AMENDING LETTER N° 2 TO THE DRAFT GENERAL BUDGET 2011 STATEMENT OF REVENUE AND EXPENDITURE BY SECTION Section III - Commission
Date: 2010-10-11
Institutions: Directorate-General for Budget, European Commission
Subjects: common foreign and security policy, diplomatic representation, draft budget, general budget, operation of the Institutions

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EUROPEAN COMMISSION 

Brussels, 11.10.2010 
SEC(2010) 1199 final 

AMENDING LETTER N° 2 
TO THE DRAFT GENERAL BUDGET 2011 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

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AMENDING LETTER N° 2 
TO THE DRAFT GENERAL BUDGET 2011 

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION 
Section III - Commission 

Having regard to: 

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– 

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the Treaty on the Functioning of the European Union, and in particular Article 314 
thereof,  in  conjunction  with  the  Treaty  establishing  the  European  Atomic  Energy 
Community, and in particular Article 106a thereof, 

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

the draft general budget of the European Union for the financial year 2011 presented 
by the Commission on 15 June 2010, 

the draft amending letter No. 1/20112, 

The  European  Commission  hereby  presents  to  the  budgetary  authority  the  Amending  Letter 
No. 2 to the 2011 draft budget for the reasons set out in the explanatory memorandum. 

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OJ L 248, 16.9.2002, p. 1. 
SEC(2010) 1064. 

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CHANGES  TO  THE  STATEMENT  OF  REVENUE  AND  EXPENDITURE  BY 
SECTION 

The  changes  to  the  statement  of  revenue  and  expenditure  by  section  are  available  on  EUR-
Lex (http://eur-lex.europa.eu/budget/www/index-en.htm). An English version of the changes 
to these statements by section is attached for information as a budgetary annex. 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

8. 

Introduction .................................................................................................................. 5 

Europol......................................................................................................................... 5 

Financial Supervision Authorities................................................................................ 6 

European Financial Stabilisation Mechanism.............................................................. 6 

Summary table by heading of the Financial Framework ............................................. 9 

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1. 

INTRODUCTION 

The  Amending  Letter  No  2  (AL  2)  to  the  Draft  Budget  for  2011  (DB  2011)  covers  the 
following: 

–  A  reinforcement  of  the  EU  contribution  to  Europol  by  EUR 552 000,  as  well  as 
modifications to the establishment plan of Europol, reflecting a request for four additional 
establishment plan posts (all AD posts); 

–  A  reinforcement  of  the  EU  contribution  to  the  three  Financial  Supervision  Authorities 
(EBA, EIOPA and ESMA) by EUR 1 224 000, as well as modifications to the establishment 
plans of the Authorities, reflecting a request for six additional establishment plan posts for 
EBA  (of  which  3  AD  posts  and  3  AST  posts),  six  additional  establishment  plan  posts  for 
EIOPA  (of  which  5  AD  posts  and  1  AST  post),  and  fifteen  additional  establishment  plan 
posts for ESMA (of which 10 AD posts and 5 AST posts); 

–  The creation of a new budget item 01 04 01 03 for the guarantee provided by the European 
Union in accordance with the provisions of Article 122(2) of the Treaty on the Functioning 
of the European Union (TFEU) and, correspondingly, a new article 802 on the revenue side. 
This has no budgetary implications. 

The  net  financial  impact  of  this  amending  letter  is  EUR 1  776 000,  both  in  commitment 
appropriations and payment appropriations. 

2. 

EUROPOL 

The  rationale  for  the  changes  introduced  in  this  amending  letter  derives  from  new  tasks 
assigned to Europol after the approval of the 2011 Draft Budget. 

Following the consent by the European Parliament and the Council to conclude the agreement 
between the European Union and the United States of America on the processing and transfer 
of Financial Messaging Data from the European Union to the United States for the purposes of 
the Terrorist Finance Tracking Programme (TFTP), as from 1 August 2010 Europol is tasked 
with  implementing  the  EU/US  TFTP  agreement.  This  includes  the  verification  of  TFTP 
requests in line with the aforementioned agreement. 

This new task assigned to Europol requires additional allocation of resources in 2011, to ensure 
secure  means  of  transmission  of  information  from  the  US  to  Europol  by  acquiring  dedicated 
equipment and software, to set up a new unit comprising four new posts, on a full year basis, 
i.e.  to  recruit  a  Head  of  Unit  supported  by  two  senior  specialists  in  terrorism  matters  and 
financial intelligence processing and one legal expert.  

The  financial  consequences  amount  to  EUR 552 000,  of  which  EUR  400  000  for  staff 
expenditure (Title 1) and EUR 152 000 for operational expenditure (Title 3). 

The full establishment plan is included in the budgetary annex. 

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3. 

FINANCIAL SUPERVISION AUTHORITIES 

The  rationale  for  the  changes  introduced  in  this  amending  letter  is  the  proposal  from  the 
Commission  to  entrust  the  European  Securities  and  Markets  Authority  (ESMA)  with  new 
responsibilities  for  the  authorisation  and  supervision  of  credit  rating  agencies,  as  well  as  the 
Legislator's  decision  to  assign  ESMA,  the  European  Banking  Authority  (EBA)  and  the 
European  Insurance  and  Occupational  Pensions  Authority  (EIOPA)  additional  tasks,  which 
were not foreseen in the initial proposals of the Commission. 

3.1. 

Proposal for an amending Regulation on credit rating agencies - ESMA  

On 2 June 2010, the Commission proposed to amend Regulation (EC) No 1060/2009 on credit 
rating  agencies3,  aiming  to  entrust  the  European  Securities  and  Markets  Authority  (ESMA) 
with  responsibilities  for  the  authorisation  and  supervision  of  credit  rating  agencies  (CRAs), 
including investigation powers, on site inspections and supervisory decisions. 

Art.  19  of  the  proposal  provides  that  ESMA's  expenditure  necessary  for  the  registration  and 
supervision of CRAs according to the Regulation shall be fully covered by fees charged to the 
credit rating agencies. The detailed structure and provisions of the fees shall – pursuant to Art. 
19  of  the  proposal  -  be  determined  by  a  Commission  delegated  act  which  is  expected  to  be 
adopted in the course of 2011 and is supposed to enter into force at the beginning of 2012.  

As the proposal was adopted by the Commission in June this year, the budgetary request was 
not  included  in  the  Draft  Budget  2011  issued  in  May  2010.  This  motivates  the  proposed 
revision  of  the  establishment  plan  and  of  the  EU  budget  contribution  as  detailed  in  the 
budgetary annex. 

In  the  transition  year  2011,  resources  for  supervision  of  CRAs  should  be  made  available  by 
Member  States  and  EU  budget  contributions  according  to  the  ratio  foreseen  in  the  ESMA 
Regulation (40% EU budget and 60% Member States contribution). According to the proposal, 
no contribution to cover the cost of supervision of CRAs will be necessary from 2012 onwards. 

The resources implications in 2011 are indicated in the financial statement accompanying the 
legislative proposal. In terms of human resources, six additional establishment plan posts are 
requested, on a full year basis Overall, the financial consequences amount to EUR 2,5 million, 
of which EUR 2,2 million for staff and infrastructure expenditure (Titles 1 and 2) and EUR 0,3 
million  for  operational  expenditure  (Title  3).  In  order  to  finance  the  corresponding  EU  share 
(40%),  the  additional  contribution  to  be  covered  by  the  EU  budget  in  2011  amounts  to 
EUR 1 million.  

3.2. 

Additional tasks assigned to ESMA, EBA and EIOPA  

The European Parliament and the Council have reached a political agreement on the creation of 
the three Authorities at the beginning of September 2010. The final text of the regulations is 
presently being finalised; the European Parliament has adopted the package on 22 September 
and the adoption by the Council is expected at the ECOFIN meeting of October. 

It  is  therefore  appropriate  that  the  budgetary  impact  in  2011  of  new  tasks  assigned  by  the 
Legislator to the Authorities is properly assessed and included in this amending letter. 

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COM (2010) 289 final 

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The additional tasks assigned to all three Authorities include, inter alia: 

–  a leading role in promoting transparency, simplicity and fairness in the market for consumer 

financial products or services (Article 6); 

–  monitoring the efficient, effective and consistent functioning of the colleges of supervisors 

(Article 12); 

–  monitoring  and  assessment  of  systemic  risk,  developing  criteria  for  the  identification  and 

measurement of systemic risk (Articles 12a to 12c); 

–  ensuring  specialised  and  ongoing  capacity  to  respond  effectively  to  the  materialisation  of 

systemic risks (Article 12c); 

–  contributing and participating actively in the development and coordination of effective and 
consistent recovery and resolution plans, procedures in emergency situations and preventive 
measures to minimise the systemic impact of any failure in the areas of competence (Article 
12c). 

Concerning the staff requirements in view of the additional tasks assigned to the Authorities, 
the Commission services estimate that nine additional posts are necessary for ESMA as well as 
six posts for EBA and six posts for EIOPA in 2011. The corresponding salary needs of half of 
these additional posts have been calculated on a nine month basis, and the other half on a six 
month  basis,  in  order  to  take  into  account  the  estimated  recruitment  time  required.  The  full 
establishment plans for ESMA, EBA and EIOPA are included in the budgetary annex. 

A  thorough  review  of  the  financial  needs  and  staff  requirements  of  the  agencies  has  been 
carried out by the Commission's services, covering  all  activities of the agencies. This review 
has also allowed the Commission to establish a more precise estimate of some budgetary items 
of  the  agencies'  budgets.  In  particular,  infrastructure  costs  of  the  ESMA  have  been  revised 
upwards  to  deal  with  the  planned  increased  staff  number  of  the  Authority,  whereas  certain 
average  costs  for  staff  appeared  to  have  initially  been  overestimated,  and  have  been  revised 
downwards accordingly.  

This detailed review of agency expenditure largely offsets the additional costs resulting from 
the  additional  tasks  granted  by  the  legislative  authority.  Overall,  a  combined  net  increase  of 
EUR 560 000 of the budget of the Authorities is considered necessary to support the creation of 
the new agencies with reference to additional tasks assigned by the Legislator, of which EUR 
300  000  for  ESMA,  EUR  140  000  for  EBA  and  EUR  120  000  for  EIOPA.  This  amount  of 
EUR  560  000  is  the  net  result  of  an  overall  increase  of  EUR 1  677 000  for  staff  and 
infrastructure  expenditure  (Titles  1  and  2),  and  an  overall  decrease  of  EUR  1  117  000  for 
operational  expenditure  (Title  3).  It  is  therefore  proposed  to  increase  the  EU  contribution  by 
EUR 224 000  in  2011,  taking  into  account  that  60%  of  the  required  reinforcement  will  be 
covered by Member States' contributions. 

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4. 

EUROPEAN FINANCIAL STABILISATION MECHANISM 

On 9th May 2010, the Council decided on a comprehensive package of measures to preserve 
financial  stability  in  Europe,  including  a  European  Financial  Stabilisation  mechanism4  based 
on  Article  122(2)  of  the  TFEU.  This  Article  foresees  financial  support  for  Member  States  in 
difficulties caused by exceptional circumstances beyond Member States’ control. 

The mechanism will operate without prejudice to the existing facility providing medium term 
financial assistance for non euro area Member States’ balance of payments. 

To grant this financial assistance the Commission will borrow on the capital markets or with 
financial institutions on behalf of the European Union. In order to honour its obligations should 
the  debtors  default,  the  Commission  may  draw  on  its  cash  resources  to  service  the  debt 
provisionally. Article 12 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 
implementing  Decision  2000/597/EC,  Euratom  on  the  system  of  the  Communities’  own 
resources shall apply. Subsequently, it may be necessary to budget the operation. 

Reimbursements after an initial default or any other revenue arising from the exercise of rights 
in connection with the guarantee may also need to be budgeted as revenue. 

It  is  therefore  proposed  to  create  a  new  budget  item  on  the  expenditure  side  and  a 
corresponding new budget article on the revenue side as the budget structure for the guarantee 
provided by the European Union. This has already been done for the 2010 budget, by means of 
Amending Budget 5/20105. 

As  it  is  of  use  for  budgetary  items  linked  to  lending  operations  without  a  specific  guarantee 
fund,  the  new  item  01 04 01 03  and  new  article  8 0 2  will  receive  a  token  entry  (p.m.).  If 
necessary, the Commission will propose to make available the appropriations needed by means 
of a transfer or an amending budget. 

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Council  Regulation  (EU)  No  407/2010  of  11  May  2010  establishing  a  European  financial  stabilisation 
mechanism. 
Former Draft Amending Budget No 7/2010, COM (2010) 383. 

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5. 

SUMMARY TABLE BY HEADING OF THE FINANCIAL FRAMEWORK  

2011 Financial framework 

2011 Draft Budget + AL 1/2011 

CA 

PA 

CA 

PA 

AL 2/2011 

CA 

PA 

2011 Draft Budget + AL 1-2/2011 

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PA 

Financial framework 
Heading/subheading 
1. SUSTAINABLE GROWTH 
1a. Competitiveness for growth and 
employment 
1b. Cohesion for growth and employment 

Total 
Margin6 

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

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

4. EU AS A GLOBAL PLAYER7 

5. ADMINISTRATION8 

Total 
Margin 

Total 
Margin   

Margin 

12 987 000 000

50 987 000 000
63 974 000 000

47 617 000 000

60 338 000 000

1 206 000 000
683 000 000
1 889 000 000

8 430 000 000

8 334 000 000

Margin 
TOTAL 
 Margin   

142 965 000 000

134 280 000 000

13 436 852 270

12 109 714 170

1 224 000

1 224 000

13 438 076 270

12 110 938 170 

50 970 093 784
64 406 946 054

67 053 946  

42 540 796 740
54 650 510 910

1 224 000

1 224 000

50 970 093 784
64 408 170 054

42 540 796 740 
54 651 734 910 

65 829 946  

43 747 401 900

43 656 761 358

43 747 401 900

43 656 761 358 

59 486 248 389

58 135 685 296

851 751 611  

59 486 248 389

58 135 685 296 

851 751 611  

1 135 252 740
667 817 000
1 803 069 740

85 930 260  

8 613 529 377
70 330 623
8 289 835 688
126 164 312
142 599 629 248
1 201 230 752

852 573 740
638 979 000
1 491 552 740

7 601 763 867

8 290 890 688

130 170 403 501
4 394 596 499

552 000

552 000

552 000

552 000

1 776 000

1 776 000

1 135 804 740
667 817 000
1 803 621 740

85 378 260  

8 613 529 377
70 330 623
8 289 835 688
126 164 312
142 601 405 248
1 199 454 752

853 125 740 
638 979 000 
1 492 104 740 

7 601 763 867 

8 290 890 688 

130 172 179 501 
4 392 820 499 

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The European Globalisation adjustment Fund (EGF) is not included in the calculation of the margin under Heading 1a (EUR 500 million). 
The 2011 margin for heading 4 does not take into account the appropriations related to the Emergency Aid Reserve (EUR 253,9 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 82 million for the 
staff contributions to the pension scheme. 

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