«<H^(W*W>. 
COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.03.1998 
COM(1998) 164 final 
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON THE ESTABLISHMENT OF A NEW 
FINANCIAL PERSPECTIVE FOR THE PERIOD 2000-2006 

CONTENTS 
INTRODUCTION 1 c-
1. BASIC DATA FOR THE NEXT FINANCIAL FRAMEWORK 
AND THE ECONOMIC ASSUMPTIONS 2 
1.1 Economie background 2 
1.2 The financial perspective at constant 1999 prices 2 
1.3 Term of the financial perspective 3 
1.4 Assumptions in connection with enlargement 3 
2. THE STRUCTURE OF THE NEXT FINANCIAL PERSPECTIVE 3 
2.1 The current Community 3 
2.2 Pre-accession aid 4 
2.3 Expenditure in connection with accession 4 
3. CHANGES IN THE VARIOUS HEADINGS OF THE FINANCIAL 
i PERSPECTIVE 4 
3.1 Agriculture (heading 1) 4 
3.2 Structural operations (heading 2) 7 
3.3 Internal policies (heading 3) 10 
3.4 Hxtern.al action (heading 4) 14 
3.5 Administrative expenditure (heading 5)... 17 
3.6 Reserves (heading 6) 1 S 
<--\ 
4. OVERALL FINANCIAL PERSPECTIVE CEILINGS AND MARGINS 
AVAILABLE BENEATH THE OWN RESOURCES CEILING V) 
4.1 Overall ceiling on appropriations lor commitments \{> 
4.2 Determining the overall ceiling on appropriations for payments 20 
4.3 Margins available beneath the own resources ceiling 20 
5. PLANNING AND FINANCING ACCESSION-RELATED 
EXPENDITURE 21 
5.1 Accession-related expenditure 21 
5.2 financing accession 22 
5.3 Incorporating the impact of accession in the financial perspective 
of an enlarged Community 22 
TABLES 
ANNEXES 
INTRODUCTION 
In last July's Agenda 20001 the Commission proposed a reference financial framework 
for 2000-06 in anticipation of the enlargement of the European Union. This framework 
shows that it is possible to provide for the development of the revamped Community 
policies for the current Member States and, under certain conditions, finance the 
accession of a number of countries from central and eastern Europe and Cyprus without 
changing the own resources ceiling of 1.27% of GNP between now and 2006. 
This communication has been produced in response to paragraph 25 of the 
Interinstitutional Agreement of 23 October 1993 on budgetary discipline and 
improvement of the budgetary procedure, which requires the Commission to present 
proposals for a new financial perspective before 1 July 1998. The financial perspective 
determines the general development in the Community budget for the current fifteen 
Member States and the pre-accession aid for the applicant countries. It must also ensure 
that resources are available for use in due course to finance accession under the 
conditions set out in Agenda 2000. The communication thus meets the Luxembourg 
European Council's call for a clear distinction between the financing intended for the 
current fifteen Member States and that for the applicant countries both before and after 
accession. 
The financial perspective set out in the communication is consistent with the other 
proposals presented by the Commission in relation to the common agricultural policy, 
structural operations, pre-accession aid and the Guarantee Fund for lending operations. 
The accompanying report on the implementation and renewal of the 1993 
Interinstitutional Agreement shows how useful this instrument is for orderly and 
controlled growth in Community expenditure in line with the resources provided and as a 
jointly agreed reference to improve collaboration between the institutions in the course of 
the annual budgetary procedure. When Agenda 2000 was first discussed, the two arms of 
the budgetary authority made it clear they wanted this instrument to be retained. The 
financial perspective is meant to form an integral part of the new Interinstitutional 
Agreement. 
The basic assumptions used for drawing up the financial framework are set out in Part 1, 
thé structure is described in Part 2, Part 3 shows how each heading will change and Part 4 
determines the ceilings on total expenditure and the margins available under the own 
resources ceiling. Finally, Part 5 deals with the programming and financing of the 
expenditure planned in connection with accession. 
Agenda 2000: For a stronger and wider Union, COM(97) 2000 final. 
1. BASIC DATA FOR THE NEXT FINANCIAL FRAMEWORK AND THE 
ECONOMIC ASSUMPTIONS 
1.1 Economic background 
The Commission has based the next financial perspective on the most recent short-term 
economic forecasts available, which were presented last November and which were used 
for the adjustment cf the financial perspective for 1999.2 
For the period 2000-06 the Commission has applied the same medium-term economic 
assumptions as in Agenda 2000, viz. a GNP economic growth rate of 2.5% a year and a 
GNP deflator of 2% a year. In actual fact, the GNP deflator is used only to check the 
consistency between the expected level of agricultural expenditure, which is evaluated at 
current prices, and the agricultural guideline. 
The most recent developments in the Community economy and the prospects opened up 
by the move to the third stage of economic and monetary union lend support to the 
economic assumptions made. 
For the applicant countries, the Commission has taken the latest economic forecasts 
available and applied a medium-term economic growth rate of 4% a year beyond 1999. 
These forecasts do not affect the financial perspective at present but they will after 
accession. 
Annex A sets out the main economic parameters used. 
1.2 The financial perspective at constant 1999 prices 
The financial perspective proposed has been drawn up at constant 1999 prices, making 
comparison easier with the 1999 budget which is now in preparation. The financial 
perspective ceilings for that year also serve as the starting point for the changes to be 
expected for the following period. Another advantage of this price base is that it can be 
used throughout the negotiations. 
For this purpose, the amounts initially set out in Agenda 2000 at 1997 prices have been 
converted into constant 1999 prices by applying the latest deflator, without any change in 
the proposals contained in that communication. This exercise produced more exact 
amounts expressed in tens of millions of euros. 
Communication from the Commission to the Council and the European Parliament on the technical 
adjustment of the financial perspective for 1999 in line with movements in GNP and prices. 
SEC(98) 306. 
1.3 Term of the financial perspective 
As in Agenda 2000, the Commission has decided to present a seven-year financial 
perspective as it feels that a period of this length is needed to assess the full effect of the 
proposed reforms to Community policies and the impact of the first wave of enlargement. 
1.4 Assumptions in connection with enlargement 
These proposals are based on the same assumptions as Agenda 2000, viz. the accession 
of five countries from Central and Eastern Europe and Cyprus as part of an overall, 
gradual and inclusive enlargement process. As a technical working assumption, this 
communication supposes that this accession will occur in 2002 and does not prejudge the 
decisions which will actually be taken. 
2. THE STRUCTURE OF THE NEXT FINANCIAL PERSPECTIVE 
The main innovation in the next financial framework is that alongside allocations for the 
current Member States, it also covers expenditure in connection with the enlargement 
process, both in terms of pre-accession aid and the expenditure resulting from the 
accession of new Member States. However, a distinction must be made between 
pre-accession aid, the level of which will already have to be decided at this stage and 
included in the financial perspective within the limits of the resources available to the 
current Community, and expenditure resulting from accession, which will not be 
incorporated in the financial framework until the time of accession by means of an 
adjustment of the financial perspective. This adjustment will cover both the new 
requirements resulting from accession and the financing of this expenditure from the 
resources left available for this purpose in the fifteen-nation Community as well as from 
the additional resources obtained from the rise in Community GNP as a result of 
enlargement. 
2.1 The current Community 
As regards the current Community, the financial framework proposed by the Commission 
is directly based on the structure of the present financial perspective, which is now well 
known. The various categories of expenditure are homogeneous and clearly identify the 
main areas of Community spending. The financial framework will therefore comprise six 
headings: agriculture, structural operations (divided into two subheadings: the Structural 
Funds and the Cohesion Fund), internal policies, external action, administrative 
expenditure and the reserves, divided into three separate subheadings: the monetary 
reserve, the reserve for emergency aid and the guarantee reserve. 
2.2 Pre-accession aid 
The Commission has proposed that pre-accession aid be financed from three different 
headings of the financial perspective. The new beefed-up Phare programme will still 
come under external action. Two new instruments, proposed elsewhere, would operate in 
the agricultural and structural sectors and would come under the headings for agriculture 
and structural operations respectively. This distinction is intended to allow the applicant 
countries to accustom themselves gradually to Community procedures and practices. A 
coordinating regulation is also being proposed to provide a clear definition of the 
objectives of each instrument and to coordinate operations. 
The Commission proposes that the amounts intended for pre-accession aid be identified 
under a specific subheading in each of the three headings concerned. This would 
guarantee appropriate financing for both the fifteen Member States and the applicant 
countries and also provide a clearer picture of Community action. Once the first wave of 
applicants has joined, the level of pre-accession aid will not be changed and will be 
concentrated on those countries not forming part of the first group. 
2.3 Expenditure in connection with accession 
Expenditure in connection with the accession of new Member States cannot be entered in 
the Community's current financial framework. It is, however, covered by specific 
programming for headings 1, 2, 3 and 5, which would be the common position of the 
fifteen-nation Community for the forthcoming negotiations. This programming, set out in 
Table 2, is based on the same guidelines and assumptions as Agenda 2000. 
3. CHANGES IN THE VARIOUS HEADINGS OF THE FINANCIAL 
PERSPECTIVE 
The new financial perspective which the Commission proposes for the lifteen-nation 
Community is set out in Table 1. This table will have to be approved by the two arms of 
the budgetary authority and annexed to the next Interinstitutional Agreement. It should 
again be pointed out that the purpose of the financial perspective is to set overall 
expenditure ceilings for a relatively long period. It is then up to the budgetary authority to 
decide on the level and breakdown of annual appropriations within this predetermined 
framework. 
3.1 Agriculture (heading 1) 
1. The Commission proposes that the ceiling for heading 1 should still be 
determined by the agricultural guideline. On the basis of the economic forecasts used by 
the Commission, heading 1 should increase by 1.9% a year in real terms and thus rise by 
around EUR 6.4 billion from EUR 45.2 billion in 1999 to EUR 51.6 billion (at 1999 
prices) in 2006. 
However, the Commission proposes a change in the expenditure financed by EAGGF 
Guarantee and covered by the agricultural guideline. It therefore proposes a review of the 
regulation on the financing of the CAP and will later present an amendment to the 
decision on budgetary discipline.3 Apart from expenditure on markets and direct 
compensatory aid, heading 1 would cover: 
• rural development measures, including the existing accompanying measures, and 
horizontal measures in the fisheries sector; 
• veterinary and plant-health measures; 
• the agricultural, agri-foodstuff and rural component of pre-accession aid, which would 
form a separate subheading and be covered by the agricultural guideline. 
2. As most of the agricultural intervention measures are fixed in nominal terms, the 
analysis of expenditure within heading 1, unlike other headings, is presented at current 
prices, assuming a deflator of 2% a year. 
The table in Annex B shows the change in agricultural expenditure at current prices from 
EUR 40.4 billion in 1999 to EUR 49.4 billion in 2006. This increase of EUR 9 billion 
would be most pronounced in the early years from 2000 to 2003 and would then level 
off. This is due, first, to new expenditure of EUR 2.8 billion to be covered under the 
agricultural guideline in 2000. Second, market expenditure should increase by around 
EUR 6.2 billion between 2000 and 2003 because of the gradual effect of agricultural 
policy reform. 
The substantial margin which the 1999 budget should leave available beneath the 
agricultural guideline (around EUR 4.8 billion) would thus be gradually reduced at the 
start of the period to around EUR 3 billion a year over the period 2001-03. Subsequently, 
the steady increase in the agricultural guideline and the stabilisation of agricultural 
spending should produce a growing margin which should come to EUR 9.7 billion by 
2006. 
The existence of this substantial margin at the end of the period will be welcome. First, it 
should provide cover for the enlargement-related costs without it being necessary to 
increase the agricultural guideline at the time of accession. The Commission also feels 
that a large margin is needed to accommodate agricultural market uncertainties. It should 
also allow the transitional arrangements applied to the new Member States to be 
terminated when necessary. The Commission therefore considers that the heading 1 
ceiling does not have to be revised at this stage but could be reviewed before 2005. The 
Commission will contact the budgetary authority at the appropriate moment in 
accordance with the Interinstitutional Agreement. 
3 Council Decision 94/729/EC of 31 October 1994 on budgetary discipline (OJ L 293, 12.11.1994). 
5 
3. The expenditure covered by heading 1 of the financial perspective should develop 
as follows over the period: 
Market expenditure under the reformed agricultural policy should increase from 
EUR 37.8 billion in 1999 to EUR 43.7 billion in 2006 according to estimates based on 
the latest trends on the agricultural markets. This increase in expenditure, partly due to 
the effect of the reforms proposed for arable crops, milk and beef, should extend over 
2001-03 as the impact of agricultural policy reform is felt before levelling off after 
2003. 
Export refunds and market intervention measures will fall by around EUR 4.8 billion 
as a result of the reform (EUR 1.6 billion for cereals, EUR 1.6 billion for beef and 
veal, EUR 1.1 billion for the milk sector and EUR 0.5 billion for other sectors where 
expenditure is indirectly linked with the reformed rnarket organisations) as 
Community prices swing into line with world prices. Agricultural policy reform 
should also lead to an increase of around EUR 8.2 billion in direct compensatory aid 
(EUR 1.6 billion for cereals, EUR 3.6 billion for beef and veal and EUR 3 billion for 
the milk sector). 
The main differences in relation to the proposals in Agenda 2000 are that the premium 
for silage grain is retained, a further cut has been made in the price of milk, milk 
quotas are increased and the premium for steers has been reduced. 
The reform of the common agricultural policy will be accompanied by a beefed-up 
rural development policy as the upcoming changes on the agricultural markets will 
also affect the future of rural economies. 
Under heading 1, this new rural development policy will group together the 
accompanying measures introduced in the 1992 reform (afforestation, early retirement 
and agri-environmental measures), aid to less-favoured areas under objective 5a of the 
Structural Funds (including operations of this type in objective 1 regions) and other 
existing EAGGF Guidance operations under objectives 5a and 5b (outside objective 1 
regions). 
However, operations of this type in objective 1 regions, with the exception of the 
current accompanying measures and aid to less-favoured areas, will be financed under 
heading 2 of the EAGGF Guidance Section. 
The Commission still feels that the Community's rural development instruments 
should be reorganised and is therefore presenting a new single regulation on EAGGF 
support for rural development which will apply throughout the Community 
irrespective of the source of finance. 
In the fisheries sector, EAGGF Guarantee would also cover measures to restructure 
fishing fleets outside objective 1 regions and the other structural measures relating to 
fisheries and aquaculture outside objective 1 and 2 regions provided for in the new 
regulation on structural operations in the fisheries sector. 
The allocation for this new rural development accompanying policy and for the 
measures in the fisheries sector will thus increase from EUR 2.6 billion in 1999 to 
EUR 4.7 billion in 2000, rising to an estimated EUR 5 billion at the end of the period. 
The veterinary and plant-health measures currently financed from Article B2-510 of 
the budget under heading 3 of the financial perspective will be transferred to heading 1 
as they are closely linked to an agricultural policy concerned with product quality and 
food safety. Some EUR 100 million a year could be envisaged during the period. 
The agricultural pre-accession instrument w'iJl be allocated a constant HI JR. 520 
million a year (1999 prices) throughout the period. The Commission is presenting a 
proposal for a regulation establishing this agricultural pre-accession instrument which 
would finance measures to improve farm structures, channels for the processing and 
marketing of agricultural and fish products, veterinary, plant-health and food quality 
inspections and integrated rural development measures. 
3.2 Structural operations (heading 2) 
1. During the next programming period (2000-06) the allocations for structural 
operations in the fifteen-nation Community would come to around EUR 247 billion, 
including a total of EUR 7 280 million to finance structural pre-accession aid. This 
consolidates and even substantially boosts the cohesion effort since the fifteen 
Member States alone will receive a total allocation of nearly EUR 240 billion, compared 
with some EUR 208 billion (1999 prices) over the period 1993-99. 
In order to concentrate aid under the Structural Funds during the phasing-out period, the 
allocations for structural operations will fall slightly between 2000 and 2006, dropping 
by an average of 1.4% a year to EUR 32 470 million in 2006 compared with the base 
allocation of EUR 35 730 million in 1999.4 However, they will still be far higher than at 
the start of the previous period (around EUR 22 billion in 1993 at 1999 prices). 
The Commission proposes three subheadings under heading 2 (Structural operations) for 
the Structural Funds, the Cohesion Fund and the structural pre-accession instrument. 
New regulations for these instruments are being proposed. 
This base allocation does not include the BUR 3 294 million not used in earlier years and transferred 
to 1999 by decisions already adopted and the Commission proposal on the adjustment of the financial 
perspective to take account of the conditions in which the 1997 budget was implemented (proposal for 
an adjustment of the financial perspective to take account of the conditions of implementation, 
presented by the Commission to Parliament and the Council on 25 February 1998, SEC(98) 307 final). 
2. The Structural Funds 
• Breakdown of the overall allocation 
In view of the efforts still to be made in the objective 1 regions, in particular to develop 
infrastructures and fight unemployment, it is proposed that the proportion accounted for 
by this objective should be kept unchanged at around two thirds of the total. 
Community initiatives would receive 5% of the resources available for the Structural 
Funds. A further 0.7% of the Structural Fund allocations would go to innovation schemes 
carried out on the Commission's initiative to improve the quality of aid under objectives 
1 to 3. Finally, 0.3% of the allocation would be used to finance technical assistance. 
• Reduction in the number of objectives 
It is proposed that the current seven objectives be cut to three - two regional and one 
horizontal. Objective 1 will be for regions lagging behind in their development, the new 
objective 2 for regions undergoing economic and social conversion and the new 
objective 3 for the development of human resources outside the regions eligible for 
objectives 1 and 2. 
Various measures currently financed from the Structural Funds at a cost of some 
EUR 2 billion would no longer be covered by heading 2 since it is proposed that in future 
similar measures be financed from the EAGGF - Guarantee Section under the agricultural 
guideline. This concerns the whole of agricultural objective 5a (outside objective I 
regions), aid to less-favoured areas in objective 1 (and 6) regions, EAGGF Guidance 
operations in current objective 5b regions and certain objective 5a - fisheries operations, 
namely restructuring of fishing fleets (outside objective 1 regions) and the other 
structural measures connected with fisheries and aquaculture (outside objective 1 and 2 
regions). 
• Geographical concentration of assistance 
The Commission is proposing a gradual phasing-out of the regions which no longer meet 
the eligibility criteria for objective 1 and the new objective 2. The regions concerned will 
be covered by a transitional scheme of six years for objective 1 (seven years if they 
satisfy the criteria for objective 2 in 1999) and four years for objective 2. 
The population eligible for objective 1 would thus be cut to around 20% of the 
population of the European Union instead of the 25% at present. I Iowcver, assistance to 
the regions still eligible could be boosted and they should also receive the EAGGF 
Guarantee-financed aid for less-favoured areas under heading 1. 
Similarly, the new objective 2 should cover no more than 18% of the population of the 
European Union (excluding the areas in objective 1 regions which would be covered by 
objective 2 at the end of the phasing-out period). However, the regions eligible for 
8 
objective 2 would receive more funds since the development of human resources would 
be financed under this objective instead of objective 3 as at present. These regions could 
also receive EAGGF Guarantee aid for less-favoured areas under heading 1 and benefit 
from the other rural development measures under a single programming framework. 
• Changes in Structural Fund allocations 
Structural Fund allocations would thus come to EUR 28 430 million in 2006, an average 
of 2% a year lower than the base allocation of EUR 32 730 for 1999. Since EAGGF 
Guarantee will be taking over the financing of some measures from the Structural Funds, 
the annual average fall would be around 1% a year if the situation remained unchanged. 
3. Cohesion Fund 
The Cohesion Fund, which helps to finance environment and transport infrastructure 
projects, will be kept unchanged. Its allocation will remain fixed at EUR 3 billion over 
the whole period. 
Member States will be eligible if their per capita GNP is lower than 90% of the 
Community average, irrespective of whether or not they join the third stage of economic 
and monetary union. Eligibility for this criterion will be subject to a mid-term review. 
The macro-economic conditions will be retained: a convergence programme will have to 
be introduced for any Member State not joining the third stage of economic and monetary 
union and those Member States taking part will have to present a stability programme to 
the Council. 
4. The structural pre-accession instrument 
The structural pre-accession instrument will be allocated EUR 1 040 million a year 
throughout the period. This instrument is intended to part-finance projects in two sectors: 
• transport infrastructure projects, in particular for the trans-European networks; 
• environmental projects to bring the recipient countries into line with the Community's 
environmental legislation. 
3.3 Internal policies (heading 3) 
1. The total allocation for internal policies will gradually increase by an average of 
2.5% a year from EUR 6 390 million in 1999 to EUR 7 600 million in 2006. 
The Commission does not propose raising the ceiling for this heading in 2000 in view of 
the margin which the 1999 budget will probably leave beneath this ceiling. After 2000 
the Commission proposes gradually raising the ceiling by just over EUR 1.2 billion, 
comparable to what the Edinburgh European Council decided for an equivalent period. 
2. Heading 3 will have the highest rate of increase in the new financial perspective, 
reflecting the priority which the Commission intends to give internal policies in view of 
the contribution they can make to growth and employment. This development of internal 
policies would also go hand in hand with market integration, which should advance 
considerably with the transition to the third stage of Economic and Monetary Union. 
The measure essential for the smooth operation of the internal market, for which 
Community assistance is of general interest, will remain a Community priority and 
should be continued in future. The financing of operations now coming under justice and 
home affairs will without doubt deserve particular attention as some of them are 
incorporated in the first pillar as a result of the Amsterdam Treaty and in view of the 
principle, also embodied in that Treaty, that the Community, unless it is decided 
otherwise, should finance operations which still come under the third pillar. 
3. The increased allocations for heading 3 should be accompanied by a boost to the 
effectiveness of the internal policies. In strict compliance with the principle of 
subsidiarity, funding should not therefore be dispersed among too many programmes 
since some might not be large enough to have a significant impact, in particular in an 
enlarged Community, and would demand a management effort out of all proportion to the 
benefits expected. The methods for managing the various programmes will doubtless 
have to be changed and the proliferation of small budget headings avoided. In particular, 
the priorities of Community action must be clearly stated and increases in budget 
allocations must be targeted. 
In this desire for greater concentration, the Commission set out five major priorities for 
the financing of internal policies in Agenda 2000: trans-European networks, research and 
innovation, education and training, introduction of environment-friendly technologies 
and measures to support smaller businesses. 
4. These priorities were based on the dual criteria of the direct or indirect 
contribution they could make to employment and Community value added level in the 
light of external effects or economies of scale. Coordination measures alone soon reveal 
their limitations if they are not backed by an adequate contribution from the Community 
budget to create a catalyst effect. 
10 
Trans-European networks 
Community spending on the trans-European transport, energy and telecommunications 
networks, which is still low compared with what is at stake, should increase substantially 
during the coming period. The Commission is therefore presenting the new Financial 
Regulation for the trans-European networks at the same time. Most of the allocations will 
go to the transport networks. 
The trans-European transport networks make an enormous contribution to growth and 
employment: apart from directly creating the jobs needed to build them, they make trade 
easier and thus enhance the effectiveness of the single market. They are also important 
vehicles for applying new technologies, directly exploiting research results. In future, 
assistance should still be concentrated on a limited number of projects and as much use 
as possible should be made of partnerships between the private and public sectors. 
Financial requirements should rise appreciably in future since only three or four of the 
fourteen priority projects selected at the Essen European Council will have been 
completed by the time the next financial perspective starts. However, most of them will 
pass from the preliminary stage of feasibility studies to the active phase of construction, 
requiring a higher Community funding contribution in the form of subsidies or interest 
relief: while the average rate of Community funding has remained rather low during the 
current period (around 4 to 5% of the investment carried out), it should tend towards 10% 
so that the Community can play an effective role in putting together funding packages. 
In addition to the fourteen priority projects, other major projects which had already been 
identified could be given priority status in future. At the same time, intelligent transport 
technology, which will make for more efficient use of existing infrastructure, in 
particular in traffic management systems, will move from the pilot-project stage to actual 
implementation. For those which have implications at European level, such as 
navigation satellites or the rail traffic management system, significant Community 
funding will be required. 
There is therefore a case for an appreciable boost to allocations, given the proposed 
increase in the rate of Community assistance combined with the faster rate of total 
investment for the fourteen priority projects (an expected increase of around 50% in 
nominal terms in relation to 1995-99) as well as the need for additional funds for other 
major projects and the traffic management projects. 
The projects involving trans-European energy and télécommunications networks should 
also move into a higher gear. 
© The purpose of the trans-European energy networks is to integrate gas and electricity 
networks. Their completion will maximise energy supply in relation to demand and 
thus contribute to the objective of sustainable development. 
© The spread of information technology satisfies not only economic bui also social 
needs. The prime importance of investment in this field is no longer limited to sectors 
11 
directly involved in information technology but also has a decisive effect on a large 
number of sectors which use this technology, making it an essential feature of 
competitiveness. 
In view of technological development, assistance for trans-European 
telecommunications networks, designed initially in 1995 around Euro-ISDN, will be 
expanded and focused on three new main priorities: basic networks, in particular 
satellite networks and mobile networks, to carry new multimedia applications; generic 
services based on the Internet to ensure that a maximum of small businesses have 
access to Intranet and Extranet services with appropriate security arrangements to 
allow the development of electronic commerce; the development of computer services 
of general interest (education, medicine, etc.). The aim of Community operations will 
be to guarantee interoperability of these networks and services at European level. 
In view of these objectives, trans-European networks can be expected to account for a 
growing proportion of heading 3 allocations during the period. 
Research and innovation 
In today's society, the production and exploitation of new knowledge is more decisive 
than ever before for industrial competitiveness and, consequently, for economic growth 
and employment. It also has a direct effect on the quality of life in several sectors 
(communications, transport, energy, health, environment, etc.). However, expenditure on 
R&D represents only 1.8% of European GDP as against 2.4% in the United States and 
2.9% in Japan. While our main competitors are making substantial investments, Europe 
must boost its research effort and improve coordination. 
Under the research framework programme, projects can be carried out more effectively at 
European Union level for reasons of cost, the range of expertise necessary, the pan-
European dimension of problems or their links with the development of the internal 
market. The experience gained in recent years has already stimulated hundreds of cross-
frontier cooperation networks embracing thousands of laboratories in both the public and 
private sectors and tens of thousands of researchers, thus boosting the technological 
capacity of many firms. While the Community's share of all research expenditure in the 
European Union did not exceed 4% in 1996, it is estimated that around 8% of all R&D 
personnel in the Member States are involved in projects receiving finance under the 
framework programme. This shows the catalyst effect of Community research policy. 
As the Commission already proposed in the fifth research framework programme,5 the 
Community must try to concentrate its efforts on a limited number of topics and place the 
Proposal of 30 April 1997 for a European Parliament and Council Decision concerning the 5th 
Framework Programme of the European Community for research, technological development and 
demonstration activities (1998-2002), COM(97) 142 final, OJ C 173, 7.6.1997, p. 10, as amended on 
11 August 1997 by COM(97) 439 final, OJ C 291, 25.9.1997, p. 15, and on 14 January 1998 by 
COM(98) 8 final. 
12 
emphasis on the exploitation of results and the transfer of technology within the 
European Union. This requires an increase in allocations to reach a critical mass. The 
proportion of heading 3 allocations devoted to research should therefore at least be kept 
at the proportion accounted for by the fourth research framework programme. 
Education and training 
Last November the Commission presented a communication entitled "Towards a Europe 
of knowledge"6 in which it underlined the growing importance of developing knowledge 
in Europe since in future this will more than ever be the key to the competitiveness of 
industry, the level of employment and the quality of life. The new programmes for 
education, training and youth will have three essential objectives: using the possibilities 
offered by European cooperation to enhance lifelong learning, developing the skills and 
abilities required in a society based on globalisation of knowledge and enhancing 
European citizenship by means of a European educational area. 
This will be done by: 
• increasing the mobility of students, schoolchildren, apprentices, young voluntary 
workers, teachers and instructors by doubling the number of available places in 
programmes such as ERASMUS, COMENIUS, LEONARDO or Voluntary Service; 
• using the resources of the information society to provide easy access to 
multimedia-based education and training methods; 
• encouraging virtual mobility by setting up networks between schools, universities, 
training centres and youth projects; 
• promoting language skills and the understanding of different cultures in order to 
encourage the broadest possible participation of European citizens in a multilingual 
European Union; 
• developing innovation through European pilot projects which could act as a catalyst or 
testing grounds for new approaches to education and training; 
• promoting the exchange of experience and knowhow and thus establishing 
European-level reference criteria for education. 
Resources will have to be concentrated on a limited number o\' measures and 
implementation must be simplified, especially as these programmes are also likely to 
Proposal of 30 April 1997 for a Council Decision concerning the 5th Framework Programme of the 
European Atomic Energy Community (Euratom) for research and training activities (1998-2002), 
COM(97) 142 final, OJ C 173, 7.6.1997, p. 30, as amended on 11 August 1997 by COM(97) 439 
final, OJ C 291,25.9.1997, p. 16, and on 14 January 1998 by COM(98) 8 final. 
Communication of 12 November 1997 from the Commission to the Council, the European Parliament, 
the Economic and Social Committee and the Committee of the Regions - Towards a Europe of 
knowledge, COM(97) 563 final. 
13 
attract a growing number of non-member countries as part of the policy leading up to 
accession. To attain these objectives the proportion of heading 3 allocations devoted to 
education and training should therefore be increased above the 1999 level. 
Introduction of environment-friendly technologies 
Greater importance will have to be attached to environment policy in future in response 
to public concern and the development of consumption and production systems. This was 
confirmed by the Amsterdam Treaty which included the concept of sustainable 
development among the Community objective. 
Although environment policy has a role to play in all Community policies, special 
emphasis should also be given to the promotion and introduction of environment-friendly 
technologies. This would mean beefing up measures in this field under the LIFE 
programme: innovative and demonstration actions designed to implement Community 
legislation and technical assistance to local authorities. Particular targets could be clean 
production processes in those sectors responsible for most pollution, new processes for 
treating pollution and industrial waste and procedures for recycling household waste. 
Although this is not the prime objective, the introduction of these new 
environment-friendly technologies could lead to new jobs. 
Measures to support small businesses 
The central role played by small business in the development of the European economy 
and employment is not disputed. The objective of European programmes relating to small 
businesses is to allow them to exploit the full potential of the single market and operate 
more effectively at European level through the dissemination of information and 
experience as well as access to Community programmes and sources of European finance 
such as the EIB or the European Investment Fund. More particularly the development of 
financial engineering for small businesses will be a major aspect of the initiatives for 
growth and employment. Apart from continuing existing measures, the next multiannual 
programme for small businesses will pay specific attention to the smallest linns and seek 
to provide businessmen with all the capacity they need to set up and run a small firm at 
European level. 
3.4 External action (heading 4) 
1. The overall allocation for external action will gradually rise from 
EUR 6 870 million in 1999 to EUR 7 900 million in 2006, an average increase of around 
2% a year. This overall ceiling will also cover the allocations lo finance the pre-
accession strategy through the PHARE programme, which will be isolated in a 
subheading with a constant amount of EUR 1 560 million a year over the entire period. 
These ceilings will not come up for adjustment at the time of enlargement. 
14 
As is the case with heading 3, the Commission can see no need for raising the heading 4 
ceiling for the year 2000 in view of the large margin that the 1999 budget will, in all 
likelihood, leave available beneath the ceiling. For the remainder of the period the 
Commission is proposing a gradual increase of around EUR 1 billion for the heading, an 
amount representing about half the increase set by the Edinburgh European Council 
(1999 prices) for the same length of time. This higher ceiling for heading 4 should cover 
needs already announced by the Commission and also make it possible to give priority to 
stepping up cooperation with certain regions of the world. 
The ceiling proposed for heading 4 does not allow for the entry of the European 
Development Fund in the budget. As the Commission stated in Agenda 2000, the 
question of the incorporation in the Community budget of development cooperation with 
the countries of Africa, the Caribbean and the Pacific may have to be addressed by 2005. 
2. Proposals resulting from the general balance of the new financial framework will 
result in an increase in financing requirements under heading 4. 
• At the start of the next period allocations for the PHARE programme for countries 
receiving pre-accession aid will need to be increased by around EUR 200 million in 
relation to the amount earmarked by the Cannes European Council for 1999. 
• The Commission is also proposing that the reserve for emergency aid be cut by around 
EUR 150 million. This proposal needs to be backed by a corresponding increase for 
the operational items for financing humanitarian aid in order to preserve the 
Community's capacity for action in a sector where, as the world's leading 
humanitarian aid donor, it traditionally has a high profile. 
3. In the wake of the Amsterdam Treaty the Union must be in a position to assert its 
presence even more strongly on the international scene and to optimise budget operations 
in the twin perspective of economic globalisation and régionalisation. 
As the Commission has already stated in Agenda 2000, a number of priorities for coming 
years can be distinguished. 
First of all, the Community should be in a position, over the coming period, to step up 
cooperation with its closest neighbours - the Republics of the former Soviet Union, 
former Yugoslavia, Albania and non-member Mediterranean countries. This need will 
become even more pressing in the future given the proximity of some of these 
countries to the applicant countries. The future development of the Community's 
external action should therefore be viewed today in the perspective of an enlarged 
Union. 
- Cooperation with the non-member Mediterranean countries will be shaped by the 
strategy laid down at the November 1995 Barcelona Conference for bringing the 
two sides closer together and with a view to the subsequent creation of a free-trade 
15 
area, which will require structural adjustment in the economies of the countries in 
the region. The Union should therefore step up its efforts to support the economic 
and social transition policies being implemented by these countries. 
Turkey will continue to be a beneficiary under the M EDA programme. In addition 
the special financial cooperation action will have to be implemented or some other 
aid provided, involving an equivalent amount, under the arrangements for 
strengthening cooperation with Turkey. 
Increased support for the Middle East peace process could also be envisaged if 
political circumstances so demand and allow. 
The Union recently concluded partnership and cooperation agreements with most 
of the New Independent States. In parallel with this enlarged cooperation the 
TACIS programme will have to go on financing technical assistance and its 
resources will increasingly need to act as a catalyst for financing infrastructure and 
for supporting investment in small businesses. With a view to an increase in trade, 
transport networks and environmental protection should also be priorities. 4 
The Community will also need to have the financial resources to continue and 
adjust its cooperation with the countries of former Yugoslavia. This aid will 
continue to be dependent on compliance with the Dayton principles and will have 
the threefold target of repairing war damage, economic conversion and 
establishment of democratic institutions. 
Humanitarian aid and food security will continue to be one of the essential aspects of 
Community action in the years ahead. 
As regards humanitarian aid, simply transferring allocations from the emergency aid 
reserve to operational headings cannot be interpreted as stepping up Community 
action. Decentralised management of Community humanitarian aid, based in 
particular on framework partnership contracts with international organisations and 
NGOs, has proved its worth. Financial resources will need to be increased if the 
Community is to be more active in rehabilitation or development operations, hitherto 
purely ancillary to humanitarian aid, in order to ensure that emergency aid is a lasting 
success. 
The Community budget will also have to be in a position to provide appropriate and 
permanent financial support for implementing the common foreign and security policy 
(CFSP) since the Treaty of Amsterdam has laid down the principle, unless the Council 
unanimously decides otherwise, that operational expenditure should be financed by 
the Community. However, as the Commission pointed out in Agenda 2000, the 
amounts envisaged for heading 4 assumed that there would be no major development 
of financing requirements in this area, although this does not rule out the possibility 
that the CFSP will boost expenditure of the same kind under the first pillar. 
16 
4. The priorities mentioned above should not be at the expense of cooperation with 
other parts of the world or other Community external action. 
Cooperation with Asia and Latin America will have to continue on a more 
regionalised basis. Given the economic development of these two geographical areas 
in recent years, the development cooperation policy, which should essentially focus on 
the least advanced countries, should therefore be supported by the strengthening of 
economic and political cooperation with the various regional groupings to the mutual 
benefit of all parties. 
Under the common fisheries policy the Community will have to continue taking part 
in international and regional fisheries organisations and it will have to pursue its 
policy on fisheries agreements with a shift towards cooperation agreements and an 
extension of the network of existing agreements. 
The Community will also have to remain active in its work for democracy, human 
rights, the environment and forests, support for NGOs, health and population and in 
rehabilitation and mine clearance. However, even though certain horizontal 
programmes will be maintained, these operation should be incorporated into 
regionalised cooperation programmes wherever this is judged to be appropriate and 
feasible in order to enhance the coherence and complementarity of operations 
conducted in a given geographical area. 
3.5 Administrative expenditure (heading 5) 
1. The overall allocation for administrative expenditure for a fiflcen-member Union 
will rise from EUR 4 730 million in 1999 to EUR 5 300 million in 2006, an average 
increase of around 1.7% a year. 
As with headings 3 and 4 the Commission is proposing that the heading 5 ceiling remain 
unchanged in 2000 in view of the margin that the 1999 budget should leave beneath the 
ceiling. The gradual increase over the rest of the period would be just over 
EUR 550 million, vor three-fifths of the increase agreed by the Edinburgh European 
Council for the same length of time. 
2. Nearly half of this increase will be taken up by the expected sharp rise in 
expenditure on pensions which, on the basis of available forecasts and assuming no 
change in the arrangements, will require an additional EUR 260 million by 2006, an 
average increase of over 6% a year in relation to 1999. 
17 
The growth in other expenditure for all the institutions should not therefore exceed 1 % a 
year on average. This will mean that the institutions will have to take a very strict line in 
managing all items of administrative expenditure. 
• Staff numbers should by and large remain at the same level as authorised in 1999. 
Staff costs would still increase because of changes in category or grade. 
The various institutions will have to envisage providing extra staff for certain 
activities, in particular as a result of the Treaty of Amsterdam. These reinforcements 
will have to come essentially from internal redeployment of available human 
résources. Generally speaking, the central functions on which the Commission will 
have to focus should be identified more clearly. 
The Commission also intends to press ahead with the reform of its administration. 
Greater effectiveness will have to be sought in the management of operational 
programmes. In particular, in implementing all programmes, care will have to be 
taken to ensure that projects are of an adequate size in order to avoid excessive 
management costs. 
The building programmes initiated in recent years by the Council and Parliament are 
now complete or will be by 1999 and the corresponding expenditure should therefore 
level off. The additional expenditure under this head, estimated at around 
EUR 50 million, should concern the following operations: 
- for the Commission, it will mainly concern the return to the licrlaymonl and other 
related operations connected with the reorganisation of the building stock. 
- The Court of Justice will have to renovate and extend its building. The Court of 
Auditors is also planning an extension. 
Other administrative expenditure will therefore have to remain at the same level in 
real terms over the entire period. 
3.6 Reserves (heading 6) 
Monetary reserve 
As announced in Agenda 2000 the Commission is proposing that the monetary reserve be 
gradually abandoned since the reform of the common agricultural policy should radically 
reduce the proportion of agricultural expenditure accounted for by refunds and hence the 
influence of variations in the euro/dollar rate on total agricultural expenditure. 
As the effects of the reform of the common agricultural policy should not begin to work 
through until 2001 and will be progressive for the beef and dairy sectors, it is proposed 
that a similar line be taken for abandoning the monetary reserve. It will remain at its 
present level of EUR 500 million in current prices in 2000 and 2001, will be reduced to 
18 
EUR 250 million in 2002 and eliminated altogether in 2003. This will require an 
appropriate amendment of the decision on budgetary discipline. 
Reserve for emergency aid 
As the Commission explained in its report on the operation of the Interinstitutional 
Agreement, the reserve for emergency aid has proved very useful in responding to urgent 
humanitarian aid requirements. However, it has not always been used as initially 
planned. In view of the relatively large amounts it contains, the use to be made of it has 
already been planned when budgets have been drawn up and operational items have 
tended to be under-endowed. The reserve for emergency aid should be restored to its 
original role of coping with genuinely new and unforeseeable requirements. 
It should then be possible to reduce the reserve to EUR 200 million a year (1999 prices) 
by 2000. This will, however, require a corresponding increase in the'operational items 
covered by heading 4. 
Reserve for loan guarantees 
The purpose of the reserve for loan guarantees is to endow the Guarantee Fund and, as a 
secondary function, to make direct payments if the Fund does not have sufficient 
resources. The amount set for the reserve has allowed Community lending activities to 
develop as required and the Guarantee Fund has reached its target figure of 10% of total 
guaranteed loan liabilities. 
As the Commission states in its report on the functioning of the Guarantee Fund, the 
Fund has never been called on to provide more than 5% of total liabilities. The 
Commission has therefore proposed in that report that the provisioning rate be lowered to 
6% of new guaranteed loans granted and at the same lime the amount of the guarantee 
reserve be reduced to EUR 150 million (1999 prices) in 2000 while maintaining an 
equivalent lending capacity. 
4. OVERALL FINANCIAL PERSPECTIVE CEILINGS AND MARGINS AVAILABLE 
BENEATH THE OWN RESOURCES CEILING 
4.1. Overall ceiling on appropriations for commitments 
The overall ceiling on appropriations for commitments will rise from EUR 103.4 billion 
in 1999 to EUR 105.2 billion in 2006, an average annual growth rate of 0.2% in real 
terms, including pre-accession aid. These expenditure ceilings, which represent a very 
slight increase for a fifteen-member Community, include the total amount of the 
guideline, which should leave a significant unused margin as long as the Community 
continues with its present members. 
19 
4.2. Determining the overall ceiling on appropriations for payments 
1. For the coming period the Commission is proposing that the ceiling on 
appropriations for payments be raised by an average of 1.2% a year, faster than for the 
ceiling on appropriations for commitments, even though the payments ceiling remains 
below the commitments ceiling throughout the period. 
After a period of strong growth, appropriations for commitments will tend to level off 
during the next period. Financing past commitments will therefore become increasingly 
important for determining the payments ceiling in relation to new commitments in the 
year. It follows that the gap between the appropriations for commitments ceiling and the 
appropriation for payments ceiling will gradually narrow during the next period. 
The new system of payments and advances in the legislation on the Structural Funds has 
also been taken into account in determining the ceiling cm appropriations for payments. 
2. As the rate at which commitments are actually cleared can always differ from 
what has been theoretically planned, it is important that the next Interinstitutional 
Agreement retain the procedure for adjustments to take account of the conditions of 
implementation. This enables the two arms of the budgetary authority, acting on a 
Commission proposal, to adjust the overall ceiling on appropriations for payments to the 
actual pace of payments to compensate for any backlog which may have built up during a 
financial year by catching up at a later date. This operation may require using part of the 
margin available beneath the own resources ceiling. 
4.3. Margins available beneath the own resources ceiling 
In the light of these considerations, the ceiling on appropriations for payments should 
rise, at constant 1999 prices, from EUR 96.4 billion in 1999 to EUR 104.6 billion in 
2006. The economic forecasts used by the Commission indicate that this ceiling will 
represent a percentage of Community GNP that falls from 1.23% in 1999 to 1.13% in 
2006 and will therefore leave a substantial margin beneath the own resources ceiling that 
will gradually increase to (\.14% of GNP in 2006. 
With regard to the use which can be made of the margin, from 2002 on a distinction must 
be made between the margin for unforeseen expenditure and the margin set aside to cover 
the cost of accession. 
In the light of past experience, the Commission believes that the margin for unforeseen 
expenditure should be 0.03% of Community GNP. The impact of an economic growth 
rate below what is forecast would have to be covered by this margin. It would also be 
used to cover the financing of adjustments to take account of conditions of 
implementation and any revisions of the financial perspective. 
The Commission is proposing that the remainder of the margin beneath the own 
resources ceiling, which will grow gradually from 0.02% of GNP in 2002 to 0.11% in 
20 
2006, equivalent to EUR 1.3 billion in 2002, growing to EUR 10.5 billion in 2006 (1999 
prices), should remain available for accession in the financial perspective for the 
fifteen-nation Community. 
5. PLANNING AND FINANCING ACCESSION-RELATED EXPENDITURE 
5.1. Accession-related expenditure 
fable 2 shows the expenditure scheduled in Agenda 2000 for accession. This financial 
planning links up with the financial perspective agreed for the existing Community by 
means of the amounts left available for accession. It will be the common negotiating 
position of the Fifteen. 
Heading 1 
On the basis of current estimates, expenditure for market measures will amount to 
between EUR 1.1 billion and EUR 1.4 billion a year at current prices, excluding direct 
aid. On top of this there will be enhanced accompanying measures, including specific 
modernisation aid similar to that financed by the pre-accession instrument, the amount of 
which will rise at current prices from EUR 0.6 billion to EUR 2.5 billion a year. 
Converted to 1999 prices for the purposes of comparison and to serve as a guide, the 
overall amount to be provided will rise from EUR 1.6 billion in 2002 to EUR 3.4 billion 
in 2006. 
Heading 2 
The new Member States will receive a total allocation of almost EUR 40 billion (1999 
prices), rising gradually from EUR 3 750 million in 2002 to EUR 12 080 million in 2006. 
Current economic forecasts suggest that, with the post-accession increase, the overall 
ceiling for heading 2 will account for the same percentage of the GNP of the enlarged 
Community as in 1999. 
Heading 3 
Many programmes under heading 3 are likely to be greatly affected by accession. This 
will apply particularly to policies where population or language (such as education and 
training, culture and information) are the relevant reference criteria and all programmes 
aimed at ensuring the smooth functioning of the single market (statistics, standardisation, 
administrative cooperation and inspections). The development of Trans-European 
networks will also assume a new significance in an enlarged Union, both in the new 
Member States and in the current Community Member States. Consequently, an average 
allocation of around EUR 800 million per year will be set aside, which amounts to an 
increase of about 10% in relation to the Community of Fifteen. 
21 
Heading 5 
Accession will involve significant additional costs for the institutions, which will depend 
on the procedures accepted at the accession negotiations. The institutions will have to be 
able to work in the new languages, cope with an increased volume of tasks and 
accommodate nationals from the new Member States. By analogy with the previous 
enlargement, the Commission has assumed an average overall cost of around 
EUR 400 million, increasing from EUR 370 million at the beginning of the period to 
EUR 450 million at the end. 
5.2. Financing accession 
Table 2 shows the appropriations for payments earmarked to cover the cost of accession. 
They increase progressively as payments have to be made against the new commitments. 
The fable also indicates tf?e origin of the financing. 
Agricultural expenditure should be entirely financed by the margin available beneath the 
guideline and therefore the financial perspective ceilings do not need to be raised. When 
the cost of enlargement is taken into account, overall agricultural expenditure should 
leave a significant margin beneath the guideline only at the end of the period, i.e. in 2005 
or 2006. 
The appropriations for payments for other headings will be covered by the reserve of 
amounts earmarked for this purpose in the financial perspective table for the fifteen 
Member States and by the additional own resources authorised by the increase in the 
Union's GNP resulting from accession. 
However, current forecasts for the GNP indicate that the financing sources available will 
exceed the appropriations for payments required. The unused net resources will then be 
added to the margin for unforeseen expenditure, which will increase from 0.03% of the 
GNP of the fifteen Member States to 0.05% and then 0.06% of the GNP of the enlarged 
Community. 
5.3. Incorporating the impact of accession in the financial perspective of an 
enlarged Community 
For each accession the Commission will propose an adjustment of the financial 
perspective, taking account of the actual accession arrangements and basing itself on the 
planning set out in Table 2. 
This adjustment will consist of raising the ceilings for headings 2, 3 and 5 to cover 
accession-generated expenditure. The agricultural guideline will not be raised at the time 
of accession, since the new expenditure will be covered by the margin beneath the 
guideline. Nevertheless, it will be calculated, by the same method, using parameters that 
relate to the enlarged Community, and especially taking account of increased economic 
growth from 2003, given the faster growth rate of the Central and Eastern European 
countries. 
22 
Table 1 
Financial perspective 
EUR million -1999 prices - Appropriations for 
commitments 
1. AGRICULTURE**) 
of which: Pre-accession aid 
2. STRUCTURAL OPERATIONS 
Structural Funds 
Cohesion Fund 
Pre-accession structural instrument 
adjustments (**) 
3. INTERNAL POLICIES 
4. EXTERNAL ACTION 
of which: Pre-accession aid 
5. ADMINISTRATION 
6. RESERVES 
Monetary reserve 
Emergency aid reserve 
Guarantee reserve 
TOTAL APPROPRIATIONS FOR COMMITMENTS 
TOTAL APPROPRIATIONS FOR PAYMENTS 
Appropriations for payments as % of GNP 
Margin 
Available for accession 
Own resources ceiling 1999 
45.205 
39.025 
32.731 
3.000 
3.294 
6.386 
6.870 
4.723 
1.192 
500 
346 
346 
103.401 
96.380 
1,23% 
• 0,04% 
1,27% 2000 
46.050 
520 
36.640 
32.600 
3.000 
1.040 
6.390 
6.870 
1.560 
4.730 
850 
500 
200 
150 
101.530 
98.800 
1,24% 
0,03% 
1,27% 2001 
46.920 
520 
37.470 
33.430 
3.000 
1.040 
6.710 
7.070 
1.560 
4.820 
850 
500 
200 
150 
103.840 
101.650 
1,24% 
0,03% 
1,27% 2002 
47.820 ••" 
520 
36.640 
32.600 
3.000 
1.040 
6.880 
7.250 
1.560 
4.910 
600 
250 
200 
150 
104.100 
102.930 
1,22% 
0,03% 
0,02% 
1,27% 2003 
48.730 
520 
35.600 
31.560 
3.000 
1.040 
7.050 
7.430 
1.560 
5.010 
350 
0 
200 
150 
104.170 
103.520 
1.20% 
0.03% 
0.04% 
1,27% 2004 
49.670 
520 
34.450 
30.410 
3.000 
1.040 
7.230 
7.610 
1.560 
5.100 
350 
0 
200 
150 
104.410 
103.810 
1.18% 
0.03% 
0.06% 
1,27% 2005 
50.630 
520 
33.410 
29.370 
3.000 
1.040 
7.410 
7.790 
1.560 
5.200 
350 
0 
200 
150 
104.790 
104.170 
1.15% 
0.03% 
0.09% 
1,27% 2006 
51.610 
520 
32.470 
28.430 
3.000 
1.040 
7.600 
7.900 
1.560 
5.300 
350 
0 
200 
150 
105.230 
104.560 
, 1,13% 
0,03% 
0,11% 
1,27% 
(*) The ceiling corresponds to the agricultural guideline. 
(**) Including the amount in respect of the EEA financial mechanism and the adjustment proposed by the Commission to take account of the conditions of 
implementation of the 1997 budget. 
Table 2: 
Expenditure resulting from accession; financing 
EUR million -1999 prices 
Expenditure 
Heading 1 (*) 
Heading 2 
Heading 3 
Heading 5 
Total appropriations for commitments 
(1) Total appropriations for payments 
Sources of financing available 
Financing of agricultural expenditure by drawing on the margin available 
beneath the guideline 
Amounts earmarked for accession in the financial framework of the fifteen-
nation Community (estimate) 
Increase in own resources resulting from growth in Union GNP following 
enlargement (estimate) 
(2) Total financing available 
Changes in the margins beneath the own resources 
ceiling 
Margin (2)-(1) 
Margin in the financial framework of the fifteen-nation Community (0.03% of 
GNP) 
Total margin available in an enlarged Community (estimate) 
Total margin as a percentage of the GNP of the enlarged Community 2002 
1.600 
3.750 
730 
370 
6.450 
4.140 
1.600 
1.280 
3.440 
6.320 
2.180 
2.520 
4.700 
0,05% 2003 
2.030 
5.830 
760 
410 
9.030 
6.710 
2.030 
3.300 
3.510 
8.840 
2.130 
2.580 
4.710 
0,05% 2004 
2.450 
7.920 
790 
450 
11.610 
8.890 
2.450 
5.680 
3.580 
11.710 
2.820 
2.650 
5.470 
0,06% 2005 
2.930 
10.000 
820 
450 
14.200 
11.440 
2.930 
8.060 
3.660 
14.650 
3.210 
2.720 
5.930 
0,06% 2006 
3.400 
12.080 
850 
450 
16.780 
14.220 
3.400 
10.470 
3.740 
17.610 
3.390 
2.780 
6.170 
0,06% 
c (*) Expenditure estimated at 199S prices for the purposes of comparison. Only estimates at current prices are relevant. 
ANNEX A Basic economic data 
EUR billion -1999 prices 
GNP - Fifteen 
GNP - new Member States 
GNP- TOTAL 1999 
7804,3 2000 
7999,4 2001 
8199,4 2002 
8404,4 
291,9 
8696,3 2003 
8614.5 
303,6 
8918.1 ' 2004 
8829,8 
315,7 
9145,6 2005 
9050,6 
328,4 
9378,9 2006 
9276,9 
341.5 
9618,3 
Growth forecasts 2000 - 2001 2002 - 2006 
GNP - Fifteen 2,5% 2.5% 
GNP-new Member States 4,0% 4.0% 
GNP - enlarged Community 2,6% 
Deflator 2,0% 2,0% 
SO 
ANNEX B Estimate of agricultural expenditure (current prices) 
EUR million 
Agricultural guideline (current prices) (*) 
Agricultural expenditure (current prices) 
Fifteen-nation Community (**) 
Reformed CAP (market measures) 
Accompanying rural development measures and 
horizontal measures in the fisheries sector 
Veterinary and plant-health measures 
Pre-accession aid (***) 
Margin 
Estimated expenditure for accession (pm) 1999 
45.205 
40.400 
40.400 
37.800 
2.600 
4.805 2000 
46.940 
42.650 
42.120 
37.275 
4.745 
100 
530 
4.290 2001 
48.750 
45.710 
45.170 
40.280 
4.790 
100 
540 
3.040 2002 
50.630 
47.515 
46.965 
42.035 
4.830 
100 
550 
3.115 
1.700 2003 
52.600 
49.040 
48.480 
43.510 
4.870 
100 
560 
3.560 
2.200 2004 
54.650 
49.250 
48.680 
43.670 
4.910 
100 
570 
5.400 
2.700 2005 
56.790 
49.270 
48.680 
43.620 
4.960 
100 
590 
7.520 
3.300 2006 
59.020 
49.360 
48.760 
43.670 
4.990 
100 
600 
9.660 
3.900 
-
(*) Guideline for the fifteen. Assuming a deflator of 2% a year between 2000 and 2006. 
'(**) For 1999 the figure shown is not necessarily the exact amount to be proposed in the preliminary draft. 
(***) EUR 520 million at constant 1999 prices. 

ISSN 0254-1475 
COM(98) 164 final 
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