COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL - Technical adjustment of the financial perspective for 2005 in line with movements in GNI and prices (Point 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)

1. INTRODUCTION

The Interinstitutional Agreement (IIA) of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure [1], as adjusted for enlargement [2], contains the financial perspective table for EU-25 (Table 1a).

[1] OJ C 172, 18.6.1999, p. 1.

[2] OJ L 147, 14.6.2003, p. 31.

Point 15 of the Interinstitutional Agreement states that each year the Commission will, ahead of the budgetary procedure for year n+1, make a technical adjustment to the financial perspective in line with movements in the EU's gross national income (GNI) and prices.

The purpose of this communication is to present to the budgetary authority the result of this technical adjustment (EU-25) for 2005.

2. TERMS OF THE ADJUSTMENT OF THE FINANCIAL PERSPECTIVE TABLE (TABLES 1-3)

Table 1 shows the financial perspective for EU-25 at 2005 prices.

Table 2 shows the financial perspective for EU-25 at 2005 prices, including the budgetary implications of a political settlement in Cyprus.

Table 3 presents the economic parameters used for this adjustment exercise. They are based on data drawn up by Eurostat and on the most recent forecasts made by the Commission in conjunction with national experts (budget forecasts, autumn 2003). The figures and forecasts are based on the European System of Accounts revised in 1995 (ESA 95).

2.1. Adjustment of expenditure ceilings by heading

The adjustment is calculated by applying the following deflators to the financial perspective (at 1999 prices):

- a cumulative deflator of 12,62% for the period 2000-2005 to the ceiling for heading 1 and to the figure for the Structural Funds in heading 2, in accordance with point 15 of the Interinstitutional Agreement (fixed rate of 2% a year).

- the GNI deflator in euros for 2000-2005 (11,28%) to the other ceilings (actual deflator).

In accordance with point 23 (a) of the Interinstitutional Agreement of 6 May 1999, the monetary reserve has been eliminated as from 2003.

To ensure consistency with the Cohesion Fund allocations for the ten new Member States enshrined in the Accession treaties, the overall figure for the Cohesion Fund in 2005 prices has been rounded up to the superior unit.

As regards payments, the adjustment is based on the appropriations for payments estimated for each expenditure heading when the financial perspective was drawn up (1999 prices). The method of calculation is set out in the following table:

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Appropriations for payments concerning the ten new Member States - whose accession to the European Union will occur on May 1st, 2004 - have been added to appropriations for payments concerning current Members, in 1999 prices and for each sub-category of the table above. Sub-totals in 1999 prices are then adjusted in 2005 prices according to the relevant deflator: heading 1 and the Structural Funds share of heading 2 have been adjusted by means of a 12,62% cumulative deflator; other headings or expenditure have been adjusted by means of a 11,28% cumulative deflator.

2.2. Main results of the technical adjustment of the Financial Perspective for 2005 (EU-25)

The overall ceiling on appropriations for commitments for 2005 comes to EUR119.419 million, equivalent to 1,14% of GNI.

The corresponding overall ceiling on the appropriations for payments comes to EUR114.060 million, i.e. 1,09% of GNI. On the basis of current economic forecasts, this leaves a margin beneath the own resources ceiling of EUR15.732 million (0,15% of GNI for EU-25).

For 2001, 2002, 2003 and 2004, the size of the margin has been updated from the previous technical adjustment using the most recent GNI estimates so that comparisons can be made over a number of years. However, the ceilings in commitments and payments resulting from the adjustments made do not change.

2.3. The financial perspective adjusted in 2005 prices including budgetary implications of a political settlement in Cyprus

Table 2 presents the financial framework EU-25 adjusted in 2005 prices including the budgetary implications of a political settlement in Cyprus.

This table has been adjusted in the same way as Table 1 and will apply in the event that a unified Cyprus enters the European Union on May 1st, 2004.

3. OTHER ELEMENTS LINKED TO THE EXERCISE OF TECHNICAL ADJUSTMENT

3.1. The agricultural guideline

The agricultural guideline has been calculated in accordance with Article 3 of the new Council Regulation on budgetary discipline [3] (see Table 4).

[3] OJ L 224, 29.9.2000, p.27. Council Regulation No 2040/2000 of 26 September 2000.

The figures for sugar and isoglucose levies, food aid refunds and ACP sugar refunds are based at this stage on the forecasts for the 2005 budget. In accordance with the regulation on budgetary discipline, the final level of these specific items in the guideline will be fixed when the preliminary draft budget for 2005 is presented.

In 2005 the agricultural guideline is provisionally estimated at EUR 55.545 million [4].

[4] This leaves a margin of EUR 3.856 million in relation to all the expenditure which, in accordance with the regulation on budgetary discipline, is included under the guideline (heading 1 and the 'agriculture' expenditure of the pre-accession aid under heading 7, i.e. EUR 250 million foreseen for Bulgaria and Romania in 2005).

3.2. Heading 5 (Administration)

In the case of heading 5, a footnote to the financial perspective states that the figures for pensions included under the ceiling for this heading are to be calculated net of staff contributions to the pension scheme, up to a maximum of EUR 1.100 million (1999 prices) for the period 2000-2006. As stated in the Commission communication on the technical adjustment for 2000 [5], "this provision should be interpreted as imposing a dual limit on the amounts deducted from expenditure on pensions when applying the ceiling of the heading":

[5] SEC (1999) 847 final, paragraph 6.

- This amount may not exceed the contributions actually entered as budget revenue in any one year;

- The accumulated total of deductions for the period 2000-2006 may not exceed EUR 1.100 million at 1999 prices, equivalent to an average of EUR 157 million (EUR 175 million at 2005 prices).

As administrative expenditure is, as a rule, recurrent, the lowest limit - i.e. a maximum of EUR 175 million at current prices for 2005 - should be adopted each year to avoid using a margin at the start of the period which will no longer be fully available afterwards.

3.3. Operations outside the budget

The fifth subparagraph of point 10 of the Interinstitutional Agreement states that information relating to operations not included in the general budget and the foreseeable development of the various categories of own resources is to be set out in tables, as an indication, and updated annually when the technical adjustment is made to the financial perspective.

This information, updated in line with the latest estimates available, is set out in Tables 5.1 to 5.2. It covers the EDF and the structure of own resources.

ANNEX

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