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EC COMMISSION PRESENTS NEW BUDGET: GERMANY'S NEW FEDERAL STATES WILL GET MORE AID

 EC COMMISSION PRESENTS NEW BUDGET:
 GERMANY'S NEW FEDERAL STATES WILL GET MORE AID
 FRANKFURT, Germany, April 23 /PRNewswire/ -- Under the EC Commission's draft budget for 1993-1997, EC revenues will gradually rise by about 30 percent, reports Deutsche Bank Research in its latest issue of the "G3 Issues" series. The new plan calls for more than ECU 20 billion ($25 billion) in new revenues, increasing from the current ECU 66.6 billion ($82.5 billion) to a total of ECU 87.5 billion ($108.5 billion) in 1997. One U.S. dollar is equal to approximately ECU 0.8.
 Contrary to earlier projections, notes DB Research, the EC's spending on agricultural support programs is slated to increase by some $5 billion by 1997, so that agriculture will remain the largest individual budget item at roughly $50 billion. However, because of the overall expansion of the budget, the agricultural sector's relative share will fall from 53 percent in 1992 to 45 percent in 1997, after amounting to as much as 64 percent in 1987.
 Most of the new resources planned for 1993-1997 will be devoted to "structural funds" for regional development. These will increase by $13.6 billion and reach 33 percent of the entire budget. The share of EC structural funds going to the EC's four poorest countries -- Greece, Ireland, Portugal and Spain -- will double under the new plan. Today, EC transfers to Greece and Ireland amount to some 6 percent of their respective GNPs.
 Eastern Germany, trailing Portugal and Greece with a per capita GDP at 37 percent of the EC average, expects considerable financial assistance from the funds for regional, social, and structural agricultural policy. DB Research reports that eastern Germany has already been allocated $3.7 billion of such transfers from 1991 to 1993.
 Funds for foreign policy commitments will also be boosted by $4.3 billion under the new budget. Most of the nearly $8.4 billion to be spent on so-called external action will go to eastern Europe, according to Deutsche Bank Research. EC aid to the east will be in the form of the project-related PHARE program, food aid, and balance of payments assistance.
 As far as the revenue side is concerned, Germany leads the EC in gross contributions and will contribute $25 billion to the EC budget 1992. The gap between Germany's contributions to, and payments from, the EC widened from about $4.5 billion in 1990 to almost $12 billion in 1991. Germany therefore accounts for nearly two-thirds of total net transfers in the entire EC budget.
 Nevertheless, notes the research institute, under the new budget plan, the size of member states' contributions will depend more than before on each country's performance and prosperity. As a consequence, Belgium, Denmark and the Netherlands, which have contributed disproportionately little in the past, would become net contributors.
 In conclusion, DB Research points out that the budgetary question should be resolved before negotiations begin on EC membership for Austria, Sweden and Finland. Otherwise, the poorer member countries are unlikely to ratify the Maastricht treaty. For their part the Community's net contributors are likely to resist such increases. Under these circumstances, a special summit might be necessary to reach an agreement on raising the EC revenues. Such a summit will probably not take place until the second half of 1992, when the United Kingdom will hold the presidency.
 For a copy of the complete text, contact Ute DeFarlo, TransAtlantic Futures Inc., Washington, 202-462-1222; fax 202-462-1229.
 -0- 4/23/92
 /CONTACT: Barbara Bottcher of Deutsche Bank Research, 011-49-69-7150-4731, in Frankfurt/ CO: Deutsche Bank Research ST: IN: SU:


IH-DC -- DC010 -- 1778 04/23/92 10:50 EDT
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Date:Apr 23, 1992
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