Proposal for a Council Regulation (EC) on budgetary discipline
Date: 1999-07-14
Institutions: European Commission
Subjects: EAGGF Guarantee Section, agricultural expenditure, budgetary discipline (EU), budgetary reserve (EU), financial year

25.1.2000

EN

Official Journal of the European Communities

C 21 E/37

Proposal for a Council Regulation (EC) on budgetary discipline

(2000/C 21 E/07)

COM(1999) 364 final (cid:151) 1999/0151(CNS)

(Submitted by the Commission on 16 July 1999)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 37, 279, 308 thereof
and,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the Court of Auditors,

(1) Whereas, at its meeting in Berlin on 24 and 25 March
the European Council decided to retain and
1999,
strengthen the
by
Decision 94/729/EC and confirmed that all Community
expenditure should be subject to the principles of sound
public finance and budgetary discipline;

introduced

budgetary

discipline

(2) Whereas budget discipline is important in all policies to
ensure a sustainable relationship between commitments,
payments and available own resources;

(3) Whereas a new Interinstitutional Agreement including the
financial perspective for 2000 to 2006 was concluded on
6 May 1999 between the European Parliament,
the
Council
the purposes of
implementing budgetary discipline and improving the
annual budgetary procedure;

and the Commission for

(4) Whereas,

for reasons of simplification, a more recent
reference base should be used for determining the agri-
cultural guideline
every year, without changing the
original rules of calculation;

(5) Whereas, on the basis of

the European Council’s
conclusions,
the institutions also agreed to maintain
unchanged the reference framework and the rate of
increase of the agricultural guideline and to extend the
reformed
the
guideline
to the new rural devel-
common agricultural policy,
opment measures,
plant-health
measures, to expenditure connected with the agricultural
pre-accession instrument and to the amounts available for
accession relating to agriculture;

expenditure

veterinary

under

and

all

to

to

(6) Whereas specific ceilings have been fixed for heading 1,
i.e. for expenditure under the common agricultural policy

not including rural development and for expenditure on
rural development and the accompanying measures,
in
order to achieve the objective of stabilising agricultural
expenditure in real terms;

(7) Whereas the mechanisms for the depreciation of stocks

formed during the budget year should be retained;

(8) Whereas all proposals and/or legislative decisions and
for each financial year
for appropriations
proposals
involving expenditure under
the EAGGF Guarantee
Section must comply with the budget ceiling laid down
for heading 1;

(9) Whereas, as a result, savings may have to be made;
in the absence of a decision by the Council,
whereas,
acting on a proposal
from the Commission, measures
could be taken during a special Council meeting held as
part of the budget discussions before 15 September;

(10) Whereas urgent measures must be taken to safeguard the
the

Union’s
Commission’s management powers must be increased;

interests; whereas, as a result,

financial

(11) Whereas, with regard to this objective, it is essential that
consideration be given to proposing appropriate measures
in the medium term;

(12) Whereas savings may have to be made in the very short
term to achieve the objective of ensuring compliance with
the ceiling laid down for heading 1; whereas the parties
interested should be informed of this aspect so that they
can adjust
in
taking these measures, the need for legal security must
be taken into account as far as possible;

their expectations accordingly; whereas,

(13) Whereas expenditure on the accompanying measures and
on the new rural development measures is multiannual in
nature and is therefore specially monitored;

(14) Whereas a monetary reserve should be entered in the
budget up to 2002 in the form of provisional appropri-
ations in order to deal with the financial consequences of
movements in the euro/dollar market rate;

(15) Whereas, with the gradual implementation of the reform
of the common agricultural policy, expenditure is likely to
be less
rate;
whereas the monetary reserve can be gradually phased
out;

sensitive to changes

in the euro/dollar

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Official Journal of the European Communities

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(16) Whereas provision should be made for the possibility of
reducing or temporarily suspending the monthly advances
when the information communicated by the Member
States does not enable the Commission to confirm that
the Community rules applicable have been observed or
indicates a clear misuse of Community funds;

(17) Whereas

the institutions have agreed that a reserve
relating to Community loans and loan guarantees to non-
member countries and in those countries must be entered
in the budget in the form of provisional appropriations so
that the Guarantee Fund set up by Council Regulation (EC,
Euratom) No 2728/94 of 31 October 1994 establishing a
guarantee fund for external actions, as amended by
Council Regulation (EC, Euratom) No 1149/1999, may
be funded and any calls on guarantees exceeding the
amount available under the Fund may be met;

(18) Whereas the institutions have agreed that a reserve should
be entered in the budget in the form of provisional appro-
priations to permit a rapid response to specific emergency
aid requirements in non-member countries resulting from
unforeseeable events, with priority being given to humani-
tarian operations;

(19) Whereas the institutions have agreed that the conditions
for calling in and mobilising funds should be the same for
the monetary reserve, the reserve relating to loan guar-
antees and the reserve for emergency aid; whereas the
detailed rules for using the reserve for emergency aid
are those defined in the Interinstitutional Agreement;

(20) Whereas,

for

reasons of clarity, Decision 94/729/EC

should be repealed and replaced by this Regulation,

HAS DECIDED AS FOLLOWS.

The agricultural guideline for a given year shall be equal

2.
to the reference base laid down in paragraph 1 plus:

(cid:151) 74 % of the rate of increase in GNP between 1995 (base

year) and the year in question,

(cid:151) the GNP deflator estimated by the Commission for the

same period,

(cid:151) forecasts of expenditure in the year in question on disposal
of ACP sugar, food aid refunds, payments by producers in
respect of levies provided for by the common organisation
of the sugar market and any other revenue raised from the
agricultural sector in the future.

3.
The statistical base for GNP shall be as defined in Council
Directive 89/130/EEC, Euratom, of 13 February 1989 on the
harmonisation on the compilation of gross national product at
market prices.

Article 4

The

shall

cover

guideline

agricultural

1.
expenditure
chargeable to Titles 1 to 4 of Subsection B1 of Section III of
the budget in the nomenclature adopted for the 2000 budget,
the expenditure connected with the agricultural pre-accession
instrument under heading 7 of the financial perspective and
the amounts relating to agriculture which are available for
accession under the financial perspective.

2.
Each year Titles 1 and 2 (heading 1) of the financial
perspective shall contain the appropriations necessary for
financing all costs
stocks
formed during the budget year.

relating to the depreciation of

Article 1

Article 5

Budgetary discipline shall apply to all expenditure. Such
discipline shall be applied, as appropriate, by the Financial
Regulation,
Interinstitutional
Agreement of 6 May 1999.

Regulation

and

this

the

I. EAGGF GUARANTEE SECTION EXPENDITURE

Article 2

The agricultural guideline, which constitutes for each budget
year the ceiling on agricultural expenditure as defined in
Article 4, must be respected each year. For each budget year,
the Commission shall determine the agricultural guideline
when presenting the preliminary draft budget.

Article 3

1.
All the legislative measures proposed by the Commission
or adopted by the Council or the Commission under the
common agricultural policy shall comply with the amounts
laid down in the financial perspective under the subheading
for expenditure on the CAP ((cid:145)subheading 1a(cid:146)) and under the
subheading for rural development and accompanying measures
((cid:145)subheading 1b(cid:146)).

2.
The Commission shall examine the medium-term budget
situation when the preliminary draft budget is established for a
given year. If it appears that there is a risk of subheadings 1a
and 1b of the financial perspective being exceeded for that year
and the following financial year, the Commission shall propose
appropriate measures to the Council
these
amounts are respected.

to ensure that

1.
The reference base from which the agricultural guideline
is to be calculated shall be equal to EUR 36 394 million for
1995, i.e. the total corresponding to the calculation made on
the previous base for 1988.

3.
the
In the preliminary draft budget for a given year,
appropriations for Titles 1 to 3 must fall within the amount
fixed for subheading 1a. The appropriations for Title 4 must
fall within the amount fixed for subheading 1b.

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If, when the preliminary draft budget is established,

it
4.
appears that
the financial
the appropriations required for
year in question exceed the amounts referred to in paragraph
3, the Commission shall take appropriate measures to remedy
the situation under the management powers at its disposal. If
this is not possible, or if the measures taken prove insufficient,
the Commission shall propose other measures, where
applicable as part of the prices package and related measures,
to ensure that these amounts are observed. The Council shall
the year
take a decision on these measures by 1 July of
preceding the financial year covered by the preliminary draft
budget in question.

In the absence of a Council Decision before the deadline
5.
referred to in paragraph 4, or if the Commission considers that
the outcome of the Council’s discussions on these proposals is
likely to exceed the costs put forward in its original proposals,
the Council shall take a decision on the measures required at a
special meeting held as part of its budget discussions before 15
September of the year preceding the financial year covered by
the preliminary draft budget in question.

6.
The European Parliament is invited to deliver its opinion
within six weeks of receiving any Commission proposal to
ensure compliance with the amounts referred to in paragraph
3.

fixed for subheading 1a cannot be respected,

7.
If, on establishment of the letter of amendment to the
preliminary draft budget for a given year, it appears that the
amount
the
Commission shall, as a precautionary measure, reduce the
amount for reimbursement of direct aid to farmers for the
If a
financial year covered by the letter of amendment.
the
positive margin emerges during implementation of
budget
the
the following year,
for
that
reimbursement of direct aid shall be adjusted
amount of
accordingly. The Commission shall take the measures which
in particular
are necessary as a result of
proposals
the financial costs
undertaken by the Member States shall be repaid from the
Community budget by, as a priority and entirely during the
financial year following the year covered by the letter of
amendment.

transfers. At all events,

financial year or

this adjustment,

for

For

the implementation of

the support
8.
measures and institutional prices provided for under
the
common agricultural policy shall apply without prejudice to
the adoption, whenever appropriate, of measures to ensure
compliance with the amounts referred to in paragraph 3.

this Article,

To monitor expenditure under Title 4 of Subsection B1,
3.
the Commission shall also carry out a special control to ensure
compliance with the amount referred to in Article 5(3), as
defined in Commission Regulation (EC) No [. . .] laying down
provisions for the implementation of Council Regulation (EC)
No 1257/1999 (1) on support for rural development from the
European Agricultural Guidance and Guarantee Fund.

of

The

statements

expenditure

the
4.
Commission by the Member States every month in accordance
with Article 3(3) of Commission Regulation (EC) No 296/96 (2)
shall be sent to the European Parliament and to the Council for
information.

presented

to

The Commission shall submit monthly reports thereafter to the
European Parliament and the Council on the development of
actual expenditure in relation to the profiles, including where
appropriate an evaluation of foreseeable implementation at the
end of the financial year.

5.
If it concludes from the examination that there is a risk of
the appropriations for subheading 1a being exceeded at the end
of the year, the Commission shall take action to remedy the
situation, using the management powers at its disposal. If these
measures prove to be insufficient,
the Commission shall
evaluate the impact of the measures to be proposed to the
Council with respect
to both the savings which they are
likely to produce and the time required for them to have
first economic and budgetary effects. The budgetary
their
authority shall be informed of
If effective
measures are found to control expenditure, the Commission
shall propose them to the Council. The European Parliament
is invited to deliver its opinion within six weeks and the
Council shall act within two months of receiving the Commis-
sion’s proposal
in order to bring expenditure back into line
with the allocation provided.

this evaluation.

6.
If it proves impossible to remedy the situation before the
end of the budget year or if the Council does not take a
decision within the time limit
the Commission
shall, as a precaution, suspend the payment of the monthly
advances made to the Member States under
the EAGGF
Guarantee Section. This suspension shall be in proportion to
the total overrun for the subheading concerned. The amounts
suspended shall be charged as a priority and entirely to the
budget for the following year.

laid down,

Article 6

Article 7

The Commission shall

implement a monthly early-
1.
warning and monitoring system for each chapter involving
expenditure of
the type referred to in Titles 1 to 4 of
Subsection B1 of the budget.

2.
For this purpose, the Commission shall define profiles of
monthly expenditure for each budget chapter based, where
appropriate, on the average monthly expenditure of the three
preceding years.

The euro/dollar rate used to draw up the budget estimates of
the expenditure under Titles 1 to 3 (heading 1) for any given
year shall be the average market rate over the three months
preceding the month in which the Commission presents a
preliminary draft budget, a preliminary draft supplementary
and amending budget or a letter of amendment to the same.

(1) OJ L 155, 22.6.1999, p. 29.
(2) OJ L 39, 17.2.1996, p. 5.

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Article 8

EUR 500 million shall be entered in a reserve in the general
budget of the European Communities, as a provision to cover
the developments caused by movements in the euro/dollar
rate in relation to the rate used in the budget
market
referred to in Article 10.

In 2002 the reserve shall be reduced to EUR 250 million. The
monetary reserve shall be abolished with effect from 2003.
These appropriations shall not be included in the agricultural
guideline.

Article 9

By no later than the end of October each year, the Commission
shall report
to the budgetary authority on the impact of
movements in the average euro/dollar rate on expenditure
under Titles 1 to 3 (heading 1).

Article 10

1.
Savings or additional costs resulting from movements in
the euro/dollar rate shall be treated in symmetrical fashion.
Where the dollar strengthens against the euro compared with
the rate used in the budget, savings in the Guarantee Section of
up to EUR 500 million in 2000 and 2001 and EUR 250
million in 2002 shall be transferred to the monetary reserve.
Where additional budgetary costs are engendered by a fall in
the dollar against the euro compared with the budget rate, the
monetary reserve shall be drawn on and transfers shall be
made to the EAGGF Guarantee Section headings affected by
the fall in the dollar. Where necessary, these transfers shall be
proposed at the same time as the report referred to in Article
9.

2.
There shall be a neutral margin of EUR 200 million.
Savings or additional costs below this amount arising from
the movements referred to in paragraph 1 will not necessitate
transfers to or from the monetary reserve. Savings or additional
costs above this amount shall be paid into, or met from, the
monetary reserve. The neutral margin shall be reduced to
EUR 100 million from 2002.

Article 11

Funds

shall be taken from the reserve only if

the
1.
additional costs cannot be met from the budget appropriations
intended to cover the expenditure referred to in Article 4(1) for
the year in question.

2.
in
The necessary own resources shall be called up,
accordance with Decision . . ./. . ./EEC, Euratom and the
provisions
the
corresponding expenditure.

pursuant

adopted

thereto,

finance

to

monetary reserve at the end of the financial year shall be
cancelled and entered as a revenue item in the budget for
the coming year by means of a letter of amendment to the
preliminary draft budget for the following year.

Article 12

Articles 8 to 11 shall apply up to and including the financial
year 2002.

Article 13

Payment of

the monthly EAGGF Guarantee Section
1.
advances by the Commission shall be effected on the basis of
the information supplied by the Member States in regard to
expenditure in each chapter.

If

2.
the declarations of expenditure or the information
submitted by a Member State do not enable the Commission
to establish whether the commitment of funds is in conformity
the Commission shall
with the relevant Community rules,
request
information
within a period which it shall determine according to the
seriousness of the problem.

the Member State to supply further

In the event of a reply which is deemed unsatisfactory or which
indicates manifest non-compliance with the rules and/or a clear
misuse of Community funds, the Commission may reduce or
temporarily suspend the monthly advances to the Member
State.

Such reductions and suspensions shall be without prejudice to
the decisions which will be taken in connection with the
clearance of accounts.

The Commission shall

3.
State
concerned before taking its decision. The Member State shall
make its position known within 10 days.

inform the Member

The Commission’s decision, stating the reasons on which it is
based, shall be taken after the EAGGF Committee has been
consulted and must be in keeping with the principle of propor-
tionality.

II. RESERVES FOR EXTERNAL OPERATIONS

1. Reserve relating to loans and loan guarantees

Article 14

Each year a reserve intended to cover

3.
Any savings made in the EAGGF Guarantee Section
which have been transferred to the monetary reserve in
accordance with Article 10(1) and which remain in the

a) the requirements of the Guarantee Fund set up by Regu-
lation (EC, Euratom) No 2728/94, as amended by Council
Regulation (EC, Euratom) No 1149/1999,

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and

Article 17

b) where necessary, activated guarantees exceeding the amount
available in the Fund so that these amounts may be charged
to the budget

The own resources necessary for financing the reserves shall
not be called in from the Member States until the reserves are
used in accordance with Article 16.

shall be entered in the general budget of
Communities as a provision.

the European

The own resources necessary shall be made available as
provided in Regulation (EEC, Euratom) No 1552/89.

The amount of that reserve shall be the same as that in the
financial perspective that forms part of the Interinstitutional
Agreement. The arrangements for using this reserve are those
set out in the Interinstiutional Agreement.

2. Reserve for emergency aid

Article 15

A reserve for emergency aid to non-member countries shall be
the European
entered each year in the general budget of
Communities as a provision. The purpose of
this reserve
shall be to permit a rapid response to specific emergency aid
requirements in non-member countries resulting from unfore-
seeable events, with priority being given to humanitarian oper-
ations.

The amount of that reserve shall be the same as that adopted
in the financial perspective contained in the Interinstitutional
Agreement.

The detailed rules for the use of the reserve shall be as laid
down in the Interinstitutional Agreement.

3. Common provisions

III. OTHER PROVISION

Article 18

No act adopted under
the co-decision procedure by the
European Parliament and the Council nor any act adopted by
the Council which involves exceeding the appropriations
available in the budget or the allocations available in the
financial perspective may be implemented in financial terms
the
the budget has been amended and,
until
financial perspective has been appropriately
revised in
accordance with the relevant procedure for each of these cases.

if necessary,

IV. FINAL PROVISIONS

Article 19

Decision 94/729/EC is hereby repealed.

Article 20

This Regulation shall enter into force on the seventh day
following its publication in the Official Journal of the European
Communities.

Article 16

It shall apply from . . .

The reserves shall be used by means of transfers to the budget
headings concerned in accordance with the provisions of the
Financial Regulation.

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