[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 14.3.2008

COM(2008) 152 final

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the adjustment of the financial framework to take account of implementation and the technical adjustment for 2009 in line with movements in GNI presented by the Commission to Parliament and the Council in accordance with paragraph 48 of the Interinstitutional Agreement of 17 May 2006

EXPLANATORY MEMORANDUM

Points 18 and 48 of the Interinstitutional Agreement of 17 May 2006 provide for the Commission to present to the two arms of the budgetary authority proposals for adjustments to the financial framework considered necessary in the light of implementation.

This procedure involves:

- the adjustment of total payment appropriations to ensure, in the light of requirements, an orderly progression in relation to the commitment appropriations (point 18);

- in the event of the adoption after 1 January 2007 of new rules or programmes governing the Structural Funds, the Cohesion Fund, Rural Development and the European Fund for Fisheries, the two arms of the budgetary authority have undertaken to authorise the transfer to subsequent years, in excess of the corresponding ceilings on expenditure, of allocations not used in 2007 (point 48).

The Commission's examination of implementation in 2007 from these two angles prompts it to present the following proposal for the adjustment of the financial framework in respect of point 48 to the budgetary authority. The present proposal to take account of implementation is applied on expenditure ceilings at current prices.

Furthermore, point 16 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 framework in line with movements in the EU's gross national income (GNI) and prices and communicate 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 Interinstitutional Agreement. As far as movements in GNI are concerned, the present proposal includes the latest economic forecasts available.

1. ADJUSTMENT OF STRUCTURAL FUNDS, COHESION FUND, RURAL DEVELOPMENT AND THE EUROPEAN FUND FOR FISHERIES IN THE LIGHT OF THE CIRCUMSTANCES OF THEIR IMPLEMENTATION (POINT 48)

Under point 48 of the Interinstitutional Agreement, in the event of adoption after 1 January 2007 of new rules or programmes governing the Structural Funds, the Cohesion Fund, Rural Development and the European Fund for Fisheries, the two arms of the budgetary authority undertake to authorise, on a proposal from the Commission, the transfer to subsequent years, in excess of the corresponding ceilings on expenditure, of allocations not used in 2007

1.1. Scope of point 48 of the Interinstitutional Agreement

The Interinstitutional Agreement sets out the principle that the transfer is limited to the unused allocations for the first year of the financial framework.

The transfer is applicable to programmes funded by the Structural Funds (the European Regional Development Fund and the European Social Fund) and the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Fisheries Fund. It also applies to the European Regional Development Fund's contribution to the cross-border and sea-basin programmes under the European Neighbourhood and Partnership Instrument (ENPI) and to the Cross-Border Programmes of the Instrument for Pre-Accession (IPA). The latter remain under the discipline of the Structural Funds and the amounts involved shall be again made available to the Member States in the event of delays in the submission of the respective programmes[1].

1.2. Proposed transfer of commitment appropriations from 2007 to future years (Table 1).

Commitment appropriations totalling EUR 2 034 million lapsed in 2007, i.e. they were not implemented in 2007 and were not carried forward to 2008. This corresponds to the 2007 envelopes related to 45 Operational Programmes that could not be adopted in 2007, mainly due to delays in the submission to the Commission. The table below shows the distribution by Fund of the delayed programmes.

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Clearly the delays in the initial programming for the period 2007-2013 were sharply reduced compared to the period 2000-2006. As illustrated in the comparative table below, the amount that needs to be reprogrammed to later years was reduced from 20% to 3%.

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72% of the reprogramming required is due to delays in the Rural Development programmes. Several aspects of rural development programming burdened their approval procedure compared to that of the Cohesion programmes. Firstly, rural development programming goes down to the level of rural development measures, with quite detailed information required, for instance on environmental aspects. Secondly, each programme is submitted for approval to the Rural Development Committee prior to Commission approval. Thirdly, a significant number of programmes were only submitted to the Commission in the second half of 2007, which to some extent might have been influenced by the uncertainty of the outcome of the negotiations on voluntary modulation during the first part of 2007. Finally, other factors (such as national institutional constraints and lack of previous programming experience) may also have contributed to the late presentation of draft programmes and/or delays in clarifications requested by the Commission.

The delays in ERDF programming were mainly due to the late submission of the programmes involved. In some cases, their content required further negotiations to improve consistency with the Community objectives. Negotiations on the four IPA programmes delayed have been progressing slowly, as negotiations involving several countries, some of them third countries, are inevitably more complex. Similar difficulties have affected the ENPI programmes, of which only the Baltic Sea programme was submitted and adopted in 2007.

Many EFF programmes were also submitted quite late (e.g. December 2007) making it impossible to adopt the programmes in 2007.

Table 1a in Annex gives a complete overview of the under-implementation in 2007 by objective and Fund. The amount of appropriations under-implemented was EUR 3 525 million. Of this, EUR 1 491 million were carried forward to 2008, given that the preliminary stages of the commitment procedure had already been completed by the end of 2007. This left EUR 2 034 million, which are here proposed to be transferred, under point 48 of the Inter-Institutional Agreement, to later years of the programming period.

The following table shows the proposed reprogramming proposed for heading 1B and heading 2[2].

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The profile is slightly front-loaded, but the amounts are small in relation to the size of the annual envelopes.

In addition, table 1b gives the detail by fund and use of the breakdown by year of the proposed transfer.

1.3. Effect of the proposed transfers on the level of the corresponding payment appropriations.

The reprogramming under heading 1B has no significant impact on the expected profile of payments throughout the period. For the Rural Development programmes (heading 2) the reprogramming increases the expected payments in 2008 by EUR 1 014 million, an amount that had originally been foreseen for 2007. The impact for the years 2009-2013 will only be marginal.

In view of the fact that the budget 2008 leaves a sufficient margin below the financial framework ceiling, the Commission does not consider it necessary to propose an adjustment of the ceilings for payment appropriations for 2008 as a result of the proposed reprogramming under point 48 of the IIA.

2. MAINTAINING AN ORDERLY PROGRESSION BETWEEN PAYMENT APPROPRIATIONS AND COMMITMENT APPROPRIATIONS (POINT 18)

One of the purposes of the financial framework is to ensure an orderly progression between commitments and payments. This relationship was established for the duration of the financial framework on the basis of a number of hypotheses, which were communicated to both arms of the budgetary authority in May 2005. The annual ceiling for appropriations for payments in the financial framework 2007-2013 was based on this methodology. The Commission is to re-examine these hypotheses in 2010 according to the terms of point 19 of the Interinstitutional Agreement.

Point 18 of the Interinstitutional Agreement obliges the Commission to check the global ceiling for payment appropriations, which was established when the financial framework was drawn up, against the budget execution for 2007 and the budget for 2008 and to make any adjustments that are needed.

The profile of the global payment appropriations shows a peak in the year 2008, followed by a dip in the year 2009. The peak in 2008 was largely due to the envisaged concentration of payments associated with the overlap between the final phase of the 2000-2006 programming period and the start-up phase of the 2007-2013 period for structural actions. Payments were expected to decrease substantially in 2009 due to phasing out of reimbursements on the 2000-2006 programmes, more than offsetting the increase in reimbursements related to the phasing in of the 2007-2013 programmes.

The current assessment of payment appropriations needs does not show a need to adjust the existing ceiling of payments for 2009. According to the latest estimates for structural operations made by the regional policy services, payment requirements are fully compatible with the existing payment ceiling. As a consequence, the Commission does not see any need to present now a proposal to adjust the ceiling for payment appropriations for the year 2009. Of course, it will continue to monitor carefully the evolution of the situation.

The Commission will fine-tune its estimates of payments in the 2009 preliminary draft budget, for structural operations and for all other headings, in line with actual needs, budget discipline principles and the need to keep a sufficient margin for unforeseen events.

Table 1: Implementation of the Structural Funds in 2007 – Transfer of unused allocations

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3. TECHNICAL ADJUSTMENT OF THE FINANCIAL FRAMEWORK FOR 2009 IN LINE WITH MOVEMENTS OF GNI (POINT 16)

Table 2 shows the financial framework for EU-27 taking account of implementation and adjusted for 2009 (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 2009 is established at EUR 13 129 billion in current prices for EU-27 (and at EUR 12 547 billion for 2008 and EUR 11 975 billion for 2007).

For subsequent years (2010-2013) 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.

3.2. Main results of the technical adjustment of the Financial Framework for 2009

The overall ceiling on commitment appropriations for 2009, taking into account of implementation (i.e. EUR 136 211 million) equals 1.04 % of GNI.

The corresponding overall ceiling concerning the payment appropriations (i.e. EUR 123 858 million) equals 0.94 % of GNI. On the basis of the latest economic forecasts, this leaves a margin beneath the 1.24 % own resources ceiling of EUR 38 941 million (i.e. 0.30 % of GNI for EU-27).

3.3. Other elements linked to the technical adjustment

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 constant 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 constant 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 2009 the amount to be deducted is EUR 78.0 million at current prices.

Expenditure 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 221.0 million per year in 2004 constant prices, or EUR 244.0 million in 2009 at 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 2007 and 2008, which may be carried over to year 2009;

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). For the year 2009 the conditions are met to enter the EUR 500 million provision in the budget.

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 Table 3. It covers the European Development Fund (EDF) and the structure of own resources.

TABLE 2: FINANCIAL FRAMEWORK 2007 -2013 in current prices

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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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Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regard adjustment of the multiannual financial framework

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Interinstitutional Agreement between the European Parliament, the Council and the Commission of 17 May 2006 on budgetary discipline and sound financial management[3], and in particular to Point 48 thereof,

Having regard to the proposal from the Commission,[4]

Whereas:

(1) As a result of delays in the adoption of certain operational programmes of Headings 1b and 2, EUR 2 034 million in current prices of the allocation provided for the Structural Funds, the Cohesion Fund, Rural Development and the European Fund for Fisheries could not be committed in 2007 nor carried over to 2008. Under point 48 of the Interinstitutional Agreement, this amount must be transferred to subsequent financial years by increasing the corresponding expenditure ceilings for commitment appropriations.

(2) Annex I of the Interinstitutional Agreement on budgetary discipline and sound financial management should therefore be amended accordingly[5],

HAVE DECIDED AS FOLLOWS:

Sole Article

Annex I to the Interinstitutional Agreement on budgetary discipline and sound financial management is replaced by the Annex to this Decision.

Done at Brussels,

For the European Parliament For the Council

The President The President

FINANCIAL FRAMEWORK 2007 -2013

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[1] In accordance with Article 21 (5) of Council Regulation 1083/2006 of 11 July 2006

[2] The amounts in this table are given in euros as the programming in Heading 1b, Rural Development and the European Fund for Fisheries is made in euros. However, the adjustment of the Financial Framework annual ceilings is made in million euros, which involves rounding.

[3] OJ C 139, 14.6.2006, p. 1. as amended by Decision 2008/29/EC of the European Parliament and of the Council of 18 December 2007 amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regard the multiannual financial framework, OJ L 6, 10.1.2008, p.7.

[4] OJ COM xxx, xx.xx.2008

[5] For that purpose, the figures in current prices are converted into 2004 prices.