Communication from the Commission to the Council and the European Parliament - Technical adjustment of the financial perspective for 2004 in line with movements in GNI and prices (Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)
Date: 2002-12-23
Institutions: European Commission
Subjects: adaptation of financial perspectives, budgetary discipline (EU), budgetary procedure, enlargement of the Union, interinstitutional agreement

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23.12.2002
COM(2002) 756 final

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Technical adjustment of the financial perspective for 2004
in line with movements in GNI and prices

(Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary
discipline and improvement of the budgetary procedure)

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT

Technical adjustment of the financial perspective for 2004
in line with movements in GNI and prices

(Paragraph 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and
improvement of the budgetary procedure)

1.  INTRODUCTION

The  Interinstitutional  Agreement  (IIA)  of  6  May  1999  on  budgetary  discipline  and
improvement  of  the  budgetary  procedure1  contains  the  financial  perspective  table  for
EU-15  (Annex  I)  and  the  indicative  financial  framework  for  EU-21  (Annex  II)  based  on
the assumption of an enlarged Union with six new Member States from 2002.

Paragraph 15 of the Interinstitutional Agreement states that each year the Commission will,
ahead  of  the  budgetary  procedure  for  year  n+1,  make  a  technical  adjustment  to  the
financial perspective in line with movements in the EU's gross national product (GNP) and
prices.

The  purpose  of  this  communication  is  to  present  to  the  budgetary  authority  the  result  of
this technical adjustment (EU-15) for 2004.

2.  TERMS OF THE ADJUSTMENT OF THE FINANCIAL PERSPECTIVE TABLE (TABLE 1)

Table 1 shows the financial perspective for EU-15 at 2004 prices.

Table  2  is  included  for  information  and  concerns  the  financial  framework  for  EU-21
established at the European Council in Berlin in March 1999.

Table  3  presents  the  macroeconomic  parameters  used  for  this  adjustment  exercise.  They
are  based  on  data  drawn  up  by  Eurostat  and  on  the  most  recent  forecasts  made  by  the
Commission in conjunction with the national experts (budget forecasts, autumn 2002). The
figures and forecasts are based on the European System of Accounts revised in 1995 (ESA
95).

2.1.

Own resources ceiling

The Council Decision of 29 September 2000 on the system of the European Communities'
own  resources2  has  entered  into  force,  after  its  ratification  by  the  Member  States'
parliaments, on 1 March 2002, with effect as from 1 January 2002, except Article 2(3), and
except Article 4, which take effect as from 1 January 2001.

1

2

OJ C 172, 18.6.1999, p. 1.
Council  Decision  of  29  September  2000  on  the  system  of  the  European  Communities'  own  resources
(2000/597/EC, Euratom) - OJ L 253, 7.10.2000, p.42.

2

                                                
This decision states that, for the purposes of its application, GNP (gross national product)
is  to  be  defined  as  GNI  (gross  national  income),  as  determined  in  accordance  with
ESA 953. It also states that the own resources  ceiling,  expressed as a percentage of GNI,
should be adjusted in order to maintain unchanged the amount of financial resources put at
the  disposal  of  the  Communities  under  ESA  95.  In  accordance  with  this  decision,  the
Commission made this adjustment in December 2001 and communicated the result to the
budgetary authority4. The own resources ceiling of 1,27% of GNP-15 is changed to 1,24%
of GNI-15.

For  the  purposes  of  clarity,  Tables  1  and  2  set  out  until  2003  the  figures  relating  to  the
technical  adjustment  in  line  with  both  the  ESA  (second  edition)  and  the  new  system
(ESA 95).

2.2.

Adjustment of expenditure ceilings by heading

The  adjustment  is  calculated  by  applying  the  following  deflators  to  the  financial
perspective (at 1999 prices):

– 

– 

– 

A  cumulative  deflator  of  10,41%  for  the  period  2000-2004  to  the  ceiling  for
heading 1 and to the figure for the Structural Funds in heading 2, in accordance
with paragraph 15 of the Interinstitutional Agreement (fixed rate of 2% a year).

The  GNP  deflator  in  euros  for  2000-2004  (10,72624%)  to  the  other  ceilings
(actual deflator).

In  accordance  with  the  financial  perspective  adopted  at  the  Berlin  European
Council, the monetary reserve has been eliminated from 2003.

As regards payments, the adjustment is based on the appropriations for payments estimated
for each heading when the financial perspective was drawn up (1999 prices). The method
of calculation is set out in the following table:

3

4

Council  Regulation  (EC)  No  2223/96  of  25  June  1996  on  the  European  system  of  national  and  regional
accounts in the Community - OJ L 310, 30.11.1996.
Communication from the Commission to the Council and the European Parliament - Adaptation of the ceiling
of  own  resources  and  of  the  ceiling  for  appropriations  for  commitments  following  the  entry  into  force  of
Decision 2000/597/EC, Euratom (COM(2001) 801 final of 28.12.2001).

3

                                                
EU-15:
appropriations for
payments 2004 at
1999 prices
(€ million)

Cumulative
deflator
2000-2004
(%)

Appropriations
for payments
2004 at 2004
prices
(€ million)

42.760

10,41

47.211

28.035

10,41

4.900

10,72624

0

0

400

10,72624

30.953

5.426

0

442

15.815

10,72624

17.511

Appropriations  for  payments
(Heading 1)

Appropriations  for  payments
(heading 2-Structural Funds)

Apppropriations  for  payments
(Heading 5)

Appropriations
for  payments
(Heading 6)

Monetary
reserve

Other
reserves

appropriations 
(Heading 

for
Other 
-
payments 
Cohesion  Fund  +  Heading  3  +
Heading 4 + Heading 7)

2 

Total 
payments

appropriations 

for

91.910

101.543

As  regards  the  appropriations  for  payments  available  for  accession,  those  coming  under
heading 1  have  been  adjusted  by  means  of  a  10,41%  cumulative  deflator.  For  "other
expenditure",  a  distinction  is  made  between  payments  for  structural  operations,  to  which
the  cumulative  deflator  10,41%  is  applied,  and  payments  under  headings  3  and  5,  for
which the cumulative 10,72624% deflator has been used.

2.3.

Main results of  the  technical  adjustment  of  the  Financial  Perspective  for  2004  (EU-
15)

The  overall  ceiling  on  appropriations 
€102.995 million, equivalent to 1,05% of GNI.

for  commitments 

for  2004  comes 

to

The corresponding ceiling on the appropriations for payments comes to €101.543 million,
i.e. 1,03 % of GNI.

Allowing for the amount available for accession, the overall ceiling on appropriations for
payments is €111.362 million (1,13% of GNI  for EU-15),  which,  on  the  basis  of  current
economic forecasts, leaves a margin beneath the own resources ceiling of €10.344 million
(0,11% of GNI for EU-15).

4

For  2001,  2002  and  2003,  the  size  of  the  margin  has  been  updated  from  the  previous
technical  adjustments  using  the  most  recent  GNI  estimates  so  that  comparisons  can  be
made  over  a  number  of  years.  On  the  other  hand,  the  ceilings  in  commitments  and
payments resulting from the adjustments made do not change.

2.4.

The Financial Framework for the Enlarged Union

The Financial Framework EU-21 (Table 2) is presented only as a reminder of the scenario
laid down at the Berlin European Council and presented in the IIA of 6 May 1999.

Since then, the Brussels European Council of 24 and 25 October 2002 confirmed that the
enlargement of the Union could concern up to ten new Members (Cyprus, Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia).

At the beginning of 2003 the Commission will present an indicative financial framework
for EU-25 at 2004 prices together with the adjustment of the financial perspective to cater
for enlargement (Point 25 of the IIA of 6 May 1999), taking into account the conclusions
of the Copenhagen European Council of 12 and 13 December 2002.

The indicative table for the financial framework for EU-21 has been adjusted in the same
way as the  EU-15  table.  In  heading  8  (Enlargement),  the  commitment  appropriations  for
agriculture  and  structural  operations  have  been  adjusted  by  means  of  the  cumulative
10,41%  deflator  and  those  for  internal  policies  and  administration  by  means  of  the
cumulative 10,72624% deflator. Payments under  heading  8  have  been  adjusted  using  the
same  method  of  calculation  as  for  the  payments  available  for  accession  in  the  financial
perspective.

3.  OTHER ELEMENTS LINKED TO THE EXERCISE OF TECHNICAL ADJUSTMENT

3.1.

The agricultural guideline

The  agricultural  guideline  has  been  calculated  in  accordance  with  Article 3  of  the  new
Council Regulation on budgetary discipline5 (see Table 4).

The figures for  sugar  and isoglucose levies,  food aid refunds and  ACP sugar  refunds  are
based at this stage on the forecasts for the 2003 budget. In accordance with the Regulation
on budgetary discipline, the final level of these specific items in the guideline will be fixed
when the preliminary draft 2004 budget is presented.

In 2004 the agricultural guideline is provisionally €53.622 million.6

5

6

Council Regulation (EC) No 2040/2000 of 26 September 2000, OJ L 224, 29 September 2000, p.27
This  leaves  a  margin  of  €3.130  million  in  relation  to  all  the  expenditure  which,  in  accordance  with  the
Regulation on budgetary discipline, is included under the guideline (heading 1, the "agriculture" section of the
pre-accession aid under heading 7, the amounts left available for accession in respect of agriculture.

5

                                                
3. 2.

Heading 5 (Administration)

In the case of heading 5, a footnote to the financial perspective states that the figures for
pensions  included  under  the  ceiling  for  this  heading  are  to  be  calculated  net  of  staff
contributions to the pension scheme, up to a maximum of €1.100 million (1999 prices) for
the  period  2000-2006.  As  stated  in  the  Commission  communication  on  the  technical
adjustment for 2000,7 this provision should be interpreted as imposing a dual limit on the
amounts deducted from expenditure on pensions when applying the ceiling for the heading:

– 

– 

this  amount  may  not  exceed  the  contributions  actually  entered  as  budget
revenue  in  any  one  year.  For  2004  these  contributions  are  provisionally
estimated8 at €187 million, i.e. €166 million at 1999 prices with the cumulative
deflator of 10,72624% applied for the adjustment to the ceiling for the heading;

the accumulated total of deductions for the period 2000-2006 may not exceed
€1.100 million  at  1999  prices,  equivalent  to  an  average  of  €157  million
(€174 million at 2004 prices).

As administrative expenditure is, as a rule, recurrent, the lowest limit - i.e. a maximum of
€174 million  at  current  prices  for  2004 -  should  be  adopted  each  year  to  avoid  using  a
margin at the start of the period which will no longer be fully available afterwards.

3. 3.

Operations outside the Budget

The  fifth  subparagraph  of  paragraph 10  of  the  Interinstitutional  Agreement  states  that
information relating  to  operations  not  included  in  the  general  budget  and  the  foreseeable
development  of  the  various  categories  of  own  resources  is  to  be  set  out  in  tables,  as  an
indication,  and  updated  annually  when  the  technical  adjustment  is  made  to  the  financial
perspective.

This information, updated in line with the latest estimates available, is set out in Tables 5.1
to 5.2. It covers the EDF and the structure of own resources.

4.  FINAL REMARK

The Commission will present to the budgetary authority its proposal for the adjustment of
the  financial  perspective  to  cater  for  enlargement,  in  compliance  with  Point  25  of  the
Interinstitutional Agreement, at the beginning of 2003.

7

8

SEC(1999)847 final, paragraph 6.
The rate of increase envisaged for 2004 for expenditure on remunerations has been applied to the amount of
contributions entered in the Amending Letter n°4/2003 (€184 million).

6

                                                
TABLE 1: FINANCIAL PERSPECTIVE (EU-15) - ADJUSTED TO 2004 PRICES

APPROPRIATIONS FOR COMMITMENTS
1. AGRICULTURE
CAP (not including rural development)
Rural development and accompanying measures
2. STRUCTURAL OPERATIONS
Structural Funds
Cohesion Fund
3. INTERNAL POLICIES (1)
4. EXTERNAL ACTION
5. ADMINISTRATION (2)
6. RESERVES 
Monetary reserve
Emergency aid reserve
Guarantee reserve
7. PRE-ACCESSION AID
Agriculture
Pre-accession structural instrument
PHARE (applicant countries)
TOTAL APPROPRIATIONS FOR COMMITMENTS
TOTAL APPROPRIATIONS FOR PAYMENTS
Appropriations for payments as % of GNP (ESA 79)
Appropriations for payments as % of GNI (ESA 95)
AVAILABLE FOR ACCESSION (approps for payments)
Agriculture
Other expenditure
CEILING, APPROPRIATIONS FOR PAYMENTS
Ceiling, payments as % of GNP (ESA 79)
Margin for unforeseen expenditure
Own resources ceiling
Ceiling, approps for payments as % of GNI (ESA 95)
Margin for unforeseen expenditure
Own resources ceiling

2000
41.738
37.352
4.386
32.678
30.019
2.659
6.031
4.627
4.638
906
500
203
203
3.174
529
1.058
1.587
93.792
91.322
1,10%
1,07%

91.322
1,10%
0,17%
1,27%
1,07%
0,17%
1,24%

2001
44.530
40.035
4.495
32.720
30.005
2.715
6.272
4.735
4.776
916
500
208
208
3.240
540
1.080
1.620
97.189
94.730
1,10%
1,08%

94.730
1,10%
0,17%
1,27%
1,08%
0,16%
1,24%

Current prices
2002
46.587
41.992
4.595
33.638
30.849
2.789
6.558
4.873
5.012
676
250
213
213
3.328
555
1.109
1.664
100.672
100.078
1,13%
1,11%
4.397
1.698
2.699
104.475
1,18%
0,09%
1,27%
1,15%
0,09%
1,24%

2003
47.378
42.680
4.698
33.968
31.129
2.839
6.796
4.972
5.211
434
0
217
217
3.386
564
1.129
1.693
102.145
102.767
1,12%
1,09%
7.266
2.197
5.069
110.033
1,20%
0,07%
1,27%
1,17%
0,07%
1,24%

2004 prices

2004
47.211
42.408
4.803
34.326
31.541
2.785
7.053
5.082
5.426
442
0
221
221
3.455
576
1.152
1.727
102.995
101.543

1,03%
9.819
2.705
7.114
111.362

2005
46.294
41.480
4.814
34.053
31.268
2.785
7.175
5.093
5.536
442
0
221
221
3.455
576
1.152
1.727
102.048
99.612

0,99%
12.634
3.235
9.399
112.246

2006
45.996
41.171
4.825
33.240
30.461
2.779
7.308
5.104
5.647
442
0
221
221
3.455
576
1.152
1.727
101.192
99.017

0,96%
15.704
3.754
11.950
114.721

1,13%
0,11%
1,24%

1,12%
0,12%
1,24%

1,11%
0,13%
1,24%

(1) The expenditure on pensions included under the ceiling for this heading is calculated net of staff contributions to the pension scheme, up to a maximum of €1 100 million at 
1999 prices for the period 2000-06.

7

TABLE 2: FINANCIAL FRAMEWORK (EU-21*) - ADJUSTED TO 2004 PRICES

APPROPRIATIONS FOR COMMITMENTS
1. AGRICULTURE
CAP (not including rural development)
Rural development and accompanying measures
2. STRUCTURAL OPERATIONS
Structural Funds
Cohesion Fund
3. INTERNAL POLICIES
4. EXTERNAL ACTION
5. ADMINISTRATION (**)
6. RESERVES 
Monetary reserve
Emergency aid reserve
Guarantee reserve
7. PRE-ACCESSION AID
Agriculture
Pre-accession structural instrument
PHARE (applicant countries)
8. ENLARGEMENT
Agriculture
Structural operations
Internal policies
Administration
TOTAL APPROPRIATIONS FOR COMMITMENTS
TOTAL APPROPRIATIONS FOR PAYMENTS
Ceiling, payments as % of GNP (ESA 79)
Margin for unforeseen expenditure
Own resources ceiling
Ceiling, payments as % of GNI (ESA 95)
Margin for unforeseen expenditure
Own resources ceiling

2000
41.738
37.352
4.386
32.678
30.019
2.659
6.031
4.627
4.638
906
500
203
203
3.174
529
1.058
1.587

93.792
91.322
1,10%
0,17%
1,27%
1,07%
0,17%
1,24%

2001
44.530
40.035
4.495
32.720
30.005
2.715
6.272
4.735
4.776
916
500
208
208
3.240
540
1.080
1.620

97.189
94.730
1,10%
0,17%
1,27%
1,08%
0,16%
1,24%

Current prices
2002
46.587
41.992
4.595
33.638
30.849
2.789
6.558
4.873
5.012
676
250
213
213
3.328
555
1.109
1.664
6.851
1.698
3.980
778
395
107.523
104.475
1,13%
0,14%
1,27%
1,11%
0,13%
1,24%

2003
47.378
42.680
4.698
33.968
31.129
2.839
6.796
4.972
5.211
434
0
217
217
3.386
564
1.129
1.693
9.778
2.197
6.311
825
445
111.923
110.033
1,15%
0,12%
1,27%
1,12%
0,12%
1,24%

2004
47.211
42.408
4.803
34.326
31.541
2.785
7.053
5.082
5.426
442
0
221
221
3.455
576
1.152
1.727
12.822
2.705
8.744
875
498
115.817
111.362

2004 prices

2005
46.294
41.480
4.814
34.053
31.268
2.785
7.175
5.093
5.536
442
0
221
221
3.455
576
1.152
1.727
15.682
3.235
11.041
908
498
117.730
112.246

2006
45.996
41.171
4.825
33.240
30.461
2.779
7.308
5.104
5.647
442
0
221
221
3.455
576
1.152
1.727
18.530
3.754
13.337
941
498
119.722
114.721

1,08%
0,16%
1,24%

1,07%
0,17%
1,24%

1,06%
0,18%
1,24%

(*) The Financial Framework is included for information in relation with the scenario defined at the European Council in Berlin (March 1999).
(**) The expenditure on pensions included under the ceiling for this heading is calculated net of staff contributions to the pension scheme, up to a maximum of €1 100 million 
at 1999 prices for the period 2000-06.

8

TABLE 3: GNP/GNI - FIGURES AND FORECASTS (EU-15)

2000

2001

2002

2003

2004

Real growth rate (%)

   -Adjustment for 2000

   -Adjustment for 2001

   -Adjustment for 2002

   -Adjustment for 2003

   -Adjustment for 2004

GNP deflator in euros (%)

   -Adjustment for 2000

   -Adjustment for 2001

   -Adjustment for 2002

   -Adjustment for 2003

   -Adjustment for 2004

2,7

3,1

3,3

3,4

3,5

1,7

2,0

2,7

2,9

3

3

3,1

1,7

1,2

1,8

1,8

1,7

1,6

3,1

1,2

0,9

2

2

2,2

2,9

1,9

1,7

1,8

2,6

1,7

GNP at current prices (EUR billion) ESA 79

   -Adjustment for 2000

   -Adjustment for 2001

   -Adjustment for 2002

   -Adjustment for 2003

8.058,5

8.138,6

8.533,3

8.275,0

8.682,5

9.127,3

8.333,2

8.621,1

8.908,7

9.320,2

GNI at current prices (EUR billion) ESA 95
   -Adjustment for 2003

   -Adjustment for 2004

8.501,2

8.794,3

9.087,4

9.506,6

8.527,0

8.775,0

9.056,0

9.400,0

9.815,0

Comparison between deflator in national currency and 
deflator in euros

Deflators in national currency (weighted average)

Deflators in euros

2000

2001

2002

2003

2004

1,5%

3,0%

2,3%

1,6%

2,3%

2,2%

2,0%

1,8%

1,9%

1,7%

9

 TABLE 4: CALCULATION OF THE AGRICULTURAL 
GUIDELINE FOR 2004

€ million

2004

BASE EXPENDITURE (1995 budget)

36.394

ANNUAL GNP GROWTH RATE

1996
1997
1998
1999
2000
2001
2002
2003
2004

1,7%
2,7%
2,9%
2,8%
3,5%
1,2%
0,9%
1,9%
2,6%

Cumulative growth rate
74% of cumulative growth rate
CORRECTED EXPENDITURE (1995 prices)

22,08%
16,34%

42.340

GNP DEFLATOR

1996
1997
1998
1999
2000
2001
2002
2003
2004

3,4%
2,7%
1,8%
2,4%
3,0%
1,6%
2,2%
1,8%
1,7%

Cumulative growth rate
CORRECTED EXPENDITURE (2003 prices)

22,57%

51.896

Plus
Estimated needs (*) for 

   - sugar and isoglucose levy
   - food aid refunds
   - ACP sugar refunds
   - Subtotal

AGRICULTURAL GUIDELINE

(*) Previsions for the 2003 budget

1000
24
702
1726

53.622

10

 
 
TABLE 5: INDICATIVE PROGRAMME OF EXPENDITURE NOT ENTERED IN THE GENERAL BUDET AND 
PROSPECTIVE TREND IN THE VARIOUS OWN RESOURCES

5.1.  EUROPEAN DEVELOPMENT FUND (1)

Decisions (D) and Payments (P)
EUR million - current prices

2000

2001

2002

2003

2004

2005

2006

2007

TOTAL

D
3757

P
1548

D
1920

P
2068

D
2000

P
1850

D
2300

P
2350

D
3275

P
2700

D
3350

P
2925

D
1625

P
2475

D
2250

P
3125

(1)  Commission communication COM (2002) 673 final of 28.11.02.

Amounts entered for 2003 and the following years are based upon a 'conservative scenario'. The Commission is currently implementing measures (i.e. reorganization of external aid, 
systematic follow-up of old commitments, launch of new initiatives in the areas of debt relief, health, etc.) that should accelerate the use of EDF funds.

5.2. OWN RESOURCES BY CATEGORY

% of total
Traditional own resources
VAT
GNP

2000
17
40
43

2001
16
40
44

2002
14
28
58

2003
12
25
63

2004
12
13
75

2005
12
13
75

2006
12
13
75

2001 : Budget Implementation, included the retroactive adjustment of 15% TOR in 2002
2002 : (SAB 3/2002 as adopted)
2003 : PDB 2003
2004-2006 : Estimate

11