agriregionieuropa Groupe de Bruges European Commission Emil Erjavec The framework of the EU budget  The budget of the EU  a financial instrument that raises funds for financing the expenditures of the EU, and beside financial it has an economic, political and legal role.  The legal base  EU Treaties set out basic principles, budget procedure, general goals of policies (expenditures).  Financial Regulation rules how to spend - financial management.  Two sides of the budget  Budget revenues – „own resources“  decision determines what and how much budgetary resources to collect. Specific rules about financing mechanisms and revenue limit (‘own resource ceilings’)  Expenditures  financing of policies and institutional set-up of the EU.  Two instruments of the EU budget policy:  Multiannual financial framework (MFF)  a strategic orientation of EU budget  Annual budget  operational implementation of MFF and determine expenditure in detail. 1

agriregionieuropa Groupe de Bruges European Commission Emil Erjavec Financial perspective and annual budget  Multiannual financial framework  Indicates the maximum amount and the composition of EU expenditure over a period in the programming period (7 years). The aim:  to stabilise the annual budget  to strengthen budgetary discipline  to keep the total increase in expenditure under control  Is not a multiannual budget!  It determines "ceilings" (the maximum amounts of commitment appropriations and payment appropriations) per "heading" (the categories of expenditure) for each year.  Is established through Interinstitutional Agreement by the European Parliament, the Council and the Commission.  Before 1988 there was no MFF. MFF as result of continuing conflicts between the three institutions with budgetary powers.  Planning of the CAP funds is one of the most difficult issues of MFF.  Annual budget  Annual financial plan which determines the sources of revenues and exact level of expenditure and the breakdown between the various budget lines.  The EU budget is not allowed to be in deficit.  Ceiling of the budget: % of the Union's Goss national income.

agriregionieuropa Groupe de Bruges European Commission Emil Erjavec Revenues – EU budget own resources  „Own resources" are transfers made by the MS to cover EU expenditure. They are divided into four categories.  Traditional own resources (arround % of the EU budget) :  Taxes raised on behalf of the EU as a whole, principally import duties on goods brought into the EU. States are allowed to keep a proportion of the revenue to cover administration (25%). The importance of this resource has declined.  Important part: agricultural duties and sugar levies.  The VAT resource (arround % of the EU budget) :  Taxes derived as a proportion of VAT levied in each member country. VAT rates vary in different countries. The importance of this resource has declined.  GNI based own resources (arround % of the EU budget) :  An "additional" resource – it is used to top up any revenue shortfall based on a forecast of each member state´s gross national income (Gross national income). This is the last recourse for raising funding for a budget year, so the actual figure is adjusted within predetermined limits to obtain the budget total required.  Other Revenue (arround 1 % of the EU budget):  This includes interest on deposits or late payments, payments from non-EU organisations, underspent funding from community programs and any other surplus from the previous budget.  Commission obtains most of its revenue indirectly by payments from treasuries of MS. Payments are made monthly by MS to the Commission.  The fact that the budget is funded from own resources makes the EU financially independent. 3

agriregionieuropa Groupe de Bruges European Commission Emil Erjavec Expenditures – financing of EU policies 4 Commitment appropriations (million, 2004 prices) FP EUR (billion)Structure (%) 1 Sustainable growth382 44% 1 A Competitivness 74 9% 1 B Cohesion % 2 Natural resources (agriculture, fishery) % CAP 1 Pillar % CAP 2 Pillar 78 9% 3 Other internal policies11 1% 4 Foreign policy49 6% 5 Administration50 6% 6 Compensations0,8 0% T O T A L %

agriregionieuropa Groupe de Bruges European Commission Emil Erjavec European Commission proposal on Multiannual Financial Framework COMPARISON MFF / Billion €-Post 2013 in 2011 prices Difference in % Smart and Inclusive Growth 443,1490,911% of which Competitiveness 75,4114,952% of which Economic, social and territorial cohesion 367,73762% 2. Sustainable Growth: natural resources 432,2382,9-11% of which Market related expenditure and direct payments ,8-12% of which rural development 97,389,8 -8% 3. Security and Citizenship 11,518,561% 4. Global Europe 58,970,019% 5. Administration 56,962,610% Total appropriations 1002,51025,0 5 … significant decrease in CAP budget!