Proposal for a COUNCIL REGULATION (EEC) amending regulation (EEC) No 1883/78 laying down general rules for the financing of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section
Date: 1993-02-09
Institutions: European Commission
Subjects: EAGGF Guarantee Section, EU financing, agricultural product, interest, intervention buying

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

COM(93) 19 final 

Brussels, 9 February  1993 

Proposal  for a 

COUNCIL REGULATION  (EEC) 

anending regulation  (EEC) No  1883/78 laying down general rules 

for the financing of interventions by the European Agricultural 

Guidance and Guarantee Fund, Guarantee Section 

2 

EXPLANATORY MEMORANDUM 

1. The attached draft Regulation amends Council Regulation (EEC) No. 1883/78 
on general rules for the financing of intervention by the EAGGF, on two 
points : 

it makes permanent what has hitherto been a derogation, introduced in 
1988, in regard to the uniform interest rate (point  3), 
it introduces a new derogation in favour of a Member State where the 
interest rates for financing are extremely high (point 2). 

2. Council Regulation (EEC) No. 1883/78 sets rules covering inter alia the 
financing of expenditure resulting from tying up the funds needed for 
intervention purchasing. 

Article 5 of that Regulation stipulates that the interest charges incurred 
by Member states in mobilising the funds used to purchase intervention 
products are to be financed at Community level using an interest rate 
uniform throughout the Community. 

In a Member state where national interest rates are very high use of the 
uniform interest rate has led to abnormal movements of products intended 
for intervention to other Member states and so disturbed the normal 
movement patterns.  It is necessary therefore to introduce a derogation 
from the uniform rate rule. 

At present the interest rate in Greece is more than double the uniform 
rate.  The proposed derogation will allow Greece to be repaid part of its 
additional costs. 

3. One of the measures introduced in 1988 following the decision on budgetary 
discipline was a derogation from the uniform interest rate rule, for the 
period 1989 to 1992, whereby, for Member States where the interest rate 
borne is lower than that fixed, the uniform interest rate may be set at a 
level below its representative level. 

This derogation is a practical application of the rule set in the first 
paragraph of Article 2 of the Community's Financial Regulation that budget 
appropriations must be used in line with the principles of sound financial 
management, in particular economy end cost-effectiveness.  The derogation 
should therefore be converted into a permanent provision of Regulation 
(EEC) No. 1883/78. 

3 

Proposal  for a 

COUNCII  REGULATION  (EEC) 

amending regulation  (EEC) No 1883/78 laying down general rules 

for the financing of interventions by the European Agricultural 

Guidance and Guarantee Fund, Guarantee Section 

THE COUNCIL OF THE EUROPEAN  COMMUNITIES, 

Having regard to the Treaty establishing  the European Economic  Community, 

Having to Council Regulation  (EEC) No. 729/70 of 21 April  1970 on the financing 

of the common agricultural policy^1),  as last amended by Regulation  (EEC) 

No 2048/88(2), and in particular Article 3(2) thereof, 

Having regard to the proposal from the commission, 

Having regard to the opinion of the European Parliament, 

(1)  OJ No. L  94, 28.04.1970, p.13 
(2)  OJ No. L 185, 15.07.1988, p. 1 

1 

Whereas, for intervention operations for which a unit amount has not been set 

by market organisation rules, basic Community financing rules have been set by 

Regulation  (EEC) No  1883/78<3), as last amended by Regulation  (EEC) 

No 787/89(4); whereas this applies in particular to the method of 

establishing the amounts to be financed, the financing of expenditure 

resulting from tying up the funds needed for intervention purchasing, the 

valuation of stocks to be carried over from one year to another and the 

financing of expenditure resulting from the physical operations of storage; 

Whereas Article 5 of Regulation  (EEC) No  1883/78 provides that the  interest 

charges incurred by Member states in mobilising the funds used to purchase 

intervention products are to be financed at Community  level at a uniform 

interest rate; whereas experience has shown that in a Member State where 

interest rates are very high this can lead to abnormal movements of products 

to intervention in other Member states and so disturb normal movement 

patterns; whereas it is necessary to introduce a derogation from the uniform 

rate rule in order to prevent such disturbance; 

Whereas the possibility afforded by the second paragraph of Article 5 of 

Regulation  (EEC) No 1883/78(5) of setting the uniform interest rate at a 

level below its representative  level amounts to a practical application of the 

principles  set out in the first paragraph of Article 2 of the Community's 

Financial Regulation^ ); whereas this provision should be put on a permanent 

basis, 

(3)  OJ No. L 216, 05.08.1978, p.l. 
(4)  OJ No. L  85, 30.03.1989, p.l. 
(5)  OJ No. L  185, 15.07.1988, p.6. 
(6)  OJ No. C  80, 24.03.1991, p.l. 

HAS ADOPTED THIS REGULATION: 

Article 1 

Article 5 of Regulation  (EEC) No. 1883/78 is hereby  amended as follows: 

1. In the second paragraph the words  "in respect of the financial years  1989 to 

1992" are deleted. 

2. The following third paragraph  is added : 

"The first paragraph notwithstanding,  if the interest rate borne by a Member 

State is more than twice the uniform  interest rate the Commission  may, in 

financing the interest costs incurred by that Member  state, apply the 

uniform rate of interest plus the difference between double that rate and 

the actual rate borne by the Member State." 

Article 2 

This Regulation shall enter into force on the day following  its publication in 

the Official Journal of the European  communities. 

It shall apply to expenditure  incurred from  1 October 1992. 

This Regulation shall be binding  in its entirety and directly  applicable  in all 

Member States. 

Done at Brussels, 

For the Council 

The President 

F I N A N C I AL 

S T A T E M E NT 

& 

DATE 

1. BUDGET HEADING: Bl -  ^O-fZ,  Bl - 1721 

APPROPRIATIONS : 

2. TITLE:  Council Regulation amending Regulation  (EEC) No 1883/78 laying down general rules 

for the financing of interventions by the EAGGF - Guarantee Section 

3. LEGAL BASIS:  Regulation  (EEC) No 729/70 of 21 April 1970 

4. AIMS OF PROJECT: 

Make a derogation from the principle of a uniform rate 

PERIOD OF 
12 MONTHS 
Mio ECU 

CURRENT FINANCIAL 
YEAR 
Mio ECU 

FOLLOWING 

FINANCIAL YEAR 

Mio ECU 

4.2 

4.2 

5. FINANCIAL IMPLICATIONS 

5.0. EXPENDITURE 

- CHARGED TO THE EC BUDGET 
(REFUNDS/INTERVENTION) 
- NATIONAL ADMINISTRATION 
- OTHER 

5.1. REVENUE 

- OWN RESOURCES OF THE EC 

(LEVIES/CUSTOMS DUTIES) 

- NATIONAL 

1994 

1995 

1996 

1997 

5.0.1. ESTIMATED EXPENDITURE 

5.1.1. ESTIMATED REVENUE 

5.2. METHOD OF CALCULATION: 

See attached table 

6.0. CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE RELEVANT CHAPTER OF THE 

CURRENT BUDGET? 

NO 

6.1. CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF THE CURRENT BUDGET? 

YES 

6.2. IS A SUPPLEMENTARY BUDGET NECESSARY? 

6.3. WILL FUTURE BUDGET APPROPRIATIONS BE NECESSARY? 

NO 

YES 

OBSERVATIONS : 

calculation of costs for public storage operations in Greece 

^ 

Financial year 1993 

(on the basis of assumptions made in letter of amendment to P DB 93). 

Average 
stock 

Cost 

t 

ECU A/t 

Rate 

PDB 

Amount 

Amount 

ECU  A 

ECU  B 

Bl-102: 

600.000 

4.218.000 

4.829.610 

Durum wheat 

600.000 

74,00 

9,5% 

4.218.000 

4.829.610 

Bl-1721: 

972.151 

1.095.614 

Tobacco 

22.505 

449,97 

9,6% 

972.151 

1.095.614 

Total 

5.190.151 

5.925.224 

Uniform 
rate 

Amount 

Amount 

ECU  A 

ECU  B 

4.562.593 

5.224.169 

10,3% 

4.562.593 

5.224.169 

1.040.618 

1.172.777 

10,3% 

1.040.618 

1.172.777 

5.603.211 

6.396.946 

Supplement  Additional 

applied 
to Greece 

cost 
ECU  A 

Additional 
cost 
ECU B 

2.973.813 

3.405.016 

6,7% 

2.973.813 

3.405.016 

678.255 

764.394 

6,7% 

678.255 

764.394 

3.652.069 

4.169.410 

I 

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