COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Technical adjustment of the financial perspective for 2003 in line with movements in GNI and prices (Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)

1. The Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure [1] contains the financial perspective table for EU-15 (Annex I) and the indicative financial framework for EU-21 (Annex II) based on the assumption of an enlarged Union with six new Member States from 2002 (Cyprus, Estonia, Hungary, Poland, the Czech Republic and Slovenia).

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

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 2003.

2. Tables 1 and 2 show the financial perspective for EU-15 and the financial framework for EU-21 at 2003 prices.

2.1. Own resources ceiling

The Council Decision of 29 September 2000 on the system of the European Communities' own resources [2] will enter into force once it has been ratified by the Member States' parliaments. These ratification procedures should be completed in early 2002. The decision will take effect on 1 January 2002 (some provisions on 1 January 2001).

[2] Council Decision of 29 September 2000 on the system of the European Communities' own resources (2000/597/EC, Euratom) - OJ L 253, 7.10.2000, p.42.

This decision states that, for the purposes of its application, GNP (gross national product) is to be defined as GNI (gross national income), as determined in accordance with ESA 95. [3] It also states that the ceiling of own resources, expressed as a percentage of GNI, should be adjusted in order to maintain unchanged the amount of financial resources put at the disposal of the Communities under ESA 95. In accordance with this decision, the Commission made this adjustment in December 2001 and communicated the result to the budgetary authority. [4] The own resources ceiling of 1.27% of GNP-15 is changed to 1.24% of GNI-15.

[3] Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community - OJ L 310, 30.11.1996.

[4] Communication from the Commission to the Council and the European Parliament - Adaptation of the ceiling of own resources and of the ceiling for appropriations for commitments following the entry into force of Decision 2000/597/EC, Euratom (COM(2001) 801 final of 28.12.2001).

For the purposes of clarity, Tables 1 and 2 set out the figures relating to the technical adjustment for 2003 in line with both the ESA (second edition) and the new system (ESA 95).

2.2. Financial perspective table EU-15

The overall ceiling on appropriations for commitments for 2003 comes to EUR102 145 million, equivalent to 1.07% of GNI.

The corresponding ceiling on the appropriations for payments for EU-15 comes to EUR102 767 million, i.e. 1.08 % of GNI.

Allowing for the amount available for accession, the overall ceiling on appropriations for payments is EUR110 033 million (1.16% of GNI for EU-15), which, on the basis of current economic forecasts, leaves a margin beneath the own resources ceiling of EUR7 849 million.

For 2000, 2001 and 2002, the size of the margin has been updated from the previous technical adjustments using the most recent GNI estimates so that comparisons can be made over a number of years. On the other hand, the ceilings in commitments and payments resulting from the adjustments made do not change.

2.3. Financial framework EU-21

As an estimate of GNI is not available for each of the six candidate countries taken into account, the GDP aggregate has been used for them here on the basis of the most recent figures and forecasts. The total GDP for these countries is put at EUR402 billion in 2003.

3. Table 3 presents the macroeconomic parameters used for this adjustment exercise. They are based on data drawn up by Eurostat and on the most recent forecasts made by the Commission in conjunction with the national experts (budget forecasts, autumn 2001).

The figures and forecasts are based on the European System of Accounts revised in 1995 (ESA 95).

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

- A cumulative deflator of 8.243% for the period 2000-03 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 (fixed rate of 2% a year).

- The GNP deflator in euros for 2000-03 (8.56%) to the other ceilings (actual deflator).

- In accordance with the financial perspective adopted at the Berlin European Council in March 1999, the monetary reserve will be eliminated from 2003.

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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As regards the appropriations for payments available for accession, those coming under heading 1 have been adjusted by means of a 8.243% cumulative deflator. For "other expenditure", a distinction is made between payments for structural operations, to which the cumulative deflator 8.243% is applied, and payments under headings 3 and 5, for which the cumulative 8.5569% deflator has been used.

The indicative table for the financial framework for EU-21 (see Table 2) has been adjusted in the same way. In heading 8 (Enlargement), the commitment appropriations for agriculture and structural operations have been adjusted by means of the cumulative 8.243% deflator and those for internal policies and administration by means of the cumulative 8.5569% 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 has been calculated in accordance with Article 3 of the new Council Regulation on budgetary discipline [5] (see Table 4).

[5] Council Regulation (EC) No 2040/2000 of 26 September 2000, OJ L 224, 29 September 2000, p.27

The figures for sugar and isoglucose levies, food aid refunds and ACP sugar refunds are based at this stage on the amounts entered in the 2002 budget. 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 2003 budget is presented.

In 2003 the agricultural guideline is provisionally EUR52 177 million. [6]

[6] A margin of EUR2 038 million in relation to all the expenditure which, in accordance with the Regulation on budgetary discipline, is included under the guideline (heading 1, the "agriculture" section of the pre-accession aid under heading 7, the amounts left available for accession in respect of agriculture.

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, [7] 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:

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

- this amount may not exceed the contributions actually entered as budget revenue in any one year. For 2003 these contributions are provisionally estimated [8] at EUR178 million, i.e. EUR163 million at 1999 prices with the cumulative deflator of 8.5569% applied for the adjustment to the ceiling for the heading;

[8] The rate of increase envisaged for 2003 for expenditure on remunerations has been applied to the amount of contributions entered in the 2002 budget (EUR175 million).

- 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 (EUR170 million at 2003 prices).

As administrative expenditure is, as a rule, recurrent, the lowest limit - i.e. a maximum of EUR170 million at current prices for 2003 - 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.

8. The Commission will present to the budgetary authority its proposal for adjustments to the financial perspective in connection with implementation under paragraphs 16 to 18 of the Interinstitutional Agreement once the outturn figures for 2000 are available (mid-February 2002).

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