Proposal for a Council Regulation on budgetary discipline (COM(1999) 364 - C5-0141/1999 - 1999/0151(CNS))
Date: 1999-11-17
Institutions: Committee on Budgets, European Parliament
Subjects: EAGGF Guarantee Section, agricultural expenditure, budgetary discipline (EU), budgetary reserve (EU), financial year

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3. Budgetary discipline *

A5-0055/1999

Proposal for a Council Regulation on budgetary discipline (COM(1999) 364 & C5-0141/1999 &
1999/0151(CNS))

The proposal was amended as follows:

TEXT PROPOSED
BY THE COMMISSION

AMENDMENTS
BY PARLIAMENT

Proposal for a Council Regulation on budgetary discipline

Proposal for a Council Decision on budgetary discipline

(Amendment 1)

Title

(Amendment 2)

Recital 1

(1) Whereas, at its meeting in Berlin on 24 and 25 March
1999, the European Council decided to retain and strengthen the
budgetary discipline introduced by Decision 94/0729/EC and
confirmed that all Community expenditure should be subject to the
principles of sound public finance and budgetary discipline;

(1) Whereas, at its meeting in Berlin on 24 and 25 March
1999,
the European Council proposed retaining and
strengthening the budgetary discipline introduced by Decision
94/0729/EC; whereas, moreover, the European Council
suggested that the Union’s expenditure must respect both
the imperative of budgetary discipline and efficient expen-
diture, and the need to ensure that the Union has suffi-
cient resources at its disposal to ensure the orderly devel-
opment of its policies for the benefit of its citizens and to
cope effectively with the process of enlargement;

(Amendment 3)

Recital 5

(5) Whereas, on the basis of the European Council’s conclusions,
the institutions also agreed to maintain unchanged the refer-
ence framework and the rate of increase of the agricultural
guideline and to extend the guideline to all expenditure under
the reformed common agricultural policy, to the new rural
to veterinary and plant-health mea-
development measures,
sures, to expenditure connected with the agricultural pre-acces-
sion instrument and to the amounts available for accession relating
to agriculture;

the

institutions

also agreed

(5) Whereas
to maintain
unchanged the reference framework and the rate of increase
of the agricultural guideline and to extend the guideline to all
expenditure under the reformed common agricultural policy, to
the new rural development measures, to veterinary and plant-
health measures and to expenditure connected with the agri-
cultural pre-accession instrument;

(Amendment 4)

Recital 9

(9) Whereas, as a result, savings may have to be made; whereas,
in the absence of a decision by the Council, 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;

(9) Whereas, as a result, measures may have to be taken to
enable the ceilings on expenditure to be complied with,
for which the Commission should submit appropriate pro-
posals; whereas the two arms of the budgetary authority
should try to reach agreement on these measures during
for which
the consultations
Annex III to the Interinstitutional Agreement of 6 May
1999 on budgetary discipline and improvement of the
budgetary procedure (1) provides;

among the institutions

(1) OJ C 172, 18.6.1999, p. 1.

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AMENDMENTS
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(Amendment 5)
Recital 10

(10) Whereas urgent measures must be taken to safeguard the
Union’s financial interests; whereas, as a result, the Commis-
sion’s management powers must be increased;

Deleted

(Amendment 6)
Recital 11

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

(11) Whereas, according to the Interinstitutional Agree-
ment, the financial perspective is intended to ensure that,
in the medium term, Community expenditure, broken
down by broad category, develops in an orderly manner
and within the limits of the own resources assigned to
the Community; whereas it is essential that consideration be
given to proposing any measures in the medium term that
may be necessary;

(Amendment 7)
Recital 12

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

(12) Whereas measures which are taken in order to make
savings should not place in doubt the principles on which
the CAP is based; whereas the reform of the CAP should
facilitate the stabilisation of agricultural expenditure;

(Amendment 8)
Recital 12a (new)

(12a) Whereas any measures which may prove necessary
in relation to agricultural expenditure should be taken in
such a way that the respective powers of the institutions
in budgetary matters, as defined in the Treaties, are
respected;

(Amendment 9)
Recital 12b (new)

(12b) Whereas the Interinstitutional Agreement offers
the Commission the possibility of proposing a revision of
the financial perspective in the event of unforeseen cir-
cumstances; whereas,
in that case, the institutions will
first examine the scope for re-allocating expenditure cov-
ered by the heading concerned by the revision;

(Amendment 10)
Recital 16

(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 Commun-
ity rules applicable have been observed or indicates a clear mis-
use of Community funds;

(16) Whereas in order to protect the financial interests of
the Union precautionary measures may need to be
adopted; whereas, consequently, 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

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AMENDMENTS
BY PARLIAMENT

that the Community rules applicable have been observed or
indicates a clear misuse of Community funds; whereas for
reasons of transparency, the Commission should submit a
report every year to the budgetary authority concerning
any cases in which it has reduced or suspended the
monthly advances referred to above;

(Amendment 11)

Recital 20

(20) Whereas,
should be repealed and replaced by this Regulation,

for reasons of clarity, Decision 94/0729/EC

(20) Whereas,
should be repealed and replaced by this Decision,

for reasons of clarity, Decision 94/0729/EC

(Amendment 12)

Article 1

Budgetary discipline shall apply to all expenditure. Such disci-
pline shall be applied, as appropriate, by the Financial Regula-
tion, this Regulation and the Interinstitutional Agreement of
6 May 1999.

Budgetary discipline shall apply to all expenditure covered by
Annex I to the Interinstitutional Agreement of 6 May
1999 (‘Financial perspective (EU-15)’). Such discipline shall
be applied, in accordance with the Treaty, by the Financial
Regulation, this Decision and the abovementioned Interinsti-
tutional Agreement.

(Amendment 31)

Article 3(2), 1st indent

@ 74 % of

the rate of

increase in GNP between 1995

@ 74 % of

the rate of

increase in GNP between 1988

(base year) and the year in question,

(base year) and the year in question,

(Amendments 32 and 13)

Article 4(1)

1.
The agricultural guideline shall cover expenditure charge-
able to Titles 1 to 4 of Sub-section 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.

1.
The agricultural guideline shall cover expenditure charge-
able to Titles 1 to 4 of Sub-section B1 of Section III of the
budget in the nomenclature adopted for the 2000 budget and
the expenditure connected with the agricultural pre-accession
instrument under heading 7 of
the financial perspective.
The agricultural guideline shall be reviewed on the basis
of a report which the Commission shall submit to the
Council and to the European Parliament before the first
enlargement of the Union so that any necessary adjust-
ments can be made.

(Amendment 14)

Article 5(1)

1.
All the legislative measures proposed by the Commission or
adopted by the Council or the Commission under the common agri-
cultural policy shall comply with the amounts laid down in the
financial perspective under the sub-heading for expenditure on
the CAP (‘sub-heading 1a’) and under the sub-heading for rural
development and accompanying measures (‘sub-heading 1b’).

1.
The Commission shall not present any legislative
proposal, or alter its proposals, or adopt any implement-
ing measure, which does not comply with the amounts laid
down in the financial perspective under the sub-heading for
expenditure on the CAP (‘sub-heading 1a’) and under the sub-
heading for rural development and accompanying measures
(‘sub-heading 1b’), whichever is applicable. All such propo-
sals and measures adopted by the Council shall comply
with the amounts laid down in the same sub-headings,
whichever is applicable.

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AMENDMENTS
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(Amendment 15)

Article 5(2)

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 sub-headings 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

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 sub-headings 1a
and/or 1b of the financial perspective being exceeded for that
year and the following financial year, the Commission shall
propose appropriate measures to the budgetary authority to
ensure that these amounts are respected.

(Amendment 16)

Article 5(4)

If, when the preliminary draft budget is established,

4.
it
appears that the appropriations required for the financial 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 take a decision
on these measures by 1 July of the year preceding the financial
year covered by the preliminary draft budget in question.

If, when the preliminary draft budget is established,

4.
it
appears that the appropriations required for the financial year
in question exceed the amounts referred to in paragraph 3, the
Commission shall take appropriate measures to remedy the
situation using the management powers at its disposal under
the provisions of Treaty and of the relevant regulations.
The Commission shall inform both arms of the budgetary
authority of the measures taken. If the situation cannot be
remedied in this way, or if the measures taken prove insuffi-
cient, the Commission shall propose other measures, where
applicable as part of the prices package and related measures,
to ensure that these amounts are observed, and the institu-
tions shall use the procedures foreseen in the Interinstitu-
tional Agreement to reach an agreement on the budgetary
implications of the measures proposed. The Council shall
take a decision on these measures by 1 July of the year preced-
ing the financial year covered by the preliminary draft budget
in question.

(Amendment 17)

Article 5(5)

5.
In the absence of a Council decision before the deadline
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.

5.
In the absence of an agreement between the two arms
of the budgetary authority, or if the Commission considers
that the outcome of the budgetary authority’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 bud-
get discussions before 15 September of the year preceding the
financial year covered by the preliminary draft budget in ques-
tion. The institutions shall make every effort to secure an
agreement on the measures to be taken on the basis of the
procedures foreseen in the Interinstitutional Agreement.
In particular, if there is a risk of the amounts referred to
in paragraph 3 being exceeded, the rules for the revision
of the financial perspective shall apply.

(Amendment 18)

Article 5(6)

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.

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

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(Amendment 19)
Article 5(7)

as

for a given year,

a precautionary measure,

If, on establishment of the letter of amendment to the
7.
preliminary draft budget
it appears that
the amount fixed for sub-heading 1a cannot be respected, the
Commission shall,
reduce
the amount for re-imbursement of direct aid to farmers for
the financial year covered by the letter of amendment. If a
positive margin emerges during implementation of the budget
for that financial year or the following year, the amount of
reimbursement of direct aid shall be adjusted accordingly. The
Commission shall take the measures which are necessary as a
result of this adjustment, in particular proposals for transfers.
At all events, the financial costs undertaken by the Member
States shall be re-paid from the Community budget by, as a
priority and entirely during the financial year following the year
covered by the letter of amendment.

for a given year,

If, on establishment of the letter of amendment to the
7.
preliminary draft budget
it appears that
the amount fixed for sub-heading 1a cannot be respected and
if
it also appears that the amount cannot be revised
according to the procedures foreseen in the Interinstitu-
tional Agreement, the Commission shall, as a precautionary
measure, reduce the amount for re-imbursement of direct aid
to farmers for the financial year covered by the letter of
amendment. If a positive margin emerges during implementa-
tion of the budget for that financial year or the following year,
the amount of reimbursement of direct aid shall be adjusted
accordingly. The Commission shall take the measures which
are necessary as a result of this adjustment, in particular pro-
posals for transfers. At all events, the financial costs undertaken
by the Member States maybe re-paid from the Community
budget within the limit of the appropriations available dur-
ing the financial year following the year covered by the letter
of amendment.

(Amendment 34)
Article 5(7), 2nd subparagraph (new)

The Commission shall submit appropriate proposals for
preventing a
cycle arising from suspended payable
amounts, which lead to the suspension of other amounts,
which then have to be paid out, resulting in fresh suspen-
sions, etc. The Commission shall also ensure that sus-
pended amounts from year x−1 are not paid out at the
expense of actual requirements in year x.

(Amendment 20)
Article 5(8)

For the implementation of this article, the support mea-
8.
sures 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.

For the implementation of

this article, care shall be
8.
taken when adopting the support measures and the institu-
tional prices provided for under the common agricultural pol-
icy to ensure compliance with the amounts referred to in para-
graph 3.

(Amendment 21)
Article 6(5)

If it concludes from the examination that there is a risk of
5.
the appropriations for sub-heading 1a being exceeded at the
end of the year, the Commission shall take action to remedy
the situation under 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 their
first economic and budgetary effects. The budgetary authority
shall be informed of this evaluation. 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 Commission’s proposal
in order to bring
expenditure back into line with the allocation provided.

If it concludes from the examination that there is a risk of
5.
the appropriations for sub-heading 1a being exceeded at the
end of the year, the Commission shall take action to remedy
the situation under the management powers at its disposal.
The Commission shall inform the budgetary authority of
the measures taken. If these measures prove to be insufficient,
the Commission shall evaluate the impact of the measures to
be proposed to the budgetary authoritywith respect to both
the savings which they are likely to produce and the time
required for them to have their first economic and budgetary
effects. The budgetary authority shall be informed of this evalu-
ation. If effective measures are found to control expenditure,
the institutions shall use the procedures foreseen in the
Interinstitutional Agreement to reach an agreement on
the budgetary implications of the necessary measures and

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AMENDMENTS
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the Commission shall propose them to the budgetary authori-
ty. The two arms of the budgetary authority shall try to
reach agreement on these measures during the consulta-
tions among the institutions for which Annex III to the
Interinstitutional Agreement of 6 May 1999 on budgetary
discipline and improvement of the budgetary procedure
provides.

(Amendment 22)

Article 6(6)

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

If it proves impossible to remedy the situation before the
6.
end of the budget year or to complete the procedure for the
revision of the financial perspective, or if the Council does
not take a decision within the time limit laid down, the Com-
mission 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 propor-
tion to the total overrun for the subheading concerned. The
amounts suspended may be charged to the budget for the fol-
lowing year within the limit of the appropriations avail-
able.

(Amendment 23)

Article 6a (new)

Article 6a

If at any point in the procedures laid down in Articles 5
or 6 there should appear a risk that the amounts fixed for
sub-heading 1a or for sub-heading 1b of the financial per-
spective were to be exceeded, despite the possible mea-
sures to be taken, the Commission may avail itself of the
possibility offered by the Interinstitutional Agreement to
propose an appropriate revision of the financial perspec-
tive.

(Amendments 24 and 36)

Article 6b (new)

Article 6b

The Commission may propose to the Council and to the
European Parliament the necessary measures to allow the
transfer of resources in Chapters B1-1 to B1-3 and B1-4
which are not utilised in one budgetary year to the fol-
lowing budgetary year in order to ease the burden on
the budget
in the following year. Unused resources
entered in Chapters B1-1 to B1-3 and B1-4 may thereby
be transferred to the following year and shall not be
returned to the Member States.

The Commission may make use of this power when draw-
ing up the preliminary draft budget.

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(Amendment 25)

Article 8, 1st paragraph

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

€ 500 million shall be entered in a reserve in the general bud-
get of the European Communities, as a provision to cover the
developments caused by movements in the euro/dollar market
rate in relation to the rate used in the budget referred to in
Article 10 as well as by unforeseen developments in the
agricultural markets.

(Amendment 26)

Article 9

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

By no later than the end of October each year, and before it
presents a letter of amendment to the preliminary draft
budget, the Commission shall report to the budgetary authori-
ty on the impact of movements in the average euro/dollar rate
on expenditure under Titles 1 to 3 of sub-section B1 of the
budget (heading 1 of the financial perspective).

(Amendment 27)

Article 13(3a) (new)

3a.
The Commission shall present an annual report to
the budgetary authority on the application of this Article
during the previous financial year.

(Amendment 28)

Article 18

No act adopted under the codecision procedure by the European Par-
liament 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 until the budget has been
amended and, if necessary, the financial perspective has been
appropriately revised in accordance with the relevant procedure
for each of these cases.

The financial implementation of any act of the European
Parliament and the Council or of any act of the Council
which involves exceeding the appropriations available in the
budget or the allocations available in the financial perspective
may not take place until the budget has been amended and, if
necessary,
the financial perspective has been appropriately
revised in accordance with the relevant procedure for each of
these cases.

(Amendment 29)

Article 18a (new)

Article 18a

Any act amending or replacing this Decision shall only be
adopted after recourse to the conciliation procedure
referred to in the Interinstitutional Agreement and after
that procedure has resulted in an agreement between the
European Parliament and the Council on the amendments
to be made.

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

This Decision is addressed to the Member States and to
the Commission.

(Amendment 30)
Article 20

It shall apply from …

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

European Parliament legislative resolution on the proposal for a Council Regulation on budgetary
discipline (COM(1999) 364 & C5-0141/1999 & 1999/0151(CNS))

(Consultation procedure)

The European Parliament,

@ having regard to the Commission proposal to the Council (COM(1999) 364),

@ having been consulted by the Council pursuant to Articles 37, 279 and 308 of the EC Treaty

(C5-0141/1999),

@ having regard to Rule 67 of its Rules of Procedure,

@ having regard to the report of the Committee on Budgets and the opinion of the Committee on

Agriculture and Rural Development (A5-0055/1999),

1.

Approves the Commission proposal as amended;

Calls on the Commission to alter its proposal accordingly, pursuant to Article 250(2) of the EC

2.
Treaty;

Calls for the conciliation procedure to be initiated should the Council intend to depart from the text

3.
approved by Parliament;

4.

5.

Asks to be consulted again if the Council intends to amend the Commission proposal substantially;

Instructs its President to forward its position to the Council and Commission.