WRITTEN QUESTION E-1621/02 by Charles Tannock (PPE-DE) to the Commission. Interpreting the Growth and Stability Pact.
Date: 2002-06-06
Institutions: European Parliament, Provisional data
Subjects: EU Member State, European Commission, budget deficit, budgetary equilibrium, coordination of EMU policies, economic cycle, multilateral surveillance, stability pact

C 192 E/8

Official Journal of the European Union

EN

14.8.2003

the annual programme instalments initially creates OCs given that payments are made following actual
execution by recipients and accordingly are spread throughout the year.

Thus during the first five months of 2002 almost all the Structural Fund appropriations were committed
(EUR 30,4 billion in total) whereas payments amounted to EUR 6,2 billion. The difference is the temporary
increase in OCs during the period. In the rest of the year commitments will rise no further whereas
payments will progress normally and so gradually reduce OCs up to the end of the year.

This automatic commitment mechanism, in conjunction with the n+2 automatic decommitment rule, is an
incitement to payment execution and when payment is not made permits reduction of the OCs.

The Commission wishes to point out that in line with the legislation in force it continuously monitors the
financial assistance and regularly reminds Member States of the importance of
state of advance of
implications of failure to do so. It is
maintaining a satisfactory pace of assistance and the financial
preparing a communication on the topic.

simplification has already been met as

The Honourable Member’s wish for
regards programme
complement treatment under the Structural Fund rules in force. In the Committee on Development and
Conversion of Regions the Commission is at present working with the national administrations on
simplifying other aspects of
implementation of the programmes part-financed by the Funds and it
encourages the Member States to take the same approach in national rules. It will not fail to keep
Parliament informed of the results of this work.

(2003/C 192 E/008)

WRITTEN QUESTION E-1621/02

by Charles Tannock (PPE-DE) to the Commission

Subject: Interpreting the Growth and Stability Pact

(6 June 2002)

Could the Commission clarify the way in which it interprets the Growth and Stability Pact? In particular,
does the Commission take account of the economic cycle when making its assessment as to whether a
Member State has complied with its provisions? Would the Commission agree that a Member State which
has a budgetary deficit of any size well into an economic upturn is likely to be in a far worse state than a
Member State with an annual budgetary deficit of over 2 % during an economic downturn if that Member
State has demonstrated good financial discipline in the past as well as a capacity to return to surplus
during an upturn, and does the Commission believe that it is necessary for Member States to achieve a
balanced budget over the economic cycle if they are to comply with the terms of the Pact?

Finally, when making its assessment, does the Commission take into account the overall level of debt built-
up by a particular Member State, and, if so, does the Commission believe that full compliance on the part
of countries which have overall levels of debt well in excess of the Maastricht criteria (60 %) can only be
achieved if those countries succeed in permanently reducing their overall level of indebtedness through
such measures as large-scale privatisations?

Answer given by Mr Solbes Mira on behalf of the Commission

(9 July 2002)

In accordance with recital
(14) of Council Regulation (EC) No 1466/97, of 7 July 1997 on the
strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic
policies (1) when assessing the compliance of each Member State with the provision of the Stability and
Growth Pact the Commission takes into account the relevant cyclical and structural characteristics of the
economy of each Member State.

14.8.2003

EN

Official Journal of the European Union

C 192 E/9

The Commission agrees that countries recording sound cyclically-adjusted budget balances (i.e. close-to-in
balance or in surplus) are in a better position to face the budgetary impact of economic downturns than
countries posting cyclically-adjusted deficits, even if the latter post nominal surpluses during upturns.
Independently of the cyclical position, however, greatest attention has to be paid in the surveillance to the
risk of nominal deficits exceeding the 3 % of gross domestic product (GDP) reference value.

In the Pact, Member States are committed to adhere to the medium-term objective for the budgetary
position of close-to-balance or in surplus. The reference to the medium term in the Pact is interpreted in
the Code of Conduct (2) as a reference to the business cycle. The Commission, therefore, uses cyclically-
adjusted balances, in addition to nominal balances, as a tool when assessing the budgetary position.

When making its assessment, the Commission also takes into account the overall level of debt built-up by
a particular Member State. Adherence to the close-to-balance or in surplus objective for the budget deficit
is considered sufficient to ensure a continuous reduction of the overall debt level especially in highly-
indebted countries. Measures such as privatisations are welcome in this sense, but are not required to
ensure the full compliance.

(1) OJ L 209, 2.8.1997.
(2) Opinion of the Economic and Financial Committee on the content and format of the stability and convergence
programmes, endorsed by the July 2001 Ecofin Council. The Code of Conduct has been adopted to facilitates the
evaluation of the programmes by the Commission and Council.

(2003/C 192 E/009)

WRITTEN QUESTION E-1656/02

by Ioannis Souladakis (PSE) to the Commission

Subject: Funding of CARDS infrastructure programmes

(11 June 2002)

The five-year strategic programme, CARDS, does not provide for funding for major infrastructure projects
owing to a shortage of appropriations. Consequently, funding to strengthen and improve infrastructure,
which is essential
is excluded from the
Community framework, raising questions as to how it can be financed.

for the long-term development of south-eastern Europe,

1. What methods of funding major infrastructure projects has the Commission provided for south-
eastern Europe?

2. Which European Union services and financial organisations does it intend to involve in the funding
of infrastructure projects?

3.
In what context will the Commission participate and become involved in funding and building the
infrastructure, as provided under the five-year CARDS programme which the Commission itself drew up?

Answer given by Mr Patten on behalf of the Commission

(22 July 2002)

1.

Cards programming and infrastructure development in the Western Balkans

One of the key objectives of the CARDS regional strategy for 2002-2006 (cid:1) which was presented on
5 October 2001 in the CARDS committee and approved on 22 October 2001 by the Commission (cid:1) is ‘to
assist the countries in developing coherent strategies for infrastructure with an international dimension in
transport, energy and environment’.