COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - Technical adjustment of the financial perspective for 2004 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. INTRODUCTION

The Interinstitutional Agreement (IIA) 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.

[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 (EU-15) for 2004.

2. TERMS OF THE ADJUSTMENT OF THE FINANCIAL PERSPECTIVE TABLE (TABLE 1)

Table 1 shows the financial perspective for EU-15 at 2004 prices.

Table 2 is included for information and concerns the financial framework for EU-21 established at the European Council in Berlin in March 1999.

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 2002). The figures and forecasts are based on the European System of Accounts revised in 1995 (ESA 95).

2.1. Own resources ceiling

The Council Decision of 29 September 2000 on the system of the European Communities' own resources [2] has entered into force, after its ratification by the Member States' parliaments, on 1 March 2002, with effect as from 1 January 2002, except Article 2(3), and except Article 4, which take effect as from 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 own resources ceiling, 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 until 2003 the figures relating to the technical adjustment in line with both the ESA (second edition) and the new system (ESA 95).

2.2. Adjustment of expenditure ceilings by heading

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

- A cumulative deflator of 10,41% for the period 2000-2004 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 2000-2004 (10,72624%) to the other ceilings (actual deflator).

- In accordance with the financial perspective adopted at the Berlin European Council, the monetary reserve has been 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 10,41% cumulative deflator. For "other expenditure", a distinction is made between payments for structural operations, to which the cumulative deflator 10,41% is applied, and payments under headings 3 and 5, for which the cumulative 10,72624% deflator has been used.

2.3. Main results of the technical adjustment of the Financial Perspective for 2004 (EU-15)

The overall ceiling on appropriations for commitments for 2004 comes to EUR102.995 million, equivalent to 1,05% of GNI.

The corresponding ceiling on the appropriations for payments comes to EUR101.543 million, i.e. 1,03 % of GNI.

Allowing for the amount available for accession, the overall ceiling on appropriations for payments is EUR111.362 million (1,13% of GNI for EU-15), which, on the basis of current economic forecasts, leaves a margin beneath the own resources ceiling of EUR10.344 million (0,11% of GNI for EU-15).

For 2001, 2002 and 2003, 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.

2.4. The Financial Framework for the Enlarged Union

The Financial Framework EU-21 (Table 2) is presented only as a reminder of the scenario laid down at the Berlin European Council and presented in the IIA of 6 May 1999.

Since then, the Brussels European Council of 24 and 25 October 2002 confirmed that the enlargement of the Union could concern up to ten new Members (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia).

At the beginning of 2003 the Commission will present an indicative financial framework for EU-25 at 2004 prices together with the adjustment of the financial perspective to cater for enlargement (Point 25 of the IIA of 6 May 1999), taking into account the conclusions of the Copenhagen European Council of 12 and 13 December 2002.

The indicative table for the financial framework for EU-21 has been adjusted in the same way as the EU-15 table. In heading 8 (Enlargement), the commitment appropriations for agriculture and structural operations have been adjusted by means of the cumulative 10,41% deflator and those for internal policies and administration by means of the cumulative 10,72624% 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.

3. OTHER ELEMENTS LINKED TO THE EXERCISE OF TECHNICAL ADJUSTMENT

3.1. The agricultural guideline

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 forecasts for the 2003 budget. In accordance with the Regulation on budgetary discipline, the final level of these specific items in the guideline will be fixed when the preliminary draft 2004 budget is presented.

In 2004 the agricultural guideline is provisionally EUR53.622 million. [6]

[6] This leaves a margin of EUR3.130 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.

3. 2. Heading 5 (Administration)

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 2000-2006. 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 2004 these contributions are provisionally estimated [8] at EUR187 million, i.e. EUR166 million at 1999 prices with the cumulative deflator of 10,72624% applied for the adjustment to the ceiling for the heading;

[8] The rate of increase envisaged for 2004 for expenditure on remunerations has been applied to the amount of contributions entered in the Amending Letter n°4/2003 (EUR184 million).

- the accumulated total of deductions for the period 2000-2006 may not exceed EUR1.100 million at 1999 prices, equivalent to an average of EUR157 million (EUR174 million at 2004 prices).

As administrative expenditure is, as a rule, recurrent, the lowest limit - i.e. a maximum of EUR174 million at current prices for 2004 - should be adopted each year to avoid using a margin at the start of the period which will no longer be fully available afterwards.

3. 3. Operations outside the Budget

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 5.2. It covers the EDF and the structure of own resources.

4. FINAL REMARK

The Commission will present to the budgetary authority its proposal for the adjustment of the financial perspective to cater for enlargement, in compliance with Point 25 of the Interinstitutional Agreement, at the beginning of 2003.

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