6. 7. 78 Official  Journal  of the European  Communities N. C 160/11 
Proposal  for  a Council  Regulation  (Euratom,  ECSC,  EEC)  amending  the  Financial 
Regulation  of 21  December  1977  applicable  to the  General  Budget  of the 
European  Communities 
(Submitted  by the Commission  to the Council  on IS June  1978) 
THE  COUNCIL  OF THE  EUROPEAN  COMMUNITIES, 
Having  regard  to  the  Treaty  establishing  the 
European  Coal  and  Steel  Community,  and  in 
particular  Article  78 (9) thereof, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Article  209 thereof, 
Having  regard  to  the  Treaty  establishing  the 
European  Atomic  Energy  Community,  and  in 
particular  Article  183  thereof, 
Having  regard  to the proposal  from  the Commission, 
Having  regard  to the  opinion  of the  European 
Parliament, 
Having  regard  to the  opinion  of the  Court  of 
Auditors, 
Whereas  the  budgetary  presentation  of borrowing 
and lending  transactions  should  be improved  by 
showing  more  clearly  in a separate  part  of the Budget 
the estimates  and  the authorizations  relating  to these 
transactions; 
Whereas  the  borrowing  and  lending  operations 
represent  commitments  the  Community  must 
honour;  whereas  these  operations  have  therefore  been 
entered  in the  General  Budget  of the  European 
Communities  in order  to express  the  Communities' 
undertaking  to use  their  own  resources,  in case  of 
default  or delay  in repayment  by the beneficiary,  to 
honour  the  obligations  arising  out  of the  loan 
contracts; 
Whereas  it would  be  desirable  to simplify  the 
presentation  of  the  research  and  investment 
appropriations  in Chapter  33 of the  Commission 
section  of the Budget; 
Whereas  in respect  of decisions  to carry  over 
appropriations  it would  be advisable  to adopt  the 
same  period  as for  transfers  of appropriations  in 
order  to give  the  Council  time  to consult  the 
European  Parliament  during  that  period; 
Whereas  it is therefore  necessary  to amend  certain 
provisions  of the Financial  Regulation  of 21 December 
1977, HAS  ADOPTED  THIS  REGULATION: 
Article  1 
The Financial  Regulation  of 21  December  1977 
applicable  to the  General  Budget  of the  European 
Communities  shall  be amended  as follows: 
1. Second  indent  of Article  1 (1):  substitute  the 
following  wording  for  the  text  of the  second 
indent  of the second  subparagraph: 
'— the revenue  and  expenditure  of the European 
Economic  Community,  particularly  any  loans 
contracted,  sums  lent  and  the  relevant 
repayments  and  costs.' 
2. Article  1 (4): substitute  the following  wording  for 
the text  of the second  subparagraph: 
'Operating  expenditure  arising  from  contracts 
which  have  been  concluded,  in accordance  with 
local  usage,  for  periods  going  beyond  the 
financial  year,  and  expenditure  for repayment  of 
loans  and  related  costs,  is not  subject  to the 
provisions  of the  preceding  subparagraph.  Such 
expenditure  shall  be charged  to the  Budget  for 
the financial  year  in which  it is effected.' 
3. Article  3 (2): substitute  the following  wording  for 
the text  of the first  subparagraph: 
'Notwithstanding  paragraph  1,  revenue 
earmarked  for a specific  purpose,  such  as income 
from  foundations,  subsidies,  gifts,  bequests,  and 
the product  of any  loans  raised,  repayment  of 
sums  lent  and  related  costs,  shall  not be used  for 
any other  purpose.' 
4. Article  6 (3): substitute  the following  wording  for 
the text  of the second  subparagraph: 
'Should  the  Council,  acting  by  a qualified 
majority,  fail  to take  a contrary  decision  within 
six weeks  of receiving  the application,  the carrying 
over of these  appropriations  shall  be deemed  to 
be approved. 
The Council  shall  consult  the  European 
Parliament  immediately  upon  receiving  the 
application  to carry  over  appropriations.' 
5. Article  6 (4): add  the following  subparagraph: 
'Authorizations  entered  in Part  II of the  Budget 
shall  be  carried  over  automatically  to  the 
No C 160/12 Official  Journal  of the European  Communities 6. 7. 78 
following  financial  year  where  the  operations 
have  not  been  implemented  by the  end  of the 
financial  year  for which  they  were  authorized.' 
6. Article  7: add  the following  subparagraph: 
'The  lendings  authorized  in Part  II of the Budget 
shall  be  covered  solely  by  the  product  of 
borrowings.' 
7. Article  12:  substitute  the following  wording  for 
the text  of paragraph  1: 
'1. The  Commission  shall,  in the  preliminary 
draft  budget  which  it shall  place  before  the 
Council  not later  than  1 September  of each  year: 
— draw  up Part  I of the  Budget  which  shall 
include  a general  statement  of revenue  of the 
Communities  and  the  consolidated  estimates 
referred  to in Article  11, 
— draw  up Part  II of the  Budget  which  shall 
include  the  borrowing  and  lending 
operations. 
It shall  at the same  time  forward  the preliminary 
draft  budget  to the European  Parliament.' 
8. Article  IS:  substitute  the following  wording  for 
the text  of paragraph  1: 
'The  Budget  shall  consist  of two  parts: 
Part I shall  consist  of: 
— a general  statement  of the  revenue  of the 
Communities,  and 
— separate  sections  subdivided  into  statements 
of revenue  and  expenditure  of the  European 
Parliament,  the Council,  the Commission,  the 
Court  of Justice  and  the  Court  of Auditors. 
The revenue  and  expenditure  of  the 
Economic  and  Social  Committee  shall  be 
entered  in the  section  dealing  with  the 
Council  and  presented  in the  form  of a 
statement  of  revenue  and  expenditure, 
subdivided  in the same  way  as the sections  of 
the Budget  and  subject  to the same  rules. 
Part II shall  consist  of: 
— the  borrowing  and  lending  operations.' 
9. Article  15 (5):  delete  the second  subparagraph. 
10. Article  16:  substitute  the following  wording  for 
the text  of paragraph  (3): 
'(3) as  regards  borrowing  and  lending 
operations: in Part  II, two  Titles  divided  into  Chapters, 
Articles  and  Items  accompanied  by appropriate 
remarks. 
These  remarks  shall,  in particular,  express  the 
Communities'  undertaking  to use  their  own 
resources,  in case  of default  or  delay  in 
repayment  by  a beneficiary,  to honour  the 
obligations  arising  out of the loan  contracts. 
Title  I shall  include: 
— authorizations  for loans  to be contracted  in 
the financial  year  concerned; 
— estimated  capital  and  interest  repayments  to 
the Community  by beneficiaries  of lending 
operations, 
— estimated  contributions  by beneficiaries  to the 
costs  of  the  borrowing  and  lending 
operations, 
— broken  down  as above,  the revenue  entered  in 
the Budget  for  the  preceding  financial  year, 
and the  actual  revenue  for the last  financial 
year for which  the accounts  have  been  closed. 
Title  II shall  include: 
— authorizations  for  Community  lending 
operations  during  the  financial  year 
concerned, 
— appropriations  to cover  the  repayment  of 
Community  borrowings  and  of  interest 
thereon, 
— appropriations  to  cover  the  costs  of 
borrowing  and  lending  operations, 
— broken  down  as above,  the  appropriations 
entered  in the  Budget  for  the  preceding 
financial  year,  and  the actual  expenditure  for 
the last  financial  year  for which  the accounts 
have  been  closed.' 
11. Article  73:  substitute  the following  wording  for 
the text  of paragraph  (5): 
'(5) Tables  showing  capital  operations  and 
debt management,  indicating: 
— total  loans  raised, 
— total  capital,  plus  interest  and  costs  repaid  in 
respect  of lending-on  operations, 
— total  loans  granted, 
— total  capital,  plus  interest  and  costs,  repaid  in 
respect  of borrowings, 
— Community  indebtedness.' 
6. 7. 78 Official  Journal  of the European  Communities No C 160/13 
12. Article  88:  substitute  the following  wording  for 
the text  of paragraph  (2): 
'(2) The  figures  given  in programme  decisions 
or corresponding  decisions  shall  be  merely 
indicative.' 
— the  present  paragraph  (2) becomes  paragraph 
(3), 
— paragraph  (3) becomes  paragraph  (4), and 
— paragraph  (4) becomes  paragraph  (5). 
13. Article  89:  substitute  the following  wording  for 
the text  of the second  and  third  subparagraphs: 
'Appropriate  remarks  on each  subdivision  shall 
include,  in particular: 
(a) a summary  description  of  the  action 
involved; 
(b) in respect  of budget  implementation: 
— the  number  of personnel  authorized  for 
the current  financial  year, 
— a simplified  version  of the  schedule  of 
amounts  and  due  dates  for commitments 
and payments  referred  to in paragraph 
(3) below. 
The following  shall  be annexed  to Section  III — 
Commission  — of the Budget: 
— a comparative  table  giving  a breakdown  by 
destination  and  type  of expenditure  of the 
appropriations  entered  in Chapter  33, 
— an indicative  schedule  of amounts  and  due 
dates  for  commitments  and  payments  by 
Article,  Item  and  amount  per  tranche 
indicating  the  rate  of  use  of  the 
appropriations  for  commitment  and  the 
corresponding  appropriations  for  payment. 
The schedule  shall  be revised  each  year; 
— the  decision  authorizing  the  Commission  to 
make  the  transfers  referred  to in Article  94 
(2).' 
14. Article  90 (2):  substitute  the following  wording 
for the text  of the last subparagraph: 
'For the  research  and  investment  objectives  or 
other  activities  of Part  I, the  appropriation 
accounts  of Part  II and  the  accounts  showing 
staff expenditure  of Part  III, the expenditure  shall 
be broken  down  by  type  into  sub-items  as 
follows: Sub-item Heading 
1 Staff  expenditure 
2 Administrative  expenditure 
3 Technical  operating  expenditure 
4 Investment 
5 Expenditure  under  contracts 
9 Reserve  appropriations 
For management  purposes,  the sub-items  may  be 
subdivided  into  categories  and  headings  which, 
as regards  expenditure,  correspond  similarly  to 
the Chapters  and  Items  of  the  Budget 
nomenclature  fixed  in accordance  with  the 
provisions  of Article  15 (3).' 
15. Article  91:  substitute  the following  wording  for 
the text  of the present  Article  90 (3),  (4),  (5) and 
(6): 
Paragraph  (3) becomes  paragraph  (1),  with  the 
first sentence  reading  as follows: 
'An appropriation  account  shall  be provided  for 
each  instrument  of implementation  referred  to in 
Article  90 (2) (b).' 
Paragraph  (4) becomes  paragraph  (2),  paragraph 
(5) becomes  paragraph  (3)  and  paragraph  (6) 
becomes  paragraph  (4). 
16. Article  94: delete  paragraph  (3) 
— the  present  paragraph  (4) becomes  paragraph 
(3), 
— paragraph  (5) becomes  paragraph  (4),  and 
— paragraph  (6) becomes  paragraph  (5). 
17. Annex  giving  'Budgetary  nomenclature  provided 
for in Article  89 of the  Financial  Regulation': 
delete. 
Article  2 
This  Financial  Regulation  shall  enter  into  force  on 
11 December  1978. 
This  Financial  Regulation  shall  be binding  in its 
entirety  and  directly  applicable  in all Member  States.