CELEX: 
Language: en
Date: 1988-07-15 00:00:00
Title: Council Decision of 24 June 1988 concerning budgetary discipline #Interinstitutional Agreement on budgetary discipline and improvement of the budgetary procedure

15 . 7 . 88                              Official Journal of the European Communities                                     No L 185 / 29
                                                          COUNCIL DECISION
                                                              of 24 June 1988
                                                     concerning budgetary discipline
                                                               ( 88 / 377 / EEC )
  THE COUNCIL OF THE EUROPEAN COMMUNITIES ,                                  maximum EAGGF financing of set-aside were to be taken
                                                                             into consideration ;
  Having regard to the Treaty establishing the European
  Economic Community, and in particular Articles 43 , 126 ,                  Whereas the European Council has also agreed to
  127 , 130d , 130i , 203 , 209 and 235 thereof,                             mechanisms for the systematic depreciation of existing and
                                                                             future agricultural stocks so that the stock situation can be
                                                                             normalized by 1992 ;
  Having regard to the proposal from the Commission ( 1 ),
                                                                             Whereas the stabilization mechanisms provided for in the
  Having regard           to the opinion    of the European                  provisions governing the common organization of markets
 Parliament ( 2 ),                                                           should play a part in ensuring compliance with the
                                                                             agricultural guideline;
 Having regard to the opinion of the Court of Auditors ( 3 ),
                                                                             Whereas the European Council has also agreed that the level
                                                                             of EAGGF Guarantee expenditure may be influenced by
 Whereas at its meetings in Brussels in 1987 and 1988 the                    movements in the dollar / ECU market rate and whereas , to
 European Council agreed to submit the use of the                            cover development caused by significant and unforeseen
 Community's own resources to effective and legally binding                  movements in the dollar / ECU market rate compared to the
 discipline parallel to the efforts being made by the Member                 rate used in the budget, a monetary reserve of 1 000 million
 States in connection with their own budgets ; whereas that                  ECU shall be entered each year in the budget in the form of
 discipline must be strengthened in the light of experience on               provisional appropriations ;
 the basis of the arrangements adopted by the European
 Council at Fontainebleau ;
                                                                             Wherear it is necessary that compulsory expenditure other
                                                                             than EAGGF Guarantee expenditure be subject to budgetary
 Whereas, in addition , an agreement, hereinafter referred to                rigour and planning ,
 as the 'Interinstitutional Agreement', was reached between
 the European Parliament, the Council and the Commission
 with the aim of attaining the objectives of the Single
                                                                             HAS ADOPTED THIS DECISION :
 European Act, of putting in concrete form the conclusions
 reached by the European Council at the said meetings on
 budgetary discipline and of improving the operation of the
 annual budgetary procedure and whereas it will take effect
 on 1 July 1988 ;                                                                           EAGGF Guarantee expenditure
                                                                                                       Article 1
 Whereas budgetary discipline must be applied to all the
 Community's expenditure and whereas it must cover both
payment and commitment appropriations ;
                                                                            The rate of increase in EAGGF Guarantee expenditure — as
                                                                            defined in Article 3 — between 1988 and a given year must
                                                                            not exceed 74 % of the rate of increase in Community gross
Whereas on 11 , 12 and 13 February 1988 the European                        national product during the same period .
Council agreed upon the principles of a guideline for the
control of agricultural expenditure (hereinafter referred to as             The maximum progression for EAGGF Guarantee
the 'agricultural guideline');                                              expenditure (the agricultural guideline), which would
                                                                            correspond to 80% if maximum EAGGF financing of
Whereas the rate of progression of the European Agricultural                set-aside were taken into consideration , must be respected
Guidance and Guarantee Fund Guarantee expenditure must                      each year.
not exceed 74 % of the rate of increase in Community gross
national product, this rate corresponding to that of 80 % if
                                                                                                       Article 2
(») OJ No C 146 , 3 . 6 . 1988 , p. 22 .
( 2 ) Opinion delivered on 16 June 1988 ( not yet published in the
      Official Journal ).                                                   The 1988 base of expenditure form which the agricultural
( 3 ) Opinion delivered on 22 June 1988 ( not yet published in the          guideline for each subsequent year is to be calculated shall be
      Official Journal ).                                                   27 500 million ECU , to be adjusted according to Article 3 .
 ---pagebreak--- No L 185 / 30                                Official Journal of the European Communities                                    15 . 7. 88
The satistical base with regard to GNP statistics shall                 ( EEC ) No 2051 / 88 ( 4 ). These two Member States shall be
correspond to that used in Council Decision 88 / 376 / EEC ,            treated as if the depreciation of stocks had been entirely
Euratom of 24 June 1988 on the system of the Communities'               finnanced by the Community in 1987 .
own resources (* ). All calculations which will be made by the
Commission at the time of submitting its annual price-fixing
proposal , subject to a possible final review at the time of                                           Article 5
submitting the preliminary draft budget for the following
year , shall be established in 1988 prices and converted into           The Commission's price proposals shall be consistent with
current prices by use of the GNP deflator estimated by the              the limits laid down by the agricultural guideline .
Commission for the year in question .
                                                                        If the Commission considers that the outcome of the
                                                                        Council's discussions on these price proposals is likely to
                                                                        exceed the costs put forward in its original proposal , the final
                                Article 3
                                                                        decision shall be referred to a special meeting of the
                                                                        Council .
The expenditure to which Article 1 applies shall be the                 The agricultural guideline must be respected each year .
expenditure chargeable to Section III , part B , Titles 1 and 2
(EAGGF Guarantee) of the budget , including expenditure
relating to set-aside within a maximum annual amount                                                   Article 6
which may not exceed 150 million ECU ( 1988 prices) up to
 1992 , less amounts corresponding to the disposal of ACP               To ensure that the agricultural guideline is respected , the
sugar food aid refunds , sugar and isoglucose levy payments             Commission shall establish an 'early warning system'
by producers and any other revenue raised from the                      covering the development of expenditure of the individual
 agricultural sector in the future .                                    EAGGF Guarantee expenditure chapters . Before the
                                                                        beginning of each budget year the Commission shall define
                                                                        expenditure profiles for each EAGGF Guarantee budget
                                                                        chapter based on the monthly expenditure over the three
                                                                        preceding years . The Commission shall submit monthly
                                Artcle 4
                                                                        reports thereafter to the European Parliament and the
                                                                        Council on the development of actual expenditure against
The agricultural guideline shall include costs relating to              profiles . Where the rate of development of expenditure is
depreciation of newly created agricultural stocks . Each year           exceeding the forecast profile , or risks doing so , the
the Council shall enter in its draft budget the appropriations          Commission shall use the management powers at its
necessary for financing all costs relating to depreciation of           disposal , including those which it has under the stabilizing
new stocks . The appropriations shall be used for the                   measures , to remedy the situation . If these measures are
systematic depreciation of the new stocks , which shall start           insufficient , the Commission shall examine the functioning
when these are formed , in accordance with the provisions               of the agricultural stabilizers in the relevant sector and , if
which will be inserted in Council Regulation (EEC ) No                  necessary, shall present proposals to the Council calculated
 1883 / 78 of 2 August 1978 laying down general rules for the           to strengthen their action . The Council shall act within a
financing of interventions by the European Agricultural                 period of two months in order to remedy the situation .
Guidance and Guarantee Fund , Guarantee Section ( 2 ), as last
amended by Regulation (EEC ) No 2050 / 88 ( 3 ).
                                                                                                       Article 7
The cost of depreciating existing surplus agricultural stocks           Payment of the monthly EAGGF Guarantee advances by the
shall be met outside the agricultural guideline. The following          Commission shall be effected on the basis of the information
amounts shall be included in Title 8 of the budget for the              supplied by the Member States in regard to agricultural
period 1988 to 1992 ( 1988 prices):                                     expenditure for each common market organization.
— 1988                                       1 200 million ECU ,
— 1989 to 1992                               1 400 million ECU .                                       Article 8
                                                                        Where no appropriations are available , the Commission
These amounts may not be used for any other purposes .                  shall propose transfers to the budget authority.
The procedures for the financial compensation granted to
Spain and Portugal in respect of their contribution to the                                             Article 9
financing of these stocks shall be dealt with by Regulation
                                                                        The dollar / ECU rate used to draw up the annual budget
( J ) See page 24 of this Official Journal .                            estimates of EAGGF Guarantee expenditure for any given
( 2 ) OJ No L 216 , 5 . 8 . 1978 , p. 1 .
( 3 ) See page 6 of this Official Journal .                             ( 4 ) See page 8 of this Official Journal .
 ---pagebreak---  15 . 7 . 88                               Official Journal of the European Communities                                No L 185 / 31
 year shall be the average market rate over the first three           transfers to or from the monetary reserve. Savings or
 months of the preceding year. However, the rate used in the          additional costs above this amount shall be paid into , or met
 budget for 1988 shall be 1 dollar = 0,85 ECU .                       from , the monetary reserve .
                            Article 10                                               Other Compulsory expenditure
                                                                                                Article 14
 1 000 million ECU shall be included annually in a reserve of
 the general budget of the European Communities , as a                Each year, at the start of the budget procedure , the Council
 provision for covering developments caused by significant            shall adopt a reference framework, taking account of the
 and unforeseen movements in the dollar / ECU market rate
                                                                      financial estimates of the Interinstitutional Agreement, for
 compared to the dollar / ECU rate used in the budget . These         compulsory expenditure other than EAGGF Guarantee
 appropriations shall not be included in the agricultural             expenditure . The reference framework shall include the
 guideline .
                                                                      maximum amounts for both commitment and payment
                                                                      appropriations which the Council considers necessary with
                                                                      due regard for the Community's legal obligations .
                            Article 11
 Each October, the Commission shall report to the budget                             Non-compulsory expenditure
 authority on the impact on EAGGF Guarantee expenditure
                                                                                                Article 15
of movements in the average dollar / ECU market rate for the
period 1 August of the preceding year to 3 1 July of the current
year compared to the rate used in the budget , as defined in          The budgetary discipline applicable to non-compulsory
Article 9 .                                                           expenditure thall be ensured on the basis of the arrangements
                                                                      contained in the Interinstitutional Agreement .
                            Article 12                                                      Other provisions
Savings or additional costs resulting from movements in the                                     Article 16
rate shall be treated in a symmetrical fashion . Where the
dollar strengthens against the ECU compared to the rate used         The financial implementation of any Council Decision
in the budget , savings in the Guarantee Section of up to 1 000      exceeding the budget appropriations available in the general
million ECU shall be transferred to the monetary reserve.            budget or the appropriations provided for in the financial
Where additional budgetary costs are engendered by a fall in         estimates may not take place until the budget and , where
the dollar against the ECU compared with the budget rate ,           appropriate, the financial estimates have been suitably
the monetary reserve shall be called up and transfers shall be       amended according to the procedure laid down for each of
made from the monetary reserve to the EAGGF Guarantee                these cases .
Section lines affected by the fall in the dollar . The necessary
own resources shall be called up , in accordance with Decision
88 / 376 / EEC , Euratom and the provisions adopted                                            Article 17
pursuant thereto , to finance the corresponding
expenditure .
                                                                     This Decision shall remain in force for the duration of
                                                                     Decision 88 / 376 / EEC , Euratom .
Any savings made in the EAGGF Guarantee Section which
have been transferred to the monetary reserve in accordance
with the first subparagraph and which remain in the
monetary reserve shall be cancelled and thus contribute to a                                   Article 18
budgetary surplus which shall be counted as a revenue item in
succeeding budgets . This shall be done by means of a letter of      This Decision is addressed to the Member States .
amendment during the budgetary procedure concerning the
budget for the coming year.
                                                                     Done at Luxembourg , 24 June 1988 .
                            Article 13
                                                                                                          For the Council
There shall be a franchise of 400 million ECU . Savings or                                                 The President
additional costs below this amount will not necessitate                                                  M. BANGEMANN
 ---pagebreak--- No L 185 / 32                             Official Journal of the European Communities                                   15 . 7 . 88
                                                             STATEMENT
             When adopting the Decision on budgetary discipline, the Council decided to have the statement made
             by the European Council at its meeting on 1 1 and 12 February 1988 published in the Official Journal
             of the European Communities, after the Decision ; this statement reads as follows:
                 'The European Council recalls the conclusions adopted by the OECD and the Venice Summit on
                 the need for a better adjustment of supply to demand through measures to enable the market to
                 play a greater role .
                 It considers that the arrangements in force since 1984 , and those it is adopting to control
                 production and agricultural expenditure , meet these commitments and will achieve their full effect
                 only if other world producers apply equivalent discipline.
                 It confirms in this respect the negotiating brief adopted by the Community under the Uruguay
                 Round .
                 If this discipline were not shared , or if a third country failed to meet its international commitments
                 and this caused serious repercussions on world markets , this situation would be regarded by the
                 Council , on a proposal from the Commission , as justifying recourse to the provisions of the Treaty
                 and in particular Articles 43 , 113 and 203 .'
 ---documentbreak--- 15 . 7 . 88                                Official Journal of the European Communities                               No L 185 / 33
                                             INTERINSTITUTIONAL AGREEMENT
                                                  ON BUDGETARY DISCIPLINE
                                 AND IMPROVEMENT OF THE BUDGETARY PROCEDURE
                                            I. BASIC PRINCIPLES OF THE AGREEMENT
               1 . The main purpose of the Interinstitutional Agreement is to achieve the objectives of the Single
                     European Act, to give effect to the conclusions of the Brussels European Council on budgetary
                     discipline and accordingly to improve the functioning of the annual budgetary procedure.
              2. Budgetary discipline under the Interinstitutional Agreement covers all expenditure and is binding
                    on all the institutions involved for as long as the Agreement is in force.
              3 . This Agreement does not alter the respective budgetary powers of the various institutions as laid
                    down in the Treaty .
              4. The contents of the Interinstitutional Agreement may not be changed without the consent of all
                    the institutions which are party to it.
                                 II . BUDGET FORECASTS : FINANCIAL PERSPECTIVE 1988 to 1992
                                                            A. Contents
              5 .. The financial perspective 1988 to 1992 constitutes the reference framework for
                     interinstitutional budgetary discipline . Its contents are consistent with the conclusions of the
                     Brussels European Council ; it forms an integral part of the Agreement.
              6 . The financial perspective 1988 to 1992 indicates, in commitment appropriations, the volume
                    and breakdown of foreseeable Community expenditure, including that for the development of
                    new policies .
                    The overall annual totals of compulsory expenditure and non-compulsory expenditure are also
                    shown in both commitment appropriations and payment appropriations.
                                                              B. Nature
             7. The European Parliament, the Council and the Commission recognize that each of the financial
                   objectives laid down in the perspective 1988 to 1992 represents an annual expenditure ceiling for
                   the Community. They undertake to observe the different ceilings during the corresponding
                   budgetary procedure .
             8 . The European Parliament, the Council and the Commission will join in the effort undertaken by
                   the Community gradually to achieve a better balance between the various categories of
                   expenditure .
                   They give an undertaking that any revision of the compulsory expenditure figure given in the
                   financial perspective will not cause the amount of non-compulsory expenditure shown in the
                   perspective to be reduced .
                                                      C. Annual adjustment
            — Technical adjustments
             9 . Each year, the Commission will update the perspective ahead of the budgetary procedure for
                  year t + 1 , making technical adjustments to the figures in line with movements in gross national
                  product (GNP) and prices .
 ---pagebreak--- No L 185 / 34                             Official Journal of the European Communities                                   15 . 7 . 88
             — Adjustments connected with the conditions for implementation
             10 . When notifying the two arms of the budgetary authority of the technical adjustments to the
                   financial perspective, the Commission will present any proposals for adjustments it considers
                   necessary to take account of the conditions for implementation on the basis of the schedules of
                   utilization of commitment appropriations and payment appropriations .
                   The European Parliament and the Council will take decisions on these proposals, before 1 May
                   of year t, in accordance with the majority rules specified in Article 203 (9 ) of the Treaty.
             11 . If the allocations provided in the financial perspective for multiannual programmes cannot be
                   used in full during a given year, the institutions party to the Agreement undertake to authorize
                   the transfer of the remaining allocations .
                                                             D. Revision
             12 . In addition to the regular technical adjustments and adjustments in line with the conditions for
                   implementation, the financial perspective may be revised by a joint decision of the two arms of
                   the budgetary authority , acting on a proposal from the Commission .
                   The joint decision will be taken in accordance with the majority rules specified in Article 203 (9 )
                   of the Treaty .
                   The revision of the financial perspective may not raise the overall expenditure ceiling, as set by
                   this perspective after the annual technical adjustment, above a margin for unforeseen
                   expenditure of 0,03% of GNP .
                   It must also respect the provisions of point 8 of this Interinstitutional Agreement .
             E . Consequences of the absence of a joint decision by the institutions on the adjustment or revision of
                                                      the financial perspective
              13 . In the absence of a joint decision by the institutions on any adjustment or revision of the financial
                   perspective proposed by the Commission, the financial objectives already determined will , after
                   the annual technical adjustment , remain applicable as the expenditure ceilings for the financial
                   year in question .
                                III . BUDGETARY DISCIPLINE FOR COMPULSORY EXPENDITURE
              14 . (a) The Eueopean Parliament, the Council and the Commission are in agreement on the
                         conclusions of the European Council concerning budgetary discipline for compulsory
                         expenditure in the EAGGF Guarantee Section .
                         The three institutions undertake , within this Agreement , to respect these conclusions .
                    (b ) The European Parliament, the Council and the Commission confirm the principles and the
                         mechanisms for the agricultural guideline and the monetary reserve .
                    (c) As regards the other compulsory expenditure, the three institutions undertake to honour the
                         Community's legal obligations in a manner consistent with the financial perspective .
 ---pagebreak--- 15 . 7 . 88                                Official Journal of the European Communities                             No L 185 / 35
             IV. BUDGETARY DISCIPLINE FOR NON-COMPULSORY EXPENDITURE AND IMPROVEMENT OF
                                                   THE BUDGETARY PROCEDURE
             15 . The two arms of the budgetary authority agree to accept, for the financial years 1988 to 1992,
                   the maximum rates of increase for non-compulsory expenditure deriving from the budgets
                   established within the ceilings set by the financial perspective.
             16. The Commission will present each year, within the limits of the financial perspective, a
                   preliminary draft budget based on the Community's actual financing requirements.
                   It will take into account :
                       the capacity for utilizing appropriations, endeavouring to maintain a strict relationship
                       between commitment appropriations and payment appropriations;
                       the possibilities for starting up new policies or continuing multiannual operations which are
                       coming to an end, after assessing whether it will be possible to secure a proper legal
                       base .
             17. Within the maximum rates of increase for non-compulsory expenditure specified in paragraph
                  15 of this Agreement, the European Parliament and the Council undertake to respect the
                  allocations of commitment appropriations provided in the financial perspective for the
                  Structural Funds, the Specific Industrial Development Programme for Portugal (PEDIP), the
                  Integrated Mediterranean Programmes (IMPs) and the Research-Technology-Development
                  ( RTD ) framework programme .
                  They also undertake to bear in mind the assessment of the possibilities for executing the budget
                  made by the Commission in its preliminary drafts.
            V. EQUIVALENCE BETWEEN ANNUAL EXPENDITURE CEILINGS AND ANNUAL CEILINGS FOR
                                          CALLING IN COMMUNITY OWN RESOURCES
            18 . The three institutions party to the Agreement agree that the overall expenditure ceiling for each
                 year also represents the annual own resources call-in ceiling for the corresponding budget year.
                  This will be expressed as a percentage of Community GNP.
                                                      VI . FINAL PROVISIONS
            19 . This Interinstitutional Agreement for 1988 to 1992 will enter into force on 1 July 1988 .
                 Before the end of 1991 the Commission will present a report on the application of this Agreement
                 and on the amendments which need to be made to it in the light of experience.
 ---pagebreak--- No L 185 / 36                                         Official Journal of the European Communities                                                         15 . 7 . 88
                                                                  FINANCIAL PERSPECTIVE
                                                                   Commitment appropriations
                                                                                                                                         (million ECU at 1988 prices)
                                                                                      1988             1989             1990               1991             1992
1 . EAGGF Guarantee                                                                 27 500            27700           28 400             29 000           29 000
                                                                                      7 790            9 200          10 600             12 100            13 450
2. Structural operations
3 . Policies with multiannual allocations                                             1 210            1 650            1 900              2 150            2 400
       ( IMPs , research ) 0 )
                                                                                      2 103            2 385            2 500              2 700            2 800
4 . Other policies
                                                                                      1 646            1 801            1 860              1 910            1 970
       of which non-compulsory
                                                                                      5 700            4 950            4 500              4 000            3 550
5 . Repayments and administration
                                                                                      1 240             1 400           1 400              1 400            1 400
       (including financing of stock disposal )
                                                                                      1 000            1 000            1 000              1 000            1 000
6 . Monetary reserve ( 2 )
                                                                TOTAL                45 303           46 885          48 900              50 950           52 800
                                                                                     33 698           32 607          32 810              32 980           33 400
of which ( 3 ) compulsory
                                                                                     11 605           14 278          16 090              17 970           19 400
                    non-compulsory
                                                                                     43 779           45 300          46 900              48 600           50 100
Payment appropriations required
                                                                                     33 640           32 604          32 740              32 910           33 110
of which ( 3 ) compulsory
                    non-compulsory                                                   10 139           12 696           14 160             15 690           16 990
Payment appropriations as % of GNP                                                    1,12              1,14            1,15               1,16             1,17
Margin for unforeseen expenditure                                                     0,03              0,03            0,03               0,03             0,03
Own resources required as % of GNP                                                    1,15              1,17            1,18               1,19             1,20
(') Chapter F on budget estimates of the European Council indicates a figure of 2 400 million ( 1988 prices) for policies with multiannual allocations in 1992. The
        policies in question are Research and Development and Integrated Mediterranean Programmes. Only expenditure for which a legal basis exists may be financed
        under this heading. The present framework programme provides a legal basis for Research expenditure of 863 million ECU (current prices) for 1992.
        The regulation on Integrated Mediterranean Programmes provides a legal basis for an estimated amount of 300 million ECU in 1992 (current prices).
        The two arms of the Budgetary Authority undertake to respect the principle that further budget appropriations within this ceiling for 1990 , 1991 and 1992 will
        require a revision of the existing framework programme or, before the end of 1991 , a decision on a new framework programme based on a proposal from the
        Commission in accordance with the legislative provisions in Article 130Q of the SEA .
 ( 2 ) At current prices.
 ( 3) Based on the classification proposed by the Commission in the 1989 preliminary draft budget. The required decision by the budgetary authority will be
        implemented as a technical adjustment, under point 9 of the Agreement .
 ---pagebreak--- 15 . 7 . 88                                 Official Journal of the European Communities                            No L 185 / 37
                Hecho en Bruselas, el 29 de junio de 1988 .
                Udfærdiget i Bruxelles, den 29. juni 1988 .
                Geschehen zu Brüssel am 29 . Juni 1988 .
                Έγινε στις Βρυξέλλες, στις 29 Ιουνίου 1988.
                Done at Brussels on the 29 June 1988 .
                Fait à Bruxelles, le 29 juin 1988 .
                Fatto a Bruxelles, addì 29 giugno 1988 .
                Gedaan te Brussel , 29 juni 1988 .
                Feito em Bruxelas, em 29 de Junho de 1988 .
             Por el Parlamento Europeo.                                   Por el Consejo de las Comunidades Europeas
               For Europa-Parlamentet                                      For Rådet for De Europæiske Fællesskaber
          Für das Europäische Parlament                                  Für den Rat der Europäischen Gemeinschaften
          Για το Ευρωπαϊκό Κοινοβούλιο                                 Για το Συμβούλιο των Ευρωπαϊκών Κοινοτήτων
            For the European Parliament                                  For the Council of the European Communities
             Pour le Parlement européen                                 Pour le Conseil des Communautés européennes
              Per il Parlamento europeo                                      Per il Consiglio delle Comunità éuropee
           Voor het Europese Parlement                                  Voor de Raad van de Europese Gemeenschappen
            Para o Parlamento Europeu                                      Pelo Conselho das Comunidades Europeias
                  Lord Henry PLUMB                                                   Gerhard STOLTENBERG
                                           Por la Comisión de las Comunidades Europeas
                                        For Kommissionen for De europæiske Fællesskaber
                                      Für die Kommission der Europäischen Gemeinschaften
                                         Για την Επιτροπή των Ευρωπαϊκών Κοινοτήτων
                                        For the Commission of the European Communities
                                       Pour la Commission des Communautés européennes
                                            Per la Commissione delle Comunità éuropee
                                      Voor de Commissie van de Europese Gemeenschappen
                                           Para a Comissão cias Comunidades Europeias
                                                           Jacques DELORS