52005SC1226

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 5.10.2005

SEC(2005) 1226 final

PRELIMINARY DRAFT AMENDING BUDGET No 8 TO THE GENERAL BUDGET FOR 2005

STATEMENT OF REVENUE AND EXPENDITURE BY SECTIONSection III - Commission

(presented by the Commission)

PRELIM INARY DRAFT AMENDING BUDGET No 8 TO THE GENERAL BUDGET FOR 2005

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION Section III - Commission

Having regard to:

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

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

- Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities[1], and in particular Article 37 thereof,

The European Commission hereby presents to the budgetary authority the preliminary draft amending budget No 8 to the 2005 budget for the exceptional reasons set out in the explanatory memorandum.

TABLE OF CONTENTS

1. Introduction 4

2. Increase in the forecast of revenue 4

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

2.2. Other revenue 4

2.2.1. Repayment of unused Community aid 4

2.2.2. Interest on late payments and fines 4

3. Heading 2: Increase of payment appropriations for the structural funds 5

4. Modification of the remarks of budget line 17 04 02 7

SUMMARY TABLE BY HEADING OF THE FINANCIAL PERSPECTIVE 9

STATEMENT OF REVENUE AND EXPENDITURE BY SECTION

Because of the still provisional nature of the own resources figures (VAT/GNI balances) presented in the explanatory memorandum of this preliminary draft budget, the Commission proposes to present the final figures and the general statement of revenue via a draft amending letter to be submitted at a later stage of the procedure.

EXPLANATORY MEMORANDUM

1. INTRODUCTION

The Commission presents this Preliminary Draft Amending Budget No 8 for the year 2005 to take into account the following exceptional circumstances:

- the need to budget an exceptional increase in the forecast of revenue, in particular for the revision of the forecasts of VAT and GNI balances (EUR 2 600 million);

- the need for an increase of payment appropriations for most of the budget lines in heading 2 (EUR 650 million), after taking into account redeployments from other headings proposed in the global transfer.

Additionally, the Commission proposes the modification of the remarks of budget line 17 04 02 - Other measures in the veterinary, animal welfare and public-health field – by adding Regulation (EC) No 178/2002 as legal base to this budget line.

2. INCREASE IN THE FORECAST OF REVENUE

2.1. Revision of the forecasts of VAT and GNI balances

In accordance with Article 16 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000, the Commission proposes to revise the forecasts of VAT and GNI balances on the basis of the available information by an increase of EUR 2 600 million. These modifications concern chapters 31 and 32 of the revenue side of the budget.

It has to be noted that at this stage these calculations are still very provisional as the final data with regard to Member States’ GNI has not yet been confirmed.

The Commission proposes therefore to present the exact amounts affecting the revenue side and the changes to the general statement of revenue by means of an amending letter at a later stage of the procedure[2].

2.2. Other revenue

2.2.1. Repayment of unused Community aid

Taking into account the cashed amounts for items 6150 and 6157 and supposing that these amounts will be not used this year to make the appropriations available once again, an amount of EUR 360 million is proposed to be budgeted.

2.2.2. Interest on late payments and fines

Chapters 70 and 71 of the general statement of revenue register interest on late payments and fines. Already in the Budget 2005 an amount of EUR 118 million was budgeted. Considering the amounts that at this stage of the year are cashed or will be probably cashed, an additional amount of EUR 200 million is proposed to be entered.

3. HEADING 2: INCREASE OF PAYMENT APPROPRIATIONS FOR THE STRUCTURAL FUNDS

1. The Budget for 2005 was adopted with a reduction of EUR 3 billion in payment appropriations for heading 2 relative to the Commission’s proposal, together with a declaration on payment appropriations for heading 2.The declaration stated that "If the execution of payment appropriations for the Structural Funds exceeds 40% by the end of July 2005, or if the Commission becomes otherwise convinced of a shortage in payment appropriations, the Commission will, after having examined the possibilities of redeployment of payment appropriations within the totality of the budget, including Heading 2, and evaluated possible sources of additional revenue, present as soon as possible a PDAB to the budgetary authority. The European Parliament and the Council will decide in one single reading on the PDAB in order to have additional appropriations needed available at the latest in early November 2005. This PDAB to be presented and decided in one single reading is exclusively meant for the appropriations needed under Heading 2” .

2. The 40% threshold mentioned in the declaration was passed by the end of May, when 42% of the available appropriations for the Structural Funds had been used. However, with execution slowing down since April, the Commission decided to wait until it was possible to evaluate possible redeployments across all headings of the budget and additional revenue in September, as well as follow the execution for several more months to forecast end-of-year results on a more solid basis, before presenting a PDAB.

3. The assessment of execution by the end of August, and the resulting end-of-year projections, show the need to reinforce the payment appropriations in heading 2 by EUR 1 040 million.

4. A separate assessment was made for each of the three main components of heading 2: the 2000-2006 Structural Funds programmes for EU-25, the closure of the pre-2000 Structural Funds programmes for EU-15, and the Cohesion Fund. The conclusions of this analysis are outlined below.

5. For the EU-25 2000-2006 programmes of the Structural Funds, payments by the end of August reached EUR 16 795 million, out of an available budget of EUR 28 386 million. Consumption by year end is foreseen to reach EUR 29 593 million. A reinforcement of EUR 1 207 million is required. The reinforcement is needed for the lines of the European Social Fund (ESF) and the European Agricultural Guidance and Guarantee Fund, Guidance Section (EAGGF), where execution this year has been quite strong. No reinforcement is required for the European Regional Development Fund (ERDF) and the Financial Instrument for Fisheries Guidance (FIFG). For the latter, a small redeployment is possible.It is worthwhile noting that the Commission’s estimate of year-end consumption is significantly below Member States’ forecasts. According to the latter, consumption would be almost EUR 38 billion. That is clearly at odds with execution so far.For the EU-10 programmes EUR 1 billion has been paid out so far. Execution corresponds predominantly to the automatic advance payments, almost no interim payment claims have been received. Significant amounts of interim payments still need to be claimed to use the full budget for these programmes, which amounts to EUR 3 093 million in line with the Copenhagen agreement.

6. For the closure of the pre-2000 programmes, EUR 556 million were paid by the end of August, out of currently available appropriations of EUR 967 million. On the basis of an analysis of the files that satisfy the conditions for closure by year end, needs for the full year are estimated at EUR 1 200 million. Thus, a reinforcement of EUR 233 million is required.

7. Finally, payments for the Cohesion Fund amounted to EUR 1 167 million by the end of August, out of available appropriations of EUR 3 146 million. The Commission’s estimate of year end execution (EUR 2 746 million) leaves a surplus of EUR 400 million, to be reallocated by means of this PDAB. It has to be noted that the Commission’s estimate of year-end execution, based on actual execution so far, is also significantly below Member States’ payment forecasts, which amount to EUR 4.2 billion.

8. A significant part of the budget for EU-10 has still to be executed. Progress in execution of the EU-15 programmes has also been uneven across funds. This may yet change before 31 October, the regulatory deadline for the introduction of payment claims for this year. The Commission intends to continue its close monitoring of execution and make a final assessment of the payment claims received from all Member States by the end of October. This may lead the Commission to revise its request in the course of the procedure concerning this PDAB. This is the only approach capable of addressing simultaneously two key, albeit conflicting, concerns: firstly, to ensure the budget is sufficient to satisfy all eligible payment claims received; secondly, to avoid to the extent possible surpluses by year-end. Therefore, the Commission asks the budgetary authority to plan its procedure concerning this PDAB with a view to allowing for a possible revision in early November of the amendments proposed here.

9. Of the EUR 1 040 million required to reinforce the lines of heading 2, EUR 390 million can be re-allocated from other headings in the context of the Global Transfer, in order to reinforce the EAGGF line 05 04 02 01 by EUR 190 million and the ESF line 04 02 06 with EUR 200 million.

10. This decreases the net reinforcement required in heading 2 to EUR 650 million.

11. The following table shows the changes sought in heading 2 lines by means of this PDAB.

Amounts in €

BUDGET LINE NUMBER | NAME | Change in PDAB 8 |

EU-25 |

05 01 04 04 | EAGGF - Non operational TA | -1 200 000 |

05 04 02 01 | EAGGF Objective 1 | 388 750 731 |

05 04 02 02 | EAGGF - PEACE | -332 |

05 04 02 06 | Leader | 73 216 825 |

04 01 04 01 | ESF - Non operational TA | -5 376 102 |

04 02 01 | ESF Objective 1 | 159 267 182 |

04 02 06 | ESF - Objectives 3 | 250 385 462 |

04 49 04 01 | ESF - Phasing out of admin spending | -1 422 372 |

11 06 04 | FIFG outside Obj 1 | -43 807 388 |

11 06 07 | FIFG - Operational TA and IA | -842 500 |

13 03 08 | ERDF - Innovative Measures | -2 396 153 |

TOTAL SF 00-06 Programmes EAGGF | 460 767 224 |

TOTAL SF 00-06 Programmes ESF | 402 854 170 |

TOTAL SF 00-06 Programmes FIFG | -44 649 888 |

TOTAL SF 00-06 Programmes ERDF | -2 396 153 |

TOTAL SF 00-06 Programmes | 816 575 353 |

05 04 02 03 | EAGGF | 86 314 253 |

05 04 02 05 | EAGGF old Obj 5a | 30 230 600 |

05 04 02 07 | EAGGF 94_99 | 20 300 000 |

04 02 03 | ESF | 51 106 000 |

04 02 05 | ESF - Old Obj2 and 5b | 29 503 000 |

04 02 07 | ESF - Old Obj 3 and 4 | 24 485 000 |

04 02 09 | ESF 94_99 | 15 310 000 |

04 02 11 | ESF | 175 794 |

11 06 06 | FIFG 94_99 | -4 000 000 |

13 03 03 | ERDF | -12 000 000 |

13 03 05 | EAGGF/ERDF/ESF Obj 2 and 5b | -8 000 000 |

TOTAL SF Pre-2000 Programmes EAGGF | 136 844 853 |

TOTAL SF Pre-2000 Programmes ESF | 120 579 794 |

TOTAL SF Pre-2000 Programmes FIFG | -4 000 000 |

TOTAL SF Pre-2000 Programmes ERDF | -20 000 000 |

TOTAL SF Pre-2000 Programmes | 233 424 647 |

13 04 01 | Cohesion Fund | -400 000 000 |

TOTAL Cohesion Fund | -400 000 000 |

GRAND TOTAL | 650 000 000 |

4. MODIFICATION OF THE REMARKS OF BUDGET LINE 17 04 02

Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 (feed and food law), and in particular its Article 50, envisages the establishment of a rapid alert system for the notification of a direct or indirect human health risk deriving from food and from feeding stuffs.

However, the 2005 budget, and in particular budget line 17 04 02, does not make reference to the aforesaid Regulation. It is therefore proposed to include it as legal basis in the budgetary comments of this line as follows:

"This item is intended to cover expenditure resulting from Article 50 of Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and the general requirements of the food law, instituting the European Food Safety Authority and laying down procedures relating to the food safety (JOL 31, 1.2.2002, p. 1) ".

SUMMARY TABLE BY HEADING OF THE FINANCIAL PERSPECTIVE

Financial perspective Heading/subheading | 2005 Financial perspective | Budget 2005 incl. AB 1 - 5/2005 and PDAB 6 - 7/2005[3] | PDAB 8/2005 | Budget 2005 incl. AB 1-5/2005 and PDAB 6 – 7 and 8/2005 |

|CA |PA |CA |PA |CA[4] |PA |CA |PA | |1. AGRICULTURE | | | | | | | | | |- Agricultural expenditure |44 598 000 000 | |42 835 450 000 |42 835 450 000 | | |42 835 450 000 |42 835 450 000 | |- Rural development and accompanying measures |6 841 000 000 | |6 841 000 000 |6 279 400 000 | | |6 841 000 000 |6 279 400 000 | |Total |51 439 000 000 | |49 676 450 000 |49 114 850 000 | | |49 676 450 000 |49 114 850 000 | | Margin | | |1 762 550 000 | | | |1 762 550 000 | | | 2. STRUCTURAL ACTIONS | | | | | | | | | |- Structural funds |37 247 000 000 | |37 291 564 455 |29 390 527 704 |-6 576 102 |1 050 000 000 |37 284 988 353 |30 440 527 704 | |- Cohesion fund |5 194 000 000 | |5 131 932 989 |3 005 500 000 | |-400 000 000 |5 131 932 989 |2 605 500 000 | |Total |42 441 000 000 | |42 423 497 444 |32 396 027 704 |-6 576 102 |650 000 000 |42 416 921 342 |33 046 027 704 | | Margin | | |17 502 556 | | | |24 078 658 | | | 3. INTERNAL POLICIES[5] |9 012 000 000 | |9 150 548 408 |8 016 662 269 | | |9 150 548 408 |8 016 662 269 | | Margin | | |-40 000 000 | | | |-40 000 000 | | | 4. EXTERNAL ACTIONS |5 119 000 000 | |5 219 000 000 |5 476 162 603 | | |5 219 000 000 |5 476 162 603 | | Margin | | |-100 000 000 | | | |-100 000 000 | | | 5. ADMINISTRATION |6 360 000 000 | |6 292 367 368 |6 292 367 368 | | |6 292 367 368 |6 292 367 368 | | Margin | | |67 632 632 | | | | 67 632 632 | | | 6. RESERVES | | | | | | | | | |- Guarantee reserve |223 000 000 | |223 000 000 |223 000 000 | | |223 000 000 |223 000 000 | |- Reserve for emergency aid[6] |223 000 000 | |223 000 000 |223 000 000 | | |223 000 000 |223 000 000 | |Total |446 000 000 | |446 000 000 |446 000 000 | | |446 000 000 |446 000 000 | | Margin | | |0 | | | |0 | | | 7. PRE-ACCESSION AID |3 472 000 000 | |2 081 000 000 |3 286 990 000 | | |2 081 000 000 |3 286 990 000 | | Margin | | | 1 391 000 000 | | | | 1 391 000 000 | | |8. COMPENSATION |1 305 000 000 | |1 304 988 996 |1 304 988 996 | | |1 304 988 996 |1 304 988 996 | | Margin | | | 11 004 | | | | 11 004 | | | TOTAL |119 594 000 000 |114 235 000 000 |116 593 852 216 |106 334 048 940 |-6 576 102 |650 000 000 |116 587 276 114 |106 984 048 940 | | Margin | | |3 000 147 784 | | | |3 006 723 886 |7 250 951 060 | |

[1] OJ L 248, 16.9.2002, p. 1.

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

[3] Only the appropriations voted by the Budgetary Authority in the initial and the amending budgets are shown here.

[4] The commitment appropriations of PDAB 8/2005 derive from the budget lines of non-differentiated appropriations, where a change is proposed for the related payment appropriations. The lines in question are 05 01 04 04 and 04 01 04 01.

[5] The EUSF amount is entered over and above the relevant headings as foreseen by the IIA of 7 November 2002 - OJ C 283, 20.11.2002.

[6] Including EUR 100 million, which have been transferred to the emergency aid line. A further EUR 70 million was also transferred as a result of the agreement reached at the conciliation of 15 July 2005 during the discussions on PDAB 3/2005.