European Atomic Energy Community
EUROPEAN COMMUNITY
EUROPEAN ATOMIC ENERGY COMMUNITY
DRAFT GENERAL BUDGET
OF THE EUROPEAN COMMUNITIES
FOR THE FINANCIAL YEAR 2005
VOLUME 0
EXPLANATORY MEMORANDUM
CONTENTS
Page
I.INTRODUCTION...... 5
II.MAIN FEATURES OF THE DRAFT BUDGET...... 13
III.ESTIMATED REVENUE...... 23
IV.ESTIMATED EXPENDITURE
Administrative expenditure for each institution:
European Parliament – Section I...... 34
Council – Section II...... 34
Commission – Section III
Administrative appropriations...... 35
AnnexII – Office for Official Publications (OPOCE)...... 38
AnnexIII – European anti-fraud office (OLAF)...... 39
Annex IV – European Personnel Selection Office (EPSO)...... 39
Annex V – Office for the administration and payment of individual entitlements (PMO) 40
Annex VI – Office for infrastructure and logistics in Brussels (OIB)...... 40
Annex VII – Office for infrastructure and logistics in Luxembourg (OIL)...... 41
Court of Justice – Section IV...... 41
Court of Auditors – Section V...... 42
European Economic and Social Committee – Section VI...... 43
Committee of the Regions – Section VII...... 43
European Ombudsman – Section VIII a...... 44
European Data Protection Supervisor - Section VIII b...... 45
Commission expenditure by policy areas:
Title 01 – ...... Economic and financial affairs 46
Title 02 – Enterprise...... 46
Title 03 – Competition...... 46
Title 04 – Employment and social affairs...... 47
Title 05 – Agriculture and rural development...... 48
Title 06 – Energy and transport...... 49
Title 07 – Environment...... 50
Title 08 – Research...... 51
Title 09 – Information society...... 51
Title 10 – Direct research...... 51
Title 11 – Fisheries...... 51
Title 12 – Internal market...... 52
Title 13 – Regional policy...... 52
Title 14 – Taxation and customs union...... 53
Title 15 – Education and culture...... 53
Title 16 – Press and communication...... 54
Title 17 – Health and consumer protection...... 54
Title 18 – Area of freedom, security and justice...... 54
Title 19 – External relations...... 55
Title 20 – Trade...... 56
Title 21 – Development and relations with ACP states...... 56
Title 22 – Enlargement...... 57
Title 23 – Humanitarian aid...... 58
Title 24 – Fight against fraud...... 58
Title 25 – Commission's policy co-ordination and legal service...... 58
Title 26 – Administration...... 58
Title 27 – Budget...... 58
Title 28 – Audit...... 58
Title 29 – Statistics...... 59
Title 30 – Pensions...... 59
Title 31 – Reserves...... 59
FINANCIAL INFORMATION ON THE EDFs
–ANNEX TO THE DRAFT BUDGET...... 61
______
FIGURESAddendum 1
I.INTRODUCTION
On 19 July 2004, the Council established the draft budget for the financial year2005. Details are set out in the present volume N° 0 of the draft budget of the EuropeanCommunities for the financial year 2005.
The Council used the preliminary draft budget of the European Communities for 2005, submitted by the Commission, as the basis for establishing the draft budget.
In keeping with the Interinstitutional Agreement of 6 May 1999 between the EuropeanParliament, the Council and the Commission on budgetary discipline and improvement of the budgetary procedure[1], a conciliation meeting between the Council and a delegation from the European Parliament, with the participation of the Commission, was held on 16 July 2004, prior to the discussions in the Council.
The proposal for revision of the financial perspective forwarded by the Commission on 15May2000 was also discussed at the meeting.
This proposal for revision of the financial perspective was subsequently not adopted by the Council at its 20 July 2000 session.
A.Preliminary draft budget 20051
The preliminary draft general budget of the European Communities for20015 (PDB), as rectified to take into account the final figures for estimates for institutions other than the Commission, forwarded to the Council by the Commission, comprises budget estimates totalling:
–EUR117 242.21 million in appropriations for commitments;
–EUR109 568.21 million in appropriations for payments.
The total amount of own resources needed to finance the expenditure provided for in the rectified preliminary draft budget corresponds to 1.04 7% of GNI.
This rectified preliminary draft general budget shows a5.2% increase in appropriations for commitments and a9.8% increase in appropriations for payments compared to the amounts authorised in the20040 budget[2].
The preliminary draft budget also takes into account the Commission proposal for revision of the financial perspective; it thus raised the ceiling on heading 4 of the financial perspective (External action) by EUR 280 million to finance the aid programme in the Western Balkans and the ceiling on heading 7 (Pre-accession aid) by EUR 20 million for aid to Cyprus and Malta. Conversely, the ceiling on subheading 1a of the financial perspective (CAP expenditure) has been lowered by EUR 300 million.
The maximum rate of increase in non-compulsory expenditure for the financial year2005, declared by the Commission pursuant to the third subparagraph of Article272(9) of the ECTreaty, is 3.4%.
B.Conciliation meeting with the European Parliament
Before establishing the draft general budget for2005, the Council held a conciliation meeting on 16July 2004 with a delegation from the European Parliament headed by MrTerenceWYNN, Chairman of the Committee on Budgets, and made up of MrSalvadorGARRIGAPOLLEDO (Rapporteur for Section III (Commission) of the 2005 budget), MrReimer BÖGE, MsKathalijneBUITENWEG, MrGianfrancoDELL'ALBA, MrDenDOVER, MsBarbaraDÜHRKOPDÜHRKOP, MrSzabolcsFAZAKAS, MsNeenaGILL, MsFrançoiseGROSSETÊTE, MsCatherineGUY-QUINT, MrArminLASCHET, MrJanMULDER, MrBarthoPRONK, MrEskoOlaviSEPPÄNEN, MrLaszloSURJÁN, MsDiemutTHEATO, MrRijkvan DAM, MrKyöstiVIRRANKOSKI andMrRalfWALTER, members of the Committee on Budgets.
Ms Michaele SCHREYER and Mr Markos KYPRIANOU, members of the European Commission, took part in the conciliation meeting.
1.Agriculture
The European Parliament wanted the Commission's confirmation that the two 2004 pilot projects, "risk financing for livestock epidemics" and "promotion of quality systems in the agricultural field" will also be financed in 2005.
The Commission confirmed that it will issue a report on the execution of these pilot projects in September, which will include, if appropriate, the amounts to be inserted in the Amending Letter in autumn.
The European Parliament and the Council agreed to resume examination of agricultural expenditure on the basis of the Amending Letter, which the Commission would present in the autumn.
2.International fisheries agreements
The European Parliament and the Commission criticised the reductions made by the Council regarding International fisheries agreements and supported the preliminary draft budget.
The European Parliament asked the Commission to consider the possibility of introducing some changes in the presentation of the lines for International fisheries agreements in order to increase their transparency.
Following their exchange of views the European Parliament and the Council agreed to resume discussion of this question in November on the basis of the Amending Letter that the Commission will submit.
3.Common foreign and security policy (CFSP)
The European Parliament stated that it was not convinced of the need for the increase of the CSFP budget retained by the Council on the basis of the information received. It also asked for more information especially in the context of the decisions taken recently in relation to Special Representatives, Georgia and Proxima and the financing of "per diem allowances" by the CSFP budget.
The Council took note of EuropeanParliament's requests and stressed its willingness to work closely together with the European Parliament. Consequently, during the forthcoming scheduled meeting between the European Parliament and the Council concerning CFSP, more additional information will be provided.
- Headings 4 and 7
The Council stated the importance of having a margin under heading 4, and of not having recourse to the flexibility instrument to finance reconstruction of Iraq.
Concerning the financing of assistance to the Turkish Cypriot Community and the relevant heading of the Financial Perspective, the European Parliament and the Council agreed to find an appropriate solution as soon as possible.
The Commission indicated that the Commission will present an Amending Letter in September to take account of the new status of Croatia as candidate country, under heading 7 (pre-accession strategy) instead of heading 4.
5.Administrative expenditure
The European Parliament could understand the need to keep a margin under heading 5, but criticised the method used by the Council. It also reserved its position until it had carried out a detailed analysis of the requests from the institutions and the possibility of anticipating in 2004 certain expenditure scheduled in 2005.
Concerning the increase of the Council's budget (Section II), the European Parliament asked for more information concerning the costs of the European Security and Defence Policy and the creation of the civil and military cell recently decided by the European Council. Additional information was given orally by the Council.
The Commission expressed its disappointment at the reductions of appropriations on administrative expenditure made by the Council and stressed the consequences that they might have on the recruitment of staff.
6.Payment appropriations
The Council insisted on the need for limited and controlled increase of payment appropriations, taking into account the national economic constraints of the Member States.
The European Parliament and the Council agreed to come back on this issue at the next conciliation meeting in November.
7.Financing programming
The European Parliament and the Council agreed on the following joint statement on financial programming:
"1.The Commission submits twice a year, the first time in May/June (together with the documents accompanying the PDB) and the second time in December/January (after the adoption of the Budget), a complete financial programming for Heading 3 and 4 of the current Financial Perspective. This document, structured by heading, policy area and budget line should identify two phases:
a.legislation in force with the distinction between multiannual programmes and annual actions:
-for multiannual programmes the Commission should indicate the procedure under which they were adopted (COD and CNS), their duration, the reference amounts, the share allocated to administrative expenditure;
-for annual actions (PP-PA, Agencies) and actions financed under the prerogatives of the Commission, it should provide multiannual estimates and (for PP-PA), the margins left under the authorised ceilings foreseen by the IIA (EUR 32 million for PP and EUR 75 million for PA);
b.pending legislation: ongoing Commission's proposals referenced by budget line (lower level), chapter and policy area. A mechanism should be found to update the tables each time a new proposal is adopted in order to evaluate the financial consequences.
2.The Commission should consider ways of cross-referencing the financial programming with its legislative programming to provide more precise and reliable forecasts. For each legislative proposal, the Commission should indicate whether it is included in the May-December programming or not. The Budgetary Authority should notably be informed of:
a.all new legislative acts adopted but not included in the May-Dec document (with the corresponding amounts);
b.all pending legislation presented but not included in the May-Dec document (with the corresponding amounts);
c.legislation foreseen in the Commission's annual legislative working programme with the indication of actions likely to have a financial impact (yes/no).
Whenever necessary the Commission should indicate the reprogramming entailed by the new legislation proposed.
On the basis of the data supplied by the Commission, stocktaking should be made at each trialogue, provided for in the IIA of 6 May 1999, as foreseen by the joint statement of July 2000."
The European Parliament and the Council also agreed on the following joint statement on programming for Iraq:
"The Budgetary Authority asks the Commission to present as soon as possible a global assessment of the needs foreseen in Iraq for the period up to and including 2006 together with a proposal for its financing including the amounts already pledged on behalf of the Union, and if appropriate to present before the Council's second reading of the 2005 budget a revised financial programming for 2006 including appropriations for Iraq. This is without prejudice to the 2006 budgetary procedure. In the context of the 2006 budgetary procedure, the Commission will present the appropriate proposal."
8.Financial Perspective 2007-2013
The European Parliament, the Council and the Commission agreed on the following joint statement:
"The European Parliament, the Council and the Commission, reminding that the Financial Perspective should be negotiated in the spirit of loyal interinstitutional co-operation, declare their willingness to take, throughout the procedure, all measures necessary to facilitate the successful completion of the procedure leading to the adoption of the next financial framework.
In this context, they agree to have an exchange of information throughout the process."
9.Agricultural modulation
The Commission indicated that it was studying the ways of making readjustments between sub-heading 1a and 1b of the Financial Perspective, as a consequence of the modulation measures foreseen in the CAP reform, which will have consequences on the 2006 Budget.
The Council and the European Parliament took note of the Commission's information.
II.MAIN FEATURES OF THE DRAFT BUDGET
A.The Council established the draft budget for the financial year 2005.
The main features of the draft are as follows:
AGGREGATE EXPENDITURE AS A RESULT
OF THE COUNCIL'S DISCUSSIONS
(EUR million – rounded off)
Appropriations for commitments (c/a)115 977.00
Appropriations for payments (p/a)105 221.20
including non-compulsory expenditure of:c/a 70 233.77
p/a 59 436.95
B.Under the draft budget established by the Council, commitment appropriations increase by4.1% compared to the 2004 budget and payment appropriations by5.4%.
The rate of increase in NCE for the 2005 draft budget is 3.0% in c/a and 5.1%inp/a.
The total payment appropriations provided for in the draft budget correspond to 0.99% of Community GNI.
C.A summary of the draft budget for 2005, by individual heading of the financial perspective, is given in the following table:
(in EUR million)
Heading / 1st reading / Difference as against PDB 2005(rectified) / % difference as against budget 2004 / Remaining margin under present FP
Commitments / Payments / Commitments / Payments / Commitments / Payments
1.Agriculture
1a. Market expenditure
1b. Rural development / 49 675.45
42 834.45
6 841.00 / 49 113.85
42 834.45
6 279.40 / – 1 000.00
– 1 000.00
0 / – 1 000.00
– 1 000.00
0 / 6.2 %
6.4 %
4.7 % / 7.5 %
6.4 %
15.3 % / 1 763.55
1 763.55
0
2.Structural operations
–Structural Funds
–Cohesion Fund / 42 378.50
37 246.57
5 131.93 / 32 396.03
29 390.53
3 005.50 / 0 / – 3 000.00
- 3 000.00 / 3.3 % / 5.1 % / 62.50
3.Internal policies
–Research Framework Programme
–Energy and Transport
–Education, vocational training, youth
–Area of freedom, security and justice / 8 903.34
5 047.00
1 021.92
884.55
533.73 / 7 686.18
4 012.58
983.64
801.67
519.00 / – 55.24 / – 42.44 / 2.3 % / 2.3 % / 108.66
4.External action
–Mediterranean countries
–Asian countries
–Countries of the Western Balkans
–Eastern Europe and central Asia Republics
–Latin America countries
–CFSP / 5 104.60
1 023.67
604.00
521.00
473.08
286.90
62.60 / 4 986.18
846.13
554.00
466.00
493.00
376.00
54.00 / – 129.40 / – 24.00 / – 1.4 % / 0.7 % / 14.40
5.Administration
–Commission
–Other institutions / 6 308.12
3 960.67
2 347.45 / 6 308.12
3 960.67
2 347.45 / – 80.57 / – 80.57 / 3.1 % / 3.1 % / 51.88
6.Reserves
–Reserve for guarantee
–Reserve for emergency aid / 446.00
223.00
223.00 / 446.00
223.00
223.00 / 0 / 0 / 0.9 % / 0.9 % / 0
7.Pre-accession aid / 1 856.00 / 2 979.85 / 0 / – 200.00 / 7.1 % / 4.3 % / 1 616.00
8.Compensations / 1 304.99 / 1 304.99 / 0 / 0 / – 7.4 % / – 7.4 % / 11.01
Grand Total
compulsory expenditure
non-compulsory expenditure / 115 977.00
45 743.23
70 233.77 / 105 221.20
45 784.25
59 436.95 / – 1 265.21 / – 4 347.01 / 4.1 % / 5.4 %
Payment appropriations as a percentage of GNI / 0,99 %
The detailed results are set out in the parts of the explanatory memorandum relating to the various sections and policy areas of the budget.
D.In establishing the draft budget for the financial year 2005, the Council followed a number of guidelines:
1.GENERALLY
a)The draft budget, resulting from the first reading in the Council:
-shows due regard to the Interinstitutional Agreement of 6May1999 on budgetary discipline and improvement of the budgetary procedure;
-is in line with the Council conclusions on the budget guidelines for 2005 adopted on 9March2004[3].
b)Particular care was taken to:
-comply with the annual expenditure ceilings set by the Financial Perspective for 2005;
-leave, where possible, adequate margins below the ceilings for the various Headings, in order to cope with unforeseen situations;
-provide adequate funding for the European Union's various priorities;
-confirm Copenhagen commitments as taken on board in the preliminary draft budget;
-have a limited and controlled growth of payment appropriations in comparison with2004.
c)Establishment of the draft budget was, moreover, guided by the following principles:
-examination in the autumn, as provided for in the Interinstitutional Agreement, of an Amending Letter concerning agricultural expenditure, in order to take account of the updated estimates of requirements, without immediately ruling out a reduction in appropriations for agricultural expenditure.
-honouring of the commitments written into the Financial Perspective for structural operations.
Regarding the level of payment appropriations, the Council has limited the increase of payment appropriations taking into account the implementation rate of the previous years and the foreseeable implementation rate in 2005.
-identification of genuine requirements within the budget amounts available for internal policies taking into account the possibilities for utilisation of appropriations and keeping in mind the maintenance of a margin below the ceiling for that Heading of the Financial Perspective allowing the European Parliament to choose its own priorities.
-identification of genuine requirements within the budget amounts available for external actions keeping in mind the maintenance of a margin below the ceiling for that Heading of the Financial Perspective.
In this context, the Council has reallocated appropriations in order not to have recourse to the flexibility instrument that has been proposed by the Commission for financing reconstruction of Iraq.
-with regard to administrative expenditure, maintenance of a sufficient margin below the ceiling of Heading 5 of the Financial Perspective in the framework of sound financial management.
–for expenditure on pre-accession aid, acceptance of the PDB regarding commitment appropriations.
Regarding the level of payment appropriations, the Council has limited the increase of payment appropriations taking into account the implementation rate of the previous years.
-limited and controlled growth of the volume of payment appropriations overall, taking into account in particular the implementation rate in the past years, the capacity for utilisation, the likely rate of payments under outstanding commitments and constraints upon national budgets.
In this context, the Council asks the Commission to submit an Amending Budget if the payment appropriations entered in the 2005 budget are insufficient to cover expenditure under Heading 1a (Agricultural expenditure excluding rural development), Heading 2 (Structural operations) and Heading 7 (Pre-accession strategy) of the Financial Perspective.
2.IN OTHER GENERAL RESPECTS
a)Nomenclature
As to the nomenclature proposed in the PDB, the Council decided to create or delete certain headings and, as in the past, not to retain the European Development Fund (EDF)[4].
b)Classification
With regard to classification, the Council followed the classification proposed by the Commission in its PDB, but emphasised that all expenditure on pensions, the common agricultural policy, veterinary and plant health and international fisheries agreements constituted compulsory expenditure according to the Interinstitutional Agreement.