Preliminary draft amending budget n° 7 to the general budget 2007 - General statement of revenue - Statement of revenue and expenditure by section - Section III - Commission
Date: 2007-11-07
Institutions: Directorate-General for Budget, European Commission
Subjects: EU financing, EU programme, European Commission, amending budget, budgetary expenditure, budgetary resources, preliminary draft EC budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.11.2007 
COM(2007) 687 final 

PRELIMINARY DRAFT AMENDING BUDGET N° 7  
TO THE GENERAL BUDGET 2007 

GENERAL STATEMENT OF REVENUE 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

(presented by the Commission) 

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PRELIMINARY DRAFT AMENDING BUDGET N° 7  
TO THE GENERAL BUDGET 2007 

GENERAL STATEMENT OF REVENUE 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

Having regard to: 

– 

– 

– 

the  Treaty  establishing  the  European  Community,  and  in  particular  Article 272 
thereof, 

the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in  particular 
Article 177 thereof, 

Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial 
Regulation  applicable  to  the  general  budget  of  the  European  Communities1,  as  last 
amended  by  Council  Regulation  (EC,  Euratom)  No  1995/20062,  and  in  particular 
Article 37 thereof, 

The  European  Commission  hereby  presents  to  the  budgetary  authority  Preliminary  Draft 
Amending  Budget  No 7  to  the  2007  budget  for  the  reasons  set  out  in  the  following 
explanatory memorandum. 

1 
2 

OJ L 248, 16.9.2002, p. 1. 
OJ L 390, 30.12.2006, p. 1. 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

Introduction .................................................................................................................. 4 

Increase in the forecast of revenue............................................................................... 4 

Revision of the forecasts of VAT and GNI balances................................................... 4 

Other revenue ............................................................................................................... 4 

Decrease in Payment Appropriations........................................................................... 4 

Heading 1a Competitiveness for Growth and Employment ........................................ 5 

Heading 1b Cohesion for Growth and Employment.................................................... 7 

Heading 2 Preservation and Management of Natural Resources................................. 9 

Heading 3a Freedom, Security and Justice .................................................................. 9 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK ..................... 11 

GENERAL STATEMENT OF REVENUE 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 

The general statement of revenue and the statement of revenue and expenditure by section are 
forwarded separately via the SEI-BUD system. An English version of the general statement of 
revenue and statement of revenue and expenditure by section is attached for information as a 
budgetary annex. 

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1. 

INTRODUCTION 

Preliminary Draft Amending Budget (PDAB) No 7 for the year 2007 takes into account of the 
following developments: 

– 

– 

the need to budget a substantial increase in the forecast of revenue, in particular for 
the revision of the forecasts of VAT and GNI balances (EUR 3 233,4 million)3; 

the  need  for  a  decrease  of  payment  appropriations  in  budget  lines  for  headings 1a, 
1b,  2  and 3a  (EUR 1 251,4 million),  after  taking  into  account  the  redeployments 
proposed in the global transfer. 

2. 

INCREASE IN THE FORECAST OF REVENUE 

2.1. 

Revision of the forecasts of VAT and GNI balances 

In accordance with Article 16 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 
2000,  the  Commission  proposes  to  revise  the  forecasts  of  VAT  and  GNI  own  resources 
balances,  on  the  basis  of  the  available  information,  by  an  increase  of  EUR 2 814,9 million. 
These modifications concern chapters 3 1 and 3 2 of the revenue side of the budget.  

At this stage the calculations for Member States' GNI are still provisional, because of the on-
going verification of GNI data. After the GNI Committee of 25 October, the Commission will 
revise the above figure accordingly, in the course of the budgetary procedure for this PDAB. 

2.2. 

Other revenue 

Repayment  of  unused  Community  aid  (item  6 1 5 0)  and  financial  corrections  in  connection 
with the Structural funds (item 6 5 0 0) 

Taking into account the cashed amounts for items 6 1 5 0 and 6 5 0 0, and assuming that these 
amounts  will  not  be  re-used  this  year,  an  amount  of  EUR 179,5 million  is  proposed  to  be 
budgeted. 

Interest on late payments and fines 

Chapters 7 0 and 7 1 of the general statement of revenue register interest on late payments and 
fines. Budget 2007 already includes an amount of EUR 123 million. Considering the amounts 
that at this stage of the year are cashed or will probably be cashed, it is proposed to enter an 
additional amount of EUR 239 million in the budget. 

3. 

DECREASE IN PAYMENT APPROPRIATIONS 

The  Commission  proposes  to  adjust  the  level  of  payment  appropriations  for  certain  budget 
lines in order to align them more closely to the latest estimates of needs and working on the 

3 

The use of updated forecasts on the revenue side improves the accuracy of the payments Member States 
are asked to make during the budgetary year. According to this proposed revision Member States will 
reduce their contributions based on GNI. 

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assumption  that  the  rebalancing  of  payment  appropriations  between  budget  lines  requested 
separately  by  the  Commission's  in  the  so-called  'Global  Transfer'  will  be  accepted  by  the 
Budget  Authority.  The  reduction  (EUR 1 251,4 million) 
level  of  payment 
appropriations requested in this PDAB takes account in particular of the following factors: 

the 

in 

–  The  fine-tuning  of  Cohesion  expenditure,  to  reflect  the  state  of  play  in  the  programming 

phase; 

–  The winding-up of payments stemming from the previous financial frameworks; 

–  The  late  adoption  of  some  legal  bases,  and  the  resulting  delays  in  starting  up  new 

programmes; and 

–  The  need  to  take  account  of  the  state  of  implementation  of  certain  pilot  projects  and 

preparatory actions. 

The present proposal concerns headings 1a, 1b, 2 and 3a of the financial framework. 

3.1. 

Heading 1a Competitiveness for Growth and Employment 

The  proposed  reduction  of  payment  appropriations  for  heading  1a  is  EUR 466,5 million.  In 
this explanatory text, the figures have been rounded to the nearest million. 

Research Framework Programmes (- EUR 239 million) 

FP-5  (EC)  (- EUR 60 million):  All  the  payments  now  made  in  relation  to  the  Fifth 
Framework  Programme  are  final  payments.  The  amount  proposed  for  withdrawal  relates 
essentially to the "Quality of Life", "Competitiveness and Sustainable Growth" and "Human 
Potential"  priorities.  Several  factors  explain  the  reduction  in  the  payment  appropriations 
required:  

–  The real costs of projects are significantly lower than the amounts initially foreseen, which 
reduces the Community contribution and generates significant de-commitments at the end 
of the Framework Programme. 

–  Certain  types  of  project  have  frequently  been  terminated  earlier  than  anticipated  (early 

termination of research grants). 

–  Final  reports  are  often  submitted  late  by  beneficiaries.  Furthermore,  there  is  generally  a 
lack  of  completeness  of  the  information  submitted  with  the  final  reports,  which  means 
additional information has to be requested. These two factors together cause delays in the 
execution of final payments. 

FP-6 (EC) (- EUR 149 million): The Sixth Framework Programme is in its first completion 
year.  The  amount  proposed  for  reduction  relates  essentially  to  the  "Human  Resources", 
"SME",  "Environment"  and  "Infrastructure"  activities.  The  main  reasons  for  under-
implementation of appropriations are as follows: cancellation of contracts prior to the start of 
projects; early termination of projects; delays in the start date of projects; delays in the receipt 
of reports; lower than anticipated project costs. 

FP-6  (Euratom)  (- EUR 30 million):  Due  to  the  rather  late  decisions  on  the  ITER  Joint 
Undertaking,  and  the  implementation  of  the  agreement,  the  relevant  commitment  was  made 

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with a year's delay. The agreement allows for a payment to be made in the year following the 
commitment. This means that the related payment, due to be made in 2007, will also be made 
with a year's delay, in 2008. 

Competitiveness and Innovation (- EUR 46 million) 

CIP in Policy Area Enterprise (- EUR 30 million): The reduction in the amount of payment 
appropriations that can be consumed on this line is linked to the delays in market procedures 
inherent  in  the  setting  up  of  this  new  programme  for  the  period  2007-2013.  These  delays 
mean  that  the  relevant  funds  will  only  be  committed  at  the  end  of  the  year,  and  hence  the 
corresponding advance payments will not be made. 

CIP in Policy Area Information Society (- EUR 10 million): An under-implementation of 
EUR 10 million  is  foreseen  on  this  line.  This  surplus  of  appropriations  relates  to  the  late 
adoption  of  the  Legal  Basis  (24  October  2006  -  Publication  Official  Journal:  9  November 
2006) and to the fact that CIP is a new programme with new objectives to be defined and put 
in place. Therefore, several meetings of the Management Committee were needed and the first 
Work Programme was only adopted on 24 May 2007. The call for proposals was published on 
25 May and the closure is  scheduled  for  23  October. The signature  of the grant agreements 
will begin in early 2008. No payments on projects are expected in 2007 and the pre-financing 
of some studies has also been delayed. An amount of EUR 1 million is expected to be paid in 
2007. 

CIP in Policy Area Transport and Energy (- EUR 6 million): 2007 is the first year of the 
programme "Intelligent Energy - Europe II", and the end of negotiations, which will result in 
the  signature  of  contracts,  will  not  happen  until  2008.  This  means  that  no  pre-financing 
payments can be made in 2007, and most of the appropriations available on this line will not 
be used. 

Energy and Transport (- EUR 168 million) 

Galileo (- EUR 100 million): Faced with difficulties surrounding the Galileo programme, on 
19 September  2007  the  Commission  presented  a  Communication  and  a  proposal  modifying 
the  Regulation  on  the  establishment  of  the  Galileo  and  EGNOS  (European  Geostationary 
Navigation  Overlay  Service)  programmes.  Given  this  context,  the  payment  appropriations 
foreseen for this year will not be used. 

Nuclear decommissioning (- EUR 45 million): The reduction follows from a reinforcement 
of  EUR 66,5 million  at  the  end  of  2006,  which  allowed  for  the  settlement  of  a  number  of 
payment  requests  from  the  European  Bank  for  Reconstruction  and  Development  (EBRD), 
submitted earlier than expected ("front-loading"). 

Intelligent Energy I (- EUR 19 million): In addition to the uncertainty related to the timing 
of  invoices  to  be  submitted,  the  strict  enforcement  of  bank  guarantees,  which  some 
contractors  have  difficulty  complying  with,  has  also  slowed  down  the  payment  flow. 
Furthermore, it is difficult to foresee the rate at which the outstanding commitments will be 
absorbed, since the analysis of the first intermediary payment requests is taking longer than 
had been anticipated. 

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Marco Polo (- EUR 4 million): 2007 is the first year of the "Marco Polo II" programme, and 
the end of negotiations, which should result in the signature of contracts, will not be possible 
until 2008. Hence, no pre-financing payment will be made in 2007. 

Pilot Projects and Preparatory Actions (- EUR 12 million) 

Support for SMEs in the new financial environment (- EUR 5 million): The reduction in 
the  amount  of  payment  appropriations  that  can  be  consumed  on  this  line  is  linked  to  the 
implementation  rhythm  of  this  preparatory  action.  The  international  financial  institutions 
involved in the action have had difficulty in finding participating banks, at the regional and 
local level, that are of sufficient size and capacity to be able to implement this action. 

Erasmus  for  Young  Entrepreneurs  (- EUR 1 million):  A  feasibility  study  is  needed  to 
implement  this  pilot  project.  To  undertake  this,  an  amount  of  EUR 1,5 million  is  required, 
which leaves the balance available for withdrawal. 

Measures to promote cooperation and partnerships between micro, small and medium-
sized  enterprises  (- EUR 2 million):  The  contracts  implementing  this  pilot  project  will  be 
signed towards the end of the year, once the relevant market procedures have been concluded. 
Hence the first payments will be made at the start of 2008, leaving the full amount of payment 
appropriations available. 

The  EU  assuming  its  role  in  a  globalised  world  (- EUR 2 million):  The  contracts 
implementing this pilot project will be signed towards the end of the year, once the relevant 
market procedures have been concluded. One pre-financing payment of EUR 1 million can be 
made in 2007, leaving the balance of payment appropriations available. 

Energy  Security  –  Bio  fuels  (- EUR 2 million):  The  forecast  of  consumption  of  payment 
appropriations on this budget line shows a likely under-implementation of the full amount of 
available  funds.  This  is  the  first  year  of  this  pilot  project,  and  the  end  of  the  negotiations, 
which  should  result  in  the  signature  of  contracts,  will  probably  not  happen  until  the  end  of 
2007 or the beginning of 2008. Hence no pre-financing payment will be made in 2007. 

3.2. 

Heading 1b Cohesion for Growth and Employment 

Structural and Cohesion Funds (- EUR 573 million) 

In  this  Preliminary  Draft  Amending  Budget  a  reduction  of  EUR 573 million  in  payment 
appropriations for heading 1b is also proposed. The reasons are set out below. 

2007  is  the  first  year  of  the  new  2007-2013  programming  period,  when  all  new  operational 
programmes are scheduled for adoption,  followed by the  first  advance  payments. Currently, 
the Commission estimates that in 2007 it may not be possible to pay EUR 1 billion, out of the 
total  budget  of  EUR 7 billion  for  advances  to  the  new  Cohesion  policy  2007-2013 
programmes, due to delays in the adoption of some programmes. 

In  contrast,  payments  for  the  pre-2007  Structural  Funds  programmes  have  so  far  exceeded 
expectations.  Assuming  steady  payment  claims  continue  for  the  rest  of  the  year,  they  are 
likely  to  absorb  part  of  the  surplus  of  payment  appropriations  that  had  been  foreseen  for 
advances for the 2007-2013 programmes.  

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Nevertheless,  two  budget  lines  require  downward  adjustments,  albeit  of  limited  magnitude. 
These are the ERDF lines for the Completion of Objective 2 programmes and the Completion 
of Technical Assistance and Innovative Measures (EUR 30 million each). For the former, the 
downward adjustment is required because of suspension of payments to some UK mainstream 
and URBAN programmes (some of which have not yet been lifted), while the latter is due to 
longer than expected closures of Innovative Action Programmes. 

There  are  also  significant  delays  in  adopting  the  new  Cross-Border  programmes  under  the 
European  Neighbourhood  and  Partnership  Instrument,  co-funded  by  the  European  Regional 
Development Fund (ERDF). None of these programmes is expected to be adopted in 2007 due 
to  delays  in  the  preparation  of  the  joint  programmes  by  the  Member  States  and  ENPI 
participant  countries.  As  a  result,  none  of 
the  amounts  budgeted  for  advances 
(EUR 13 million) funded by the ERDF can be used. 

The final component concerns payments for pre-2007 projects of the Cohesion Fund. Despite 
Portugal  and  Poland  exceeding  forecast  payment  claims,  in  general  payments  have  trailed 
expectations  in  the  other  Member  States,  with  claims  from  Bulgaria,  Spain,  the  Czech 
Republic and Slovenia being especially low. Consequently, overall payments are forecast to 
be some EUR 500 million lower than forecast. 

Taking  into  account  the  above,  the  Commission  proposes  to  reduce  payment  appropriations 
for the following lines of heading 1b: 

Budget Line 

13 04 01 
13 03 04 

13 03 08 

19 08 02 02 
Total Heading 
1b 

Name 
Cohesion Fund - Completion of previous projects (prior to 
2007) 
Completion of ERDF, Objective 2 (2000 to 2006) 
Completion of ERDF - Technical assistance and innovative 
measures (2000 to 2006) 
Cross Border Cooperation (CBC), contribution from Heading 
1b (Regional Policy) 

Change 
(EUR)

-500 000 000
-30 000 000

-30 000 000

-12 753 208

-572 753 208

The  Commission's  proposal  reflects  the  most  recent  information  available  and  the  best 
estimates  at  the  time  of  proposing  the  PDAB.  Nevertheless,  the  Commission  intends  to 
continue  its  close  monitoring  of  execution  and  make  a  final  assessment  of  the  progress  in 
adopting new 2007-2013 programmes and related payment of advances, and of the payment 
claims received from all Member States for the pre-2007 programmes and projects, by the end 
of  October  (1  November  for  the  Cohesion  Fund),  which  is  the  regulatory  deadline  for  the 
introduction  of  payment  claims  for  this  year.  This  may  lead  the  Commission  to  revise  its 
request  in  the  course  of  the  procedure  concerning  this  PDAB.  This  is  the  only  approach 
capable of addressing simultaneously two key, albeit conflicting, concerns: firstly, to ensure 
the  budget  is  sufficient  to  satisfy  all  eligible  payment  claims  received  and  advances  to  be 
made; secondly, to avoid surpluses at the end of the year, as far this is possible. Therefore, the 
Commission, if appropriate, will provide an update of the current estimates, with a view to a 
possible revision in early November of the amendments proposed here. 

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3.3. 

Heading 2 Preservation and Management of Natural Resources 

European Fisheries Fund (- EUR 19 million) 

Almost  half  of  the  twenty-six  new  2007-2013  programmes  of  the  European  Fisheries  Fund 
have yet to be received by the Commission. The respective advances will not be paid in 2007. 
Consequently,  the  Commission  proposes  a  reduction  of  payment  appropriations  for  budget 
line 11 06 12 of EUR 19,4 million. 

For reasons similar to the ones mentioned for the amendments proposed in this PDAB for the 
Structural and the Cohesion funds, the Commission may revise its request in the course of the 
procedure concerning this PDAB. 

Environment (- EUR 88 million) 

The  Regulation  on  the  LIFE+  programme  was  adopted  on  23  May  2007.  Despite  the  late 
adoption  of  the  legal  basis,  the  Commission  is  striving  to  achieve  a  good  level  of 
implementation in 2007. The call for proposals, covering EUR 187 million, was published on 
28  September  2007.  The  projects  will  therefore  be  selected  in  2008  and  no  payment 
appropriations  will  be  needed  in  2007  for  this  part  of  the  programme.  The  payment 
appropriations  to  be  used  in  2007  relate  to  measures  undertaken  by  the  Commission  in 
support  of  the  Commission's  role  in  initiation  of  environmental  policy  development  and 
implementation  (studies  and  evaluations,  services  with  a  view  to  the  implementation  and 
integration  of  environmental  policy  and  legislation,  meetings,  seminars  and  workshops  with 
experts and stakeholders), information, publication and dissemination activities and operating 
grants to NGOs. 

3.4. 

Heading 3a Freedom, Security and Justice 

Freedom, Security and Justice (- EUR104 million) 

External Border Fund (- EUR 60 million) and Integration of Third-country Nationals (-
 EUR 32 million): Following the late adoption of the legal basis, the strategic guidelines were 
adopted this summer. The implementing rules will only be adopted in autumn 2007, as there 
are significant translation requirements. The distribution of funds between Member States has 
been determined. On this basis, the financing decisions for the External Borders Fund will be 
taken by the end of 2007. The adoption of the work programmes for the Community actions 
for  this  fund  is  foreseen  for  the  autumn,  following  which  both  the  global  commitments  and 
the calls for proposal will be finalised. Given the delayed adoption of the legal bases and the 
required preparatory actions, the 2007 annual programme for the Member States will only be 
adopted  in  the  first  semester  of  2008.  This  also  goes  for  the  contracting  of  the  grant 
agreements for the Community actions. Due to these delays, practically no payments will be 
made in 2007. 

Daphne  (- EUR 7 million):  The  new  programme  will  be  committed  at  the  end  of  the  year 
2007 due to the late adoption of the legal basis (end of June 2007 instead of end of the year 
2006 as originally foreseen) and the procedure for the approval of the financing decision. For 
these reasons, the pre-financing payments will be made in 2008 and the Commission will not 
be able to use any payment appropriations in 2007. 

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Fundamental  rights  and  citizenship  (- EUR 5 million):  The  new  programme  will  be 
committed at the end of the year 2007 due to the late adoption of the legal basis (April 2007 
instead of end of the year 2006 as originally foreseen) and the procedure for the approval of 
the  financing  decision.  For  these  reasons,  only  pre-financing  payments  for  an  amount  of 
EUR 763 000 will be made in 2007. The balance of appropriations will thus remain unused. 

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SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK 

2007 Financial framework 

Budget 2007 + AB 1-5/2007 +PDAB 6/2007

PDAB 7/2007 

CA 

PA 

CA 

PA 

CA 

PA 

Budget 2007 + AB 1-5/2007 + 
PDAB 6 + 7/2007  

CA 

PA 

Financial framework 
Heading/subheading 

1. SUSTAINABLE GROWTH 
1a. Competitiveness for growth and 
employment 
1b. Cohesion for growth and 
employment 

Total 
Margin4 

2. PRESERVATION AND 
MANAGEMENT OF NATURAL 
RESOURCES 
Of which market related expenditure and 
direct payments 

Total 
Margin 

3. CITIZENSHIP, FREEDOM, 
SECURITY AND JUSTICE 
3a. Freedom, Security and Justice 
3b. Citizenship 

Total 
Margin5   

8 918 000 000

45 487 000 000

54 405 000 000

45 759 000 000

58 351 000 000

637 000 000
 636 000 000
1 273 000 000

4. EU AS A GLOBAL PARTNER6 

6 578 000 000

5. ADMINISTRATION7 

6. COMPENSATION 

Margin 

Margin 

Margin 
TOTAL 

Margin   

7 039 000 000

445 000 000

128 091 000 000

123 790 000 000

9 367 547 511

7 011 294 397

-466 493 000

9 367 547 511

6 544 801 397 

45 486 784 504

37 618 069 823

-572 753 208

45 486 784 504

37 045 316 615 

54 854 332 015

50 667 985  

44 629 364 220

-1 039 246 208

54 854 332 015

43 590 118 012 

50 667 985  

42 711 661 000

42 435 641 756

42 711 661 000

42 435 641 756 

56 250 230 036
2 100 769 964  

623 833 000
819 799 099
1 443 632 099

25 934 000  

6 812 460 000
67 000
6 977 864 032
137 135 968
444 646 152
353 848
126 783 164 334
2 314 928 765

54 718 545 736

-108 120 000

56 250 230 036
2 100 769 964  

54 610 425 736 

473 908 000
900 243 751
1 374 151 751

7 352 746 732

6 977 764 032

444 646 152

115 497 218 623
8 368 781 377

-104 037 000

-104 037 000

-1 251 403 208

623 833 000
819 799 099
1 443 632 099

25 934 000  

6 812 460 000
67 000
6 977 864 032
137 135 968
444 646 152
353 848
126 783 164 334
2 314 928 765

369 871 000 
900 243 751 
1 270 114 751 

7 352 746 732 

6 977 764 032 

444 646 152 

114 245 815 415 
9 620 184 585 

4 
5 
6 
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The European Globalisation adjustment Fund (EGF) is not included in the calculation of the margin under Heading 1a. 
The European Union Solidarity Fund (EUSF) amount is entered over and above the relevant headings as foreseen by the IIA of 17 May 2006 (OJ C 139 of 14.6.2006) 
The 2007 margin for heading 4 does not take into account the appropriations related to the Emergency Aid Reserve (EUR 234,5 million). 
For calculating the margin under the ceiling for heading 5, account is taken of the footnote (1) of the financial framework 2007-2013 for an amount of EUR 76 million for the staff 
contributions to the pensions scheme. 

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