25.XI.2004
COUNCIL OFTHE EUROPEAN UNION / EN
C/04/322
Brussels, 25 November 2004
14617/04 (Presse 322)
PRESS RELEASE
2623rd Council Meeting
Economic and Financial Affairs
Budget
Brussels, 25 November 2004
President Mr Atzo NICOLAÏ
Minister for European Affairs of the Netherlands
14617/04 (Presse 322) 1
EN
Main Results of the CouncilThe Council reached political agreement, together with the European Parliament and the Commission, on the second reading of the draft general budget for 2005.
CONTENTS1
PARTICIPANTS 4
ITEMS DEBATED
PRESENTATION OF THE ANNUAL REPORT FOR 2003 BY THE COURT OF AUDITORS 6
CONCILIATION MEETING WITH THE EUROPEAN PARLIAMENT 6
ESTABLISHMENT OF THE DRAFT BUDGET FOR THE FINANCIAL YEAR 2005 11
OTHER ITEMS APPROVED
ECONOMIC AND FINANCIAL AFFAIRS
– Commission Communication on Clearing and Settlement - Council conclusions* 14
PARTICIPANTS
The Governments of the Member States and the European Commission were represented as follows:
Belgium:
Mr Johan VANDE LANOTTE Deputy Prime Minister and Minister for the Budget and Public Undertakings
Czech Republic:
Mr Eduard JANOTA First Deputy Minister for Finance
Denmark:
Mr Thor PEDERSEN Minister for Finance
Germany:
Mr Caio Kai KOCH-WESER State Secretary, Federal Ministry of Finance
Estonia:
Mr Väino REINART Permanent Representative
Greece:
Mr Petros DOUKAS State Secretary for Economic Affairs and Finance
Spain:
Mr Carlos BASTARRECHE SAGÜES Permanent Representative
France:
Mr Pierre SELLAL Permanent Representative
Ireland:
Mr Tom PARLON Minister of State at the Department of Finance with special responsibility for the Office of Public Works
Italy:
Mr Rocco Antonio CANGELOSI Permanent Representative
Cyprus:
Mr Nicholas EMILIOU Permanent Representative
Latvia:
Ms Valentīna ANDRĒJEVA State Secretary, Ministry of Finance
Lithuania:
Mr Algirdas BUTKEVIČIUS Minister for Finance
Luxembourg:
Ms Martine SCHOMMER Permanent Representative
Hungary:
Mr Tibor KISS Permanent Representative
Malta:
Mr Richard CACHIA CARUANA Permanent Representative
Netherlands:
Mr Atzo NICOLAÏ Minister for European Affairs
Austria:
Mr Alfred FINZ State Secretary, Federal Ministry of Finance
Poland:
Mr Wieslaw SZCZUKA Deputy State Secretary, Ministry of Finance
Portugal:
Mr Álvaro MENDONÇA E MOURA Permanent Representative
Slovenia:
Mr Ciril ŠTOKELJ Permanent Representative
Slovakia:
Mr Ivan MIKLOŠ Deputy Prime Minister and Minister for Finance
Finland:
Ms Ulla-Maj WIDEROOS Second Minister for Finance
Sweden:
Mr Sten OLSSON State Secretary at the Cabinet Office
United Kingdom:
Mr Stephen TIMMS Financial Secretary to the Treasury
Commission:
Mr Siim KALLAS Vice-President
Ms Dalia GRYBAUSKAITE Member
ITEMS DEBATED
PRESENTATION OF THE ANNUAL REPORT FOR 2003 BY THE COURT OF AUDITORS
The Council took note of the presentation of the Court's annual report on the implementation of the budget for 2003 given by Mr FABRA VALLES, President of the Court of Auditors.
After an exchange of views the Council instructed the Permanent Representatives Committee to examine the report and delegations' suggestions to prepare for the discussion and the Council's adoption, at its meeting in March 2005, of its recommendation on a discharge.
The Danish delegation intervened to comment on the contents of the Court's Report in the light of last year's Danish initiative to improve the discharge procedure by setting up a working party that would systematically follow-up the Court's report while the Court organised a DAS[1] seminar and prepared a report on the performance of the institutions. The German delegation, while acknowledging the efforts made by the Commission to improve the accounting system, expressed its regrets that the Court of Auditors had been unable to issue the DAS and supported the Danish initiative. The United Kingdom delegation shared the Danish and German delegations' concerns.
It should be recalled that the Court of Auditors' annual report on the implementation of the Community budget is examined by the Council, which subsequently adopts the recommendation provided for in the procedure for the discharge to be given to the Commission in respect of the implementation of the budget in accordance with Article 276 of the Treaty.
This report covers the financial year ending 31 December 2003. The recommendation to the European Parliament that the Commission should be given a discharge in respect of the implementation of the budget will be adopted at the ECOFIN Council meeting in March 2005.
As in previous years, the Annual Report is followed by several Special Reports of which the conclusions are to be included in the Council recommendation. This year, the Court presented 6 Special Reports at the same time.
In the 2003 report, the Court was able to conclude that the accounts of the European Communities faithfully reflect the revenue and expenditure of the Communities for the financial year and the situation of the Communities. As regards revenue, commitments and administrative expenditure, the Court considers the transactions underlying the consolidated annual accounts to be legal and regular. As in the past, the Court gives no positive DAS regarding agriculture structural measures, internal policies, external action and pre-accession aid. These reservations are above all due, according to the Court, to the fact that the accounting system was not designed to ensure that the assets are fully recorded. In this respect, the Court stresses the additional efforts should be made to implement the action plan concerning the modernisation of the accounting system.
CONCILIATION MEETING WITH THE EUROPEAN PARLIAMENT
Before proceeding with the second reading of the draft budget for 2005, the Council held a conciliation meeting with a delegation from the European Parliament under the Inter-institutional Agreement of 6 May 1999 on budgetary discipline. The European Parliament delegation was led by
Mr Janusz LEWANDOWSKI, Chairman of the Committee on Budgets and comprised, MsLaimaLiucija ANDRIKIENE, Mr Valdis DOMBROVSKIS, Mr Markus FERBER, MrSalvador GARRIGA POLLEDO, Rapporteur for the 2005 Budget (Commission), MrJanuszLEWANDOWSKI, Chairman of the Committee on Budgets, Mr Paul RÜBIG, MrAntonis SAMARAS, Mr José Albino SILVA PENEDA, Mr Laszlo SURJÁN, MsBarbaraDÜHRKOP DÜHRKOP, Mr Szabolcs FAZAKAS, Ms Neena GILL, MsCatherineGUY-QUINT, Ms Jutta HAUG, Mr Giovanni PITTELLA, Mr Ralf WALTER, MsAnne JENSEN, Rapporteur for the 2005 Budget (Other institutions), Mr Jan MULDER, Rapporteur for the 2004 Budget (Commission), Mr Kyösti VIRRANKOSKI, Ms Helga TRÜPEL, Mr Esko SEPPÄNEN, Mr Wojciech ROSZKOWSKI.
The European Parliament, the Council and the Commission agreed on the following:
– to accept Amending Letter No 1/2005 concerning the pre-accession strategy for Croatia as proposed by the Commission; EUR 120 million in appropriations for the Turkish Cypriot Community to be put in the reserve, the amount includes appropriations proposed by the Commission in Preliminary Draft Amending Budget No9/2004; EUR50million for the PEACE II programme, of which EUR5million redeployed from innovative measures. For 2006 the Commission will redeploy EUR 16 million for the PEACE II programme;
– to finance actions encouraging the economic development of the Turkish Cypriot community and pre-accession strategy for Croatia under Heading 7 of the Financial Perspective;
– to accept Amending Letter No 2/2005 concerning Executive Agencies, inter alia. A joint statement on the management of the relevant posts was agreed;
– to accept Pilot Projects on quality promotion and on a risk financing model for livestock epidemics as proposed by the Commission in its Amending Letter No 3/2005;
– to accept the mobilisation of EUR45million from the flexibility instrument under sub-Heading 2a) of the Financial Perspective for the PEACE II programme, EUR40million under Heading 3 for Decentralised Agencies and EUR100million under Heading 4 for Iraq;
– to fix the amount of the CFSP budget at EUR62,6million for 2005;
– to accept Preliminary Draft Amending Budget No 11/2004 with a total amount of payment appropriations of EUR 3,7 billion for Structural Funds and a call for additional own resources of EUR500million.
– the total amount for payment appropriations decided at the end of the 2005 budgetary procedure in December shall not exceed EUR106,3billion;
– a joint statement on an Amending Budget to be established in 2005 for reductions of administrative expenditure resulting from the adaptation of the salaries and pensions;
– a joint statement on payment appropriations for Heading 2.
Details concerning the Agreement are provided hereafter.
As regards the 2004 Budget:
to accept Amending Budget No 10 for 2004 (ex PDAB No 11) with EUR 3,7 billion for payment appropriations for Structural Funds and EUR0,5billion for the call of fresh money;
to accept the merging of Preliminary Draft Amending Budget No 9 for 2004 on assistance to Northern Cyprus (EUR 6 million) with Amending Letter No 1 for 2005 (EUR 114 millions). However this amount will be put in the reserve until a legal basis is drawn up.
As regards the 2005 Budget:
Heading 1 (agriculture):
To accept only the changes of nomenclature and to agree on the two pilot projects for EUR 1 million (0,5 each) proposed by the Commission in its Amending Letter No 3/2005 for agricultural expenditure; consequently heading 1 is maintained at a similar level to that of the first reading (EUR 49.676.450.000 in commitments appropriations and EUR 49.114.850.000 in payment appropriations, including EUR 1 million corresponding to the 2 abovementioned pilot projects)
Heading 2 (Structural operations):
To agree on the overall amount of EUR 60 million for 2005 for the PEACE II programme; Amending Letter No 1/2005 aimed at financing the PEACE II programme with EUR 50 million from the Community budget in 2005 is accepted, including EUR45million from the flexibility instrument; agreement was also reached on a two-year budget for the PEACE II programme (2005 and 2006) with EUR 16 million expected from the Commission for 2006. However, a Council statement taking note of the Commission's commitment to review this amount of EUR 16 million in 2005 is agreed; an additional statement is added allowing the Commission to present a preliminary draft amending budget for 2005 if the execution of payment appropriations for structural funds exceeds 40% by the end of July 2005 or if the Commission foresees a shortage of payment appropriations.
Heading 3 (Internal policies):
to accept the use of EUR40million from the flexibility instrument to finance the Decentralised Agencies and to reject Amendment 481 reducing appropriations for Decentralised Agencies; to agree that the financing of the assistance to Northern Cyprus - including 2004 and 2005 as stated above (see amending budget No9/2004) - should take place under Heading 7.
Heading 4 (External actions):
to agree on an amount of EUR 190 million for assistance to Iraq of which EUR 100 million is to be financed through the use of the flexibility instrument for this purpose; to agree on Amending Letter No 3 for 2005, as regards International Fisheries Agreements with a transfer of EUR 2,5 million from the reserve to the relevant budget lines in order to take into account progress made in the negotiation of some agreements; to agree on Amending Letter No 1 for 2005 with additional appropriations of EUR105 million under Heading 7 (Preaccession strategy) and a decrease of EUR65million in the appropriations for the Western Balkans (Heading 4); to agree the level of CFSP expenditure (EUR 62,6 million) as stated in the Council's first reading.
Heading 5 (Administration):
to agree on Amending Letter No 2 for 2005 on Executive Agencies with a transfer of administrative expenditure already included in the 2005 Draft Budget either in the Commission's administrative budget or in the appropriations for programmes that should themselves lead to savings of EUR7,691million under Heading 5 (Administrative expenditure); to agree on the two proposed joint statements on Executive Agencies regarding the management of posts and on an Amending Budget in 2005 on the reduction resulting from the adaptation of salaries and pensions in 2004.
Heading 7 (Pre accession strategy):
to agree on the financing of assistance to Northern Cyprus and of the preaccession strategy for Croatia under Heading 7 of the Financial Perspective as stated previously (see Heading 3); to agree on an amount of EUR 120 million for the assistance to Northern Cyprus in 2005, by merging of Preliminary Draft Amending Budget No 9 for 2004 and Amending Letter No 1 for 2005, to be put in the reserve (see Budget 2004).
PAYMENT APPROPRIATIONS
The limit for payment appropriations for the 2005 budget is set at EUR 106,3 billion.
ESTABLISHMENT OF THE DRAFT BUDGET FOR THE FINANCIAL YEAR 2005
After the meeting with the European Parliament and on the basis of the preparatory proceedings of the Permanent Representatives Committee and the agreements reached with the European Parliament at the conciliation meeting, the Council reached political agreement on the second reading of the draft general budget for 2005.
Details of the amounts by heading and field of action are given in the table set out below.
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OTHER ITEMS APPROVED
ECONOMIC AND FINANCIAL AFFAIRS
Commission Communication on Clearing and Settlement - Council conclusions*
The Council adopted the following conclusions:
"1. The Council welcomes the Commission’s initiative to put forward a Communication on Clearing and Settlement[2]. The efficient, cost-effective and safe cross-border clearing and settlement of securities transactions in a competitive environment within the European Union would constitute a significant step towards the completion of the Internal Market for financial services and hence towards meeting the objectives set out in the Lisbon Strategy. Therefore it is of great importance for the Commission, the Member States and the sector to move forward on this issue.
- The Council welcomes the establishment of the Cesame clearing and settlement advisory and monitoring group. This group will have an important task to support and coordinate the dismantling of the barriers identified in the Giovannini reports for which the private sector has responsibility. The Cesame group should work in close cooperation with the public authorities.
- The Giovannini group has identified several important barriers to efficient cross-border clearing and settlement which need to be addressed by public authorities. The Council agrees with the Commission thatlegal and fiscal barriers should not hamper efficient, effective and safe cross-border clearing and settlement. The Commission will establish expert groups on legal and tax issues. These groups will focus on the above mentioned barriers, the analysis of the existing legal systems, and the reduction of legal uncertainty and of costs, in particular those resulting from the additional compliance burden created by differences in national legal, regulatory and tax regimes. The Council emphasizes that the legal certainty aspects are a precondition for adequate investor protection and the creation of a stable market in which cross-border back-office costs can be reduced.
- The Council agrees with the Commission that differing national regulatory regimes may be hindering the development of efficient and safe cross-border clearing and settlement systems in the EU. The Council believes that creating rights of access and choice and establishing a common regulatory and supervisory framework may be useful to create free movement of services and to reach the aforementioned goals. Public measures should follow a functional approach, based on precise functional definitions, aiming to ensure a level playing field between all market participants, without imposing any specific market or institutional structure.
- The Council welcomes the Commission intention to put forward an extended impact analysis of each of the main elements of its planned regulatory proposal. This impact analysis including a quantitative cost-benefit analysis, based on a non-legal document elaborating the Commission’s proposal, should include all the relevant aspects of the proposal including, in particular the cost-reduction potential of dismantling all the barriers identified by the Giovannini Group, the impact on direct holding systems and the interaction between different holding systems, free access and choice, a common regulatory and supervisory framework, as well as implementation of appropriate governance arrangements.
Further proposals by the Commission should take into account the outcome of the regulatory impact analysis. Possible adaptations of supervisory arrangements could be considered, based on the principle of home country control while ensuring an efficient coordination between the concerned authorities, and to make sure that risks in relation to the stability of all relevant markets are taken into account.