Communication from the Commission to the European Parliament and the Council - Technical adjustment of the financial perspective for 2005 in line with movements in GNI and prices (Point 15 of the Interinstitutional Agreement of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure)
Date: 2003-12-12
Institutions: European Commission
Subjects: adaptation of financial perspectives, budgetary discipline (EU), budgetary procedure, enlargement of the Union, interinstitutional agreement, national income, price fluctuation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 12.12.2003
COM(2003) 785 final

COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Technical adjustment of the financial perspective for 2005
in line with movements in GNI and prices

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

EN

  EN

COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Technical adjustment of the financial perspective for 2005
in line with movements in GNI and prices

(Point 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, as adjusted for enlargement2, contains the
financial perspective table for EU-25 (Table 1a).

Point  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  income
(GNI) and prices.

The purpose of this communication is to present to the budgetary authority the result
of this technical adjustment (EU-25) for 2005.

2. 

TERMS  OF  THE  ADJUSTMENT  OF  THE  FINANCIAL  PERSPECTIVE  TABLE
(TABLES 1-3)

Table 1 shows the financial perspective for EU-25 at 2005 prices.

Table  2  shows  the  financial  perspective  for  EU-25  at  2005  prices,  including  the
budgetary implications of a political settlement in Cyprus.

Table 3 presents the economic 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  national  experts  (budget  forecasts,  autumn  2003).
The figures and forecasts are based on the European System of Accounts revised in
1995 (ESA 95).

2.1. 

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  12,62%  for  the  period  2000-2005  to  the  ceiling  for
heading 1 and to the figure for the Structural Funds in heading 2, in accordance
with point 15 of the Interinstitutional Agreement (fixed rate of 2% a year).

1

2

OJ C 172, 18.6.1999, p. 1.
OJ L 147, 14.6.2003, p. 31.

2

 
                                                
– 

the GNI deflator in euros for 2000-2005 (11,28%) to the other ceilings (actual
deflator).

In accordance with point 23 (a) of the  Interinstitutional Agreement of 6 May 1999,
the monetary reserve has been eliminated as from 2003.

To ensure consistency with the Cohesion Fund allocations for the ten new Member
States enshrined in the Accession treaties, the overall figure for the Cohesion Fund in
2005 prices has been rounded up to the superior unit.

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

EU-25:
appropriations  for
payments  2005  at
1999 
prices
(€ million)

Cumulative
deflator
2000-2005
(%)

for

Appropriations 
payments
2005  at  2005  prices
(€ million)

Appropriations  for  payments
(Heading 1)

45.179

Appropriations  for  payments
(Heading 2-Structural Funds)

29.592

Appropriations  for  payments
(Heading 5)

5.558

Appropriation
s for payments
(Heading 6)

Monetary
reserve

Other
reserves

-

400

12,62

50.879

12,62

33.325

11,28

6.185

-

0

11,28

445

20.871

11,28

23.225

appropriations 
(Heading 

for
Other 
payments 
2-
Cohesion Fund + Heading 3 +
Heading  4  +  Heading  7  +
Heading 8)

TOTAL 
payments

appropriations 

for

101.600

114.059

Appropriations for payments concerning the ten new Member States - whose accession to the
European  Union  will  occur  on  May  1st,  2004 -  have  been  added  to  appropriations  for
payments concerning current Members, in 1999 prices and for each sub-category of the table
above.  Sub-totals  in  1999  prices  are  then  adjusted  in  2005  prices  according  to  the  relevant
deflator: heading 1 and the Structural Funds share of heading 2 have been adjusted by means
of a 12,62% cumulative deflator; other headings or expenditure have been adjusted by means
of a 11,28% cumulative deflator.

3

 
2.2.  Main  results  of  the  technical  adjustment  of  the  Financial  Perspective  for  2005

(EU-25)

The overall ceiling on appropriations for commitments for 2005 comes to €119.419
million, equivalent to 1,14% of GNI.

The  corresponding  overall  ceiling  on  the  appropriations  for  payments  comes  to
€114.060 million, i.e. 1,09% of GNI. On the basis of current economic forecasts, this
leaves a margin beneath the own resources ceiling of €15.732 million (0,15% of GNI
for EU-25).

For  2001,  2002,  2003  and  2004,  the  size  of  the  margin  has  been  updated  from  the
previous  technical  adjustment  using  the  most  recent  GNI  estimates  so  that
comparisons  can  be  made  over  a  number  of  years.  However,  the  ceilings  in
commitments and payments resulting from the adjustments made do not change.

2.3. 

The  financial  perspective  adjusted 
implications of a political settlement in Cyprus

in  2005  prices 

including  budgetary

Table  2  presents  the  financial  framework  EU-25  adjusted  in  2005  prices  including
the budgetary implications of a political settlement in Cyprus.

This table has been adjusted in the same way as Table 1 and will apply in the event
that a unified Cyprus enters the European Union on May 1st, 2004.

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 discipline3 (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 2005 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 budget for 2005 is presented.

In 2005 the agricultural guideline is provisionally estimated at € 55.545 million4.

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

3

4

OJ L 224, 29.9.2000, p.27. Council Regulation No 2040/2000 of 26 September 2000.
This leaves a margin of € 3.856 million in relation to all the expenditure which, in accordance with the
regulation  on  budgetary  discipline,  is  included  under  the  guideline  (heading  1  and  the  'agriculture'
expenditure  of  the  pre-accession  aid  under  heading  7,  i.e.  € 250  million  foreseen  for  Bulgaria  and
Romania in 2005).

4

 
                                                
technical adjustment  for  20005,  "this  provision  should  be  interpreted  as  imposing  a
dual limit on the amounts deducted from expenditure on pensions when applying the
ceiling of the heading":

– 

– 

This  amount  may  not  exceed  the  contributions  actually  entered  as  budget
revenue in any one year;

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 (€ 175
million at 2005 prices).

As  administrative  expenditure  is,  as  a  rule,  recurrent,  the  lowest  limit  –  i.e.  a
maximum of € 175 million at current prices for 2005 – 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  point  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.

5

SEC (1999) 847 final, paragraph 6.

5

 
                                                
TABLE 1: FINANCIAL PERSPECTIVE (EU-25) ADJUSTED FOR ENLARGEMENT AT 2005 PRICES

ANNEX

COMMITMENT APPROPRIATIONS
1. AGRICULTURE
1a Common Agricultural Policy
1b Rural development
2. STRUCTURAL ACTIONS
Structural funds
Cohesion fund
3. INTERNAL POLICIES
4. EXTERNAL ACTIONS
5. ADMINISTRATION (1)
6. RESERVES 
Monetary reserve
Emergency aid reserve
Guarantee reserve
7. PRE-ACCESSION AID
Agriculture
Pre-accession structural instrument
PHARE (applicant countries)
8. COMPENSATION
TOTAL APPROPRIATIONS FOR COMMITMENTS
TOTAL APPROPRIATIONS FOR PAYMENTS
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
1,07%
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
1,07%
0,17%
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
1,09%
0,15%
1,24%

2003
47.378
42.680
4.698
33.968
31.129
2.839
6.796
4.972
5.211
434

217
217
3.386
564
1.129
1.693

102.145
102.767
1,11%
0,13%
1,24%

2004
49.305
42.769
6.536
41.035
35.353
5.682
8.722
5.082
5.983
442

221
221
3.455

1.410
115.434
111.380
1,11%
0,13%
1,24%

2005
51.439
44.598
6.841
42.441
37.247
5.194
9.012
5.119
6.185
446

223
223
3.472

1.305
119.419
114.060
1,09%
0,15%
1,24%

2005 prices
2006
51.587
44.610
6.977
43.701
37.768
5.933
9.138
5.130
6.356
446

223
223
3.472

1.046
120.876
116.555
1,08%
0,16%
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 
euros at 1999 prices for the period 2000-2006.

6

 
TABLE 2: FINANCIAL PERSPECTIVE (EU-25) ADJUSTED FOR ENLARGEMENT AT 2005 PRICES
(including budgetary implications of a political settlement in Cyprus)

Current prices

2004
49.297
42.772
6.525
41.094
35.395
5.699
8.737
5.082
5.983
442

2003
47.378
42.680
4.698
33.968
31.129
2.839
6.796
4.972
5.211
434

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

COMMITMENT APPROPRIATIONS
1. AGRICULTURE
1a Common Agricultural Policy
1b Rural development
2. STRUCTURAL ACTIONS
Structural funds
Cohesion fund
3. INTERNAL POLICIES
4. EXTERNAL ACTIONS
5. ADMINISTRATION (1)
6. RESERVES 
Monetary reserve
Emergency aid reserve
Guarantee reserve
7. PRE-ACCESSION AID
Agriculture
Pre-accession structural instrument
PHARE (applicant countries)
8. COMPENSATION
TOTAL APPROPRIATIONS FOR COMMITMENTS
TOTAL APPROPRIATIONS FOR PAYMENTS
Ceiling, approps for payments as % of GNI (ESA 95)
Margin for unforeseen expenditure
Own resources ceiling
(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 euros at 1999 prices for the period 2000-2006.

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

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

2005
51.437
44.608
6.829
42.528
37.319
5.209
9.027
5.119
6.185
446

1.410
115.500
111.380
1,11%
0,13%
1,24%

1.305
119.519
114.060
1,09%
0,15%
1,24%

102.145
102.767
1,11%
0,13%
1,24%

100.672
100.078
1,09%
0,15%
1,24%

97.189
94.730
1,07%
0,17%
1,24%

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

217
217
3.386
564
1.129
1.693

223
223
3.472

221
221
3.455

223
223
3.472

1.046
121.015
116.555
1,08%
0,16%
1,24%

2005 prices
2006
51.584
44.621
6.963
43.827
37.875
5.952
9.154
5.130
6.356
446

7

 
TABLE 3: GNP-GNI - FIGURES AND FORECASTS

Real growth rate (%) (EU-15)
   - Adjustment for 2000
   - Adjustment for 2001
   - Adjustment for 2002
   - Adjustment for 2003
   - Adjustment for 2004
   - Adjustment for 2005
GNP-15 deflator in euros (%)
   - Adjustment for 2000
   - Adjustment for 2001
   - Adjustment for 2002
   - Adjustment for 2003
   - Adjustment for 2004
   - Adjustment for 2005

2000

2001

2002

2003

2004

2005

2,7
3,1
3,3
3,4
3,5
3,6

1,7
2,0
2,7
2,9
3
2,9

3
3,1
1,7
1,2
1,7

1,8
1,8
1,7
1,6
1,7

3,1
1,2
0,9
1

2
2
2,2
2,3

2,9
1,9
0,7

1,7
1,8
0,5

2,6
1,9

1,7
1,7

2,5

1,7

Comparison between the deflators in national 
currencies and the deflators in euros (EU-15)

2000

2001

2002

2003

2004

2005

Deflators in national currency (weighted average)
Deflators en euros

1,4%
2,9%

2,4%
1,7%

2,5%
2,3%

2,2%
0,5%

2,0%
1,7%

1,7%
1,7%

GNP-15 at current prices (EUR billion) ESA 79

   - Adjustment for 2000
   - Adjustment for 2001
   - Adjustment for 2002
   - Adjustment for 2003

GNI-15 at current prices (EUR billion) ESA 95

2000
8.058,5
8.138,6
8.275,0
8.333,2

2001

2002

2003

2004

2005

8.533,3
8.682,5
8.621,1

9.127,3
8.908,7

9.320,2

   - Adjustment for 2003
   - Adjustment for 2004
   - Adjustment for 2005

8.501,2
8.527,0
8.544,0

8.794,3
8.775,0
8.841,0

9.087,4
9.056,0
9.144,0

9.506,6
9.400,0
9.256,0

9.815,0
9.603,0

10.014,0

GNI-10 at current prices (EUR billion)

   - Adjustment for 2004
   - Adjustment for 2005

2004

2005

512,4
443,0

474,3

8

 
 TABLE 4 : CALCULATION OF THE AGRICULTURAL GUIDELINE FOR 2005

EUR million

2005

BASE EXPENDITURE (1995 budget)

36.394

ANNUAL GNP GROWTH RATE

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

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

GNP DEFLATOR

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005

1,7%
2,6%
2,9%
2,9%
3,6%
1,7%
1,0%
0,7%
1,9%
2,50%

23,66%
17,51%

3,4%
2,7%
1,7%
2,3%
2,9%
1,7%
2,3%
0,5%
1,7%
1,7%

42.766

Cumulative growth rate
CORRECTED EXPENDITURE (2005 prices)

22,94%

52.578

IMPACT OF ENLARGEMENT

GNI  growth rate in 2004
74 % of cumulative growth rate
CORRECTED EXPENDITURE

Plus
Estimated needs (*) for

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

   AGRICULTURAL GUIDELINE

4,61%
3,41%

54.373

359,9
10
802,2
1172,1

55.545

(*) Previsions for the 2004 budget

9

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

TABLE 5.1.  EUROPEAN DEVELOPMENT FUND (1)

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

2000

2001

2002

2003

2004

2005

2006

2007

2008

D
4007

P
1640

D
1921

P
2124

D
2115

P
1902

D
3200

P
2500

D
3275

P
2500

D
4350

P
2875

D
2650

P
3200

D
2450

TOTAL
(1) Commission Communication COM (2003) 720 final, 21.11.2003
Amounts entered for 2004 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.

P
3050

D
p.m.

P
2475

TABLE 5.2. OWN RESOURCES BY CATEGORY

% of total
Traditional own resources
VAT
GNI

2005
2000
11
17
15
40
74
43
2000-2002 : bugdet implementation, included the retroactive adjustment of 15% TOR in 2002
2003 : amending budget 4/2003
2004 : PDB 2004, EU-25
2005-2006 : previsions

2002
14
28
58

2001
16
40
44

2004
12
14
74

2003
12
25
63

2006
11
14
76

10