Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the adjustment of the financial perspective to take account of implementation presented by the Commission to Parliament and the Council in accordance with paragraphs 16 - 18 of the Interinstitutional Agreement of 6 May 1999

EXPLANATORY MEMORANDUM

Paragraphs 16 to 18 of the Interinstitutional Agreement of 6 May 1999 provide for the Commission to notify the two arms of the budgetary authority of the adjustments to the financial perspective considered necessary in the light of implementation.

This procedure involves:

-the adjustment of total appropriations for payments to ensure, in the light of requirements, an orderly progression in relation to the appropriations for commitments;

-for the adjustment exercise in 2001 and in the event of delays in the adoption of the programmes for structural operations, the transfer to subsequent years, in excess of the corresponding ceilings on expenditure, of the allocations not used in 2000. The two arms of the budgetary authority have undertaken to authorise this transfer.

The Commission's examination of implementation in 2000 from these two angles prompts it to present the following proposal for the adjustment of the financial perspective to the budgetary authority.

1. The transfer to subsequent years of the allocations for structural operations not used in 2000 following a delay in the adoption of the programmes

1.1. Scope of paragraph 17 of the Interinstitutional Agreement

Unlike its predecessor, the new Interinstitutional Agreement no longer sets out the principle that unused allocations may be transferred for the whole of heading 2 and for the whole period covered by the financial perspective. This type of transfer is now limited to the unused allocations for the first year of the financial perspective and is conditional on a delay in the adoption of the programmes.

Appropriations may be transferred for operations which form part of a multiannual programme laid down at the start of the period for the whole duration of the financial perspective. This is the case with measures under objectives 1, 2 and 3 of the Structural Funds and the Community initiatives.

Appropriations for these programmes are also divided between the recipient Member States for the whole of the period. In view of the new rules for commitment which apply to them (automatic commitment in annual tranches), it is only at the start of the period that the allocations provided may be under-utilised as a result of delays in adopting the programmes.

As regards innovation measures and technical assistance, 104 million was transferred from these budget lines in the course of the year to supplement the financing of programmes for the period 1994-99. When this transfer is taken into account, the under-utilisation for these lines comes to 31 million, of which 23 million is accounted for by ERDF innovation measures. Traditionally, innovation measures have never been covered by multiannual programming, which explains why this amount has not been included in the proposed transfers to subsequent financial years. However, the guidelines which the Commission recently adopted for innovation measures [1] after consulting Parliament represent a change in practice for the ERDF: innovation measures are now conducted under multiannual programmes with the same implementing procedure as for programmes under Objective 1, Objective 2 and Community initiatives. The Commission would draw the budgetary authority's attention to this specific situation.

[1] Guidelines for innovative actions under the ERDF [COM(2001) 60 of 31 January 2001].

Operations under the Cohesion Fund or technical assistance do not, however, fit in with this idea of a multiannual programme, even if some of them may be implemented over a period exceeding one year. Under-utilisation of allocations in the first year cannot be directly attributed to a delay in the adoption of the programmes covering the whole of the period. Under-utilisation may also occur again in future years.

1.2. Under-utilisation of appropriations for commitments for the Structural Funds in 2000 and their transfer to future years (Table 1).

Appropriations for commitments totalling EUR 6 152.3 million lapsed in 2000, i.e. they were not implemented in 2000 and were not carried over to 2001.

The proposed schedule of the amounts to be transferred over the period 2002-06 has been drawn up by the category of programme involved. The guideline adopted is a breakdown by equal annual tranches. However, for Objective 2, account has been taken of the fact that some areas will no longer be eligible for these measures in 2006. The profile adopted for the Community initiatives is intended to smooth out the initial programming.

1.3. Effect of the proposed transfers on the level of the corresponding appropriations for payments.

Under the new Structural Fund regulations, the payments to be made by the Commission in response to the applications for reimbursement sent in by the Member States will depend on the programmes actually being carried out. The payments, set at a relatively modest level for the first two years of the financial perspective, are no longer linked automatically to commitments, which are made in fixed annual tranches. In practice, the annual commitments serve mainly as a basis for applying the rule that any commitments from year n which are not cleared (allowing for payments on account) by the end of year n+2 should, as a rule, be cancelled.

This raises the question of whether the delay in adopting certain programmes which leads to the transfer of the appropriations for commitments will affect the date when applications for payment are sent to the Commission.

A delay in adopting programmes should not lead to an equivalent delay in payments as the starting point for the eligibility of expenditure is the date on which a plan regarded as valid is presented to the Commission and not the date on which the programme is adopted. However, if there is a delay in applying for payment, this would probably lead to a time-lag in the annual amounts planned rather than a change in their profile. This would increase the balances to be paid beyond 2006.

There thus appears to be no justification at this stage for an increase in appropriations for payments over the period 2002-06 in line with the transfer of commitments. However, the situation will be reviewed during future adjustments of the financial perspective in the light of the applications for reimbursements actually made by the Member States.

2. Maintaining an orderly progression between appropriations for payments and appropriations for commitments

One of the purposes of the financial perspective is to ensure an orderly progression between commitments and payments.

The adjustment of the financial perspective provides an opportunity to check budget implementation to ensure that the link established when the financial framework is drawn up remains valid and to make any adjustments that are needed to the overall ceiling for appropriations for payments.

In practice, this exercise consists of comparing the change in outstanding commitments corresponding to the ceilings for commitments and payments laid down in the financial perspective with the actual change in outstanding commitments resulting from budget implementation. If the change in outstanding commitments actually recorded is higher than that included in the financial perspective, potential payments for the remainder of the period would be higher than initially projected in the financial framework and there would thus be a risk of a shortfall in the overall ceiling for payments if the ceilings for commitments are fully utilised.

2.1. Link between commitments and payments in the financial perspective for 2000-06

The link between the growth in appropriations for commitments and the growth in appropriations for payments adopted when the financial perspective for 2000-06 was drawn up was based on the following approach:

a) The outstanding commitments foreseeable at the end of 1999 were estimated pending information on the outturn of the 1999 budget.

b) It was assumed that the full annual ceilings for commitments would be entered in the budget and implemented.

c) The method used to estimate the necessary level of payments differs according to the category of expenditure involved.

-In the case of non-differentiated appropriations, the commitments are cleared in the course of the same financial year and no outstanding commitments accumulate. Headings 1, 5 and 6 (monetary reserve and loan guarantee reserve) contain non-differentiated appropriations.

-As regards the Structural Funds (heading 2), the change in management rules from 2000 required a special method for calculating the annual payments necessary. Three components were identified: the clearance of outstanding commitments from the previous period, the payments on account to be made in the first two years of the new programming period and the annual payments in response to the applications for reimbursement presented.

-The payments needed for the other categories of expenditure were estimated on the basis of a foreseeable average schedule for the clearance of the commitments entered into (commitments implemented before 2000, commitment ceilings from 2000 onwards).

Table 2 shows, for categories of expenditure with non-differentiated appropriations, the results of these calculations for 2000, as have been included in the financial perspective.

2.2. Comparison with the budget outturn.

The budget outturn is also shown in Table 2. The following conclusions may be drawn (section D of the table).

a) Outstanding commitments at the end of 1999 were EUR 1 915 million higher than estimated when the financial framework for 2000-06 was adopted. This higher level is mainly attributable to the 1999 outturn figures for the Cohesion Fund and to a lesser extent, the internal policies in heading 3.

b) The actual reduction in the volume of outstanding commitments from the previous period as a result of payments or decommitments in 2000 is virtually the same as the figure included in the financial perspective for that year (the difference is only 179 million). The delay noted for the Cohesion Fund was offset by the fact that outstanding commitments for the Structural Funds and heading 3 fell more quickly than expected.

c) Payments against new commitments in 2000, in conjunction with the appropriations for commitments and payments carried over to 2001, have led to an increase in outstanding commitments which, overall, is EUR 660 million less than envisaged in the financial perspective.

-In the case of the Structural Funds, the increase in outstanding commitments resulting from the implementation of new operations in 2000 is substantially lower than originally expected. This is due to the delay in the commitment of programmes, whereas a fairly large proportion of the payments on account have been made. The possible implications of this situation for the future trend in payments has been examined at point I.3 above.

-However, there was a considerable delay in the clearance of new Cohesion Fund commitments in 2000 compared with what was expected and virtually no payments have been made under the ISPA and SAPARD pre-accession instruments.

Overall, the change in the level of outstanding commitments following implementation of the 2000 budget does not at this stage suggest any risk that the ceiling on appropriations for payments laid down in the financial perspective will be inadequate. However, if additional requirements for payments, which are not foreseeable at present, should nonetheless emerge in 2002, they could certainly be covered by the margins for manoeuvre which the budget and budget implementation will leave available below the existing ceiling.

In any event, there will be a regular review of whether the ceiling on appropriations for payments can accommodate actual requirements at each of the annual adjustment exercises provided for by the Interinstitutional Agreement. On this occasion, on the basis of information emerging from the first year of application of the financial framework, special attention will have to be given to:

-the trend in applications for reimbursements presented by the Member States in respect of the Structural Funds;

-the rate of clearance for Cohesion Fund commitments entered into, in particular to discover whether the delay in relation to the forecasts in the financial perspective is being made up;

-the progress in payments under the two new pre-accession instruments ISPA and SAPARD.

>REFERENCE TO A GRAPHIC>

>REFERENCE TO A GRAPHIC>

2001/0075 (COD)

Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the adjustment of the financial perspective to take account of the conditions of implementation

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to paragraphs 16 to 18 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure, [2]

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

Having regard to the proposal from the Commission, [3]

[3] OJ C [...], [...], p. [...].

Acting in accordance with the voting rules laid down in the fifth subparagraph 06 Article 272(9) of the Treaty,

Whereas:

(1) The financial perspective for 2000-06 must be adjusted to take account of the implementation of the budget in 2000.

(2) As a result of a delay in the adoption of certain programmes relating to structural operations, EUR 6 152.3 million of the allocation provided for the Structural Funds could not be committed in 2000 nor carried over to 2001. Under paragraph 17 of the Interinstitutional Agreement, this amount must be transferred to subsequent financial years by increasing the corresponding expenditure ceilings for appropriations for commitments.

(3) The 2000 budget outturn does not show any need for an adjustment to the overall ceiling for appropriations for payments at this stage. The situation in this respect will be reviewed at each future adjustment exercise,

HAS ADOPTED THIS DECISION:

Article 1

The annual ceilings for appropriations for commitments in the Structural Funds subheading of heading 2 of the financial perspective shall be raised by the following amounts, expressed in EUR million in current prices.

>TABLE POSITION>

Article 2

The financial perspective for EU-15 and the financial framework for EU-21, after the technical adjustment for 2002 in line with movements in GNP and prices and the adjustments covered by this Decision, are attached.

Done at Brussels, [...]

For the European Parliament For the Council

The President The President

[...] [...]

>REFERENCE TO A GRAPHIC>

>REFERENCE TO A GRAPHIC>