Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies
Date: 2010-10-07
Institutions: European Commission
Subjects: Community budget, Economic and Monetary Union, coordination of EMU policies, economic convergence, economic policy, multilateral surveillance

EN 

EN 

   EN 

 
EUROPEAN COMMISSION 

Brussels, 29.9.2010 
COM(2010) 526 final 

2010/0280 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of 
budgetary positions and the surveillance and coordination of economic policies 

EN 

   EN 

 
 
  
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The global economic and financial crisis has exposed and amplified the need for greater co-
ordination  and  enhanced  surveillance  of  economic  policies  in  the  economic  and  monetary 
union  (EMU).  Existing  instruments  and  methods  of  co-ordination  and  surveillance  enabled 
the  EU  to  weather  a  storm  that  no  Member  State  could  have  withstood  on  its  own.  The 
European institutions and Member States reacted quickly and are continuing to work together 
to recover from a crisis that has no precedent in our generation. 

However,  these  recent  experiences  also  revealed  remaining  gaps  and  weaknesses  in  the 
current system of coordination and in the existing surveillance procedures. There is a broad 
agreement  that  the  framework  for  EMU  should  be  urgently  strengthened  in  order  to  anchor 
macroeconomic stability and the sustainability of public finances, which are preconditions for 
durable output and employment growth. 

The  crisis  has  drastically  reversed  the  favourable  economic  and  financial  conditions  that 
prevailed until 2007 and made clear yet again that windfalls accumulated during good times 
had  not  been  sufficiently  used  to  create  room  for  manoeuvre  when  times  turn  bad.  Very 
sizeable consolidation will be necessary in most Member States to bring public debt back onto 
a downward path. This is all the more urgent as European societies and economies are facing 
the effects of ageing populations, which will put further pressure on labour supply and public 
budgets. Reducing debt levels is highly relevant for most countries in view of their negative 
effects on economic incentives and growth through higher taxes and risk premia. 

The key instrument for fiscal policy co-ordination and surveillance is the Stability and Growth 
Pact (SGP), which implements the Treaty provisions on budgetary discipline. Strengthening 
the Pact is important for both increasing the credibility of the agreed co-ordinated fiscal exit 
strategy and avoiding a repetition of past mistakes. The set of proposals now being presented 
aims to strengthen the Pact by: (i) improving its provisions in the light of experience, not least 
of  the  crisis;  (ii)  equipping  it  with  more  effective  enforcement  instruments;  and  (iii) 
complementing it with provisions on national fiscal frameworks. This set of proposals is part 
of a broader reform of economic governance under the umbrella of the Europe 2020 strategy, 
which  includes  proposals  for  addressing  macroeconomic  imbalances  through  stronger 
surveillance,  including  alert  and  sanction  mechanisms.  The  different  strands  of  economic 
policy coordination, including surveillance of structural reforms, are to be integrated in a new 
surveillance cycle, the European Semester, which will bring together existing processes under 
the  SGP  and  the  Broad  Economic  Policy  Guidelines,  including  simultaneous  submission  of 
stability and convergence programmes and national reform programmes. 

2. 

RESULTS OF CONSULTATIONS WITH INTERESTED PARTIES  

The  outlines  of  the  present  proposals  were  announced  by  the  Commission  in  two 
communications: Reinforcing economic policy coordination of 12 May 2010 and Enhancing 
economic policy coordination for stability, growth and jobs – Tools for stronger EU economic 
governance of 30 June 2010. In opting for a formal communication, the Commission wished 
to  demonstrate  its  commitment  to  fostering  dialogue  with  Member  States,  the  European 

EN 

2 

   EN 

Parliament  and  all  stakeholders,  while  at  the  same  time  delivering  concrete  proposals  for 
action. 

In June 2010, the European Council agreed on the urgent need to reinforce the coordination of 
our  economic  policies.  The  agreement  included  first  orientations  as  regards  the  SGP  and 
budgetary surveillance. In particular, the European Council agreed on: (i) strengthening both 
the  preventive  and  corrective  parts  of  the  SGP,  including  with  sanctions  and  taking  due 
account  of  the  particular  situation  of  euro-area  Member  States;  (ii)  giving,  in  budgetary 
surveillance,  a  much  more  prominent  role  to  levels  and  evolutions  of  debt  and  overall 
sustainability; (iii) ensuring that all Member States have national budgetary rules and medium 
term budgetary frameworks in line with the SGP; (iv) ensuring the quality of statistical data. 

The  European  Council  invited  the  Task  Force  on  economic  governance  chaired  by  its 
President and established in March 2010 and the Commission to rapidly develop further and 
make  operational  these  orientations.  A  constructive  relationship  developed  between  the 
Commission and the Task Force. The Commission contributed to the work of the Task Force 
through the Communications referred to above and through ad hoc contributions.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

The  legal  basis  for  the  SGP  is  laid  down  in  Articles  121  and  126  of  the  Treaty  on  the 
Functioning  of  the  European  Union.  The  SGP  consists  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  (referred  to  as  preventive  part);  Council 
Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation 
of  the  excessive  deficit  procedure  (referred  to  as  corrective  part);  and  the  Resolution  of  the 
European Council of 17 June 1997 on the Stability and Growth Pact. These Regulations were 
amended  in  2005  by  Regulations  (EC)  No  1055/2005  and  (EC)  No  1056/2005  and 
complemented by the Council Report of 20 March 2005 on ‘Improving the implementation of 
the Stability and Growth Pact’. The present proposals seek further amendments to Regulations 
No 1466/97 and (EC) No 1467/97. Additional enforcement instruments are proposed in a new 
Regulation  of  the  European  Parliament  and  the  Council  on  the  effective  enforcement  of 
budgetary  surveillance  in  the  euro  area,  based  on  Article  136  of  the  Treaty,  in  combination 
with Article 121(6). The requirements for the budgetary frameworks of the Member States are 
the  subject  of  a  new  Council  Directive  based  on  Article  126(14):  the  Directive  aims  in 
particular  to  specify  the  obligations  of  national  authorities  to  comply  with  the  provisions  of 
Article 3 of Protocol No 12 to the Treaties on the excessive deficit procedure. 

The preventive part of the SGP is meant to ensure that Member States follow prudent fiscal 
policies so that there is no need to adopt more stringent forms of coordination to avoid public 
finance  sustainability  being  put  at  risk,  with  potential  negative  consequences  for  EMU  as  a 
whole.  Accordingly,  Member  States  are  required  to  present  stability  and  convergence 
programmes  outlining  their  plans  to  achieve  medium-term  budgetary  objectives  (MTOs), 
which are defined as a percentage of GDP in structural terms (i.e. adjusting for the effect of 
the  cycle  and  excluding  one-off  and  temporary  measures)  and  are  differentiated  across 
countries around a close-to-balance position to reflect the level of public debt and liabilities 
related  to  ageing.  Member  States  not  having  reached  their  MTO  are  expected  to  converge 
towards it at an annual pace of 0.5% of GDP in structural terms. 

EN 

3 

   EN 

However,  progress  towards  MTOs  has  been  generally  insufficient,  leaving  public  finances 
badly  exposed  to  the  economic  downturn.  Moreover,  the  structural  balance  has  in  practice 
proved  an  insufficient  measure  of  a  country’s  underlying  fiscal  position,  owing  to  the 
difficulty  of  assessing  the  cyclical  position  of  the  economy  in  real  time  and  to  insufficient 
account being taken of revenue windfalls and shortfalls not directly related to the economic 
cycle (in particular housing and financial market developments). As a result, in a number of 
countries,  even  apparently  sound  budgetary  positions  before  the  crisis  masked  a  strong 
reliance  on  windfall  revenues  to  finance  expenditure,  the  reversal  of  which  contributed  to 
soaring budget deficits. 

To  respond  to  these  shortcomings  the  reform  of  the  preventive  part  that  is  being  proposed, 
while  retaining  the  current  MTOs  and  the  0.5%  of  GDP  annual  convergence  requirement, 
makes  them  operational  in  terms  of  a  new  principle  of  prudent  fiscal  policy-making.  This 
principle implies that annual expenditure growth should not exceed – and if the MTO has not 
been  achieved  should  be  clearly  below  –  a  prudent  medium-term  rate  of  growth  of  GDP, 
unless the MTO has been significantly overachieved or the excess of expenditure growth over 
the prudent medium-term rate is matched by discretionary measures on the revenue side. The 
essential aim is to ensure that revenue windfalls are not spent but are instead allocated to debt 
reduction. The new principle will provide the benchmark against which countries’ fiscal plans 
in the stability and convergence programme will be examined. Additionally, failure to respect 
keep to the agreed rate of growth of expenditure, in conjunction with the stipulated revenue 
measures, will make the Member State concerned liable to a warning from the Commission 
and,  if  persistent  and/or  particularly  serious,  a  Council  recommendation  to  take  corrective 
action issued under Article 121 of the Treaty. Such a recommendation, while being issued in 
the  context  of  the  preventive  part,  would  be  backed,  for  the  first  time  and  for  euro-area 
countries only, by an enforcement mechanism under Article 136 of the Treaty, in the form of 
an  interest-bearing  deposit,  amounting  to  0.2%  of  GDP.  A  procedure  of  ‘reverse  voting’ 
mechanism  is  introduced  for  imposing  the  interest-bearing  deposit:  on  the  issue  of  a 
recommendation, the deposit would become due on proposal by the Commission, unless the 
Council  decides  to  the  contrary  by  qualified  majority  within  ten  days.  The  Council  could 
reduce the amount of the deposit only unanimously or based on a Commission proposal and a 
reasoned  request  from  the  Member  State  concerned.  The  deposit  will  be  returned  with  the 
accrued interest once the Council is satisfied that the situation giving rise to it has come to an 
end. 

The  corrective  part  of  the  SGP  is  meant  to  avoid  gross  errors  in  budgetary  policies,  which 
might  put  at  risk  the  sustainability  of  public  finances  and  potentially  endanger  EMU.  This 
translates into the obligation for Member States to avoid excessive government deficits, which 
are defined against a numerical threshold for deficit (3% of GDP) and debt (60% of GDP or 
sufficiently declining toward it). The excessive deficit procedure (EDP) that implements the 
ban  on  excessive  deficits  provides  for  a  sequence  of  steps,  which,  for  euro-area  countries, 
include the eventual imposition of financial sanctions. 

The  EDP  has  been  regularly  applied  in  line  with  the  relevant  provisions,  even  against  the 
background  of  the  exceptional  circumstances  of  the  financial  crisis,  thereby  contributing  to 
anchoring  expectations  of  its  orderly  resolution.  However  a  number  of  shortcomings  have 
emerged.  While  the  deficit  and  the  debt  criterion  are  in  principle  on  an  equal  footing,  and 
persistently  high  levels  of  debt  arguably  represent  a  more  serious  threat  to  public  finance 
sustainability than occasionally high deficits, in practice the ‘3% of GDP’ threshold has been 
the almost exclusive focus of the EDP, with debt playing a marginal role so far. This owes to 
the  less  straightforward  nature  of  the  debt  threshold  compared  to  the  deficit,  including  the 

EN 

4 

   EN 

ambiguity of the notion of sufficiently diminishing pace of reduction and the greater impact 
on  the  debt  ratio  of  variables  outside  the  control  of  the  government,  notably  inflation.  The 
EDP  is  backed  in  principle  by  a  strong  enforcement  mechanism,  as  financial  sanctions  can, 
and  should  be,  imposed  in  the  event  of  persistent  failure  to  correct  an  excessive  deficit. 
However,  such  sanctions  arguably  come  into  play  too  late  in  the  process  to  represent  an 
effective deterrent against gross fiscal policy errors, not least because the financial situation of 
the  country  concerned  may  have  deteriorated  so  much  as  to  make  the  threat  of  a  fine  less 
credible at the very time when it should become real. Finally, the recent crisis has highlighted 
that if the obligation to correct excessive deficits contributes to anchoring the expectation that 
government solvency will be maintained, the timeline of the correction and the profile of the 
adjustment may have to reflect EMU-wide considerations. 

To respond to these shortcomings the following key proposals for the reform of the corrective 
part are being put forward. 

The  debt  criterion  of  the  EDP  is  to  be  made  operational,  notably  through  the  adoption  of  a 
numerical benchmark  to  gauge  whether the debt ratio is sufficiently diminishing toward the 
60%  of  GDP  threshold.  Specifically,  a  debt-to-GDP  ratio  above  60%  is  to  be  considered 
sufficiently  diminishing  if  its  distance  with  respect  to  the  60%  of  GDP  reference  value  has 
reduced over the  previous three years at  a  rate of the  order  of one-twentieth per year. Non- 
compliance with this numerical benchmark is not, however, necessarily expected to result in 
the country concerned being placed in excessive deficit, as this decision would need to take 
into  account  all  the  factors  that  are  relevant,  in  particular  for  the  assessment  of  debt 
developments,  such  as  whether  very  low  nominal  growth  is  hampering  debt  reduction, 
together with risk factors linked to the debt structure, private sector indebtedness and implicit 
liabilities  related  to  ageing.  In  line  with  the  greater  emphasis  on  debt,  more  consideration 
should be given to relevant factors in the event of non-compliance with the deficit criterion, if 
a country has a debt below the 60% of GDP threshold. 

The more flexible approach put forward with respect to considering the relevant factors in the 
steps  of  determining  the  existence  of  an  excessive  deficit  could  also  benefit  countries 
undertaking  systemic  pension  reforms,  beyond  the  currently  foreseen  five-year  transitory 
period.  The  special  provisions  of  the  SGP  for  systemic  pension  reforms  with  regards  the 
deficit criterion are also extended to the debt criterion; through establishing the same five-year 
transitory period for considering the net costs of such reforms when assessing the compliance 
with  the  debt  criterion.  Finally,  equal  consideration  shall  be  given  to  the  partial  or  total 
reversal of previously implemented systemic pension reforms, during both the launch and the 
abrogation of an EDP. 

Enforcement  is  strengthened  by  introducing  a  new  set  of  financial  sanctions  for  euro-area 
Member  States,  which  would  apply  much  earlier  in  the  process  according  to  a  graduated 
approach.  Specifically,  a  non-interest-bearing  deposit  amounting  to  0.2%  of  GDP  would 
apply upon a decision to place a country in excessive deficit, which would be converted into a 
fine in the event of non-compliance with the initial recommendation to correct the deficit. The 
amount is equal to the fixed component of the sanctions already provided for in the final step 
of  the  EDP.  It  also  bears  a  link  with  the  EU  budget,  which  should  facilitate  the  envisaged 
move to a system of enforcement based on the EU budget as outlined in the above-mentioned 
Commission  Communication  of  30  June  2010.  Further  non-compliance  would  result  in  the 
sanction being stepped up, in line with the already existing provisions in the SGP. To reduce 
discretion in enforcement, the ‘reverse voting’ mechanism is envisaged for imposing the new 
sanctions in connection with the successive steps of the EDP. Specifically, at each step of the 

EN 

5 

   EN 

EDP,  the  Commission  will  make  a  proposal  for  the  relevant  sanction,  and  this  will  be 
considered  adopted,  unless  the  Council  decides  to  the  contrary  by  qualified  majority  within 
ten  days.  The  size  of  the  non-interest-bearing  deposit  or  the  fine  could  only  be  reduced  or 
cancelled by the Council unanimously or based on a specific proposal from the Commission 
on  grounds  of  exceptional  economic  circumstances  or  following  a  reasoned  request  by  the 
Member State concerned. 

Moreover,  the  criteria  for  assessing  compliance  with  the  recommendations  at  each  step, 
including  the  possibility  of  allowing  an  extension  of  the  deadlines  for  the  correcting  the 
excessive deficit, are clarified by placing explicit emphasis on the fiscal variables that can be 
assumed  to  be  under  the  direct  control  of  the  government,  in  particular  expenditure,  by 
analogy  with  the  approach  proposed  for  the  preventive  part.  Beyond  these  country-specific 
circumstances, the possibility is introduced of extending the deadlines also in the event of a 
general economic crisis. 

Effective enforcement of the EMU budgetary coordination framework cannot be expected to 
derive  only  from  provisions  laid  down  at  EU  level.  The  particular  decentralised  nature  of 
fiscal policy-making in the EU and the general need for national ownership of EU rules make 
it essential that the objectives of the EMU budgetary coordination framework are reflected in 
the  national  budgetary  frameworks.  A  national  budgetary  framework  is  the  set  of  elements 
that form the basis of national fiscal governance, i.e. the country-specific institutional policy 
setting  that  shapes  fiscal  policy-making  at  national  level.  This  includes  public  accounting 
systems,  statistics,  forecasting  practices,  numerical  fiscal  rules,  budgetary  procedures 
governing  all  stages  of  the  budget  process  and  medium  term  budgetary  frameworks  in 
particular, and fiscal relations across government sub-sectors. While Member States’ specific 
needs and preferences must be respected, a number of features stand out as being needed in 
terms  of  ensuring  minimum  quality  and  consistency  with  the  EMU  budgetary  framework. 
These  are  the  subject  of  the  Directive  on  national  budgetary  frameworks  that  is  being 
proposed  to  complement  the  reform  of  the  SGP.  Such  features  firstly  require  that  the  most 
primary elements of national budgetary frameworks, namely accounting and statistical issues 
and  forecasting  practices,  work  in  line  with  minimum  European  standards  to  facilitate 
transparency  and  the  monitoring  of  fiscal  developments.  Domestic  budgetary  frameworks 
need also to adopt a multi-annual fiscal planning perspective so as to ensure the achievement 
of  the  medium-term  objectives  set  at  EU  level.  Additionally,  Member  States  must  have  in 
place  numerical  fiscal  rules  conducive  to  compliance  with  the  deficit  and  debt  thresholds. 
Member  States  must  ensure  that  these  features  apply  to  all  general  government  sub-sectors. 
National authorities must also guarantee the transparency of the budget process by providing 
detailed  information  on  existing  extra-budgetary  funds,  tax  expenditures  and  contingent 
liabilities. 

EN 

6 

   EN 

2010/0280 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of 
budgetary positions and the surveillance and coordination of economic policies 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(6) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliament, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The coordination of the economic policies of the Member States within the Union, as 
provided by the Treaty, should entail compliance with the guiding principles of stable 
prices,  sound  public  finances  and  monetary  conditions  and  a  sustainable  balance  of 
payments.  

The  Stability  and  Growth  Pact  initially  consisted  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 policies1, Council Regulation (EC) 
No 1467/97 of 7 July 1997  on speeding up and clarifying the implementation  of  the 
excessive  deficit  procedure2  and  the  Resolution  of  the  European  Council  of  17  June 
1997  on  the  Stability  and  Growth  Pact3.  Regulations  (EC)  No  1466/97  and  (EC)  No 
1467/97  were  amended  in  2005  by  Regulations  (EC)  No  1055/2005  and  (EC)  No 
1056/2005 respectively. In addition Council Report of 20 March 2005 on 'Improving 
the implementation of the Stability and Growth Pact' was adopted.  

The Stability and Growth Pact is based on the objective of sound government finances 
as a means of strengthening the conditions for price stability and for strong sustainable 
growth underpinned by financial stability and conducive to employment creation. 

The  preventive  part  of  the  Stability  and  Growth  Pact  requires  that  Member  States 
should achieve and maintain a medium-term budgetary objective and submit stability 
and convergence programme to that effect. 

1 
2 
3 

OJ L 209, 2.8.1997, p. 1. 
OJ L 209, 2.8.1997, p. 6. 
OJ C 236, 2.8.1997, p. 1. 

EN 

7 

   EN 

                                                 
(5) 

(6) 

(7) 

(8) 

(9) 

The  content  of  the  stability  and  convergence  programmes  as  well  as  the  criteria  for 
their examination should further be adapted in the light of the experience gained with 
the implementation of the Stability and Growth Pact. 

Adherence  to  the  medium-term  budgetary  objective  of  budgetary  positions  should 
allow Member States to have a safety margin with respect to the 3% of GDP reference 
value  in  order  to  ensure  rapid  progress  towards  sustainability  and  to  have  room  for 
budgetary manoeuvre, in particular taking into account the needs of public investment. 

The obligation to achieve and maintain the medium-term budgetary objective needs to 
be put into operation, through the specification of principles of prudent fiscal policy-
making. 

The  obligation  to  achieve  and  maintain  the  medium-term-objective  should  equally 
apply to participating Member States and Member States with a derogation. 

Prudent fiscal policy-making implies that the growth rate of government expenditure 
does  normally  not  exceed  a  prudent  medium-term  growth  rate  of  GDP,  increases  in 
excess  of  that  norm  are  matched  by  discretionary  increases  in  government  revenues 
and discretionary revenue reductions are compensated by reductions in expenditure. 

(10)  A temporary departure from prudent fiscal policy-making should be allowed in case of 
severe economic downturn of a general nature in order to facilitate economic recovery. 

(11) 

(12) 

In the event of a significant deviation from prudent fiscal-policy a warning should be 
addressed to the Member State concerned and in case the significant deviation persists 
or is particularly serious, a recommendation should be addressed to the Member State 
concerned to take the necessary corrective measures. 

In order to ensure compliance with the fiscal surveillance framework of the Union for 
participating Member States, a specific enforcement mechanism should be established 
on the basis of Article 136 of the Treaty for cases where a persistent and significant 
deviation from prudent fiscal policy making prevails. 

(13)  References contained in Regulation (EC) No 1466/97 should take account of the new 

Article numbering of the Treaty on the Functioning of the European Union. 

(14)  Regulation (EC) No 1466/97 should therefore be amended accordingly, 

EN 

8 

   EN 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 1466/97 is amended as follows: 

1. 

Article 2 is replaced by the following: 

'Article 2 

For  the  purpose  of  this  Regulation  'participating  Member  States'  shall  mean  those 
Member  States  whose  currency  is  the  euro  and  'Member  States  with  a  derogation' 
shall mean Member States other than those whose currency is the euro.' 

2. 

Article 3 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

'1.  Each  participating  Member  State  shall  submit  to  the  Council  and 
Commission information necessary for the purpose of multilateral surveillance 
at  regular  intervals  under  Article  121  of  the  Treaty  in  the  form  of  a  stability 
programme, which provides an essential basis for price stability and for strong 
sustainable growth conducive to employment creation.' 

(b)  paragraph 2 is amended as follows: 

(i) 

point (a) is replaced by the following: 

'(a) the medium-term budgetary objective and the adjustment path towards this 
objective  for  the  general  government  balance  as  a  percentage  of  GDP,  the 
expected path of the general government debt ratio, the planned growth path of 
government  expenditure,  the  planned  growth  path  of  government  revenue  at 
unchanged  policy  and  a  quantification  of  the  planned  discretionary  revenue 
measures;' 

(ii)  point (c) is replaced by the following: 

'(c)  a  quantitative  assessment  of  the  budgetary  and  other  economic  policy 
measures being taken or proposed to achieve the objectives of the programme, 
comprising  a  cost-benefit  analysis  of  major  structural  reforms  which  have 
direct long-term cost-saving effects, including by raising potential growth;' 

(c) 

paragraph 3 is replaced by the following: 

'3.  The  information  about  the  paths  for  the  general  government  balance  and 
debt ratio, the growth of government expenditure, the planned growth path of 
government  revenue  at  unchanged  policy,  the  planned  discretionary  revenue 
measures and the main economic assumptions referred to in paragraph 2(a) and 
(b) shall be on an annual basis and shall cover, the preceding year, the current 
year and at least the following three years.' 

EN 

9 

   EN 

 
 
 
 
3. 

Article 4 is replaced by the following: 

'Article 4 

1.  Stability  programmes  shall  be  submitted  annually  between  1  and  30  April.  A 
Member  State  adopting  the  euro  shall  submit  a  stability  programme  within  six 
months of the Council Decision on its participation in the euro. 

2. Member States shall make public their stability programmes.' 

4. 

Article 5 is replaced by the following: 

'Article 5 

1.  Based  on  assessments  by  the  Commission  and  the  Economic  and  Financial 
Committee,  the  Council  shall,  within  the  framework  of  multilateral  surveillance 
under  Article  121  of  the  Treaty,  examine  the  medium-term  budgetary  objectives 
presented  by 
the  economic 
the  Member  States  concerned,  assess  whether 
assumptions on which the programme is based are plausible, whether the adjustment 
path  towards  the  medium-term  budgetary  objective  is  appropriate  and  whether  the 
measures  being  taken  or  proposed  to  respect  that  adjustment  path  are  sufficient  to 
achieve the medium-term budgetary objective over the cycle. 

The Council, when assessing the adjustment path toward the medium-term budgetary 
objective,  shall  examine  if  the  Member  State  concerned  pursues  an  appropriate 
annual  improvement  of  its  cyclically-adjusted  budget  balance,  net  of  one-off  and 
other  temporary  measures,  required  to  meet  its  medium-term  budgetary  objective, 
with 0.5% of GDP as a benchmark. For Member States with a high level of debt or 
excessive macroeconomic imbalances or both, the Council shall examine whether the 
annual  improvement  of  the  cyclically-adjusted  budget  balance,  net  of  one-off  and 
other temporary measures is higher than 0.5% of GDP. The Council shall take into 
account whether a higher adjustment effort is made in economic good times, whereas 
the effort may be more limited in economic bad times. 

With  a  view  to  ensuring  that  the  medium-term  budgetary  objective  is  effectively 
achieved and maintained, the Council shall verify that the growth path of government 
expenditure, taken in conjunction with the effect of measures being taken or planned 
on the revenue side, is consistent with prudent fiscal policy-making. 

Fiscal  policy-making  shall  be  considered  prudent  and  thereby  conducive  to  the 
achievement of the medium-term budgetary objective and its maintenance over time 
if the following conditions are satisfied: 

(a) 

(b) 

for  Member  States  that  have  achieved  the  medium-term  budgetary  objective, 
annual  expenditure  growth  does  not  exceed  a  prudent  medium-term  rate  of 
GDP growth, unless the excess is matched by discretionary revenue measures; 

for  Member  States  that  have  not  yet  reached  their  medium-term  budgetary 
objective,  annual  expenditure  growth  does  not  exceed  a  rate  below  a  prudent 
medium-term  rate  of  GDP  growth,  unless  the  excess  is  matched  by 
discretionary revenue measures. The size of the shortfall of the growth rate of 
government  expenditure  compared  to  a  prudent  medium-term  rate  of  GDP 

EN 

10 

   EN 

growth is set in such a way as to ensure an appropriate adjustment towards the 
medium-term budgetary objective; 

(c) 

discretionary  reductions  of  government  revenue  items  are  matched  either  by 
expenditure  reductions  or  by  discretionary  increases  in  other  government 
revenue items or both. 

The prudent medium-term of growth should be assessed on the basis of projections 
over a ten-year horizon updated at regular intervals. 

When  defining  the  adjustment  path  to  the  medium-term  budgetary  objective  for 
Member States that have not yet reached this objective and in allowing a temporary 
deviation from this objective for Member States that have already reached it, under 
the condition that an appropriate safety margin with respect to the deficit reference 
value  is  preserved  and  that  the  budgetary  position  is  expected  to  return  to  the 
medium-term  budgetary  objective  within  the  programme  period,  the  Council  shall 
take into account the implementation of major structural reforms which have direct 
long-term cost-saving effects, including by raising potential growth, and therefore a 
verifiable impact on the long-term sustainability of public finances. 

Special  attention  shall  be  paid  to  pension  reforms  introducing  a  multi-pillar  system 
that  includes  a  mandatory,  fully  funded  pillar.  Member  States  implementing  such 
reforms shall be allowed to deviate from the adjustment path to their medium-term 
budgetary objective or from the objective itself, with the deviation reflecting the net 
cost  of  the  reform  to  the  publicly  managed  pillar,  under  the  condition  that  the 
deviation  remains  temporary  and  that  an  appropriate  safety  margin  with  respect  to 
the deficit reference value is preserved.  

The  Council  shall  furthermore  examine  whether  the  contents  of  the  stability 
programme facilitate the achievement of sustained convergence within the euro area, 
closer  coordination  of  economic  policies  and  whether  the  economic  policies  of  the 
Member  State  concerned  are  consistent  with  the  broad  guidelines  of  economic 
policies of the Member States and of the Union. 

In periods of severe economic downturn of a general nature Member States may be 
allowed  to  temporarily  depart  from  the  adjustment  path  implied  by  prudent  fiscal-
policy making referred to in the fourth subparagraph. 

2. The Council shall carry out the examination of the stability programme within at 
most  three  months  of  the  submission  of  the  programme.  The  Council,  on  a 
recommendation  from  the  Commission  and  after  consulting  the  Economic  and 
Financial  Committee,  shall,  if  necessary,  deliver  an  opinion  on  the  programme. 
Where the Council, in accordance with Article 121 of the Treaty, considers that the 
objectives and the content of the programme should be strengthened with particular 
reference to prudent fiscal policy-making, the Council shall, in its opinion, invite the 
Member State concerned to adjust its programme.' 

EN 

11 

   EN 

5. 

Article 6 is replaced by the following: 

'Article 6 

1.  As  part  of  multilateral  surveillance  in  accordance  with  Article  121(3)  of  the 
Treaty, the Council shall monitor the implementation of stability programmes, on the 
basis of information provided by participating Member States and of assessments by 
the  Commission  and  the  Economic  and  Financial  Committee,  in  particular  with  a 
view  to  identifying  actual  or  expected  significant  divergences  of  the  budgetary 
position  from  the  medium-term  budgetary  objective,  or  from  the  appropriate 
adjustment  path  towards  it  ensuing  from  deviations  from  prudent  fiscal-policy 
making.  

2. In the event of a significant deviation from prudent fiscal-policy making referred 
in the fourth subparagraph of Article 5(1) of this regulation, and in order to prevent 
the  occurrence  of  an  excessive  deficit, the  Commission,  in  accordance  with  Article 
121(4) of the Treaty may address a warning to the Member State concerned. 

A deviation from prudent fiscal policy making shall be considered significant if the 
following  conditions  occur:  an  excess  over  the  expenditure  growth  consistent  with 
prudent  fiscal  policy-making,  not  offset  by  discretionary  revenue-increasing 
measures;  or  discretionary  revenue-decreasing  measures  not  offset  by  reductions  in 
expenditure;  and  the  deviation  has  a  total  impact  on  the  government  balance  of  at 
least 0.5 % of GDP in one single year or of at least 0.25 % of GDP on average per 
year in two consecutive years.  

The  deviation  shall  not  be  considered  if  the  Member  State  concerned  has 
significantly overachieved the medium-term budgetary objective, taking into account 
the presence of excessive macroeconomic imbalances, and the budgetary plans laid 
out in the stability programme do not jeopardise this objective over the programme 
period. 

The deviation may be equally not considered in case of severe economic downturn of 
a general nature. 

3. 
In  the  event  that  the  significant  deviation  from  prudent  fiscal-policy  making 
persists  or  is  particularly  serious,  the  Council,  on  a  recommendation  from  the 
Commission, shall address a recommendation to the Member State concerned to take 
the  necessary  adjustment  measures.  The  Council,  on  a  proposal  from  the 
Commission, shall make the recommendation public.' 

6. 

Article 7 is hereby amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

'1.  Each  Member  State  with  a  derogation  shall  submit  to  the  Council  and  the 
Commission information necessary for the purpose of multilateral surveillance 
of  regular  intervals  under  Article  121  of  the  Treaty  in  the  form  of  a 
convergence  programme,  which  provides  an  essential  basis  for  price  stability 
and for strong sustainable growth conducive to employment creation.' 

(b)  paragraph 2 is amended as follows: 

EN 

12 

   EN 

 
(i) 

point (a) is replaced by the following:  

'(a) the medium-term budgetary objective and the adjustment path towards this 
objective  for  the  general  government  balance  as  a  percentage  of  GDP,  the 
expected path of the general government debt ratio, the planned growth path of 
government  expenditure,  the  planned  growth  path  of  government  revenue  at 
unchanged  policy  and  a  quantification  of  the  planned  discretionary  revenue 
measures,  the  medium-term  monetary  policy  objectives,  the  relationship  of 
those objectives to price and exchange rate stability and to the achievement of 
sustained convergence;' 

(ii)  point (c) is replaced by the following: 

'(c)  a  quantitative  assessment  of  the  budgetary  and  other  economic  policy 
measures being taken or proposed to achieve the objectives of the programme, 
comprising  a  cost-benefit  analysis  of  major  structural  reforms,  which  have 
direct long-term cost-saving effects, including by raising potential growth;' 

(c) 

paragraph 3 is replaced by the following: 

'3.  The  information  about  the  paths  for  the  general  government  balance  and 
debt ratio, the growth of government expenditure, the planned growth path of 
government  revenue  at  unchanged  policy,  the  planned  discretionary  revenue 
measures and the main economic assumptions referred to in paragraph 2(a) and 
(b) shall be on an annual basis and shall cover the preceding year, the current 
year and at least the following three years.' 

7. 

Article 8 is replaced by the following: 

'Article 8 

1. 

Convergence programmes shall be submitted annually between 1 and 30 April. 

2.  Member States shall make public their convergence programmes.' 

8. 

Article 9 is replaced by the following: 

'Article 9 

1.  Based  on  assessments  by  the  Commission  and  the  Economic  and  Financial 
Committee,  the  Council  shall,  within  the  framework  of  multilateral  surveillance 
under  Article  121  of  the  Treaty,  examine  the  medium-term  budgetary  objectives 
the  economic 
the  Member  States  concerned,  assess  whether 
presented  by 
assumptions on which the programme is based are plausible, whether the adjustment 
path  towards  the  medium-term  budgetary  objective  is  appropriate  and  whether  the 
measures being taken and/or proposed to respect that adjustment path are sufficient 
to  achieve  the  medium-term  budgetary  objective  over  the  cycle  and  to  achieve 
sustained convergence. 

The Council, when assessing the adjustment path toward the medium-term budgetary 
objective,  shall  take  into  account  whether  a  higher  adjustment  effort  is  made  in 
economic  good  times,  whereas  the  effort  may  be  more  limited  in  economic  bad 

EN 

13 

   EN 

 
 
 
times.  For  Member  States  with  a  high  level  of  debt  or  excessive  macroeconomic 
imbalances  or  both,  the  Council  shall  examine  whether  the  annual  improvement  of 
the cyclically-adjusted budget balance, net of one-off and other temporary measures 
is higher than 0.5% of GDP. For ERM2 Member States, the Council shall examine if 
the  Member  State  concerned  pursues  an  appropriate  annual  improvement  of  its 
cyclically adjusted balance, net of one-off and other temporary measures, required to 
meet its medium-term budgetary objective, with 0.5% of GDP as a benchmark.  

With  a  view  to  ensuring  that  the  medium-term  budgetary  objective  is  effectively 
achieved and maintained, the Council shall verify that the growth path of government 
expenditure,  taken  in  conjunction  with  the  effect  of  the  measures  being  taken  or 
proposed on the revenue side, is consistent with prudent fiscal-policy making. 

Fiscal-policy  making  shall  be  considered  prudent  and  thereby  conducive  to  the 
achievement of the medium-term budgetary objective and its maintenance over time 
if the following conditions are satisfied: 

(a)  for  Member  States  that  have  achieved  the  medium-term  budgetary  objective, 
annual  expenditure  growth  does  not  exceed  a  prudent  medium-term  rate  of  GDP 
growth, unless the excess is matched by discretionary revenue measures; 

(b)  for  Member  States  that  have  not  yet  reached  their  medium-term  budgetary 
objective,  annual  expenditure  growth  does  not  exceed  a  rate  below  a  prudent 
medium-term  rate  of  GDP  growth,  unless  the  excess  is  matched  by  discretionary 
revenue  measures.  The  size  of  the  shortfall  of  the  growth  rate  of  government 
expenditure compared to a prudent medium-term rate of GDP growth is set in such a 
way  as  to  ensure  an  appropriate  adjustment  towards  the  medium-term  budgetary 
objective; 

(c)  discretionary  reductions  of  government  revenue  items  are  matched  either  by 
expenditure cuts or by discretionary increases in other government revenue items or 
both.  

The prudent medium-term of growth should be assessed on the basis of projections 
over a ten-year horizon updated at regular intervals.  

When  defining  the  adjustment  path  to  the  medium-term  budgetary  objective  for 
Member States that have not yet reached this objective and in allowing a temporary 
deviation from this objective for Member States that have already reached it, under 
the condition that an appropriate safety margin with respect to the deficit reference 
value  is  preserved  and  that  the  budgetary  position  is  expected  to  return  to  the 
medium-term  budgetary  objective  within  the  programme  period,  the  Council  shall 
take into account the implementation of major structural reforms which have direct 
long-term cost-saving effects, including by raising potential growth, and therefore a 
verifiable impact on the long-term sustainability of public finances. 

Special  attention  shall  be  paid  to  pension  reforms  introducing  a  multi-pillar  system 
that  includes  a  mandatory,  fully  funded  pillar.  Member  States  implementing  such 
reforms shall be allowed to deviate from the adjustment path to their medium-term 
budgetary objective or from the objective itself, with the deviation reflecting the net 
cost  of  the  reform  to  the  publicly  managed  pillar,  under  the  condition  that  the 

EN 

14 

   EN 

deviation  remains  temporary  and  that  an  appropriate  safety  margin  with  respect  to 
the deficit reference value is preserved. 

The  Council  shall  furthermore  examine  whether  the  contents  of  the  convergence 
programme  facilitate  the  closer  coordination  of  economic  policies  and  whether  the 
economic  policies  of  the  Member  State  concerned  are  consistent  with  the  broad 
guidelines of economic policies of the Member States and of the Union. In addition, 
for  ERM2  Member  States,  the  Council  shall  examine  whether  the  content  of  the 
convergence  programme  ensure  a  smooth  participation  in  the  exchange  rate 
mechanism. 

In periods of severe economic downturn of a general nature Member States may be 
allowed  to  temporarily  depart  from  the  adjustment  path  implied  by  prudent  fiscal-
policy making referred to in the fourth subparagraph. 

2. The Council shall carry out the examination of the convergence programme within 
at  most  three  months  of  the  submission  of  the  programme.  The  Council,  on  a 
recommendation  from  the  Commission  and  after  consulting  the  Economic  and 
Financial  Committee,  shall,  if  necessary,  deliver  an  opinion  on  the  programme. 
Where the Council, in accordance with Article 121 of the Treaty, considers that the 
objectives and the content of the programme should be strengthened with particular 
reference to prudent fiscal-policy making, the Council shall, in its opinion, invite the 
Member State concerned to adjust its programme.' 

9. 

Article 10 is replaced by the following: 

'Article 10 

1.  As  part  of  multilateral  surveillance  in  accordance  with  Article  121(3)  of  the 
Treaty,  the  Council  shall  monitor  the  implementation  of  convergence  programmes, 
on  the  basis  of  information  provided  by  Member  States  with  a  derogation  and  of 
assessments  by  the  Commission  and  the  Economic  and  Financial  Committee,  in 
particular with a view to identifying actual or expected significant divergences of the 
budgetary  position  from  the  medium-term  budgetary  objective,  or  from  the 
appropriate adjustment path towards it, ensuing from deviations from prudent fiscal-
policy making. 

In addition, the Council shall monitor the economic policies of Member States with a 
derogation in the light of convergence programme objectives with a view to ensure 
that  their  policies  are  geared  to  stability  and  thus  to  avoid  real  exchange  rate 
misalignments and excessive nominal exchange rate fluctuations. 

2. In the event of a significant deviation from prudent fiscal-policy making referred 
to  in  the  fourth  subparagraph  of  Article  9(1)  of  this  Regulation,  and  in  order  to 
prevent the occurrence of an excessive deficit, the Commission, in accordance with 
Article 121(4) of the Treaty may address a warning to the Member State concerned.  

A deviation from prudent fiscal policy making shall be considered significant if the 
following  conditions  occur:  an  excess  over  the  expenditure  growth  consistent  with 
prudent  fiscal  policy-making,  not  offset  by  discretionary  revenue-increasing 
measures;  or  discretionary  revenue-decreasing  measures  not  offset  by  reductions  in 
expenditure;  and  the  deviation  has  a  total  impact  on  the  government  balance  of  at 

EN 

15 

   EN 

least  0.5%  of  GDP  in  one  single  year  or  of  at  least  0.25%  of  GDP  on  average  per 
year in two consecutive years.  

The  deviation  shall  not  be  considered  if  the  Member  State  concerned  has 
significantly overachieved the medium-term budgetary objective, taking into account 
the presence of excessive macroeconomic imbalances, and the budgetary plans laid 
out in the stability programme do not jeopardise this objective over the programme 
period. 

The deviation may be equally not considered in case of severe economic downturn of 
a general nature. 

3.  In  the  event  that  the  significant  deviation  from  prudent  fiscal  policy  making 
persists  or  is  particularly  serious,  the  Council,  on  a  recommendation  from  the 
Commission, shall address a recommendation to the Member State concerned to take 
the  necessary  adjustment  measures.  The  Council,  on  a  proposal  from  the 
Commission, shall make the recommendation public.' 

10. 

All  references  to  'Article  99'  shall  be  replaced  throughout  the  Regulation  by 
references to 'Article 121'. 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 2 

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

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

EN 

16 

   EN 

LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Regulation of the European parliament and of the Council on strengthening of the surveillance 
of budgetary positions and the surveillance and coordination of economic policies; 

1.2. 

Policy area(s) concerned in the ABM/ABB structure4  

Economic and Financial Affairs 

1.3. 

Nature of the proposal/initiative  

(cid:133) The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action5  

(cid:56) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objectives 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

To foster EU growth, employment creation and sustainable development 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objectives: No.1 and 3. 

- To ensure effective policy co-ordination and overall policy consistency in developing an EU 
response  to  the  economic  crisis,  in  the  context  of  achieving  the  EU  2020  agenda  and 
sustainable development and in order to raise the growth potential of Member States and make 
the EU more competitive; 

-  To  promote  the  pursuit  by  Member  States  of  sound  budgetary  positions  and  of  public 
finances that are sustainable and of high quality in terms of their contribution to growth.  

ABM/ABB activity(ies) concerned 

Economic and Monetary Union 

4 
5 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

17 

   EN 

                                                 
1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The  Commission's Communication COM(2010) 367 emphasised the  need for a well defined 
EU policy approach in order to (i) revigorate the economic recovery, (ii) put public finances 
back on a sound footing and (iii) actively promote sustainable growth and jobs.  

The proposed amendment of the regulation constituting the preventive arm of the Stability and 
Growth  Pact  (SGP)  forms  part  of  the  formal  legislative  proposals  announced  in  the 
abovementioned  Communication.  These  amendments  aim  at  strengthening  economic  policy 
coordination,  notably  by  addressing  the  need  for  an  effective  enforcement  of  economic 
surveillance of Member States' fiscal policies through appropriate incentives and sanctions and 
by putting an increased focus on public debt and fiscal sustainability.  

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

The achievement of the Commission's general objective of fostering EU growth, employment 
creation and sustainable development is measured through the following impact indicators: 

- the degree to which Member States record budgetary outturns in line with the SGP; 

- potential growth/output.  

The  achievement  of  the  specific  objective  #3  mentioned  above  is  measured  through  the 
following  result  indicator:  percentage  of  individual  Commission  recommendations  related  to 
the  Stability  and  Growth  Pact  (SGP)  implemented  by  Member  States  (contingent  upon  their 
adoption by the Council). 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

The legislative proposal constitutes part of the measures announced by the Commission in its 
Communication (2010) 367 of 30 June 2010, which further develops the policy ideas set out in 
the  Commission's  Communication  COM(2010)  250  of  12  May  2010  and  builds  on  the 
orientations agreed at the 17 June 2010 European Council. 

1.5.2.  Added value of EU involvement 

The coordination of Member States' economic policies form an integral part of the EU’s remit 
as reflected in Title VIII (on economic and monetary policy) of the Treaty on the Functioning 
of the European Union. 

1.5.3.  Lessons learned from similar experiences in the past 

Past experience has demonstrated that economic policy coordination needs to be enhanced and 
that notably the preventive and corrective arms of the SGP need to be strengthened. 

EN 

18 

   EN 

1.5.4.  Coherence and possible synergy with other relevant instruments 

The legislative proposal constitutes one of the elements of a comprehensive economic reform 
package presented in COM(2010) 367 of 30 June 2010. 

1.6. 

Duration and financial impact  

(cid:133) Proposal/initiative of limited duration  

–  (cid:133) Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–  (cid:133) Financial impact from YYYY to YYYY  

(cid:56) Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from YYYY to YYYY, 

–  followed by full-scale operation. 

1.7.  Management mode(s) envisaged6  

(cid:56) Centralised direct management by the Commission  

(cid:133) Centralised indirect management with the delegation of implementation tasks to: 

–  (cid:133) executive agencies  

–  (cid:133) bodies set up by the Communities7  

–  (cid:133) national public-sector bodies/bodies with public-service mission  

–  (cid:133) persons entrusted with the implementation of specific actions pursuant to Title V of the 
Treaty  on  European  Union  and  identified  in  the  relevant  basic  act  within  the  meaning  of 
Article 49 of the Financial Regulation  

(cid:133) Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

If more than one management mode is indicated, please provide details in the "Comments" section. 

Comments  

6 

7 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

EN 

19 

   EN 

 
                                                 
2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

N/A 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

N/A 

2.2.2.  Control method(s) envisaged  

N/A 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

N/A 

EN 

20 

   EN 

 
3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1. 

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

The legislative proposal does not require any additional human or financial resources. 

•  Existing expenditure budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure

Contribution  

Number  
[Description………………………...……….] 

DA/NDA 
(8) 

from 
EFTA9 
countries 

from 
candidate 
countries10 

from third 
countries 

within the meaning 
of Article 18(1)(aa) 
of the Financial 
Regulation  

[XX.YY.YY.YY] 

DA/DN
A 

YES/N
O 

YES/N
O 

YES/N
O 

YES/NO 

•  New budget lines requested : None 

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure

Contribution  

Number  
[Heading……………………………………..] 

Diff./non-
diff. 

[XX.YY.YY.YY] 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the meaning 
of Article 18(1)(aa) 
of the Financial 
Regulation  

YES/N
O 

YES/N
O 

YES/N
O 

YES/NO 

Heading of 
multiannual 
financial 
framework 

Heading of 
multiannual 
financial 
framework 

8 
9 
10 

EN 

DA= Differentiated appropriations / DNA= Non-Differentiated Appropriations 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

21 

   EN 

 
 
 
 
 
                                                 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial 
framework:  

Number 

[Heading 
……………...……………………………………………………………….] 

EUR million (to 3 decimal places) 

DG: <…….> 

(cid:121) Operational appropriations  

Number of budget line 

Number of budget line 

Appropriations 
of 
 from the envelop of specific programs12  
Number of budget line 

an 

administrative 

TOTAL appropriations 
for DG <…….> 

Year 
N11 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(1a) 

(2a) 

nature 

financed 

N/A 

N/A 

N/A 

Commitments 

Payments 

(3) 

=1+1a 
+3 

=2+2a 

+3 

11 
12 

EN 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former "BA" lines), indirect research, direct 
research. 

22 

E

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
(cid:121) TOTAL operational appropriations  

Commitments 

Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelop of specific programs  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADING <….> 
of the multiannual financial framework 

Commitments 

=4+ 6 

Payments 

=5+ 6 

If more than one heading is affected by the proposal / initiative: 

(cid:121) TOTAL operational appropriations  

Commitments 

Payments 

(cid:121)  TOTAL  appropriations  of  an  administrative  nature 
financed from the envelop of specific programs  

(4) 

(5) 

(6) 

TOTAL appropriations  
under HEADINGS 1 to 4 
of the multiannual financial framework 
(Reference amount) 

Commitments 

=4+ 6 

Payments 

=5+ 6 

EN 

23 

E

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial 
framework:  

5 

" Administrative expenditure " 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)  

TOTAL 

EUR million (to 3 decimal places) 

DG: <…….> 

(cid:121) Human resources  
(cid:121) Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total 
= Total payments) 

commitments 

Year 
N13 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EUR million (to 3 decimal places) 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

Payments 

13 

Year N is the year in which implementation of the proposal/initiative starts. 

EN 

24 

E

 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.2.  Estimated impact on operational appropriations  

–  (cid:56) The proposal/initiative does not require the use of operational appropriations  

–  (cid:133) The proposal/initiative requires the use of operational appropriations, as explained below: 

Indicate 
objectives and 
outputs  

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

TOTAL 

OUTPUTS 

Commitment appropriations in EUR million (to 3 decimal places) 

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

Cost 

Total 
numbe
r of 
ouputs 

Total  
cost 

(cid:216) 

Type 
of 
output
14 

Avera
ge 
cost  
of the 
ouput 

r
e
b
m
u
N

s
t
u
p
u
o

f
o

SPECIFIC OBJECTIVE No 115… 

- Output 

- Output 

- Output 

Sub-total for specific objective N°1 

SPECIFIC OBJECTIVE No 2… 

- Output 

Sub-total for specific objective N°2 

TOTAL COST 

14 
15 

EN 

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.). 
As described in Section 1.4.2. "Specific objective(s)…" 

25 

E

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  (cid:56) The  proposal/initiative  does  not 

require 

the  use  of  administrative 

appropriations  

–  (cid:133) The  proposal/initiative  requires  the  use  of  administrative  appropriations,  as 

explained below: 

EUR million (to 3 decimal places) 

Year 
N 16 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as necessary 
to show the duration of the impact 
(see point 1.6) 

TOTAL 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

Other administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 517 
of the multiannual 
financial framework  

Human resources  

Other expenditure  
of an administrative 
nature 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

16 
17 

Year N is the year in which implementation of the proposal/initiative starts. 
Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former "BA" lines), indirect research, direct research. 

EN 

26 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.  Estimated requirements of human resources  

–  (cid:56) The proposal/initiative does not require the use of human resources  

–  (cid:133) The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year
N 

Year
N+1 

Year N+2 

Year N+3 

… enter 
as many 
years as 
necessary 
to show 
the 
duration 
of the 
impact 
(see point 
1.6) 

(cid:121) Establishment plan posts (officials and temporary agents) 

XX 01 01 01 (Headquarters and 
Commission’s Representation Offices) 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

(cid:121) External personnel (in Full Time Equivalent unit: FTE)18 

XX 01 02 01 (CA, INT, SNE from the 
"global envelope") 

XX 01 02 02 (CA, INT, JED, LA and SNE in 
the delegations) 

XX 01 04 yy 19 

- at Headquarters20 

- in delegations  

XX 01 05 02 (CA, INT, SNE - Indirect 
research) 

10 01 05 02 (CA, INT, SNE - Direct 
research) 

Other budget lines (specify) 

TOTAL 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to 
management of the action and/or have been redeployed within the DG, together if necessary 

18 

19 
20 

CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young 
Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert;  
Under the ceiling for external personnel from operational appropriations (former "BA" lines). 
Essentially  for  Structural  Funds,  European  Agricultural  Fund  for  Rural  Development  (EAFRD)  and 
European Fisheries Fund (EFF). 

EN 

27 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
with any additional allocation which may be granted to the managing DG under the annual 
allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary agents 

External personnel 

3.2.4.  Compatibility with the current multiannual financial framework  

–  (cid:56) Proposal/initiative is compatible the current multiannual financial framework. 

–  (cid:133) Proposal/initiative  will  entail  reprogramming  of  the  relevant  heading  in  the 

multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

–  (cid:133) Proposal/initiative requires application of the flexibility instrument or revision 

of the multiannual financial framework21. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

3.2.5.  Third-party contributions  

–  (cid:56) The proposal/initiative does not provide for co-financing by third parties  

–  (cid:133) The proposal/initiative provides for the co-financing estimated below: 

Appropriations in EUR million (to 3 decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

TOTAL appropriations 
cofinanced  

21 

See points 19 and 24 of the Interinstitutional Agreement. 

EN 

28 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.3. 

Estimated impact on revenue  

–  (cid:56) Proposal/initiative has no financial impact on revenue. 

–  (cid:133) Proposal/initiative has the following financial impact: 

– 

– 

(cid:133) 

(cid:133) 

on own resources  

on miscellaneous revenue  

Appropriation
s available for 
the ongoing 
budget 
exercise 

Budget revenue line: 

Article …………. 

EUR million (to 3 decimal places) 

Impact of the proposal/initiative22 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… insert as many columns as necessary 
in order to reflect the duration of the 
impact (see point 1.6) 

For miscellaneous assigned revenue, specify the budget expenditure line(s) affected. 

Specify the method for calculating the impact on revenue. 

22 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 25% for collection costs. 

EN 

29 

   EN