EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

The Council Regulation (EU, EURATOM) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020 (‘MFF Regulation’) allows for the mobilisation of the Contingency Margin of up to 0,03 % of Gross National Income for the EU-28 to react to unforeseen circumstances as a last resort instrument. In the technical adjustment of the MFF for 2017, based on Article 6 of the MFF Regulation, the absolute amount of the Contingency Margin for the year 2017 is set at EUR 4 496,8 million.

In accordance with Article 13 of the MFF Regulation, and after having examined all possibilities for financing additional and unforeseen commitment needs, the Commission proposes to mobilise the Contingency Margin for 2017 for an amount of EUR 1 164,4 million so as to complement the commitment appropriations related to expenditure in heading 3 in the general budget of the European Union for the financial year 2017, over and above the commitment ceiling of EUR 2 578 million in current prices.

In accordance with point 14 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, the Commission has carried out an analysis of the possibility to reallocate significant amounts within the existing budget. In accordance with Article 13(3) of the MFF Regulation the Commission proposes to offset the reinforcement of the expenditure ceiling of heading 3 as follows: EUR 650,0 million against the unallocated margin available under the expenditure ceiling of heading 2 and EUR 514,4 million against the unallocated margin available in heading 5 in 2017.

This proposal is accompanied by a Commission proposal to mobilise in full the amount of the Flexibility Instrument available for 2017 (EUR 530 million), also for heading 3.

2.JUSTIFICATION OF THE MOBILISATION

2.1.INTRODUCTION

The internal dimension of the migration, refugee and security crisis is financed from heading 3 through the Asylum, Migration and Integration Fund (AMIF), the Internal Security Fund (ISF) as well as through specialised agencies such as Frontex, EASO, eu-Lisa and Europol. A new instrument providing emergency support within the Union was adopted by the Council in 2016, which will continue to offer in 2017 emergency support of a humanitarian nature in response to the current influx of refugees and migrants into the Union.

The expenditure ceiling of heading 3 in 2017 stands at EUR 2 578 million in current prices. The commitment appropriations authorised for heading 3 in the 2016 budget are EUR 4 052 million, which required the mobilisation of all the availability of the Flexibility Instrument at a level of EUR 1 506 million over and above the ceiling of heading 3, in accordance with Article 11(2) of the MFF Regulation.

The Commission proposes the full mobilisation of the EUR 530 million annual ceiling for the Flexibility Instrument available in 2017 to increase spending above the expenditure ceiling of heading 3.

However, the budgetary needs for managing the impact of the migration, refugee and security crisis are expected to be at least as high in 2017 as in 2016. As a policy response, the Commission has proposed a wide range of structural actions in relation with security and the management of external borders, the reform of the Common European Asylum System, integration and return.

Spending related to migration, refugees and security under heading 3 represent more than 70 % of total expenditure under the ceiling. The Commission has carefully examined all possibilities for redeployment and proposes to reduce the level of appropriations (in comparison with the financial programming) for Food and Feed and the Civil Protection Mechanism. Nonetheless, the room for manoeuvre is limited by the small size of programmes and new requirements, such as the new emergency measures in plant health foreseen in the Food and Feed Regulation for 2017. For this reason it is only possible to cover a small percentage of the additional needs related to migration and refugees by a redeployment of appropriations within heading 3.

As a consequence the only possible recourse to meet the budgetary needs is the mobilisation of the Contingency Margin. Availability of margins in other headings allows its mobilisation to be completely offset in 2017.

The corresponding payment appropriations will be accommodated within the 2017 ceiling for payments; there is therefore no need to mobilise the Contingency Margin in payments.

2.2.THE CONTINGENCY MARGIN AS THE LAST RESORT INSTRUMENT

Article 13(1) of the MFF Regulation defines the Contingency Margin as a last resort instrument to react to unforeseen circumstances. In the 2017 Draft Budget (DB), the Commission proposes to fully use the unallocated margin under the commitment ceiling of heading 3 after having examined all possibilities for redeployment within the heading.

Given the full mobilisation of the flexibility instrument in the DB 2017 (EUR 530 million), the mobilisation of the Contingency Margin for 2017 at a level of EUR 1 164,4 million is therefore the only available instrument to address the gap between the level of the expenditure ceiling of heading 3 in 2017 and the additional unforeseen needs estimated for 2017.

2.3.BUDGETARY IMPACT OF UNFORESEEN CIRCUMSTANCES IN 2017