PRELIMINARY DRAFT AMENDING BUDGET No 3 TO THE BUDGET FOR 2004 - GENERAL STATEMENT OF REVENUE - STATEMENT OF REVENUE AND EXPENDITURE BY SECTION:

Section I - Parliament

Section II - Council

Section III - Commission

Section IV - Court of Justice

Section V - Court of Auditors

Section VI - Economic and Social Committee

Section VII - Committee of the Regions

Section VIII Part A- European Ombudsman

(presented by the Commission)

Having regard to

- the Treaty establishing the European Community, and in particular Article 272 thereof,

- the Treaty establishing the European Atomic Energy Community, and in particular Article 177 thereof,

- Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, [1] and in particular Article 37 thereof,

[1] OJ L 248, 16.09.2002.

the European Commission hereby presents to the budgetary authority the preliminary draft amending budget No 3 to the 2004 budget for the reasons set out in the explanatory memorandum.

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STATEMENT OF REVENUE AND EXPENDITURE BY SECTION

The general statement of revenue and the statement of revenue and expenditure by section are forwarded separately via the SEI-BUD system. One language version of the general statement of revenue and of the statement of revenue and expenditure by section is attached as a technical annex by way of example.

EXPLANATORY MEMORANDUM

1. Introduction

This amending budget is mainly intended to give substance to the decisions taken at the conciliation meeting on 24 November 2003. In the first place it brings into line the appropriations awarded to the institutions for the publication of the acquis in the languages of the new Member States. It also adjusts the appropriations required for remunerations, to match them to the establishment plans, which were altered significantly from past years in order to take into account the administrative requirements connected with enlargement.

At the conciliation it was agreed that the Commission and the Council could present a preliminary draft amending budget to cover any additional needs for the publication of the acquis. It was thought that this would be necessary because the number of pages was higher than initially forecast and the programming of the arrival of the translations at OPOCE had changed. However, recent information from the Publications Office suggests that the Commission will no longer need to provide additional appropriations for the acquis in 2004 as the cost per page published has been reduced. Only the Council's additional needs are therefore included in this preliminary draft budget.

The adjustment concerning remunerations is to reconcile the decisions taken at the end of 2003 on the establishment plan in connection with enlargement and the salary review.

With the present budgets as adopted by the budgetary authority at the end of 2003, the institutions would be forced to leave vacant some of the posts allocated for enlargement in order to cover their obligations under the Staff Regulations.

In order to deal with this problem which was already known at the time of the conciliation on 24 November, the two arms of the budgetary authority agreed to leave an adequate margin in heading 5 so that a correction could be made once the exact amount had been calculated.

This amount is the difference between the initial assumptions used for calculating the appropriations and the decisions taken by the Council at the end of 2003. Apart from remunerations, it also concerns pensions. All the institutions are affected by these adjustments. Parliament, however, has decided to make the adjustment by means of a transfer within its present budget and is not therefore involved in this preliminary draft amending budget. The case of the European Data-Protection Supervisor is also special because of the recent appointment of the members of this institution. It too is not involved in this preliminary draft amending budget. The Commission also proposes other changes to the 2004 budget in connection with the remarks to certain budget lines which proved necessary after the budget was adopted and whose overall budgetary effect is neutral.

2. Acquis Communautaire

Because of the delay in the production of the secondary legislation, only EUR2 million of the Council's forecast share of EUR16.9 million entered in the 2002 budget (and carried over to 2003) has been used.

In principle the consequence of the delay should be that the 2002 appropriations cancelled should be restored in 2004. However, according to information from OPOCE, a number of factors underlying the estimate of the costs of the acquis have changed:

- increase in number of pages from 70 000 to 83 000 (19% increase),

- reduction in price per page from EUR75 to EUR58 (23% reduction),

- impossibility of producing the entire acquis in Maltese in 2004 (a third of production deferred to 2005).

On the basis of these figures COREPER believes that for the production of the acquis, only an additional EUR13.5 million is required in 2004, and an estimate of EUR1.5 million for 2005.

As the reduction in the price per page also applies to the ordinary production of the Official Journal, a saving on routine production of EUR3 million can be envisaged for 2004.

COREPER is proposing, in view of the amounts involved, that the appropriation entered for Article 270 be increased, via the amending budget, by the net result of these two movements, i.e. EUR10.5 million.

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3. Conversions and enlargement-related management posts

3.1. Conversions

In its statement of estimates for 2004 the Council's General Secretariat proposed converting a number of posts with a view to ensuring an appropriate career progression.

3.1.1. The Budgetary Committee did not accept the upgradings requested, stating that "if upgradings are granted to other institutions in the subsequent budgetary procedure, the circumstances of the requests made by the Council in its own estimate should be re-examined " [2].

[2] Doc. 11242/03, 11 July 2003.

As it happens, during the budgetary procedure, Parliament passed amendments granting upgradings to all the other institutions.

In accordance with the declaration of the Budgetary Committee, COREPER has re-entered in this amending budget the request for upgradings made in its statement of estimates:

- 3 A7 converted to 2 A5 and 1 A6

- 7 LA7 converted to 5 LA4 and 2 LA6

- 6 B5 converted to 3 B1, 3 B2

- 17 C5 converted to 4 C1, 5 C2, 5 C3 et 3 C4

The budgetary cost of this package of conversions is EUR0.4 million for 2004.

3.1.2. In line with one objective of its personnel policy which is to boost the number of category A staff in order to enhance the operation of its General Secretariat, COREPER proposes creating 6A posts in the following grades (2 A3, 3 A4, 1 A7).

The "méthode maîtrisée", which involves rationalising translation, will offset this requirement by dispensing with 10 LA7. In other words the budgetary impact of this conversion of posts is nil.

3.1.3. COREPER also wishes to convert a temporary A2 post into an A2. The budgetary impact of this conversion is of course nil.

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3.2. Enlargement-related posts

To meet the challenge of enlargement COREPER has worked out a restrictive approach not involving A1, A2 and A3 management posts.

A recent evaluation of human resource requirements revealed that the number of posts awarded (502) should be increased slightly for management posts alone (2 A2 and 4 A3), in order to allow for the expansion and wider range of tasks flowing from enlargement and also to achieve a more rational organisation of certain departments.

The job descriptions of the proposed management posts are as follows:

- A director for DG G (Economic and Social Affairs) [3]

[3] This DG currently has only one Director.

- A director for DG I (Protection of the Environment and Consumers, Civil protection, Health, Foodstuffs, Education, Youth, Culture, Audiovisual)3.

The A3 posts should be used, given the present situation, to strengthen the structure of the various DGs, more particularly:

- DG A - Personnel and Administration

- DG B - Agriculture - Fisheries

- DG E - External economic relations, common foreign and security policy

- DG I - Protection of the Environment and Consumers, Civil protection, Health, Foodstuffs, Education, Youth, Culture, Audiovisual

The budgetary cost of the posts identified above for 2004 is EUR0.5 million.

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1. ESTABLISHMENT PLAN COUNCIL

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4. Financing the adjustment of remunerations and pensions

The parameter used for the adjustment of remunerations and pensions from January 2004 when calculating the appropriations for the 2004 budget was 2%. However, the correction of 1% [4] and the increase of 3.4% decided in December 2003 [5] outstrip the adjustment used for drawing up the 2004 budget by a total 2.4%.

[4] OJ L 327, 16.12.2003 Council Regulation (EC, Euratom) No 2181/2003, 8 December 2003.

[5] OJ L 327, 16.12.2003 Council Regulation (EC, Euratom) No 2182/2003, 8 December 2003.

The additional appropriations arising from these adjustments for all the institutions come to EUR80.198 million in heading 5. The breakdown is as follows:

- Parliament: EUR7.778 million

- Counsil: EUR5.733 million

- Commission: EUR59.227 million (incl. pensions: EUR19.136 million)

- Court of Justice: EUR3.934 million

- Cour of Auditors: EUR1.750 million

- Economic and Social Committee: EUR1.025 million

- Committee of the Regions: EUR0.653 million

- European Ombudsman: EUR0.098 million

The preliminary draft amending budget proposed here enters the appropriations needed for the payment of remunerations and pensions in 2004 only in Sections II to VIII for the institutions concerned (EUR72.420 million), the exception being Parliament, which will make a transfer within its section .

The breakdown of appropriations within each section of the budget is as follows:

4.1. Section II (Council)

The appropriations requested by the Council break down as follows:

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4.2. Section III (Commission)

The appropriations requested by the Commission break down as follows:

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The breakdown of Title XX appropriations by budget line in the various policy areas and the breakdown of appropriations for the offices by budget line in the relevant annexes are set out in the technical annex to this amending budget.

4.3. Section IV (Court of Justice)

The breakdown by budget line of the appropriations requested by the Court of Justice is as follows:

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4.4. Section V (Court of Auditors)

The breakdown by budget line of the appropriations requested by the Court of Auditors is as follows:

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4.5. Section VI (Economic and Social Committee)

The breakdown by budget line of the appropriations requested by the Economic and Social Committee is as follows:

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4.6. Section VII (Committee of the Regions)

The breakdown by budget line of the appropriations requested by the Committee of the Regions is as follows:

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4.7. Section VIII (European Ombudsman)

The breakdown by budget line of the appropriations requested by the Ombudsman is as follows:

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5. Compatibility with the heading 5 ceiling

This preliminary draft amending budget of EUR83 796 748 reduces the margin below the heading 5 ceiling to EUR32 163 138 when account is taken of preliminary draft amending budget No 2 concerning the European Data-protection Supervisor.

6. Other changes to the 2004 budget

6.1. The European Regional Development Fund and the Cohesion Fund

There is a need to amend the 2004 budget for the European Regional Development Fund and the Cohesion Fund technical assistance lines on two counts. First, the budgetary remarks of the ERDF and the Cohesion Fund lines for expenditure on administrative management have to be amended and, second, the breakdown of appropriations between the administrative and operational lines have to be corrected.

The first amendment concerns changes to the budgetary remarks of two budget items, Item 13 01 04 01 - ERDF - Expenditure on Administrative Management and Item 13 01 04 03 - Cohesion Fund - Expenditure on Administrative Management.

The budgetary remark on the Cohesion Fund item has been revised to align it with the remark on the comparable ERDF item. The budgetary remark of the ERDF line has been amended to adjust the ceiling for expenditure on temporary staff. The combined ceiling for this expenditure under the Cohesion Fund and the ERDF has been increased by EUR 305 000. This is justified by the need to mobilise additional resources (84 man/months) for the preparation of the accounting reform (analysis and migration of historical data concerning the operations funded by the ERDF and the Cohesion Fund).

As a consequence of this additional need for expenditure on temporary staff in the context of the accounting reform, two transfers are necessary: a transfer of appropriations from the operational line to the administrative chapter line, within the ERDF (EUR 213 500) and a similar transfer within the Cohesion Fund (EUR 91 500). These transfers are budget-neutral.

The proposed amendments of budget remarks, as well as the new proposed amounts for 2004 appropriations are as follows:

Item 13 01 04 01 -- European Regional Development Fund (ERDF) -- Expenditure on administrative management

Appropriations 2004 - commitments // Appropriations 2004 - payments

3 213 500 // 3 213 500

Remarks

This appropriation is intended to cover the ERDF-funded technical assistance provided for in Article 23 of Regulation (EC) No 1260/1999.

Technical assistance covers preparatory, monitoring, evaluation, supervision and management measures required for implementation of the ERDF within the Commission.

The appropriations can, in particular, be used to cover:

- support expenditure (representation expenses, training, meetings, missions),

- information and publishing expenditure,

- expenditure on information technology and telecommunications,

- contracts for the provision of services,

- expenditure on temporary staff (national and individual experts, auxiliaries, temporary and local staff) up to the sum of EUR 1 823 500.

Article 13 02 01 -- European Regional Development Fund (ERDF) - Operational Technical Assistance

Appropriations 2004 - commitments // Appropriations 2004 - payments

16 507 879 // 13 546 500

Remarks

No change.

Item 13 01 04 03 -- Cohesion Fund -- Expenditure on administrative management

Appropriations 2004 - commitments // Appropriations 2004 - payments

1 591 500 // 1 591 500

Remarks

This appropriation is intended to cover expenditure on technical assistance and administrative expenditure within the Commission under the Cohesion Fund.

Technical assistance covers preparatory, monitoring, evaluation, supervision and management measures required for implementation of the Cohesion Fund within the Commission.

The appropriations can, in particular, be used to cover:

- support expenditure (representation expenses, training, meetings, missions),

- information and publishing expenditure,

- expenditure on information technology and telecommunications,

- contracts for the provision of services,

- expenditure on temporary staff (national and individual experts, auxiliaries, temporary and local staff) up to the sum of EUR 781 500.

Article 13 04 01 -- Cohesion Fund

Appropriations 2004 - commitments // Appropriations 2004 - payments

5 680 408 500 // 2 798 508 500

Remarks

No change.

6.2. European Agency for the Evaluation of Medicinal Products

To cushion the risk that fluctuations in fees might have on budget execution in the European Agency for the Evaluation of Medicinal Products, the Commission has proposed that the repayment in year n+1 of the positive balance in the outturn account in year n should be considered as assigned revenue.

For these arrangements to apply in 2004 to any repayments arising from a surplus from the 2003 subsidy, the remarks to budget lines 02 04 02 01, 02 04 02 02 and 02 04 02 03 must be amended as follows:

"Any surplus Community subsidy will be repaid to the Community budget and will give rise to the provision of the equivalent assigned revenue."

6.3. Preparatory action - Aid to small and medium-sized firms in the new financial environment

This preparatory action has been proposed by Parliament. The appropriations allocated are covered by appropriate sub delegation and are distributed, in accordance with Article 54(2)(c) of the Financial Regulation, to the International Financial Institutions explicitly referred to in the remarks at budget line 02 02 03 02.

This arrangement is an extension of what has been done under PHARE in recent years: the agreements between the Commission and the International Financial Institutions stipulate that 1.25% of the grant is to cover "audit and management expenditure". Given the total allocation to this line, this percentage of 1.25% comes to a total of EUR75 000. These grants cover the technical assistance accompanying loans which are a hundred times higher. The multiplier effect is thus particularly high.

In view of the past situation, the International Financial Institutions demand that this provision be retained in future grant agreements.

Moreover, under Articles 54(2) and 56 of the Financial Regulation, an independent external audit must be carried out on grants made by the International Financial Institutions to match funds from the Commission.

The Commission therefore proposes that the following be added to the remarks to this budget line (underlined):

"The appropriations eligible for technical assistance under this preparatory action, and audit and management expenditure amounting to 1.25% of the total, must accompany the loans to the small firms...".

7. Chemicals Agency (REACH project)

In its preliminary draft budget the Commission proposed a preparatory action with an allocation of EUR3 million (line 02 04 04), ahead of the creation of the future Chemicals Agency. This was intended to cover some necessary work on producing a computerised tool/database for the cataloguing and management of chemicals in line with the Commission proposal currently being discussed [6].

[6] COM(2003) 644, 29 October 2003.

This proposal was not accepted by the budgetary authority and even though the line still appears in the budget nomenclature, it carries only a token entry (pm).

The essential priority expenditure can be financed by mobilisation of administrative appropriations (ex Title A7) and appropriations from line 02 04 01, by reviewing the priorities set for pre-programmed expenditure. The budget remarks have already been amended in AL No 1/2004 [7] and now refer to the Commission's institutional prerogatives.

[7] SEC(2003) 1058, 1.10.2003.

In the light of the above the Commission proposes adding the following to the remarks for the line in question (02 04 01):

"This appropriation is also intended to finance preparatory expenditure on setting up the future Chemicals Agency (in particular the REACH project)."

7.1. Statistical information policy

European Parliament and Council Decision EC/1608/2003 is mainly financed by the Statistical programme 2003-07, thus budget line 29 02 01. However, the budget remarks for this budget line in the 2004 budget do not include this Decision as legal basis to be financed.

The Commission is therefore proposing to include in the remarks of this line, after

"Decision No 2367/2002/EC of the European Parliament and of the Council of 16 December 2002 on the Community statistical programme (2003 to 2007) (OJ L 358, 31.12.2002, p. 1)."

a reference to the above-mentioned Decision (underlined in the following text):

"Decision No 1608/2003/EC of the European Parliament and of the Council of 22 July 2003 concerning the production and development of Community statistics on science and technology (OJ L 230, 16.9.2003, p. 1)."

7.2. Management of Election Observation Missions

The draft Communication on the Management of Election Observation Missions foresees, between the arrangements for implementation of European Union Election Observation Mission, that the Chief Observer should be appointed as Special Adviser, according to Articles 5, 82 and 83 of the Conditions for Employment of Other Servants. All the costs related to the implementation of election observation missions, which are considered as individual projects implemented by the Commission under the terms of the relevant legal bases (Regulations 975/1999 and 976/1999), can be financed on the operational appropriations, including the cost of the recruitment of the Chief Observer as Special Adviser.

As a matter of transparency toward the Budgetary Authority, it is proposed, in order to explicitly foresee the possibility to finance this cost from the operational appropriations, to amend the budgetary comment of the line 19 04 03 by adding the following paragraph:

"This appropriation is also intended to enable the financing of the Chief Observer contract with the Commission as Special Adviser under Articles 5 and 82 of the Conditions for Employment of Other Servants in the Staff Regulations as well as the cost of external staff providing support to electoral observation missions."

7.3. The appointment and remuneration of Dr Busek (Stability Pact coordinator) as Commission Special Adviser

From 2004, the EU's contribution to the Special Coordinator of the Stability Pact for South-eastern Europe, which until 2003 was financed from the CFSP budget, is contained in budget line 19 07 04. The legal base for this line [8] has been duly adjusted.

[8] Council Regulation (EC) No 2098/2003 of 27 November 2003 amending Regulation (EC) No 1080/2000 on support for the United Nations Interim Mission in Kosovo (UNMIK) and the Office of the High Representative in Bosnia and Herzegovina (OHR) (OJ L 316, 29.11.2003, pp. 1-2).

The remarks to this budget line have also had to be adjusted to reflect the fact that the legal base has been extended to the Stability Pact and that the operating appropriations in this line also finance the recruitment of the Special Coordinator as a Commission Special Adviser (until now the Special Coordinator has been recruited as a Special Adviser by the General Secretariat of the Council).

It is proposed that the following paragraph be added:

"This appropriation is also intended to enable the financing of the Special Coordinator's contract with the Commission as Special Adviser under Articles 5 and 82 of the Conditions for Employment of Other Servants in the Staff Regulations, as well as the cost of external staff providing support to the Special Coordinator of the Stability Pact for South-eastern Europe, including covering the running costs of his office."

SUMMARY TABLE BY HEADING of the financial perspective

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