COMMISSION OF THE EUROPEAN COMMUNITIES 
11 COM(94) 291 final 
Brussels, 27.07.1994 
DRAFT ECSC OPERATING BUDGET FOR 1995 
(presented by the Commission) 
CONTENTS 
Foreword 
I. GENERAL INTRODUCTION 
A. ECONOMIC AND POLICY CONTEXT 
1. The economic outlook for the Community in 1994 
and 1995 . . 4 
2. Outlook for the coal industry 5 
3. Outlook for the steel industry 6 
4. Future of ECSC budgetary aids 8 
B. FINANCIAL CONTEXT 
1. Financial activities 10 
2. Budgetary approach for 1995 11 
II. DRAFT ECSC OPERATING BUDGET FOR 1995 
A. RESOURCES 11 
B. REQUIREMENTS 12 
C. DRAFT BUDGET 12 
ANNEXES 
1. Explanatory note on the forecasts at 30 June 1994 on the implementation 
of the ECSC budget for 1995 13 
2. Analysis of requirements and resources for 1995 15 
3. ECSC balance sheet at 31 December 1993 20 
4. ECSC borrowing and lending operations (1993/1994/1995) 21 
5. ECSC operating budgets for 1993 and 1994 22 
6. Draft ECSC operating budget for 1995 23 
FOREWORD 
As usual, the views of Parliament will be sought before the Commission takes a 
decision on the levy rate and the ECSC operating budget for the financial year 1995. 
The draft budget forms the basis for the consultation of Parliament. It is divided into 
the following chapters: 
/. General introduction 
IL Draft ECSC operating budget for 1995 
The draft budget is also being sent, for information, to the ECSC Consultative 
Committee and to the Council, in response to the latter's request to be informed of 
future trends in the ECSC s financial activities. 
I. GENERAL INTRODUCTION 
This chapter summarizes the information needed to set the draft ECSC operating 
budget for 1995 in its economic, policy and financial context. 
A. ECONOMIC AND POLICY CONTEXT 
A.l. The economic outlook for the Community in 1994 and 1995 
After three quarters of negative growth, real GDP has increased since the second 
quarter of 1993 at an annual rate of 1 to 2%. This rise marks a reversal of the recent 
trend in economic activity in the Community, although it can hardly be described as 
signifying a strong recovery. 
There was a slight contraction of Community GDP in real terms in 1993 (-0.3%), as 
factors conducive to growth (the gradual easing of monetary conditions in the 
Community during the last eighteen months, improvement in the international 
environment due to a recovery in economic activity in the United States and EFT A, 
together with expectations of a rise in the value of the dollar against EC currencies 
and a moderate upturn in confidence in the private sector) were offset by factors 
having the opposite effect (tight monetary policy, the crisis in consumer confidence, 
lack of competitiveness, an increase in unemployment and, more recently, efforts at 
fiscal consolidation in some Member States). However, GDP may grow by 1.6% in 
1994 and, as the recovery gradually takes hold, average growth for 1995 should be 
around 2.5%. 
The sluggish rate of growth in 1994 will not make a major impact on the depressed 
labour market, but the expected decline in employment in the Community should be 
moderate (around 0.5%) compared with the 2% drop in 1993. As the recovery 
gathers pace in 1995, employment will grow again by around 0.3%. Unemployment, 
which affected 10.6% of the civilian working population in 1993, is expected to rise 
further in 1994 and is not likely to peak until mid-1995 at a level of around 11.5%. 
Inflation, as measured by the private consumption deflator, continued to fall in 1993 
to 3.75%. Influenced by moderate wage increases, improvements in unit labour costs 
and the Community's large production gap, it should fall further to below 3.5% in 
1994 and around 3% in 1995. 
Because of the lack of vigour of the recovery, the Community's budget deficit (which 
rose to around 6% of GDP in 1993) is expected to fall only slightly in 1994, despite 
the budgetary consolidation programmes implemented in many Member States. An 
improvement is expected for 1995, with the deficit probably dropping to around 5% 
of GDP ~ the level recorded in 1992. 
COMMUNITY GROSS DOMESTIC PRODUCT, AT CONSTANT PRICES (Percentage 
change over previous year) 
1993 
-0.3% 1994(*) 
1.6% 1995(*) 
2.5% 
(*) June 1994 forecasts. 
4 
A.2. Outlook for the coal industry 
Community production fell by 13% from 183.7 million tonnes in 1992 to 160 million 
tonnes in 1993. Imports from non-member countries were down 15% on 1992 from 
131.2 million tonnes to 116.2 million tonnes. 
The outlook for 1994 suggests Community coal production will continue to decline, 
with a drop of at least 18 million tonnes (-11%). A maximum of 142 million tonnes 
would thus be produced, while imports could fall by 2% to 114 million tonnes. 
In 1995 Community production is expected to decline further to around 
131 million tonnes. 
Demand on the international market is notoriously slack and coal prices have been 
falling constantly because of the resulting surpluses. International demand in 1994 is 
unlikely to be strong enough to push prices up again. At the end of 1993 the price of 
imported steam coal was USD 48 dollars per tonne of coal equivalent (tee), 
8.4% down on 1992. 
By way of comparison, production costs in the Community in 1993 were ECU 151 
per tee in Germany, ECU 131 per tee in Spain, ECU 108 per tee in France and 
ECU 62 per tee in the United Kingdom. 
Production millions of tonnes 
Jobs at 31.12. COAL INDUSTRY 
1993 
160 
184 000 1994(*) 
142 
167 000 1995(*) 
131 
153 000 
(*) Estimate. 
The Commission's prime objective in coal policy is still to ensure that production 
takes place in economically acceptable conditions and that economic and social 
cohesion measures continue in the declining coalfields. From this angle, the policy of 
monitoring State aid assumes considerable importance among the Community's 
activities and has been strengthened by the new Community rules for State aid to the 
coal industry adopted by the Commission.1 
The Commission observes that, despite the restructuring process which has been 
going on for many years and the granting of aid totalling over ECU 75 billion since 
1965, the coal industry is still facing an extremely critical situation. Although some 
coalfields have managed to increase productivity and reduce production costs, the 
average cost of production in the Community is still ECU 110 per tee, compared with 
a price of around ECU 40 on the world market. That is why the Commission felt 
that the ban on State aid to the coal industry imposed under Article 4 of the ECSC 
Treaty should be suspended until 23 July 2002 subject to certain conditions, . 
As the Treaty is due to expire in 2002, the new rules cover the transitional period 
required to integrate the coal industry fully into the EC Treaty. They will make it 
OJL 329, 30.12.1993. 
possible to pursue restructuring efforts, while taking into account social and regional 
constraints. 
The aid granted under the new rules must help achieve at least one of thé following 
objectives: 
to make further progress towards economic viability, in the light of coal prices 
on international markets, with the aim of running down aids; 
to solve the social and regional problems created by total or partial reductions 
in the activity of production units; 
to help the coal industry adjust to environmental protection standards. 
To this end, aid is classified in various categories: operating aid, aid for the reduction 
of activity, aid to cover exceptional costs, aid for research and development and aid 
for environmental protection. 
A.3. Outlook for the steel industry 
Since the Commission communication of 23 November 1992 presenting a set of 
measures to encourage and facilitate the restructuring process,2 the situation in the 
Community steel market has seriously deteriorated. Domestic consumption fell 
by 9% between 1992 and 1993; the biggest drop was for hot-rolled products 
(down 13% in the first half of 1993). 
1993 was a year of general recession (with GDP down by 0.3%), but, according to 
the Commission's present forecasts, economic growth in 1994 and 19953 will 
probably be too weak to enable demand for steel to recover and exceed its 1992 level. 
It will only reach that level in 1995 if the economic recovery in sectors which use 
large quantities of steel, in particular the motor vehicle and building industries, 
speeds up from the second half of 1994 onwards. 
In the first half of 1993 there was a considerable improvement in the balance of trade 
with non-member countries, in particular with China and — from the second quarter 
onwards ~ with North America. There was also a sharp fall in imports from Central 
and Eastern Europe and the CIS. 
However, this improvement was exceptional and is unlikely to be repeated in 1994, 
although a modest recovery is expected in 1995 (a positive balance of 10 million 
tonnes compared with 8 million in 1992). 
2 SEC(92) 2160. 
3 See table on page 4. 
Gross steel (million 
production tonnes) 
Jobs STEEL SECTOR 
1993 
132 
320 000 1994(*) 
133.5 
288 000 1995(*) 
135 
260 000 
(*) Estimate 
In a Communication to the Council in November 1992 on the competitiveness of the 
Community iron and steel industry, the Commission concluded that there was a need 
for new restructuring. 
The Council endorsed the Commission's approach in its conclusions of 
25 February 1993. The overall concept of the restructuring policy runs on along two 
parallel lines: the drawing up of a programme of reduction of capacities on the part of 
industry and a variety of support measures to assist the programme. 
During 1993, all the support measures have been put into effect. They cover: 
• measures of support in the social field under the social dimension of steel 
policy with a total budget of ECU 240 million for the period 1993-95; 
• improvement of structures through the authorization of specialization 
agreements and/or mergers; 
• authorization of financial arrangements under Article 53(a) ECSC. In this 
context, the Commission authorized three agreements on coils, heavy plate and 
beams in December 1993. These will be eligible for ECSC loans; 
• market stabilization measures. To this end, since April 1993 the Commission 
has formulated overall quarterly guidelines on production and deliveries in the 
Community, broken down by product category, in addition to its six-monthly 
forward programmes; 
• external measures, including an ex ante monitoring system based on import 
documents and an ex post system based on import statistics. In June 1993 the 
Commission also negotiated an increase in tariff quotas with the Czech 
Republic and Slovakia up to the end of 1995. The Commission will resume 
negotiations on the Multilateral Steel Agreement (MSA) as soon as possible 
and bilateral agreements will be negotiated with Russia and Ukraine, at the 
express request of those two countries. 
The overcapacity in hot-rolled products is estimated at between 19 and 26 million 
tonnes. 
On the basis of the Commission's intermediate report, the Council, at its meeting of 
22 April 1994, noted that capacity for hot-rolled products has already been reduced 
by a total of around 11 million tonnes, divided equally between subsidized firms and 
the remainder of the industry in the private sector. The closures compensated by State 
aid, under Article 95 ECSC, concern the restructuring or privatization of six firms 
for which the Council gave its assent on 17 December 1993, establishing, among 
other things, a strict monitoring system. 
On 15 June 1994 the Commission stressed that the minimum closure target of 
19 million tonnes would be maintained and it confirmed its commitment to reaching 
this target. Guidelines were laid down to make way for the authorization of aid to 
compensate the closure of iron and steel works in the private sector for a total 
capacity in hot-rolled products of around 5 million tons, thus making a considerable 
step towards reaching the intended minimum target for closures. 
The Commission also called on private industry's sense of responsibility to implement 
the further closures that would be needed to complete the restructuring process 
required to reform the sector on a lasting basis. 
In its conclusions of 22 June 1994 the Council reaffirmed its support for the approach 
put forward by the Commission. 
A.4. Future of ECSC budgetary aids 
The ECSC s budgetary instruments, as provided in the Treaty and subordinate 
legislation, need to be deployed by the Community on a basis which takes account not 
only of the economic and policy constraints indicated above, but also of more specific 
budgetary constraints. 
These budgetary constraints spring from the Commission's approach, as developed in 
dialogue with the other interested parties, to the tapering off of financial operations 
under the Treaty of Paris in anticipation of the expiry of that Treaty in 2002. 
These transitional arrangements, outlined below, necessarily concern both the 
borrowing and lending activity of the Community, the level and scope of which 
directly affect the availability and potential use of budget resources and the level and 
scope of the budget itself. 
The transitional arrangements for ECSC borrowing and lending are covered in a 
document promulgated by the Commission last October (COM(93)512 of 
20 October 1993) to which Parliament reacted in its Resolution (A3-223/94) of 
21 April 1994 and the Council in the conclusions adopted at its 1750th meeting on 
22 April 1994. Very broadly, during an initial period, borrowing and lending activity, 
while remaining sensitive to needs specially connected with the restructuring effort, is 
to be kept down to a level which avoids increasing the reserves. Thereafter, as from 
1997, there should be a progressive decline, at a rate to be examined annually in 
connection with the budget procedure, in the volume of outstanding loans and, 
consequently, in the reserves. 
The main point affecting the level and scope of the operating budget is the recent 
sharp decline in annual resources, which have fallen from an outturn of nearly 
ECU 600 million in 1993 to a recently revised forecast outturn of ECU 427 million in 
1994. For 1995, on present information, if the proposals set out in Chapter II below 
are put into effect, the forecast level will undergo a further reduction to just 
ECU 291 million. 
The reasons for this decline are simple. The two industries which pay to the ECSC 
levies, on which the Community's specific regime of budgetary aid is grounded have 
made clear, with support from the Council and Parliament, their anxiety to be 
relieved from the burden of this sectoral tax without undue delay. The Commission, 
as the authority responsible for the ECSC levy and budget, has accepted this 
objective. 
As a natural consequence, along with the decline in sectoral finance, the coal and 
steel sectors will become eligible for their proper share of corresponding financial 
aids granted from the General Budget for the European Union. 
Given this decline, the precise phasing, for each aid, of the transition from the 
sectoral regime which these industries have enjoyed for some 40 years to such 
horizontal aids as are available in the same field under General Budget arrangements 
will depend both on what is done to cover the relevant needs of the coal and steel 
sectors by General Budget instruments and on the priorities applied in allocating he 
ECSC budget's shrinking resources year by year between the competing claims. 
The questions of priority are difficult, because the General Budget aids are, in 
general, less favourable than the specially financed specific aids granted hitherto. In 
any case, although the sources of the General Budget aid most clearly corresponding 
to the sectoral ECSC aids are clear, it is not possible to specify in advance what level 
of horizontal aid will be granted from the General Budget to coal and steel 
beneficiaries. 
Thus, for future social aid, ECSC needs would be covered, subject to the normal 
rules, from the European Social Fund; for research aids, the relevant source is the 
Framework programmes; for regional aid, i.e. interest relief grants for job-creating 
investment, the European Regional Development Fund. 
Regarding availability of General Budget aids to the coal and steel sectors, however, 
given the objective recognized by the Council in its conclusions of 24 November 1992 
of treating coal and steel on the same footing as other sectors, the Commission does 
not expect to propose the creation within the General Budget of new legal bases or 
specific budgetary headings offering special treatment for these two sectors, 
accordingly it is not possible to give an advance estimate of the amount of General 
Budget aid liable to be granted to them in future years. 
All that can be stated is that: 
the amount of General Budget social aid granted for the coal and steel sectors 
in lieu of ECSC aid will depend, within the eligible aid categories, on the 
applications submitted year by year by Member States in accordance with the 
new Community Support Frameworks now being elaborated, this is currently 
under discussion with Member States' representatives; 
the amount of General Budget research aid granted for the coal and steel 
sectors in lieu of ECSC aid will depend on the success with which, within the 
eligible research areas, aid requests from those sectors compete year by year 
with requests from other sectors within the relevant parts of the 4th 
Framework Programme; 
the amount of General Budget regional aid granted for the coal and steel 
sectors in lieu of ECSC conversions aid will depend on the applications 
submitted by Member States in accordance with future Community Support 
Frameworks. In practice, however, although a legal base exists, Member 
States are not expected to utilize European Regional Development Fund 
resources for this purpose in the timescale of the next Community Support 
Frameworks. 
Against this background, the Commission's approach to the allocation of the 
diminishing resources available to the ECSC operating budget can only be a 
pragmatic one. In brief, utilization of the remaining sectoral resources will be 
proposed and decided by the Commission year by year, after taking due 
account of Parliament's views, as seems best for the restructuring of the two 
sectors. 
B. FINANCIAL CONTEXT 
B.l. Financial activities4 
ECSC financial report No 39, outlining the ECSC s borrowing and lending activities 
and other financial operations in 1993, will be published shortly. 
Borrowing contracted in 1993 totalled ECU 908 million, compared with 
ECU 1 474 million in 1992 and ECU 1 446 million in 1991. 
Industrial loans amounted to ECU 217 million in 1993 compared with 
ECU 1 047 million in 1992 and ECU 505 million in 1991, conversion loans came to 
ECU 688 million, compared with ECU 426 million and ECU 859 million, and 
workers' housing loans to ECU 13 million, compared with ECU 13 million and 
ECU 17 million. 
The forecast for 1994 is ECU 1 000 million in borrowing and loans. The forecast for 
1995 is ECU 800 million. 
Investment expenditure in the coal industry rose from ECU 653 million in 1992 to 
ECU 730 million in 1993. Investment expenditure in the steel industry in 1993 was 
ECU 3 092 million, 21.9% down on the ECU 3 957 million invested in 1992. 
Borrowing and lending operations since the start of ECSC financial activities thus 
total ECU 22 866 million and ECU 21 549 million respectively (including 
ECU 350 million in loans from own funds). 
The outstanding balance of loans raised at 31 December 1993 was 
ECU 7 330 million. 
In 1993 the ECSC granted loans totalling ECU 918 million, 38.2% less than the 1992 
figure of ECU 1 486 million. The main reason for this fall in the volume of lending 
was the economic recession which affected all the Member States, while the 
uncertainty and inaction linked to the debate over the future of the ECSC s financial 
activities held back the canvassing for and appraisal of new loans. 
Future lending activities will depend on the action taken on the guidelines for the 
future of the ECSC Treaty (borrowing/lending activity) adopted by the Commission 
See summary table in Annex 4. 
10 
on 20 October 1993,5 on the economic situation and on the budget resources available 
for interest subsidies (Article 56). 
According to information supplied by the companies, investment expenditure for 1994 
is estimated at ECU 481 million for the coal industry and ECU 2 116 million for the 
steel industry. 
B.2. Budgetary approach for 1995 
The forecast of price increases to be used for assessing the 1995 draft budget 
is 3.1%. 
The preparation of the ECSC draft budget for 1995 takes place in a setting of drastic 
economic transformations, accompamed by substantial job losses, in both the coal and 
steel sectors, but it is dominated by one simple fact: the steep decline in available 
resources already referred to at Point A above. Because of the conscious aim, also 
noted above, of cutting revenue, foreseeable budgetary resources, at less than half the 
level obtained in 1993, are manifestly inadequate to provide the same level of support 
as in the past for the sectoral policies of social aid for redundant workers and soft 
loans to create viable alternative jobs which are of obvious relevance to the 
restructuring process. 
Faced with this conflict between increasing needs and diminishing resources, the 
Commission, after careful consideration, has decided, for the year 1995, to place in 
abeyance the policy it has applied over the last four years of annually abating 
by 0.02% the levy rate. It has, therefore, based the ECSC draft operating budget for 
1995 on a levy rate of 0.21%. 
As explained below, this approach makes available for 1995 a total of resources 
presently estimated at ECU 291 million, i.e. a third less than in 1994. Of this sum, it 
is proposed to allocate 70% (ECU 204 million) to social aid, the rest being split 
between conversion aid and research aid. 
In addition, to supplement the declining sectoral aids, the Commission is taking 
administrative action to urge Member States to apply for European Social Fund 
support for potential beneficiaries in the coal and steel sectors and to ensure that 
sponsors of research in these sectors are fully aware of the possibilities open to them 
for seeking aid from the Framework Programme. 
II. DRAFT ECSC OPERATING BUDGET FOR 1995 
A. RESOURCES 
On the basis of a rate of 0.21%, resources from the ECSC levy are estimated at 
ECU 96 million. 
COM(93)512 final. 
11 
The net balance for 1995 is estimated at ECU 125 million. This estimate takes 
account of the volume of investments and the assumed changes in interest rates as 
well as any movements in reserves. 
Debt repayment is estimated at ECU 6 million. 
The cancellation of commitments not likely to be implemented is estimated at 
ECU 49 million. 
In addition, a recent forecast on the implementation of the 1994 budget points to a 
likely surplus of ECU 13 million to be carried forward from the previous year. 
Finally, ECU 2.0 million is released from the special reserve to balance the ECSC 
budget. 
ECU 11.5 million is to be earmarked for the third tranche of the 12th low-cost 
housing programme. This is made up of foreseeable repayments of previously granted 
loans of the same type. 
B. REQUIREMENTS 
The Commission's proposals are as follows: 
ECU 5 million for administrative expenditure; 
ECU 204 million to finance social measures broken down into 
ECU 114 million for traditional redeployment aid, ECU 60 million for social 
measures in the steel industry and ECU 30 million for social measures in the 
coal industry; 
ECU 35 million for research expenditure broken down into ECU 24 million 
for steel, ECU 10 million for coal and ECU 1 million for social research. 
ECU 6 million of the allocation for coal will be earmarked for environmental 
projects, while environmental projects in the steel sector will come under the 
framework programme (general budget); 
ECU 47 million for interest subsidies for conversion loans. 
C. DRAFT BUDGET 
Annex 5 contains a detailed explanation of the above forecasts in respect of forecasts 
at 30 June 1994 regarding the implementation of the ECSC operating budget for 
1994. 
The draft ECSC operating budget for 1995 established on this basis comes to 
ECU 291 million and is presented in Annex 6 in the form of a summary table. 
12 
Annex 1 
EXPLANATORY NOTE ON THE FORECASTS AT 30 JUNE 1994 
ON IMPLEMENTATION OF THE ECSC OPERATING BUDGET 
(see summary table in Annex 5) 
There are three factors involving major changes to the forecasts on implementation of the 
ECSC budget for 1994. They are, in order of importance: 
the agreement reached with a steelmaking company regarding the amount of 
compensation it was to be awarded for losses incurred from the implementation of the 
quota arrangements that were in force between October 1980 and June 1988, thus 
releasing ECU 40.5 million;6 
the recent drop in the value as at 31 May 1994 of the ECSC's financial portfolio, 
resulting in a drop in the net balance of ECU 35 million; 
the result of the 1993 financial year which was ECU 7 million lower than forecast. 
The implementation of the 1994 budget may, therefore, be forecast at 30 June 1994 to have a 
surplus of ECU 13 million. 
The initial forecasts have been changed in the following chapters: 
Requirements 
1. Chapter 7: damages and interest: ECU 21 million 
This amount represents the compensation owing to a steel-making company for losses 
incurred from the implementation of the quota arrangements that were in force 
between October 1980 and June 1988, in accordance with the agreement signed 
between the Commission and the company. 
2. Surplus: ECU 13 million 
Resources 
1. Article 1.1: yield from 0.23% levy - ECU 103 million 
The most recent forecasts point to a slight upturn in demand for iron and steel 
products, adding ECU 1 million to the levy yield forecast. 
2. Article 1.2: net balance of the financial year - ECU 115 million 
A drop in the current book value of the ECSC's financial portfolio means that the 
available net balance is ECU 35 million down. 
3. Article 4: ECU 6 million 
The recovery of amounts paid in excess is likely to be ECU 4 million for interest 
subsidies and ECU 2 million for research aid. 
6 The difference between the amounts entered in Chapter 4 of Resources (Contingency reserve) and 
Chapter 7 of Requirements (Losses and interest). 
13 
4. Chapter 2: cancellation of commitments not likely to be implemented -
ECU 58 million 
Additional cancellations of ECU 8 million are to be made. 
5- Chapter 3: resources from the previous year (1993) not used - ECU 60 million 
The surplus from 1993 is ECU 60 million, which is ECU 7 million less than forecast. 
6. Chapter 4: contingency reserve - ECU 61 million 
ECU 91 954 337 was entered on the ECSC balance sheet on 31 December 1993 to 
cover any compensation the ECSC may be liable to pay to iron and steel companies 
for losses incurred from the implementation of the quota arrangements that were in 
force between October 1980 and June 1988. 
An agreement was recently reached with an iron and steel company on the amount of 
compensation to be awarded. The ECU 61 million set aside as a provision following 
the dispute with the company may therefore be released and entered into the 1994 
budget. The actual amount of damages is quoted above under point 1 (Chapter 7 
"Damages and interest"). 
14 
Annex 2 
ANALYSIS OF REQUIREMENTS AND 
RESOURCES FOR 1995 
(see summary table in Annex 6) 
OPERATIONS ENTERED IN THE BUDGET 
Requirements 
1. Chapter 1: Administrative expenditure - ECU 5 million 
The ECSC contribution to the Commission's administrative expenditure is provided 
for in Article 50 ECSC and specified in Article 20 of the Merger Treaty. The Council 
Decision of 21 November 1977, adopted in this framework, set the annual amount of 
the payment at ECU 5 million. 
2. Chapters 2, 5 and 6: Social aid - ECU 204 million 
Social aid is granted under Article 56 ECSC and in accordance with the bilateral 
agreements concluded between the Commission and the Governments of the Member 
States. 
The Commission provides non-repayable aid towards: 
the payment of tideover allowances to workers; 
the financing of allowances to workers taking early retirement; 
the payment of resettlement allowances to workers; 
the financing of vocational training for workers having to change job. 
The grant of aid is conditional upon payment by the Member State concerned of a 
special contribution of not less than the amount of that aid. The average ECSC 
contribution per worker is subject to an overall ceiling and a ceiling for each standard 
situation. In addition, following the initiative of making the coal and steel industries 
eligible for aid schemes financed from the general budget, 13 000 workers in these 
industries may receive aid from the Social Fund. 
2.1 Chapter 2: Aid for redeployment - ECU 114 million 
31 500 steel workers should receive traditional redeployment aid in 1995. The 
number of recipients in the coal industry is 19 000. This figure includes recipients of 
aid granted to the coal industry under Article 56(1 )(c). 
Given the overall ceiling and the intermediate ceilings to be applied in connection 
with wage levels and public authority contributions, the traditional aid required for 
1995 is estimated at ECU 114 million. 
2.2 Chapter 5: Social measures in connection with the restructuring of the steel 
industry - ECU 60 million 
This chapter contains supplementary aid measures to cover job losses resulting from 
the reduction of capacity: aid for early retirement, redeployment (including vocational 
training) and unemployment. 
It is also proposed that 8 000 coal and steel workers receive aid from the European 
Social Fund (phasing-in). 
The number of recipients in 1995 is estimated at 19 500. The average amounts per 
worker will be a maximum of ECU 5 000 for early retirement, ECU 4 000 for 
redeployment and ECU 2 000 for unemployment aid. In view of these ceilings, the 
requirements to be financed in 1995 are put at ECU 60 million. 
15 
2.3 Chapter 6: Social measures in connection with the restructuring of the coal 
industry - ECU 30 million 
This chapter contains supplementary aid under the social support measures in 
connection with the restructuring and rationalization of the coal industry and covers 
vocational training, unemployment and early retirement. A new programme was 
adopted by the Commission on 7 April 1994.7 
In addition, it is proposed that 5 000 workers receive aid under the European Social 
Fund as part of the phasing-in operation. 
The maximum number of recipients in 1995 is estimated at 7 500. The average 
amounts per worker will be a maximum of ECU 4 000 for early retirement, 
ECU 4 000 for redeployment and ECU 2 000 for unemployment aid. On the basis of 
these ceilings the level of aid for 1995 is estimated at ECU 30 million. 
3. Chapter 3: Aid for research - ECU 35 million 
Aid for research is granted under Article 55 ECSC, which states that the Commission 
must promote technical and economic research into the production and use of coal and 
steel and occupational safety in the coal and steel industries. To this end it grants aid 
to finance research after obtaining the opinion of the ECSC Consultative Committee 
and after receiving the Council's assent. 
The Commission's approach is gradually to reduce the amount of aid, as some types of 
assistance (e.g. for generic research) could qualify for co-financing under the 
framework programme (general budget). 
3.1 Article 3.1; Steel - ECU 24 million 
Research is concentrated mainly on: 
improving quality and reducing production costs; 
maintaining traditional outlets for steel and opening up new markets. 
Research on the adjustment of production processes in order to meet increasingly strict 
environmental requirements should now be covered by the framework programme. 
3.2 Article 3.2: Coal - ECU 10 million 
Research is concentrated mainly on: 
effective protection of the environment and increasing public awareness of the role 
of coal as an energy source; 
improving the competitiveness of coal; 
the rational use of Community resources. 
3.3 Article 3.3: Social research - ECU 1 million 
In view of the budgetary difficulties, further Community financing in this field is likely 
to be limited to expenditure of a transitional nature. 
4. Chapter 4: Conversion aid - ECU 47 million 
Conversion loans are granted under Article 56(2)(a) ECSC to encourage job-creating 
investments in regions hit by declining economic activity in the coal and steel 
industries. The purpose is to assist economic conversion of these regions and the 
productive redeployment of redundant coal and steel workers. The loans may be 
accompanied by an interest subsidy from the ECSC budget. 
The rate now applicable to interest subsidies is 3% per year. Payment is staggered 
over five years. 
7 Written procedure E/401/1994; C(94)699 to 699/6. 
16 
The operational rules for granting these loans ~ the version currently in force was 
adopted by the Commission in 19908 ~ were supplemented by procedures for the 
coordination of these loans with Structural Fund programmes.9 
The Commission expects heavy demand for this aid. However, in view of the limits of 
the resources available, it is proposing an allocation of ECU 47 million for 1995. 
5. Chapter 7: Damages and interest - token entry 
This article may be used where necessary to cover any damages which the ECSC may 
have to pay to undertakings for losses incurred under the quota arrangements in force 
between October 1980 and June 1988 (see also point 6 on page 15). 
Resources 
1. Article 1.1: Yield from 0.21% levy - ECU 96 million 
Levies are imposed under Articles 49 and 50 ECSC and Decisions 2/52 and 3/52 of 
23 December 1952. The forecast yield is an estimate of established entitlements in 
respect of output in the 1995 financial year calculated on the basis of the production 
declarations made by undertakings. 
The levies are calculated on the basis of a fixed scale per tonne which is decided each 
financial year by the Commission and published in the Official Journal. In accordance 
with the Commission decision of 11 April 198310, the reference period used to 
calculate the average values which serve as a basis for calculating the levy for 1995 
will be the 1993 calendar year. 
The levy rate for 1992 was 0.27%, the rate for 1993 was 0.25% and the rate for 1994 
is 0.23%. The proposal for 1995 is 0.21%. 
The latest estimates of the average values which serve as a basis for calculating the 
levies suggest that the figures for 1995 will be some 4% higher than in 1994 for steel, 
around 2% lower for coal and over 5% higher for briquettes and semi-coke derived 
from brown coal. However, as with the figures for the foreseeable volume of leviable 
production, there is a margin of uncertainty because all the requisite data are not yet 
available. 
2. Article 1.2: Net balance of the financial year - ECU 125 million 
The net balance of the financial year is the result of the ECSC's financial and budget 
operations minus all the provisions established as part of these operations and any 
transfer to the reserves. 
Under its decision of 30 June 1993,11 the Commission enters the full balance in the 
budget. As the exact figure of the balance is not determined until the Commission 
adopts the ECSC balance sheet and related accounts, the amount entered in the budget 
is an estimate. 
3 • Article 1.3: Fines and surcharges for late payment - token entry 
This item is to accommodate the payment of fines and penalties imposed by the 
Commission, in particular under Articles 47, 58 and 60 of the ECSC Treaty. In view 
of the appeals made to the Court of Justice, the revenue in question should be regarded 
as deferred resources. Only payments expected in the course of the financial year are 
entered as budgetary resources. 
8 OJC 188, 28.7.1990. 
9 OJ C 59, 6.3.1992. 
10 OJC 101, 14.4.1983. 
11 SEC(93)988 final. 
17 
4. Article 1.4: Miscellaneous - ECU 6 million 
This article allows miscellaneous revenue to be entered as resources for the financial 
year (in particular, repayments of amounts paid in excess). 
5. Chapter 2: Cancellation of commitments not likely to be implemented -
ECU 49 million 
This item is based on the Internal Rules for the drawing up and implementation of the 
ECSC operating budget, which state that, once all parties have discharged their 
obligations under a commitment, any remaining part of the provision will be cancelled. 
Any remaining part of a provision for a contract or agreement for which obligations 
have not been satisfied in accordance with the contractual requirements may also be 
cancelled in full or in part. The amounts thus released become available again as 
resources for the current financial year. 
The estimate shown in this chapter relates to normal cancellations involving 
redeployment and interest subsidies on investment and conversion loans. Other 
amounts relate to the cancellation of balances remaining in respect of completed 
research contracts. 
It is difficult to estimate the rate of cancellation as it depends on several factors, such 
as negotiations with the national or regional authorities in the case of redeployment aid 
and social measures and with the banks for loans bearing interest subsidies. The 
estimated figure for 1995 assumes a sustained rate. 
6. Chapter 3: Resources from the previous year not used - ECU 13 million 
This item allows any surplus from the implementation of the previous year's operations 
to be entered as resources. The latest forecasts for 1994 suggest that a figure of 
ECU 13 million should be entered here. 
7. Chapter 4: Contingency reserve - token entry 
This item allows the operating budget to be balanced at the end of the financial year. 
The contingency reserve for operations in 1995 will be fixed when the Commission 
adopts the ECSC balance sheet at 31 December 1994. 
8. Chapter 5: Exceptional resources - ECU 2 million 
This heading is for the entry of any exceptional resources, notably from the reserves; 
ECU 2 million may be drawn from the special reserve in 1995. 
OPERATIONS NOT ENTERED IN THE BUDGET 
9. The financing arrangements for low-cost housing which the ECSC has been operating 
since 1954 are not the same as programmes financed on a non-repayable basis from the 
resources for a given financial year. But forecasts on the low-cost housing programme 
have also been included for the information of Parliament, the Council and the 
Advisory Committee in order to complete the picture of the ECSC's activities. 
These activities have as their basis Article 54 and Commission decisions allocating to 
low-cost housing programmes resources from former ECSC pension funds or the 
special reserves made up of the interest on investments and loans on non-borrowed 
funds. 
The ECSC's intervention takes the form of long-term low-interest (1%) loans which 
are intended to ease the burden of financing costs for housing. The ECSC loans 
complement other loans from national sources. The ECSC loans are paid to credit 
institutions or ECSC enterprises involved in conducting the programmes. 
The objectives are: 
to meet the housing needs of the workforce, 
18 
to ensure that the housing is of adequate quality; 
to assist the smooth running of the restructuring process by taking due account of 
the social dimension. 
The adoption of the 12th programme (1994-1996)12 will make it possible to monitor the 
policy pursued by the Commission on this subject in line with the requirements 
expressed by the Regional Committees assisting it in conducting the programmes. The 
Council has given its assent to the programme and the appropriations for 1993 and 
1994 (ECU 19 million and ECU 17 million respectively). 
10. ECU 11.5 million is earmarked for the third tranche of the 12th low-cost housing 
programme. This is made up of foreseeable repayments of previously granted loans. 
The total amount to be withdrawn from the reserves will be confirmed when the 
Commission adopts the ECSC balance sheet on 31 December 1994. 
SEC(93)1175 final of 1 September 1993. 
19 
EUROPEAN COAL AND STEEL COMMUNITY 
BALANCE SHEET AT 31 DECEMBER 1993 ANNEX 3 
ECU 
ASSETS LIABILITIES 
1. Balances with central banks 
2. Balances with credit 
institutions 
2.1 repayable on demand 
2.2 with agreed maturity dates 
or periods of notice 
2.3 loans 
3. Claims on customers 
3.1 loans 
3.2 levies 
3.3 fines 
3.4 interest subsidies 
4. Bonds and other 
fixed-yield securities 
4.1 Public issues 
4.2 Other issues 
5. Tangibles and intangibles 
6. Other assets 
7. Accruals and deferred income 
9. GRAND TOTAL 1.179,187 
22,027,113 
418,119,954 
3,550,197,206 
4,126,203,226 
13,567,192 
1,615,162 
540,499 
1,379,534,947 
322,038,071 
12,886,095 
68,555,368 
334,866,210 
10,251,330,230 1. Liabilities towards third parties 
1.1 Amounts owed to credit institutions 
- Current accounts 
- With agreed maturity dates or 
periods of notice 
- Borrowings 
1.2 Debt securities 
1.3 Other liabilities 
1.4 Accruals and deferred income 
1.5 Provisions for losses and expenses 
1.6 Commitments for ECSC operating budget 
1.7 Total liabilities towards third parties 
2. Net assets 
2.1 Provisions for the financing of the ECSC 
operating budget 
2.2 Reserves 
- Guarantee fund 
- Special reserve 
- Former pension fund 
- Reassessment reserve 
2.3 Profit brought forward 
2.4 Profit for the financial year 
2.5 Net total 
3. GRAND TOTAL 0 
438,779 
2,745,123,621 
4,585,526,867 
405,814,982 
270,264,348 
5,296,750 
1,361,211,011 
9,373,676,358 
209,566,925 
429,885,000 
166,980,000 
58,923,329 
10,684,405 
440,406 
1,173,807 
877,653,872 
10,251,330,230 
20 
ANNEX 4 
ECSC - BORROWING AND LENDING OPERATIONS 
AMOUNTS RECEIVABLE 
Loans raised 
Repayments of loans 
granted 
Interest payments on loans 
Repayment of costs 
involved in borrowing and 
lending operations Outturn 
1993 
907.6 
1 063.9 
600.3 
18.0 Forecast 
1994 
1000 
1 138 
548 
10 Forecast 
1995 
800 
1048 
463 
10 
AMOUNTS PAYABLE 
Loans to be granted 
Repayments of loans 
granted 
Interest payments on loans 
Payment of costs involved 
in borrowing and lending 
operations Outturn 
1993 
918.3 
901.3 
638.1 
20.2 Forecast 
1994 
1 000 
1 180 
631 
15 Forecast 
1995 
800 
928 
557 
15 
21 
X05. ANNEX 5 
ECSC OPERATING BUDGETS FOR 1 993 AND 1 994 
(ECU million) 
REQUIREMENTS 
OPERATIONS TO BE FINANCED FROM 
RESOURCES FOR THE FINANCIAL YEAR 
1 Administrative expenditure 
2 Aid for redeployment (Art. 56) 
3 Aid for research (Art. 55) 
3.1 Steel 
3.2 Coal 
3.3 Social 
4 Interest subsidies 
4.1 Investment (Art. 54) 
4.2 Conversion (Art. 56) 
5 Social measures connected with re­
structuring of the steel industry (Art.56) 
6 Social measures connected with re­
structuring of the coal industry (Art, 56) 
7 Damages and interest 
8 Surplus 
BUDGET TOTAL 
OPERATIONS FINANCED BY LOANS FROM 
NON-BORROWED FUNDS 
Low-cost housing 1993 
Forecast 
5 
185 
124.8 
58 
51.8 
15 
127 
127 
60 
50 
pm 
551.8 Outturn 
5 
182.4 
124.6 
58 
51.8 
14.8 
114.3 
114.3 
60 
50 
pm 
60.2 
596.4 1994 
Forecast 
5 
157 
52 
34 
17 
1 
53 
53 
86 
40 
pm 
393 Outturn 
forecast 
at 30.6.94 
5 
157 
52 
34 
17 
1 
53 
53 
86 
40 
21 
13 
427 RESOURCES 
RESOURCES FOR THE FINANCIAL YEAR 
1 Current resources 
1.1 Yield from levy - 0,25% (1993) 
Yield from levy - 0,23% (1994) 
1.2 Net balance 
1.3 Fines and surcharges for late payments 
1.4 Miscellaneous 
2 Cancellation of commitments not likely to be 
implemented 
3 Resources from previous year not used 
4 Drawings on contingency reserve (1) 
5 Exceptional resources (2) 
BUDGET TOTAL 1993 
Forecast 
117 
252 
pm 
pm 
78.7 
53.1 
pm 
51 
551.8 Outturn 
forecast 
at 30.6.94 
121.25 
277 
0.02 
94.04 
53.09 
51 
596.4 1994 
Forecast 
102 
150 
2 
pm 
50 
67 
pm 
22 
393 Outturn 
forecast 
at 30.6.94 
103 
115 
2 
6 
58 
60 
61 
22 
427 
19 pm 17 17 ORIGIN OF NON-BORROWED FUNDS 
Special reserve amd former ECSC Pension Fund 19 pm 17 17 
(1) Resources available at 31.12.1993: ECU 123.9 million, including ECU 32 million to cover any discrepancy between revenue and expenditure in 1994. 
(2) Special reserve. 
Annex 6 
DRAFT ECSC OPERATING BUDGET FOR 1995 
(ECU million) 
REQUIREMENTS 
OPERATIONS TO BE FINANCED FROM 
RESOURCES FOR THE FINANCIAL YEAR 
1 Administrative expenditure 
2 Aid for redeployment (Art. 56) 
3 Aid for research (Art. 55) 
3.1 Steel (1) 
3.2 Coald) 
3.3 Social 
4 Conversion aid (Art. 56) 
5 Social measures connected with 
restructuring of steel industry (Art. 56) 
6 Social measures connected with 
restructuring of coal industry (Art. 56) 
7 Damages and interest 
BUDGET TOTAL PROPOSALS 
5 
114 
35 
24 
10 
1 
47 
60 
30 
pm 
291 RESOURCES 
RESOURCES FOR THE FINANCIAL YEAR 
1 Current resources 
1.1 Yield from 0.21% levy 
1.2 Net balance 
1.3 Fines and surcharges for late payments 
1.4 Miscellaneous 
2 Cancellation of commitments not 
likely to be implemented 
3 Resources from previous year not used 
4 Drawings on contingency reserve 
5 Exceptional resources (2) 
BUDGET TOTAL PROPOSALS 
96 
125 
pm 
6 
49 
13 
pm 
2 
291 
OPERATIONS FINANCED BY LOANS FROM NON-BORROWED 
FUNDS 
Low-cost housing 11.5 ORIGIN OF NON-BORROWED FUNDS 
Special reserve and former ECSC Pension Fund 11.5 
(1) Aid for projects with a specific impact on the environment: 
Headings 3.1 : Steel projects specifically related to the environment will come under the framework programme. 
3.2: ECU 6 million. 
(2) Special reserve 
NB: Any additional resource will be allocated to social measures connected with the restructuring of the coal and steel industries. 
The steel restructuring programme may continue in 1996, reaching a total of ECU 240 million. 
ISSN 0254-1475 
COM(94) 291 final 
DOCUMENTS 
EN 01 
Catalogue number : CB-CO-94-320-EN-C 
ISBN 92-77-71543-X 
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