COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Technical adjustment of the financial perspective for 2001 in line with movements in GNP and prices (Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Technical adjustment of the financial perspective for 2001 in line with movements in GNP and prices (Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)

1. The financial perspective table for 2000-06 forms an integral part of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure.

Paragraph 15 of the Interinstitutional Agreement states that each year the Commission will, ahead of the budgetary procedure for year n+1, make a technical adjustment to the financial perspective in line with movements in the EU's gross national product (GNP) and prices.

The purpose of this communication is to present to the budgetary authority the result of this technical adjustment for 2001.

2. Table 1 shows the adjusted financial perspective at 2001 prices.

The overall ceiling on appropriations for commitments for 2001 comes to EUR97 189 million, equivalent to 1.19% of GNP.

The corresponding ceiling on the appropriations for payments required comes to EUR94 730 million, i.e. around 1.11% of GNP.

This leaves a margin of EUR13 643 million between the ceiling on appropriations for payments and the own-resources ceiling, i.e. 0.16% of GNP, on the basis of current economic forecasts. The margin for 2000 has been updated in relation to the technical adjustment for 2000 [1] by including the latest GNP estimates for 2000 and thus allowing comparisons to be made between a number of years. However, the ceilings on commitments and payments resulting from that adjustment have not been changed.

[1] SEC(1999) 847 final, tables 1 and 2.

Table 2 sets out the adjusted financial framework for EU-21 at 2001 prices by way of indication. The GNP figure incorporates the latest estimates available for the GNP of the six countries in the first wave of accession (Poland, Czech Republic, Hungary, Estonia, Slovenia, Cyprus). The total GNP of these countries for 2001 is estimated at EUR315 billion.

3. Table 3 contains the macroeconomic data and forecasts used by the Commission to make the technical adjustment for 2001. The latest estimates presented by the Commission (budget forecasts, November 1999) have been used for the period 1999-2000. Both the retrospective data for 1988-1998 (drawn up by Eurostat and used here to calculate the agricultural guideline) and the provisional forecasts for 1999-2001 are based on the European System of Accounts set up in 1979 (ESA 79). Under the proposal for a new own resources decision, [2] the new ESA 95 will not be used for budgetary purposes until 2002.

[2] COM(1999) 333 final

4. The adjustment is calculated by applying the following deflators to the financial perspective (at 1999 prices):

- A cumulative deflator of 4.04% for the period 1999-2001 to the ceiling for heading 1 and to the figure for the Structural Funds in heading 2, in accordance with paragraph 15 of the Interinstitutional Agreement.

- The GNP deflator in euros for 1999-2001 (3.84%) to the other ceilings, apart from subheading 6 (Monetary reserve), which is expressed in current prices.

As regards payments, the adjustment is based on the appropriations for payments estimated for each heading when the financial perspective was drawn up (1999 prices). The method of calculation is set out in the following table:

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In heading 1, the appropriations for payments available for accession have been adjusted by means of a 4.04% cumulative deflator. For "other expenditure", a distinction is made between payments for structural operations, to which the cumulative 4.04% deflator is applied, and payments under headings 3 and 5, for which the cumulative 3.84% deflator has been used.

The indicative table for the financial framework for EU-21 has been adjusted in the same way (see Table 2). In heading 8 (Enlargement), the commitment appropriations for agriculture and structural operations have been adjusted by means of the cumulative 4.04% deflator and those for internal policies and administration by means of the cumulative 3.84% deflator. Payments under heading 8 have been adjusted using the same method of calculation as for the payments available for accession in the financial perspective.

5. The agricultural guideline, which is no longer the ceiling for heading 1, is calculated in accordance with the latest Council Decision on budgetary discipline [3] (see table 4). The parameters applied - both for real growth and the deflator - relate to the twelve-nation Community for the period 1988-95 and the fifteen-nation Community from 1996 onwards.

[3] OJ L 293, 12.11.1994. An adjustment to the method for calculating the agricultural guideline is now being discussed, but has yet to be adopted. It cannot therefore be used in this case.

The figures for sugar and isoglucose levies, food aid refunds and ACP sugar refunds are based at this stage on the most recent estimates. In accordance with the decision on budgetary discipline, the final level of these specific items in the guideline will be fixed when the preliminary draft budget is presented.

In 2001 the agricultural guideline comes to EUR48 841 million. [4]

[4] A margin of 3 771 millions in relation to all the expenditure which will now be included under the guideline as a result of the conclusions of the Berlin European Council (heading 1 and the agricultural section of the pre-accession aid under heading 7).

6. In the case of heading 5, a footnote to the financial perspective 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 EUR1 100 million (1999 prices) for the period 2000-06. As stated in the Commission communication on the technical adjustment for 2000, [5] this provision should be interpreted as imposing a dual limit on the amounts deducted from expenditure on pensions when applying the ceiling for the heading:

[5] SEC(1999) 847 final, paragraph 6.

- this amount may not exceed the contributions actually entered as budget revenue in any one year. For 2001 these contributions are provisionally estimated [6] at EUR169.3 million, i.e. 163 million at 1999 prices with the cumulative deflator of 3.84% applied for the adjustment to the ceiling for the heading;

[6] As with remunerations, a rate of increase of 3% has been applied to the figure for 2000 (EUR 164.4 million). The figure proposed by the Commission will appear in the preliminary draft budget for 2001.

- the accumulated total of deductions for the period 2000-06 may not exceed EUR1 100 million at 1999 prices, equivalent to an average of EUR157 million a year (EUR163 million at 2001 prices).

As administrative expenditure is, as a rule, recurrent, the lowest limit - i.e. a maximum of EUR163 million at current prices for 2001 - should be adopted each year to avoid using a margin at the start of the period which will no longer be fully available afterwards.

7. The fifth subparagraph of paragraph 10 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 perspective.

This information, updated in line with the latest estimates available, is set out in Tables 5.1 to 5.3. It covers the EDF, the ECSC operating budget and the structure of own resources.

Table 1 : FINANCIAL PERSPECTIVE ADJUSTED TO 2001 PRICES

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(1) In accordance with Article 2 of Decision No182/1999/EC of the European Parliament and of the Council and Article 2 of Council Decision1999/64/Euratom (OJ L 26, 1.2.1999, p. 1 and p. 34), EUR11 510 million at current prices is available for research over the period 2000-02.

(2) The expenditure on pensions included under the ceiling for this heading is calculated net of staff contributions to the pension scheme, up to a maximum of EUR1 100 million at 1999 prices for the period 2000-06.

Table 2 : FINANCIAL FRAMEWORK EU-21 ADJUSTED TO 2001 PRICES

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(1) In accordance with Article 2 of Decision No182/1999/EC of the European Parliament and of the Council and Article 2 of Council Decision 1999/64/Euratom (OJ L 26, 1.2.1999, p. 1 and p. 34), EUR11 510 million at current prices is available for research over the period 2000-02.

(2) The expenditure on pensions included under the ceiling for this heading is calculated net of staff contributions to the pension scheme, up to a maximum of EUR1 100 million at 1999 prices for the period 2000-06.

Table 3: GNP - FIGURES AND FORECASTS

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Table 4 : CALCULATION OF THE AGRICULTURAL GUIDELINE FOR 2001

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Table 5: Indicative programme of expenditure not entered in the general budget and prospective trend in the various own resources

5.1. European Development Fund (1)

Decisions (D) and payments (P)

EUR million - current prices

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(1) Commission communication COM(1999)688final of 13.12.1999

5.2. ECSC operating budget

EUR million - current prices

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(1) ECSC Treaty expires on 23 July 2002

5.3. Own resources by category

% of total

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2000: Budget

2001-06: Estimates based on ceilings on appropriations for payments in the financial perspective (EU 15) and conclusions of the Berlin European Council (March 1999).