección General de Alimentación. Secretaria General de Agricultura y Alimentación del Ministerio de Agricultura, Pesca y Alimentación de España. |
| --- | --- |
| Address: | Paseo Infanta Isabel, 1, E-28071 Madrid |
| Tel.: | (34) 91 347 53 94 |
| Fax: | (34) 91 347 54 10 |

Name:

Subdirección General de Sistemas de Calidad Diferenciada. Dirección General de Alimentación. Secretaria General de Agricultura y Alimentación del Ministerio de Agricultura, Pesca y Alimentación de España.

Address:

Paseo Infanta Isabel, 1, E-28071 Madrid

Tel.:

(34) 91 347 53 94

Fax:

(34) 91 347 54 10

2.   Group:

| 2.1 | Name: |
| --- | --- |

2.1

Name:

OLEICOLA HOJIBLANCA DE MALAGA, S.C.A. DE 2o GRADO

| 2.2 | Address: |
| --- | --- |

2.2

Address:

| Carretera de Córdoba, s/n |
| --- |
| E-29200 Antequera (Málaga) España |
| Aptdo. Correos no 172 |

Carretera de Córdoba, s/n

E-29200 Antequera (Málaga) España

Aptdo. Correos no 172

Tel.:

(34) 52 84 14 51

Fax:

(34) 52 84 03 59

| 2.3 | Composition: |
| --- | --- |

2.3

Composition:

Producer/processor (X) Other ( )

3.   Type of product:

Extra virgin olive oil — Class 1.5 — Oils and fats.

4.   Specification:

(Summary of requirements under Article 4(2))

4.1   Name: ‘Antequera’

4.2   Description: Extra virgin olive oil, obtained from olives (Olea europea, L.) of the varieties Hojiblanca, Picual or Marteño, Arbequina, Lechín de Sevilla or Zorzaleño, Gordal de Archidona, Picudo, Verdial de Vélez-Málaga and Verdial de Huévar. Hojiblanca is the main variety.

These are all moderately stable oils thanks to their high concentrations of tocopherols, a typical property of Hojiblanca oils. This makes Antequera oils rich in vitamin E.

They have an ideal fatty acid content for a balanced diet. This is due as much to the Hojiblanca variety as to the geographical area. It contains high levels of oleic acid, average levels of linoleic acid and a high level of unsaturated fats in relation to saturated fats.

The fraction of unsaponifiable matter of Antequera oils is notable for high levels of methyl sterols, more than 30 mg per 100 g of oil.

As regards their organoleptic properties, the oils are light in the mouth. They present a range of fruity aromas of green olives, other ripe fruits, almonds, banana and fresh grass. The intensities of the fruit aromas vary from medium to high. The degree of bitterness and spiciness also varies from light to medium, perfectly complementing the slightly sweet tastes.

The colour varies from golden yellow to greenish-yellow, depending on when and where in the area the olives were harvested.

The oils covered by the PDO must be extra virgin and of one of the following types, based on their organoleptic and physical/chemical properties:

‘Intense taste’ — olive oil presenting the most intense organoleptic properties.

‘Smooth taste’ — olive oil presenting organoleptic properties of average intensity.

Both types have the following maximum permitted values:

4.3   Geographical area: The oils are produced in the natural area formed by the Antequera Depression, one of the westernmost Andalusian depressions. In the north it borders the provinces of Córdoba and Sevilla, in the east the provinces of Sevilla and Cadiz and in the west that of Granada. Its southern limit is bounded by parts of the Penibética mountain range, which separate it from the Montes de Málaga, Hoyas in Valle del Guadalhorce and Serranía de Ronda, all districts of the province of Málaga.

This area comprises all the land in the following municipalities of the province of Málaga: Alameda, Almargen, Antequera, Archidona, Campillos, Cañete La Real, Cuevas Bajas, Cuevas de San Marcos, Fuente de Piedra, Humilladero, Mollina, Sierra de Yeguas, Teba, Villanueva de Algaidas, Villanueva del Rosario, Villanueva del Trabuco and Villanueva de Tapia, and the municipality of Palenciana in the province of Córdoba.

The product is processed and bottled in the same area.

4.4   Proof of origin: The olives come from authorised varieties grown on plantations registered for the Designation of Origin. The oil is obtained from mills in the production area which are also registered for the PDO. It is stored in registered mills and bottling plants which have suitable facilities for keeping it as fresh as possible. The Regulatory Board will lay down a monitoring plan to cover the oils up to and including the time they receive their final certification. A numbered label issued by the Regulatory Board will guarantee that the oils covered by the PDO are in compliance with the specifications.

4.5   Method of production: The trees are planted in rows, in blocks usually measuring between 8 m × 8 m and 12 m × 12 m, and the number of scions per tree is generally 3, although this varies between 1 and 4. Most of the land on the plantations is not irrigated. The cultivation practices used are traditional local methods, which tend to be environmentally friendly. Only healthy, ripe fruit is harvested, being picked directly from the tree using the traditional methods of hand-pole beating and vibrator pickers, or a mixture of beating and vibration. The olives are always transported to the mill in bulk, in trailers or rigid containers. They are milled in registered mills no later than 48 hours after being harvested. The milling process is continuous, in inert-material hammer mills authorised in the food-processing industry. The temperature at which the pomace obtained is milled is kept below 36 °C at all times. The only adjuvant authorised is certified food-processing talc, no more than 2,5 %. The phases are generally separated by centrifugation. Oils obtained from the second centrifugation (oils from the second pressing) do not qualify for certification under the ‘Antequera’ PDO. The temperature of the water added to the decanters (horizontal centrifuges) or to the vertical centrifuges must not exceed 35 °C. The process of decanting the oils takes not less than 6 hours (when centrifuging) or 36 hours (when decanting by gravity). The extra virgin olive oil is stored in warehouses, in stainless steel tanks, presses or lined steel tanks suitable for storing foodstuffs. The storage tanks must be completely sealed, be able to be cleaned properly, and be equipped with a system enabling periodic drainage and the taking of samples. The storage area must be climate-controlled to a temperature that ensures the oil does not spoil. Bulk PDO oils may not be moved out of the production area, to guarantee their traceability and origin. The oils are processed and bottled (in registered bottling plants) in the production area.

The requirement to bottle the oil at source is designed strictly to provide a better guarantee of the product's quality and authenticity and, therefore, the standing of the PDO — for which the PDO producers collectively take full responsibility. The controls organised by these producers in the production area are both systematic and meticulous, performed by professionals who have specialised knowledge of the product's characteristics.

The checks needed to guarantee the quality of the product cannot easily be set up outside the production area. Registered bottling companies must ensure that PDO olive oil is bottled separately from other products in their plants, and must have in place quality assurance systems, certified under standard ISO-9001:2000, which cover the oil from its arrival at the plant in bulk to the dispatch of the bottled product, as well as a series of ex post checks.

The containers that hold the finished product are foodstuffs containers made of glass, lined metal or ceramic.

4.6   Link: The natural production area for Antequera oils is the extreme west of the Andalusian depressions. This area has particular geomorphological and climatic characteristics. It covers an area of depressions with smooth topography at an altitude of 400-600 m, surrounded by a series of mountain ranges to the north (the Sierras Subbéticas) and south (the Sistema Penibético) which give the area a microclimate and soil conditions suitable for olive cultivation.

The olives are grown between 450 and 600 metres above sea level, on medium-depth very limy soil (20-70 % carbonate of lime). Hojiblanca is very well adapted to this type of limy soil, since olive trees require large amounts of calcium from the soil. What is more, because the surrounding area drains into the Antequera Depression, various different levels of river terrace have developed, all bearing large quantities of tertiary deposits, including Middle Pliocene red clay, which provide the olive trees with plentiful amounts of potassium and have high levels of moisture retention, promoting vegetation in the olive trees, which is useful given that more than 90 % of the plantation land is not irrigated.

The Antequera area has a temperate to warm Mediterranean climate, with some continental characteristics due to its location in the Andalusian depression. This situation produces great contrasts in temperature between summer and winter, and between night and day. The low temperatures in winter delay the olives' ripening period, especially for Hojiblanca, altering the acid profile of the oils produced to give higher levels of oleic acid and less fatty saturated and unsaturated acids.

Hojiblanca, the main variety (accounting for over 90 % of the olives grown in the area), is perfectly adapted to these environmental conditions. This area is the centre of Hojiblanca olive cultivation in Andalusia.

The production of virgin olive oil in the Antequera area dates back to Roman times, between the 1st and 3rd centuries AD, via a rural system formed by almost fifty villae olearias scattered across the whole area. The archaeological remains of these villae olearias were studied by Mr Romero of the Antequera local authority in 1998 and led to the recovery of Roman mills with all the parts described in the works of the famous agronomists of the classical period, Pliny and Columella. Related to these Roman mills, a number of petrified olive stones were discovered, which were identified as being of the Hojiblanca variety by the University of Cordoba's Technical School of Agricultural Engineering and Mountain Science (Escuela Técnica Superior de Ingenieros Agrónomos y Montes), evidence that the main variety under this PDO has been cultivated locally for almost 2 000 years. This major discovery shows that the Hojiblanca variety may have originated in the Antequera area.

Antequera's Historical Archive contains references from the 16th century to ‘Municipal ordinances on oil mills and millers’, approved by the Antequera Town Council in 1537 and confirmed by King Charles I of Spain and V of Germany some years later. Similar Ordinances from 1598 were found in another municipality in the area, Archidona. In 1679 there were 2 400 ha of olive groves and 61 oil mills in the municipality of Antequera, according to the land register of Father Francisco Cabrera of the Order of Saint Augustine.

The golden age of olive growing in Antequera was around the end of the 19th century and the first third of the 20th, during which time the land area under olives boomed from 26 755 ha in 1888 to 44 007 ha in 1922, according to the Spanish Directorate-General for Agriculture. This major expansion fuelled the development of a local milling machinery industry (presses, mills, hydraulic pumps, etc.), mainly due to the presence in Antequera in the 1870s of the Valencian engineer Beltrán de Lis. The foundries set up by his successors (Luna, Alcaide, Herrera and Rodas), which specialised in making this type of machinery, supplied southern Spain with large numbers of olive mills and olive oil factories in the early years of the 20th century. All such milling equipment produced in the area was marked not just with the manufacturer's stamp but also with the designation ‘Antequera’.

4.7   Inspection body:

| Name: | Consejo Regulador de la denominación de origen ‘Antequera’ |
| --- | --- |
| Address: | C/ Carrera, no 9. |
| E-29300 Archidona (Málaga) España |
| Aptdo. Correos no 36 |

Name:

Consejo Regulador de la denominación de origen ‘Antequera’

Address:

C/ Carrera, no 9.

E-29300 Archidona (Málaga) España

Aptdo. Correos no 36

This body meets the requirements of Standard EN-45.011.

4.8   Labelling: All Antequera PDO products must be labelled: ‘Denominación de Origen “ANTEQUERA”’. The labels must be authorised by the Regulatory Council. They must be numbered and issued by the Regulatory Council.

4.9   National requirements: Law 25/1970 of 2 December 1970 laying down rules on vineyards, wine and spirit drinks; Decree 835/1972 of 23 March 1972 laying down detailed rules for the application of Law 25/1970; Order of 25 January 1994 specifying the correlation between Spanish legislation and Regulation (EEC) No 2081/92 on designations of origin and geographical indications for food products; Royal Decree 1643/1999 of 22 October 1999 laying down the procedure for processing applications for registration in the Community Register of Protected Designations of Origin and Protected Geographical Indications.

---

(1)  European Commission, Directorate-General for Agriculture and Rural Development, Agricultural Products Quality Policy Unit, B-1049 Brussels.

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/33 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/33

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Non-opposition to a notified concentration

(Case COMP/M.3789 — Johnson Controls/Robert Bosch/Delphi SLI)

(2005/C 177/13)

(Text with EEA relevance)

On 29 June 2005, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website under document number 32005M3789. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex) |
| --- | --- |

—

in electronic form on the EUR-Lex website under document number 32005M3789. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex)

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| 19.7.2005 | EN | Official Journal of the European Union | C 177/33 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/33

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Non-opposition to a notified concentration

(Case COMP/M.3809 — Siemens/Flender)

(2005/C 177/14)

(Text with EEA relevance)

On 29 June 2005, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website under document number 32005M3809. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex) |
| --- | --- |

—

in electronic form on the EUR-Lex website under document number 32005M3809. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex)

---

III Notices

Commission

| 19.7.2005 | EN | Official Journal of the European Union | C 177/34 |
| --- | --- | --- | --- |

19.7.2005

EN

Official Journal of the European Union

C 177/34

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Call for proposals for indirect RTD actions under the specific programme for research, technological development and demonstration: ‘Integrating and strengthening the European Research Area’

Thematic sub-priority area: ‘Global Change and Ecosystems’

Call identifier: FP6-2005-Global-4

(2005/C 177/15)

| 1. | In accordance with Decision No 1513/2002/EC of the European Parliament and of the Council, of 27 June 2002, concerning the sixth framework programme of the European Community for research, technological development and demonstration activities contributing to the creation of the European Research Area and to innovation (2002 to 2006) (1), the Council adopted on 30 September 2002 the specific programme for research, technological development and demonstration: ‘Integrating and strengthening the European Research Area’ (2002-2006) (2) (referred to as ‘the specific programme’).
  In accordance with Article 5(1) of the specific programme, the Commission of the European Communities (referred to as ‘the Commission’) has adopted on 9 December 2002, a work programme (3) (referred to as ‘the work programme’) setting out in greater detail, the objectives and scientific and technological priorities of the specific programme, and the timetable for implementation.
  In accordance with Article 9(1) of the Regulation of the European Parliament and of the Council, of 16 December 2002, concerning the rules for the participation of undertakings, research centres and universities in, and for the dissemination of research results for, the implementation of the European Community Sixth Framework Programme (2002 to 2006) (4) (referred to as ‘the rules for participation’), proposals for indirect RTD actions should be submitted under the terms of calls for proposals. |
| --- | --- |

1.

In accordance with Decision No 1513/2002/EC of the European Parliament and of the Council, of 27 June 2002, concerning the sixth framework programme of the European Community for research, technological development and demonstration activities contributing to the creation of the European Research Area and to innovation (2002 to 2006) (1), the Council adopted on 30 September 2002 the specific programme for research, technological development and demonstration: ‘Integrating and strengthening the European Research Area’ (2002-2006) (2) (referred to as ‘the specific programme’).

In accordance with Article 5(1) of the specific programme, the Commission of the European Communities (referred to as ‘the Commission’) has adopted on 9 December 2002, a work programme (3) (referred to as ‘the work programme’) setting out in greater detail, the objectives and scientific and technological priorities of the specific programme, and the timetable for implementation.

In accordance with Article 9(1) of the Regulation of the European Parliament and of the Council, of 16 December 2002, concerning the rules for the participation of undertakings, research centres and universities in, and for the dissemination of research results for, the implementation of the European Community Sixth Framework Programme (2002 to 2006) (4) (referred to as ‘the rules for participation’), proposals for indirect RTD actions should be submitted under the terms of calls for proposals.

| 2. | The present call for proposals for indirect RTD actions (referred to as ‘the call’) comprises the present general part and the specific conditions that are described in the annex. The annex indicates in particular, the dates of closure for the submission of proposals for indirect RTD actions, an indicative date for the completion of the evaluations, the indicative budget, the instruments and the areas concerned, the evaluation criteria for the evaluation of proposals for indirect RTD actions, the minimum number of participants and any applicable restrictions. |
| --- | --- |

2.

The present call for proposals for indirect RTD actions (referred to as ‘the call’) comprises the present general part and the specific conditions that are described in the annex. The annex indicates in particular, the dates of closure for the submission of proposals for indirect RTD actions, an indicative date for the completion of the evaluations, the indicative budget, the instruments and the areas concerned, the evaluation criteria for the evaluation of proposals for indirect RTD actions, the minimum number of participants and any applicable restrictions.

| 3. | Natural or legal persons fulfilling the conditions stated in the rules for participation and that do not fall under any of the exclusion cases in the rules for participation or in Article 114(2) of the Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5) (referred to as ‘the proposers’) are invited to submit to the Commission proposals for indirect RTD actions subject to the conditions in the rules for participation and in the call concerned being fulfilled.
  The conditions of participation of the proposers will be verified within the framework of the negotiation of the indirect RTD action. Before that however, proposers will have signed a declaration stating that they do not fall under any of the cases given by Article 93(1) of the Financial Regulation. They will also have given the Commission the information listed in Article 173(2) of the Commission Regulation (EC, Euratom) No 2342/2002, of 23 December 2002, laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (6).
  The European Community has adopted an equal opportunities policy and, on this basis, women are particularly encouraged to either submit proposals for indirect RTD actions or participate in the submission of proposals for indirect RTD actions. |
| --- | --- |

3.

Natural or legal persons fulfilling the conditions stated in the rules for participation and that do not fall under any of the exclusion cases in the rules for participation or in Article 114(2) of the Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5) (referred to as ‘the proposers’) are invited to submit to the Commission proposals for indirect RTD actions subject to the conditions in the rules for participation and in the call concerned being fulfilled.

The conditions of participation of the proposers will be verified within the framework of the negotiation of the indirect RTD action. Before that however, proposers will have signed a declaration stating that they do not fall under any of the cases given by Article 93(1) of the Financial Regulation. They will also have given the Commission the information listed in Article 173(2) of the Commission Regulation (EC, Euratom) No 2342/2002, of 23 December 2002, laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (6).

The European Community has adopted an equal opportunities policy and, on this basis, women are particularly encouraged to either submit proposals for indirect RTD actions or participate in the submission of proposals for indirect RTD actions.

| 4. | The Commission makes available guides for proposers relating to the call, which contain information on the preparation and the submission of a proposal for an indirect RTD action. The Commission also makes available Guidelines on Proposal Evaluation and Selection Procedures (7). These guides and guidelines, the work programme and other information relating to the call, can be obtained from the Commission via the following addresses:





  European Commission |
| --- | --- |
| The FP6 Information Desk |
| Directorate General RTD |
| B-1049 Brussels |
| Internet address: http://fp6.cordis.lu/fp6/call_details.cfm?CALL_ID=211 |
| Email address: rtd-sustainable@cec.eu.int rtd-sustainable@cec.eu.int |

4.

The Commission makes available guides for proposers relating to the call, which contain information on the preparation and the submission of a proposal for an indirect RTD action. The Commission also makes available Guidelines on Proposal Evaluation and Selection Procedures (7). These guides and guidelines, the work programme and other information relating to the call, can be obtained from the Commission via the following addresses:

European Commission

The FP6 Information Desk

Directorate General RTD

B-1049 Brussels

Internet address: http://fp6.cordis.lu/fp6/call_details.cfm?CALL_ID=211

Email address: rtd-sustainable@cec.eu.int rtd-sustainable@cec.eu.int

| 5. | Proposals for indirect RTD actions are invited to be submitted only as an electronic proposal via the web-based Electronic Proposal Submission System (EPSS (8)). In exceptional cases however, a coordinator may request permission from the Commission to submit on paper, in advance of a call deadline. This should be done in writing to one of the following addresses:





  European Commission |
| --- | --- |
| Mr Thierry Prost |
| Directorate General RTD |
| CDMA 3/133 |
| B-1049 Brussels |
| Email address: Thierry.Prost@cec.eu.int |

5.

Proposals for indirect RTD actions are invited to be submitted only as an electronic proposal via the web-based Electronic Proposal Submission System (EPSS (8)). In exceptional cases however, a coordinator may request permission from the Commission to submit on paper, in advance of a call deadline. This should be done in writing to one of the following addresses:

European Commission

Mr Thierry Prost

Directorate General RTD

CDMA 3/133

B-1049 Brussels

Email address: Thierry.Prost@cec.eu.int

The request must be accompanied by an explanation of why the exception is being sought. Proposers wishing to use paper submission take the responsibility for ensuring that such requests for exemption and the associated procedures are completed in time for them to meet the call deadline.

All proposals for indirect RTD actions must contain two parts: the forms (Part A) and the content (Part B).

Proposals for indirect RTD actions may be prepared off-line or on-line and submitted on-line. Part B of proposals for indirect RTD actions can only be submitted in PDF (‘portable document format’, compatible with Adobe Version 3 or higher with embedded fonts). Compressed (‘zipped’) files will be excluded.

The EPSS software tool (for off-line or on-line usage) is available via the Cordis website www.cordis.lu.

Proposals for indirect RTD actions that are submitted on-line and which are incomplete, illegible or contain viruses, will be excluded.

Versions of proposals for indirect RTD actions submitted on a removable electronic storage medium (e.g. CD-ROM, diskette), by email or by fax, will be excluded.

Any proposal for indirect RTD actions that has been allowed to be submitted on paper and which is incomplete will be excluded.

Further details on the various proposal submission procedures are given in Annex J of the Guidelines on Proposal Evaluation and Selection Procedures.

| 6. | Proposals for indirect RTD actions have to reach the Commission at the latest on the closure date and at the time specified in the call concerned. Proposals for indirect RTD actions arriving after this date and time will be excluded.
  Proposals for indirect RTD actions not satisfying the conditions relating to the minimum number of participants indicated in the call concerned will be excluded.
  This also applies regarding any additional eligibility criteria given in the work programme. |
| --- | --- |

6.

Proposals for indirect RTD actions have to reach the Commission at the latest on the closure date and at the time specified in the call concerned. Proposals for indirect RTD actions arriving after this date and time will be excluded.

Proposals for indirect RTD actions not satisfying the conditions relating to the minimum number of participants indicated in the call concerned will be excluded.

This also applies regarding any additional eligibility criteria given in the work programme.

| 7. | In the case of successive submissions of the same proposal for an indirect RTD action, the Commission will examine the last version received before the closure date and time specified in the call concerned. |
| --- | --- |

7.

In the case of successive submissions of the same proposal for an indirect RTD action, the Commission will examine the last version received before the closure date and time specified in the call concerned.

| 8. | In all correspondence relating to a call (e.g. when requesting information, or submitting a proposal for an indirect RTD action), proposers are invited to cite the relevant call identifier. |
| --- | --- |

8.

In all correspondence relating to a call (e.g. when requesting information, or submitting a proposal for an indirect RTD action), proposers are invited to cite the relevant call identifier.

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(1)  OJ L 232, 29.8.2002, p. 1.

(2)  OJ L 294, 29.10.2002, p. 1.

(3)  Commission Decision C(2002)4789, as modified by C(2003)577, C(2003)955, C(2003)1952, C(2003)3543, C(2003)3555, C(2003)4609, C(2003)5183, C(2004)433, C(2004)2002, C(2004)2727, C(2004)3324, C(2004)4178, C(2004)5286, C(2005)27, C(2005)961, C(2005)2076 and C(2005)2747, all decisions unpublished.

(4)  OJ L 355, 30.12.2002, p. 23.

(5)  OJ L 248, of 16.9.2002, p. 1.

(6)  OJ L 357, of 31.12.2002, p. 1.

(7)  C(2003)883 of 27.3.2003, as last modified by C(2004)1855 of 18.5.2004.

(8)  The EPSS is a tool to assist proposers to develop and submit their proposals electronically.

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ANNEX

FP6-2005-Global-4

Call information

1.   Specific Programme: Integrating and strengthening the European Research Area

2.   Activity: Priority thematic area ‘Sustainable Development, Global Change and Ecosystems’; Sub-Priority ‘Global Change and Ecosystems’

3.   Call title: Thematic call in the area of ‘Global Change and Ecosystems’

4.   Call identifier: FP6-2005-Global-4

5.   Date of publication (1):

6.   Closure date(s): For IP and NOE: 3 November 2005 (first stage) at 17:00 (Brussels local time). For STREP and CA: 3 November 2005, at 17:00 (Brussels local time). For SSA: 3 November 2005, at 17:00 (Brussels local time) (please see also No 12 Proposal submission and evaluation procedure).

7.   Total indicative budget: EUR 205 million

8.   Areas called and Instruments:

| Area | Topic | Instrument | Indicative Community contribution
  (EUR million) |
| --- | --- | --- | --- |
| Area 6.3.I: | Impact and mechanisms of greenhouse gas emissions and atmospheric pollutants on climate, ozone depletion and carbon sinks |

Area

Topic

Instrument

Indicative Community contribution

(EUR million)

Area 6.3.I:

Impact and mechanisms of greenhouse gas emissions and atmospheric pollutants on climate, ozone depletion and carbon sinks

I.1.1

STREPs/CA

—

I.2.1

STREPs/CA

—

I.2.2

IP

10

I.3.1

IP

10

I.3.2

STREPs/CA

—

| Area 6.3.II: | Water cycle, including soil-related aspects |
| --- | --- |

Area 6.3.II:

Water cycle, including soil-related aspects

II.1.1

IP

10

II.1.2

STREPs/CA

—

II.2.1

STREPs/CA

—

II.3.1

STREPs/CA

—

II.3.2

STREPs

—

II.3.3

STREPs/CA

—

II.3.4

STREPs/CA

—

II.3.5

STREPs/CA

—

II.3.6

STREPs/CA

—

II.3.7

STREPs/CA

—

II.3.8

CA

—

II.4.1

IP

7

| Area 6.3.III: | Biodiversity and ecosystems |
| --- | --- |

Area 6.3.III:

Biodiversity and ecosystems

III.1.1

IP

7

III.1.2

IP

10

III.2.1

CA

—

| Area 6.3.IV: | Mechanisms of desertification and natural disasters |
| --- | --- |

Area 6.3.IV:

Mechanisms of desertification and natural disasters

IV.1.1

IP

7

IV.2.1

STREPs/CA

—

IV.2.2

STREPs/CA

—

| Area 6.3.V: | Strategies for sustainable land management, including coastal zones, agricultural land and forests |
| --- | --- |

Area 6.3.V:

Strategies for sustainable land management, including coastal zones, agricultural land and forests

V.1.1

IP

7

V.1.2

STREPs/CA

—

V.1.3

IP

10

| Area 6.3.VI: | Operational forecasting and modelling including global climatic change observation systems |
| --- | --- |

Area 6.3.VI:

Operational forecasting and modelling including global climatic change observation systems

VI.1.1

NOE

7

VI.1.2

IP

7

VI.1.3

IP

7

VI.1.4

STREPs/CA

—

| Area 6.3.VII: | Complementary research |
| --- | --- |

Area 6.3.VII:

Complementary research

VII.1.1

IP

10

VII.1.2

CA

—

VII.2.1

CA

—

VII.2.2

IP

5

VII.2.3

IP

5

| Area 6.3.VIII: | Cross-cutting issue: Sustainable Development concepts and tools |
| --- | --- |

Area 6.3.VIII:

Cross-cutting issue: Sustainable Development concepts and tools

VIII.1.1

IP

5

VIII.1.2

STREPs/CA

—

| Area 6.3.IX: | Specific Support Actions |
| --- | --- |

Area 6.3.IX:

Specific Support Actions

IX

SSA

—

9.   Minimum number of participants (3):

| Instrument | Minimum number of participants |
| --- | --- |
| IP, NOE, STREP and CA | Three independent legal entities established in three different MS or AS, with at least two MS or ACC |
| SSA | 1 legal entity from a MS or AS |

Instrument

Minimum number of participants

IP, NOE, STREP and CA

Three independent legal entities established in three different MS or AS, with at least two MS or ACC

SSA

1 legal entity from a MS or AS

10.   Restrictions to participation: None.

11.   Consortia agreements:

| — | Participants in IP and NOE resulting from this call are required to conclude a consortium agreement. |
| --- | --- |

—

Participants in IP and NOE resulting from this call are required to conclude a consortium agreement.

| — | Participants in STREP, CA, and SSA resulting from this call are encouraged, but not required, to conclude a consortium agreement. |
| --- | --- |

—

Participants in STREP, CA, and SSA resulting from this call are encouraged, but not required, to conclude a consortium agreement.

12.   Proposal submission and evaluation procedure:

| — | For IP and NOE the evaluation shall follow a two-stage procedure. First stage: An outline proposal consisting of a part A (4), and of a part B of a maximum of 15 pages for this stage (font size 12), addressing only a reduced set of the evaluation criteria i.e.:






  — | For IP: relevance, potential impact, and S/T excellence |
| --- | --- | --- |

—

For IP and NOE the evaluation shall follow a two-stage procedure. First stage: An outline proposal consisting of a part A (4), and of a part B of a maximum of 15 pages for this stage (font size 12), addressing only a reduced set of the evaluation criteria i.e.:

—

For IP: relevance, potential impact, and S/T excellence

| — | For NOE: relevance, degree of integration and the JPA |
| --- | --- |

—

For NOE: relevance, degree of integration and the JPA

shall be submitted at the closure date mentioned under item No 6 above. Proposals having passed the minimum thresholds required in the first stage (12 out of 15 for IP and 8 out of 10 for NOE) will be retained for the second stage (‘go’ proposals).

Second stage: Coordinators of ‘go’ proposals will be requested to provide a complete proposal, consisting of parts A and B, which will be evaluated against the whole set of evaluation criteria. The closure date for the second submission will be included in the invitation to complete the proposal (indicative closure date: 2 March 2006).

| — | For other instruments, the evaluation shall follow a single stage procedure. |
| --- | --- |

—

For other instruments, the evaluation shall follow a single stage procedure.

| — | The evaluation process may involve ‘remote’ evaluation of proposals by members of the evaluation panel and applicants may be invited to discuss their proposal with the evaluation panel. |
| --- | --- |

—

The evaluation process may involve ‘remote’ evaluation of proposals by members of the evaluation panel and applicants may be invited to discuss their proposal with the evaluation panel.

| — | Proposals will not be evaluated anonymously. |
| --- | --- |

—

Proposals will not be evaluated anonymously.

13.   Evaluation criteria: See Annex B of the work programme for the applicable criteria (including their individual weights and thresholds and the overall threshold) for each instrument.

14.   Indicative evaluation and contractual timetable:

| — | Evaluation results are expected to be available within two to three months after the closure date. |
| --- | --- |

—

Evaluation results are expected to be available within two to three months after the closure date.

| — | Conclusion of first contracts: it is estimated that the first contracts related to this call will be signed as from:






  — | June 2006 for STREP, CA and SSA; |
| --- | --- | --- |

—

Conclusion of first contracts: it is estimated that the first contracts related to this call will be signed as from:

—

June 2006 for STREP, CA and SSA;

| — | October 2006 for IP and NOE. |
| --- | --- |

—

October 2006 for IP and NOE.

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(1)  The Director-General responsible for the call may publish it up to one month prior to or after the envisaged date of publication.

(2)  IP = Integrated project; NOE = Network of excellence; STREP = Specific targeted research project; CA = Coordination action; SSA = Specific support action

(3)  MS = Member States of the EU; AS (incl. ACC) = Associated States; ACC = Associated candidate countries.

Any legal entity established in a Member State or Associated State and which is made up of the requested number of participants may be the sole participant in an indirect action.

(4)  For part A of IP and NOE outline proposals, only the co-ordinator shall fill in the requested forms with the details of its organisation and the overall project budget.

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