Proposal for a Council Regulation amending Regulation (EC) No 3605/93 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community
Date: 1999-09-13
Institutions: European Commission
Subjects: European accounting system, Protocol (EU), Treaty on European Union, loss, public debt

C 376 E/18

EN

Official Journal of the European Communities

28.12.1999

Proposal for a Council Regulation amending Regulation (EC) No 3605/93 on the application of the
Protocol on the excessive deficit procedure annexed to the Treaty establishing the European
Community

(1999/C 376 E/02)

COM(1999) 444 final (cid:151) 1999/0196(CNS)

(Submitted by the Commission on 13 September 1999)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
the third subparagraph of
Community, and in particular
Article 104(14),

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

(1) Whereas

the definitions of

(cid:145)deficit(cid:146) and
(cid:145)government(cid:146),
(cid:145)investment(cid:146) are
laid down in the Protocol on the
excessive deficit procedure annexed to the Treaty estab-
lishing the European Community and in Council Regu-
lation (EC) No 3605/93 of 22 November 1993 (1) by
reference to the European System of Integrated Economic
Accounts; whereas Council Regulation (EC) No 2223/96 of
25 June 1996 (2) replaced that system with the European
System of National
in the
and Regional Accounts
Community (hereinafter referred to as (cid:145)ESA 95(cid:146));

instruments; whereas,

(2) Whereas the definition of (cid:145)government debt(cid:146) laid down in
the Protocol on the excessive deficit procedure and in
Council Regulation (EC) No 3605/93 needs to be further
amplified by a reference to the classification codes of ESA
95; whereas, in the case of financial derivatives, as defined
in ESA 95, there is no nominal value identical to that for
other debt
financial
derivatives must not be included with the liabilities
the
making up government debt
Protocol on the excessive deficit procedure; whereas for
liabilities denominated in foreign currency which are
subject to agreements fixing the exchange rate, this rate
should be taken into account
in the conversion into
national currency and this approach should similarly
apply to agreements
rates
between foreign currencies;

the purposes of

relating to the

therefore,

exchange

for

(3) Whereas the calculation of the ratios of government deficit
to gross domestic product and of government debt to gross
domestic product referred to in Article 104 of the Treaty
should also be rendered coherent on the basis of ESA 95;
whereas ESA 95 provides an appropriate, detailed defi-
nition of gross domestic product at current market prices;

(1) OJ L 332, 31.12.1993, p. 7.
(2) OJ L 310, 30.11.1996, p. 1.

indicator

States has

(4) Whereas consolidated government interest expenditure is
an important
for monitoring the budgetary
situation in the Member States; whereas interest expen-
diture is intrinsically linked to government debt; whereas
government debt to be reported to the Commission by the
consolidated within the
Member
the levels of government
government
debt
should be made
mutually consistent; whereas the methodology of ESA 95
(point 1.58) recognises that, for certain kinds of analysis,
consolidated aggregates are more significant than overall
gross figures; whereas the way in which the figures on
interest expenditure are to be provided to the Commission
by the Member States should be clarified;

to be
sector; whereas
interest

expenditure

and of

(5) Whereas the definitions and classification codes of ESA 95
may be subject to revision in the context of the necessary
harmonisation of national statistics or for other reasons;
to its
whereas
revisions of ESA 95 or amendments
methodology
the
Commission in accordance with the rules on competence
and procedure laid down in the Treaty and in Council
Regulation (EC) No 2223/96;

the Council or

decided

are

by

(6) Whereas Article 8(2) of Council Regulation (EC) No
2223/96 stipulates that the former European System of
Integrated Economic Accounts is to continue to be used
for the purposes of the excessive deficit procedure during a
transitional period until
the reporting exercise of 1
September 1999,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 3605/93 is hereby amended as follows:

1. Articles 1 and 2 are replaced by the following text:

(cid:145)Article 1

For the purposes of

1.
the Protocol on the excessive
deficit procedure and of this Regulation, the terms given
in the following paragraphs are defined according to the
European System of National and Regional Accounts in
the Community (hereinafter
(cid:147)ESA 95(cid:148)),
adopted by Council Regulation (EC) No 2223/96 of 25
June 1996. The codes in brackets refer to ESA 95.

referred to as

28.12.1999

EN

Official Journal of the European Communities

C 376 E/19

the

(cid:147)Government(cid:148) means

(cid:147)general
2.
government(cid:148) (S.13), that is (cid:147)central government(cid:148) (S.1311),
(cid:147)state government(cid:148)
(S.1313)
and (cid:147)social security funds(cid:148) (S.1314),
to the exclusion of
commercial operations, as defined in ESA 95.

(cid:147)local government(cid:148)

(S.1312),

sector

of

The exclusion of commercial operations means that
the
sector of (cid:147)general government(cid:148)(S.13) comprises only institu-
tional units producing non-market services as their main
activity.

deficit

(cid:147)Government

(surplus)(cid:148) means

the
net
3.
borrowing (net
(cid:147)general
(B.9) of
government(cid:148) (S.13), as defined in ESA 95. The interest
comprised in the government deficit is the interest (D.41),
as defined in ESA 95.

the sector of

lending)

(cid:147)Government

4.
capital
government(cid:148) (S.13), as defined in ESA 95.

investment(cid:148) means
of

formation (P.51)

the

the gross
of

fixed
(cid:147)general

sector

5.
(cid:147)Government debt(cid:148) means the total gross debt at
nominal value outstanding at the end of the year of the
sector of (cid:147)general government(cid:148) (S. 13), with the exception
of
those liabilities the corresponding financial assets of
which are held by the sector of (cid:147)general government(cid:148) (S. 13).

Government debt is constituted by the liabilities of general
in the following categories: currency and
government
deposits
than shares, excluding
financial derivatives (AF.33) and loans (AF.4), as defined in
ESA 95.

securities other

(AF.2);

shall be
Liabilities denominated in foreign currencies
converted to the national currency on the basis of
the
representative market exchange rate prevailing on the last
working day of each year, except for those liabilities where
the
covered through
contractual agreements. These liabilities shall be converted
into national currency at the rate agreed upon in these
contracts.

foreign exchange

rate

risk

is

Article 2

For the purposes of the Protocol on the excessive deficit
procedure and of this Regulation, gross domestic product
means gross domestic product at current market prices
(GDP mp) (B.1*g), as defined in ESA 95.(cid:146)

2. In Article 4(2) the codes for subsectors S61, S62 and S63
given at the end of the second subparagraph are replaced by
the codes S.1311, S.1312, S.1313 and S.1314.

3. At the end of Article 5, the words (cid:145)and interest expenditure(cid:146)
expenditure

replaced by the words

(cid:145)and interest

are
(consolidated)(cid:146).

4. Article 7 is replaced by the following text:

(cid:145)Article 7

In the event of a revision of ESA 95 or of an amendment to
its methodology to be decided on by the Council or the
Commission in accordance with the rules on competence
and procedure laid down in the Treaty and in Regulation
(EC) No 2223/96, the Commission shall introduce the new
references to ESA 95 into Articles 1, 2 and 4.(cid:146)

The nominal value of a liability outstanding at the end of
the year is the face value.

Article 2

The nominal value of an index-linked liability corresponds
to its face value adjusted by the index-related increase in the
value of the principal accrued to the end of the year.

This Regulation shall enter into force on 1 January 2000.

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