19.7.2005   

EN

Official Journal of the European Union

C 177/1

(1)

On 8 March 2005 the Council examined the updated stability programme of Spain, which covers the period 2004-2008. The programme complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. However, the updated programme was presented three weeks beyond the 1 December deadline set in the code of conduct.

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth to pick up from 2,6 % in 2004 to 2,9 % in 2005 and to average 3,0 % over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect rather favourable growth assumptions. The update also considers a ‘moderate scenario’ that projects annual GDP growth of 2,4 % in 2005 and 2,5 % thereafter. While the baseline scenario can be considered as relatively optimistic, the moderate growth scenario is on the low side. The programme's projections for inflation (based on the GDP deflator) appear realistic, but still remain relatively high thus posing risk to competitiveness.

(3)

(4)

The risks to the budgetary projections in the programme appear broadly balanced. In particular, although growth assumptions are somewhat favourable, the risk of sizeable deviations from the programme's objectives appears limited.

(5)

In view of this risk assessment, the budgetary stance in the programme is sufficient to maintain the Stability and Growth Pact's medium-term objective of a position of close-to-balance throughout the programme period (with a temporary deviation in 2004 related to the one-off accounting adjustments). It also provides a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations over the period covered in the update.

(6)

The debt ratio is estimated to have declined to 49,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to further decline by 9 percentage points over the programme period, mainly on account of primary surpluses above 2 % of GDP.

(7)

The budgetary strategy outlined in the programme puts Spain in a relatively favourable position with regard to long-term sustainability of the public finances, in spite of the projected budgetary costs of an ageing population. However, given the risks surrounding such long-term expenditure projections and the large increase of pension expenditure projected in the very long term, current policies need to be supplemented by measures to prevent the emergence of unsustainable trends in public finances in the long run, in particular through a comprehensive reform of the pension system in line with the recommendations of the multi-partisan agreement ‘Pacto de Toledo’.

(8)

Overall, the economic policies outlined in the update are partly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, as regards the recommended reform of the public pension system to ensure the long-term viability of the system has not been implemented yet.

19.7.2005   

EN

Official Journal of the European Union

C 177/4

(1)

On 8 March 2005 the Council examined the updated convergence programme of Cyprus, which covers the period 2004 to 2008. The programme complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’.

(2)

The programme contains four different scenarios for the macroeconomic and budgetary projections: a ‘central’ scenario, an ‘upper’ scenario, ‘lower’ scenario and ‘higher interest rate’ scenario. The so-called ‘central’ scenario is considered as the reference scenario for assessing budgetary projections because, on the basis of currently available information, it seems to reflect plausible growth assumptions. It projects real GDP growth to pick up from 3,6 % in 2004 to 4,3 % on average over the rest of the programme period. The programme's projections for inflation also appear realistic.

(3)

On 5 July 2004, the Council decided that an excessive deficit existed in Cyprus and recommended that this be corrected by 2005. The update aims at reducing the government deficit to below the 3 % of GDP reference value in 2005, in line with the Council recommendation under Article 104(7). Compared to the May 2004 convergence programme the update maintains the deficit target for 2005 but sharpens the targets after 2005. It foresees the general government deficit to sharply decline from 4,8 % of GDP in 2004 to 2,9 % in 2005 and to decline more gradually thereafter, to 0,9 % in 2008. Since interest expenditures are projected to remain constant at around 3,5 % of GDP the path of the primary balance is similar to that of the overall balance, improving from - 1,3 % in 2004 to 2,5 % at the end of the programme period. To this end, the update envisages a series of mostly structural measures to restrain expenditure and to increase revenue. Expenditure limits contribute 2,3 percentage points to the overall deficit reduction of almost 4 percentage points of GDP over the period 2004-2008. The adjustment path reflects the government commitment to improve public finances with the intention of early adoption of the euro. This is the main factor behind the frontloading of the fiscal adjustment which would reduce the general government budget deficit by 1,9 percentage points of GDP in 2005.

(4)

The risks to the budgetary projections in the update appear broadly balanced. In particular, the main downside macroeconomic risks are the economic outlook in the US and the EU (notably the UK and Germany, main tourist source countries), tensions in the Middle East, and oil price developments (2). The update further indicates that several planned measures for 2005 onward are to be ‘studied’ further, which leaves some uncertainty. On the other hand, the estimated deficit outcome for 2004 has been better than expected. This positive result was achieved despite delays in a number of consolidation measures originally planned for 2004. These are now to be implemented in 2005, the budgetary impact of which is prudently considered as a safety margin for 2005 in case of e.g. delays in other measures, to keep the target of 2,9 % of GDP as an ‘upper limit’ while at the same time expenditure is to be kept under strict control. Although expenditure overruns were a main problem in the past, the consolidation measures now emphasize structural expenditure control, especially on government consumption. In addition, several of the planned measures for 2005 have now been successfully negotiated with the social partners. The Commission services autumn 2004 forecast projected a deficit of 3,0 % of GDP for 2005, given a slightly lower GDP growth forecast for that year. However, the update reiterates that ‘additional measures’ will be taken if lower growth would risk leading to a higher deficit in 2005. All this would facilitate the adjustment to 2,9 % of GDP for 2005. All in all, the planned deficit reduction for 2005 looks challenging but increasingly feasible. For the period 2006-2007 the adjustment path is slightly tightened to reach lower deficits compared to the previous May 2004 programme. However, it is not clear how this tightening will be achieved, given that the planned measures and GDP growth path have broadly remained the same. The adjustment path has to be underpinned by measures of a permanent nature.

(5)

In view of this risk assessment, the budgetary stance in the programme seems sufficient to reduce the deficit to below 3 % of GDP by 2005 and seems to provide a sufficient safety margin against breaching this threshold with normal macroeconomic fluctuations from 2006 onward. It is however not sufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved within the programme period.

(6)

The debt ratio is estimated to have reached 74,9 % of GDP in 2004, above the 60 % of GDP Treaty reference value. The programme projects the debt ratio to decline by almost 17 percentage points over the programme period. The evolution of the debt ratio is partly driven by debt-reducing stock-flow adjustments linked to the gradual phasing out of sinking funds, the accumulation of which had earlier on led to debt-increasing stock flow adjustments.

(7)

Cyprus presents some risks with regard to long-term sustainability of the public finances, reflected by the projected budgetary costs of an ageing population. The strategy outlined in the update is mainly based on the budgetary consolidation in the next few years and additional reforms of pension and health care system to be implemented in the future. It is imperative to pursue the reform process in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term.

(8)

The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. In particular, the fiscal consolidation programme aims to reduce the general government deficit within a multi-annual framework. The fiscal consolidation measures both on the expenditure and revenue side are mostly of a structural nature, and there is still some uncertainty surrounding the implementation of some of the planned consolidation measures. The deficit objective path, particularly for 2005, is ambitious but does not look implausible.

(i)

implement with vigour the measures envisaged in the updated convergence programme to bring the deficit below 3 % of GDP by 2005 and ensure through measures of a permanent nature that budgetary consolidation towards the medium term budgetary position of close to balance or in surplus is sustained after the excessive deficit has been corrected;

(ii)

ensure that the debt ratio will start to decline from 2005 onward; and

(iii)

pursue the reform process in the pension and health care system in order to reduce the sustainability risks associated with the future evolution of age-related expenditures, together with the planned and necessary budgetary consolidation in the medium term.

19.7.2005   

EN

Official Journal of the European Union

C 177/7

(1)

On 8 March 2005 the Council examined the updated convergence programme of Latvia, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. However, the ESA95 classification of data on the composition of the general government revenue and expenditure needs to be improved. Accordingly, Latvia is invited to achieve compliance with the requirements of the code of conduct.

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth, estimated at 8,1 % in 2004, remaining strong over the rest of the programme period, averaging 6,6 % per year. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation appear slightly on the low side.

(3)

The programme update aims at keeping the deficit below the 3 % of GDP reference value in each programme year with the general government budget deficit gradually falling from an estimated 1,7 % of GDP in 2004 to 1,4 % of GDP in 2007. In 2005 both revenue and expenditure ratios increase sharply, linked to EU accession. Thereafter, the medium-term adjustment in public finances is based on a reduction of both the revenue and the expenditure ratios. The primary expenditure ratio falls mainly through lower ratios of transfers and subsidies while at the same time allowing for an increase in the investment ratio. The revenue ratio falls through tax reductions, mainly on income, lowering the tax burden moderately.

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, assumptions about the tax intensity of economic activity seem somewhat pessimistic, suggesting that revenues could be better than expected. On the other hand, given the commitment of expenditures predicated on EU funding, the achievement of the deficit targets is conditional on the receipt of such funds in government revenues. Tight expenditure discipline (including in managing partly EU-funded projects) might be difficult given weaknesses in administrative capacity.

(5)

In view of this risk assessment, the budgetary stance in the programme is insufficient to achieve the close to balance or surplus medium-term objective of the Stability and Growth Pact within the programme period. Furthermore, it may provide insufficient margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations. However, it is sufficient to maintain the debt-to-GDP ratio at a very low level.

(6)

The debt ratio is estimated at 14,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The slight increase in the debt ratio over the programme period, to 15,0 % of GDP in 2007, mainly results from persisting deficits, substantially offset by nominal GDP growth.

(7)

The budgetary strategy outlined in the programme puts Latvia in a relatively favourable position with regard to long-term sustainability of the public finances, despite the projected budgetary costs of an ageing population. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillar, and the accumulation of assets in the funded pension scheme will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and on the budgetary impact of the pension reform. Reforms in the field of health and long-term care could, however, involve higher expenditures. A risk to sustainability may emerge in the long run. Latvia's relatively low tax ratio should, however, ease the accommodation of any such sustainability gap that may arise.

(8)

The economic policies outlined in the programme are broadly consistent with the country-specific broad economic policy guidelines (BEPGs) in the area of public finances. Under the challenge to address the sizable current account deficit, Latvia was recommended to reduce the general government deficit in a credible and sustainable way within a multi-annual framework. In the light of the narrowing current account deficit foreseen in the programme, the lower-than-projected budget deficit in 2004 and the consolidation path foreseen in the update are in line with the recommendation of the BEPGs. However, this assessment is conditional on the favourable development of the external balance and is thus subject to further monitoring. Furthermore, as was pointed out in the Council Opinion on the programme of last May, assessment of the appropriate fiscal position is also dependent on demand pressures in the economy, even if it is difficult to determine the country's position in the business cycle; the assessment is also therefore conditional on macroeconomic policy being appropriate to consolidating the moderation in inflation from its recent peak.

19.7.2005   

EN

Official Journal of the European Union

C 177/10

(1)

On 8 March 2005 the Council examined the updated convergence programme of Lithuania, which covers the period 2004 to 2007. The programme broadly complies with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Some required data related to external assumptions are not available and also some optional data are not provided, although this does not make more difficult the programme's evaluation. Accordingly, Lithuania is invited to achieve compliance with the data requirements of the code of conduct.

(2)

The macroeconomic scenario underlying the programme envisages real GDP growth to decelerate from 6,5 % in 2004 to 6,2 % on average over the rest of the programme period. On the basis of currently available information, this scenario seems to reflect plausible growth assumptions. The programme's projections for inflation also appear realistic, although the projection for 2006 appears on the low side.

(3)

The key objective of the medium-term fiscal strategy defined in the programme is the approximation to a cyclically balanced general government budget. The programme foresees the general government deficit to remain at 2,5 % of GDP in 2005 and to decline gradually thereafter to 1,5 % in 2007. The primary deficit is expected to improve marginally from 1,5 % of GDP in 2004 to 1,4 % in 2005, decreasing gradually afterwards to 0,5 % in 2007. Consolidation is planned to be mainly achieved by an increase in the revenue ratio from a low base, with the expenditure side also contributing from 2005. Revenues are expected to increase from 33 % of GDP in 2004 to 34,5 % in 2007, after peaking in 2006. Expenditure is foreseen to initially increase from 35,5 % of GDP in 2004 to 36,9 % in 2005, decreasing gradually to 36 % in 2007. A significant programme of public investment is being implemented, which lifts public investment from 3,4 % of GDP in 2004 to 5 % in 2007, resulting in an average public investment ratio over the programme period of about 4,6 % of GDP, against an EU-average of 2,4 % of GDP in 2004. When compared to the May 2004 programme, the deficit outcome for 2004 is estimated to have been lower than budgeted. The targets for 2005-2007 are maintained, despite a considerable downward revision of GDP growth.

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, the government has shown a good track record in meeting the fiscal targets in recent years. The new growth assumptions are cautious and downside macroeconomic risks seem limited. The main risk to the fiscal projections stems from the uncertainty about the application of budgetary measures announced in the programme. In particular, the tax revenue target for 2005 might be difficult to achieve if compensatory measures for the abolition of the turnover tax were not introduced. A failure to execute foreseen measures constraining expenditure overruns could threaten the budgetary targets over the programme's period. Other risks stem from the relatively uncertain costs of the pension reform, the high outstanding contingent liabilities, budget arrears, outstanding liabilities related to the savings and real estate restitution obligations and spending related to the decommissioning of the Ignalina nuclear power plant.

(5)

In the light of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations throughout the programme period, particularly in 2005. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close to balance is achieved. Against the background of the strong economic performance and the large current account deficit, a prudent budgetary policy is needed, also in view of preventing potential risks of overheating.

(6)

The debt ratio is estimated to have reached 20,1 % of GDP in 2004, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to remain at the same level in 2007, after peaking at 20,9 % in 2005.

(7)

Lithuania appears to be in a relatively favourable position with regard to long-term sustainability of the public finances, of which the projected budgetary costs of an ageing population is an important element. The relatively low debt ratio, the pension reform measures enacted, including the introduction of the funded pillars will contribute to limit the budgetary impact of ageing. The strategy outlined in the programme is based on a contained budgetary deficit over the medium term and the long-term budgetary impact of the pension reform. Nevertheless, risks related to the costs of the pension reform should be monitored. In addition, reform measures in the field of health-care could involve higher expenditures. However, Lithuania has a relatively low tax ratio: the sustainability gap that arises in the long-run could be addressed by raising it.

(8)

Overall, the economic policies outlined in the update are broadly consistent with the country-specific broad economic policy guidelines in the area of public finances. There are measures to use better-than-projected revenues and savings in budgeted EU co-financing for deficit reduction and limit expenditure overruns. The announced measures are not extended to savings made in items unrelated to EU co-financing.

i)

timely implement the tax measures announced by the Government in the convergence program (real estate tax, vehicle tax) to make further progress towards a close to balance budgetary position. This is necessary particularly in order to manage domestic demand pressures, which are currently fuelled by strong credit growth, and thereby prevent a deterioration of the current account deficit and acceleration of underlying inflation.

ii)

implement strictly the budget for 2005 in order to reduce the risk of breaching the 3 % reference value; and

iii)

use better-than-projected or additional revenues and unused expenditure items for deficit reduction.

19.7.2005   

EN

Official Journal of the European Union

C 177/13

(i)

take action in a medium-term framework in order to bring the deficit including the burden of the pension reform below 3 % of GDP by 2008 in a credible and sustainable manner, in particular through additional measures to achieve the deficit target for 2005 and a subsequent adjustment of 2 percentage points of GDP to correct the excessive deficit by 2008 and by seizing every opportunity to accelerate the fiscal adjustment;

(ii)

make the timing and implementation of any tax cuts conditional upon the achievement of the deficit targets of the convergence programme update submitted in December 2004;

(iii)

progress with the envisaged reforms of the public administration, health and education systems as committed also with a view to improving the long-term sustainability of the public finances.

19.7.2005   

EN

Official Journal of the European Union

C 177/17

(1)

On 8 March 2005 the Council examined the updated convergence programme of Slovenia, which covers the period 2004 to 2007. The programme partly complies with the data requirements of the ‘code of conduct on the content and format of stability and convergence programmes’. Government accounts do not fully abide by ESA95 standards evidenced in the high share of ‘other’ revenue and expenditure as percentage of GDP. Therefore, Slovenia is invited to achieve full compliance with the data requirements.

(2)

On the basis of currently available information, the macroeconomic scenario underlying the programme seems to reflect plausible growth assumptions. It envisages real GDP growth, estimated at 4,0 % in 2004, to continue growing at around that level throughout the rest of the programme period. The projections for inflation appear attainable but risks remain.

(3)

The budgetary strategy underlying the programme aims at achieving sound public finances as defined by a budgetary position of close-to-balance, but not during the programme period. The programme envisages a gradual reduction of the general government deficit over the period covered, consistent with a sustained cut in the expenditure share as percentage of GDP. The revenue ratio, after falling steadily until 2006, rebounds towards the end of the programme period in view of the net positive budgetary impact of EU membership. According to the adjustment path, the deficit halves over the next four years, reaching just above 1 % in 2007. Compared with the previous programme, the current update broadly confirms the planned adjustment against a slightly more favourable macroeconomic scenario.

(4)

The risks to the budgetary projections in the programme appear broadly balanced. On the one hand, a plausible macroeconomic scenario supports the deficit targets. Furthermore, it is at the government's discretion to refuse claims for further expenditure to safeguard the deficit target should it be threatened by unfavourable conditions, in the manner exercised in 2004. In addition, the yearly loss of VAT revenue at 0,3 % of GDP budgeted for 2005-2007 may be overestimated, rendering the tax revenue projections overly cautious. On the other hand, the level of direct tax revenues after the adopted tax reform could be uncertain. At the same time, the outcome for 2007 is partly due to the new EU financial perspective 2007-2013, anticipating a significant rise in the net budgetary inflows from the EU budget. Moreover, there is a risk of expenditure overruns, particularly regarding pension outlays should the review of the current pension indexation formula, announced for 2006, lead to a loosening of the parameters.

(5)

In view of this risk assessment, the budgetary stance in the programme may not provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with normal macroeconomic fluctuations except for the final year of the programme. It is also insufficient to ensure that the Stability and Growth Pact's medium-term objective of a budgetary position of close-to-balance is achieved by 2007.

(6)

Gross government debt is relatively low: the debt ratio is estimated to have reached 30,2 % of GDP in 2004, well below the 60 % of GDP Treaty reference value, and to attain 29,7 % by 2007.

(7)

Slovenia appears to be at some risk with regard to the long-term sustainability of the public finances, of which the projected budgetary cost of an ageing population is an important element. The ongoing pension reform has had a positive budgetary impact but the projected increase in pension expenditure beyond 2020 remains very high. In addition, despite the introduction of some rationalisation measures of the health-care system in 2004, a further, substantial reform of the health-care system would contribute to the improvement of the long-term sustainability of the public finances.

(i)

seize all opportunities to accelerate the reduction of the general government deficit;

(ii)

undertake further measures to improve the long-term sustainability of the public finances, including the reforms of the pension and health-care systems.

19.7.2005   

EN

Official Journal of the European Union

C 177/19

(1)

On 8 March 2005 the Council examined the updated convergence programme of the United Kingdom, which covers the period 2003/04 to 2009/10. The programme complies partly with the data requirements of the revised ‘code of conduct on the content and format of stability and convergence programmes’. Data relating to total expenditure and revenues, while based on ESA95 components, use differing aggregation methods to the harmonised measure; balances are not affected (2). The update also continues to treat the receipts from the sale of the UMTS spectrum as an annual income stream, rather than as the sale of an asset. Accordingly, the United Kingdom is invited to achieve full compliance with the data requirements.

(2)

(3)

The UK's fiscal policy framework is based on two domestic fiscal policy rules for the public sector: the ‘golden rule’, which aims to ensure that, over the course of the economic cycle, the government borrows only to finance net investment, and not to fund current expenditure; and the ‘sustainable investment rule’, which aims to keep public sector net debt at ‘a stable and prudent level’ below 40 % of GDP over the cycle. Within this framework, the updated programme projects a reduction in the deficit from an estimated 3,2 % of GDP in financial year 2003/04 to below the 3 % reference value in 2004/05 (the financial year being the reference period for assessing the UK's public finances under the Stability and Growth Pact). Thereafter the update projects a further gradual reduction in the deficit over the medium term, to a level of 1,7 % in 2008/09. The expenditure ratio continues to increase, in line with the government's policy priorities, but the expected increase in the revenue ratio would, if realised, lead to an overall improvement in the general government balance. Within the overall level of expenditure, a significant programme of public investment is being implemented, which aims to lift general government net investment from 1,9 % of GDP in 2004/05 to 2,4 % in 2007/08. Relative to the 2003 update, deficit projections for both this financial year and next have been revised upwards; beyond 2005/06, however, the medium-term projections contained in the update represent a slightly more rapid consolidation of the public finances than those in the previous update.

(4)

There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. In both the short and medium terms, risks are present regarding the extent to which the recovery in corporation tax continues. Especially in the period of slower projected expenditure growth from 2006/07, government departments will need to adjust to tighter budgets, and thus might make use of accumulated unspent balances. From 2006/07, however, negative risks are countered by the relatively cautious macroeconomic projections.

(5)

In view of this risk assessment, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3 % of GDP deficit threshold with historical macroeconomic fluctuations at any point during the projection period. However, given the decreased volatility of the UK economy in recent years and the cautious approach on the growth assumptions underlying the public finance projections, the risk appears small in the outer years. It is insufficient to ensure that the Stability and Growth Pact's medium-term objective of budgetary position close to balance is achieved by 2009/10. At the same time, however, it has to be noted that the debt ratio is relatively low and the projected balances are affected by the implementation of the above-mentioned significant programme of public investment.

(6)

The gross debt ratio is estimated to have reached 39,5 % of GDP in 2003/04, well below the 60 % of GDP Treaty reference value. The programme projects the debt ratio to increase modestly by less than two percentage points over the period to 2009/10.

(7)

The UK appears to be in a relatively favourable position with regard to the long-term sustainability of the public finances, despite the projected budgetary cost of an ageing population. The relatively low debt-to-GDP ratio and the strong emphasis that the UK authorities have placed, in existing policies, on long-term sustainability of the public finances are positive in this regard. Higher age-related expenditures cannot be excluded as there is a possibility of insufficient provision of private pensions which might have implications for the public finances, but the authorities are introducing the Pension Protection Fund, from April 2005, to protect members of private defined-benefit schemes where the sponsoring firm becomes insolvent and there are insufficient assets in the scheme to meet its liabilities. These measures are welcome, though their effectiveness is yet to be tested. The UK's relatively low tax ratio should ease the accommodation of any imbalances that may arise in the longer term.

(8)

The economic policies outlined in the programme are partly consistent with the country-specific recommendation on the public finances addressed to the UK in the 2004 update of the BEPGs, namely that the UK was recommended ‘in endeavouring to avoid the occurrence of an excessive deficit, to improve the cyclically-adjusted position to consolidate the public finances, consistent with a budgetary position of close to balance or in surplus in the medium term’. There is a clear risk that the budgetary outcome could be worse than projected in the programme in the short term. Moreover, the planned slight expansionary stance in 2005/06 and the fiscal stance over the medium term are not fully in line with the recommendation in the BEPGs.

(i)

ensure that the deficit is below 3 % of GDP in line with plans, and

(ii)

improve the cyclically-adjusted position to ensure that a budgetary position close to balance or in surplus is achieved and maintained over the medium term.

19.7.2005   

EN

Official Journal of the European Union

C 177/22

19.7.2005   

EN

Official Journal of the European Union

C 177/23

19.7.2005   

EN

Official Journal of the European Union

C 177/25

1.

On 11 July 2005, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertakings Carlyle Luxembourg Holding 1 Sarl and Carlyle Luxembourg Holding 2 Sarl (together ‘Carlyle funds’, Luxembourg) controlled by the Carlyle Group (‘Carlyle’, United States) acquire within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of the undertaking Otor Finance (‘Otor’, France) by way of conversion of bonds into shares.

2.

The business activities of the undertakings concerned are:

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (No (32-2) 296 43 01 or 296 72 44) or by post, under reference number COMP/M.3870 — Carlyle/Otor, to the following address:

19.7.2005   

EN

Official Journal of the European Union

C 177/26

for fundamental research: max. 100 %;

for industrial research: max. 50 %;

for precompetitive development: max. 25 %;

plus additional 10 %-points for SMEs;

plus additional 10 %-points regional bonus;

plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework;

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

for fundamental research: max. 100 %;

for industrial research: max. 50 %;

for precompetitive development: max. 25 %;

plus additional 10 %-points for SMEs;

plus additional 5 %-points regional bonus;

plus additional 10 %-points pursuant to point 5.10.4. b) R&D-framework;

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

for fundamental research: max. 100 %;

for industrial research: max. 50 %;

for precompetitive development: max. 25 %;

plus additional 10 %-points for SMEs;

plus additional 10 %-points regional bonus;

plus additional 15 %-points pursuant to point 5.10.3 first subparagraph;

plus additional 10 %-points pursuant to point 5.10.4. a), b) or c) R&D-framework;

altogether, including boni, not exceeding 75 % for industrial research and 50 % for precompetitive development

19.7.2005   

EN

Official Journal of the European Union

C 177/28

19.7.2005   

EN

Official Journal of the European Union

C 177/33

—

from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—

in electronic form on the EUR-Lex website under document number 32005M3789. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex)

19.7.2005   

EN

Official Journal of the European Union

C 177/33

—

from the Europa competition web site (http://europa.eu.int/comm/competition/mergers/cases/). This web site provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—

in electronic form on the EUR-Lex website under document number 32005M3809. EUR-Lex is the on-line access to European law. (http://europa.eu.int/eur-lex/lex)

19.7.2005   

EN

Official Journal of the European Union

C 177/34

1.

In accordance with Decision No 1513/2002/EC of the European Parliament and of the Council, of 27 June 2002, concerning the sixth framework programme of the European Community for research, technological development and demonstration activities contributing to the creation of the European Research Area and to innovation (2002 to 2006) (1), the Council adopted on 30 September 2002 the specific programme for research, technological development and demonstration: ‘Integrating and strengthening the European Research Area’ (2002-2006) (2) (referred to as ‘the specific programme’).

In accordance with Article 5(1) of the specific programme, the Commission of the European Communities (referred to as ‘the Commission’) has adopted on 9 December 2002, a work programme (3) (referred to as ‘the work programme’) setting out in greater detail, the objectives and scientific and technological priorities of the specific programme, and the timetable for implementation.

In accordance with Article 9(1) of the Regulation of the European Parliament and of the Council, of 16 December 2002, concerning the rules for the participation of undertakings, research centres and universities in, and for the dissemination of research results for, the implementation of the European Community Sixth Framework Programme (2002 to 2006) (4) (referred to as ‘the rules for participation’), proposals for indirect RTD actions should be submitted under the terms of calls for proposals.

2.

The present call for proposals for indirect RTD actions (referred to as ‘the call’) comprises the present general part and the specific conditions that are described in the annex. The annex indicates in particular, the dates of closure for the submission of proposals for indirect RTD actions, an indicative date for the completion of the evaluations, the indicative budget, the instruments and the areas concerned, the evaluation criteria for the evaluation of proposals for indirect RTD actions, the minimum number of participants and any applicable restrictions.

3.

Natural or legal persons fulfilling the conditions stated in the rules for participation and that do not fall under any of the exclusion cases in the rules for participation or in Article 114(2) of the Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (5) (referred to as ‘the proposers’) are invited to submit to the Commission proposals for indirect RTD actions subject to the conditions in the rules for participation and in the call concerned being fulfilled.

The conditions of participation of the proposers will be verified within the framework of the negotiation of the indirect RTD action. Before that however, proposers will have signed a declaration stating that they do not fall under any of the cases given by Article 93(1) of the Financial Regulation. They will also have given the Commission the information listed in Article 173(2) of the Commission Regulation (EC, Euratom) No 2342/2002, of 23 December 2002, laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (6).

The European Community has adopted an equal opportunities policy and, on this basis, women are particularly encouraged to either submit proposals for indirect RTD actions or participate in the submission of proposals for indirect RTD actions.

4.

The Commission makes available guides for proposers relating to the call, which contain information on the preparation and the submission of a proposal for an indirect RTD action. The Commission also makes available Guidelines on Proposal Evaluation and Selection Procedures (7). These guides and guidelines, the work programme and other information relating to the call, can be obtained from the Commission via the following addresses:

5.

Proposals for indirect RTD actions are invited to be submitted only as an electronic proposal via the web-based Electronic Proposal Submission System (EPSS (8)). In exceptional cases however, a coordinator may request permission from the Commission to submit on paper, in advance of a call deadline. This should be done in writing to one of the following addresses:

The request must be accompanied by an explanation of why the exception is being sought. Proposers wishing to use paper submission take the responsibility for ensuring that such requests for exemption and the associated procedures are completed in time for them to meet the call deadline.

All proposals for indirect RTD actions must contain two parts: the forms (Part A) and the content (Part B).

Proposals for indirect RTD actions may be prepared off-line or on-line and submitted on-line. Part B of proposals for indirect RTD actions can only be submitted in PDF (‘portable document format’, compatible with Adobe Version 3 or higher with embedded fonts). Compressed (‘zipped’) files will be excluded.

The EPSS software tool (for off-line or on-line usage) is available via the Cordis website www.cordis.lu.

Proposals for indirect RTD actions that are submitted on-line and which are incomplete, illegible or contain viruses, will be excluded.

Versions of proposals for indirect RTD actions submitted on a removable electronic storage medium (e.g. CD-ROM, diskette), by email or by fax, will be excluded.

Any proposal for indirect RTD actions that has been allowed to be submitted on paper and which is incomplete will be excluded.

Further details on the various proposal submission procedures are given in Annex J of the Guidelines on Proposal Evaluation and Selection Procedures.

6.

Proposals for indirect RTD actions have to reach the Commission at the latest on the closure date and at the time specified in the call concerned. Proposals for indirect RTD actions arriving after this date and time will be excluded.

Proposals for indirect RTD actions not satisfying the conditions relating to the minimum number of participants indicated in the call concerned will be excluded.

This also applies regarding any additional eligibility criteria given in the work programme.

7.

In the case of successive submissions of the same proposal for an indirect RTD action, the Commission will examine the last version received before the closure date and time specified in the call concerned.

8.

In all correspondence relating to a call (e.g. when requesting information, or submitting a proposal for an indirect RTD action), proposers are invited to cite the relevant call identifier.