EN

Brussels, 16.4.2010

COM(2010)160 final

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

on the technical adjustment of the financial framework for 2011 in line with movements in GNI, including the adjustment of amounts allocated from funds supporting cohesion to the Member States concerned by divergence between estimated and actual GDP for the period 2007-2009

presented in accordance with points 16 and 17 of the Interinstitutional Agreement of 17 May 2006

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

on the technical adjustment of the financial framework for 2011 in line with movements in GNI, including the adjustment of amounts allocated from funds supporting cohesion to the Member States concerned by divergence between estimated and actual GDP for the period 2007-2009

1. Introduction

In 2010, exceptionally, the annual technical adjustment of the financial framework for 2011 concerns not only the regular adjustment to movements in prices and GNI (Point 16 of the Interinstitutional Agreement (IIA) of 17 May 2006 on budgetary discipline and sound financial management [1]) but also an adjustment for heading 1B (Point 17 of the IIA).

In fact, Point 17 of the IIA states that, "in its technical adjustment for the year 2011, if it is established that any Member's State cumulated GDP for 2007-2009 has diverged by more than +/- 5% from the cumulated GDP estimated when drawing up this Agreement, the Commission will adjust the amounts allocated from funds supporting cohesion to the Member State concerned for that period…". Point 17 further introduces a first constraint that the total net effect, whether positive or negative, of those adjustments may not exceed €3 billion and in particular a second constraint that, in case the net effect is positive, "total additional resources shall be limited to the level of under-spending against the ceilings for sub-heading 1B for the years 2007-2010". Finally Point 17 stipulates that "the required adjustments will be spread in equal proportions over the years 2011-2013 and the corresponding ceilings will be modified accordingly."

According to Point 16 of the IIA, the Commission makes each year, ahead of the budgetary procedure for year n+1, a technical adjustment to the financial framework in line with movements in the EU's gross national income (GNI) and prices and communicates the results to the two arms of the budgetary authority. As far as prices are concerned, expenditure ceilings at current prices are established using the fixed 2% deflator foreseen in point 16 of the IIA. As far as movements in GNI are concerned, the present Communication includes the latest economic forecasts available.

The purpose of this communication is to present to the budgetary authority the result of the technical adjustment (EU-27) for 2011 according to Points 16 and 17 of the IIA.

2. Adjustment of the 2011-2013 ceilings for Heading 1B (Point 17)

2.1. Eligibility of Member States

According to Point 17 of the IIA, the Commission must adjust the amounts allocated from funds supporting cohesion for any Member State for which the cumulated GDP for 2007-2009 has diverged by more than +/- 5% from the cumulated GDP estimated at the time the IIA was being drawn up. The divergence must therefore be measured between the statistics published in April 2005 [2] and those published in November 2009, which represent the most recent data available.

This provision only has practical applications for those Member States whose global cohesion allocation is subject to capping [3], i.e. Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia. The amounts allocated from funds supporting cohesion for the other Member States are not affected by the 2007-2009 divergence in GDP.

The comparison between both sets of statistical data yields the following result:

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No Member State has a negative GDP divergence of more than 5%. There is therefore no need to reduce the amounts allocated to any Member State. On the other hand, there are three Member States with a positive divergence in excess of 5%: the Czech Republic (+ 7.5%), Poland (+ 8.0%) and Slovakia (+ 10.8%). The amounts allocated from funds supporting cohesion for these Member States will therefore have to be increased.

2.2. Establishment of the global amount of 'underspending'

Since the net effect of the adjustment will be positive, it is necessary to determine the level of 'underspending' against the ceilings for sub-heading 1B for the years 2007-2010. This 'underspending' consists of three different elements [4]:

· the sum of the differences between the ceilings for heading 1B for each of the years 2007 to 2010 and the commitment appropriations budgeted for the period;

· the cancelled (or lapsed) commitment appropriations under heading 1b for each of the years 2007 to 2010, excluding the 2007 amounts transferred to subsequent years under point 48 of the IIA [5];

· the de-commitments of the years 2007-2010 related to cohesion expenditure, excluding the amounts related to EAGGF Guidance and the FIFG.

The details of the 'underspending' are given in the table below, taking into account the most recent data available.

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The positive adjustment for all Member states concerned will therefore be globally restricted to an amount of € 1 007 million. This amount respects the first constraint limiting the total net effect of the adjustments to € 3 billion.

2.3. Adjustment of the 2011-2013 ceilings for heading 1B

Based on the global allocations by Member State for the period 2007-2009, the positive adjustment would theoretically have amounted to € 3 331 million. However, given the constraint presented by the level of 'underspending', the positive adjustments are proportionally reduced as follows:

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The required adjustments need to be spread in equal proportions over the years 2011-2013. Furthermore, the corresponding adjustments of the ceilings for heading 1B need to be made in million of euro.

The ceilings for commitment appropriations for heading 1B (in current prices) are therefore increased as follows:

· 2011: + 336 million

· 2012: + 336 million

· 2013: + 336 million

2.4. Payment appropriations

Point 23, fourth paragraph, of the IIA provides that any revision must maintain an appropriate relationship between commitments and payments. Hence, the annual ceilings for payment appropriations need to be modified on the basis of the payment profiles foreseen for the additional commitments under heading 1b. Given that most of the payments related to this increase in commitments are expected to occur post-2013, the increase in the payment ceilings remains limited.

The ceilings for payment appropriations (in current prices) are therefore increased as follows:

· 2011: + 17 million

· 2012: + 87 million

· 2013: + 187 million

2.5. Summary table and conclusion

The below table summarises the changes to the ceilings for commitment and payment appropriations in the financial framework. Amounts are expressed in current prices:

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The financial framework table included in the IIA [6] is expressed in constant 2004 prices. The amounts in current values are thus to be converted into 2004 prices by means of a fixed deflator of 2% a year, in accordance with Point 16 of the IIA.

Table 1 shows the financial framework for EU-27 in 2004 prices as modified in accordance with Point 17 of the IIA.

3. Technical Adjustment of the financial framework for 2011 in line with movements of GNI (Point 16)

Table 2 shows the financial framework for EU-27 taking into account the above-mentioned adjustment of the 2011-2013 ceilings and adjusted for 2011 (i.e. in current prices and expressed in percentage of GNI using the latest economic forecasts available).

3.1. Total figure for GNI

According to the latest forecast available, the GNI for 2011 is established at EUR 12 354 021.3 million in current prices for EU-27 (and at EUR 11 966 504.7 million for 2010, EUR 11 614 170.1 million for 2009, EUR 12 294 000.1 million for 2008 and EUR 12 206 170.2 million for 2007).

For subsequent years (2012-2013) the EU-27 GNI has been calculated on the basis of internal Commission projections for the annual average growth rate in real terms. These projections are indicative and will be updated annually on the basis of the latest economic forecasts available.

The 2010 and 2011 GNI includes financial intermediation services indirectly measured (FISIM) based on Council Decision 2010/196/EU, Euratom of 16 March 2010 to apply FISIM for own resources purposes [7] from 1 January 2010 onwards.

3.2. Main results of the technical adjustment of the Financial Framework for 2011 (EU-27)

The overall ceiling on commitment appropriations for 2011 (EUR 142 965 million) equals 1.16 % of GNI.

The corresponding overall ceiling concerning the payment appropriations (EUR 134 280 million) equals 1.09 % of GNI. On the basis of the latest economic forecasts, this leaves a margin beneath the 1.23 % own resources ceiling of EUR 17 674 million (0.14 % of GNI for EU-27).

The ceilings for own resources and for commitment appropriations were adapted following the entry into force of Decision 2010/196 to apply FISIM for own resources purposes [8].

4. Other elements linked to the technical adjustment

4.1. Heading 5 (Administration)

In the case of heading 5, a footnote to the financial framework states that the figures for pensions included under the ceiling for this heading are to be calculated net of staff contributions to the pension scheme, up to a maximum of EUR 500 million (2004 prices) for the period 2007-2013. This provision should be interpreted as imposing a dual limit on the amounts deducted from expenditure on pensions when applying the ceiling of the heading:

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

– The accumulated total of deductions for the period 2007-2013 may not exceed EUR 500 million at 2004 prices, equivalent to an average of EUR 71.4 million (EUR 82 million at 2011 prices).

The recurrent nature of administrative expenditure imposes that the lowest limit is adopted annually to avoid using a margin at the start of the period which would no longer be fully available afterwards. For 2011 the amount to be deducted is EUR 82 million at current prices.

4.2. Expenditure items outside the financial framework 2007-2013

A number of instruments are available outside expenditure ceilings agreed in the financial framework 2007-2013. These instruments aim at providing rapid response to exceptional or unforeseen events, and provide some flexibility beyond the agreed expenditure ceilings within certain limits:

– the Emergency Aid reserve, which can be mobilised up to a maximum amount of EUR 221 million per year in 2004 prices, or EUR 253.9 million in 2011 at current prices (EUR 1 744 million for the whole period in current prices);

– the EU Solidarity Fund, whose maximum annual amount in current prices is EUR 1 billion;

– the Flexibility Instrument, with a maximum annual amount in current prices of EUR 200 million, plus the portion of the unused annual amounts of the years 2008-2010, which may be carried over to year 2011;

In addition, it will be possible to mobilise the European Globalisation Adjustment Fund (EGF) up to a maximum of EUR 500 million per year in current prices by drawing from any margin existing under the global ceiling for commitment appropriations of the previous year, and/or from cancelled commitments from the previous two years (excluding those related to heading 1b).

5. Operations outside the budget and own resources

The fourth subparagraph of Point 11 of the Interinstitutional Agreement states that information relating to operations not included in the general budget and the foreseeable development of the various categories of own resources is to be set out in tables, as an indication, and updated annually when the technical adjustment is made to the financial framework.

This information, updated in line with the latest estimates available, is set out in Tables 3.1 to 3.2. It covers the European Development Fund (EDF) and the structure of own resources.

ANNEX

TABLE 1: FINANCIAL FRAMEWORK 2007-2013 ADJUSTED FOR POINT 17

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TABLE 2: FINANCIAL FRAMEWORK 2007-2013 ADJUSTED FOR 2011 AND POINT 17

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TABLE 3: INDICATIVE PROGRAMME OF EXPENDITURE NOT ENTERED IN THE GENERAL BUDGET

AND PROSPECTIVE TREND IN THE VARIOUS OWN RESOURCES

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[1] OJ C 139, 14/06/2006, p. 1.

[2] Point 9 of Annex II to Council Regulation 1083/2006 of 11 July 2006.

[3] Points 7, 8 and 11 of Annex II to Council Regulation 1083/2006 of 11 July 2006.

[4] As explained in the Working document of the Commission services 'Fiche 99' of 15 February 2006.

[5] Decision of the European Parliament and of the Council of 29 April 2008 (OJ L 128/8 16.5.2008)

[6] As most recently amended by the Decision of the European Parliament and of the Council of 17 December 2009 amending the IIA of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework – Financing projects in the field of energy in the context of the European Economic Recovery Plan (OJ L 347, 24/12/2009, p. 26).

[7] Council Decision 2010/196/EU, Euraton of 16 March 2010 on the allocation of financial intermediation services indirectly measured (FISIM) for the establishment of the Gross National Income (GNI) used for the purposes of the European Union's budget and its own resources, OJ L 87, 7.4.2010, p. 31.

[8] Communication from the Commission to the EP and the Council on the adaptation of the ceiling of own resources and of the ceiling for appropriations for commitments following the decision to apply FISIM for own resources purposes, COM(2010) 162 final.

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