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BUDGET : 99.2% OF EUROPEAN FUNDING USED IN 2005.

The execution of the EU budget reached record levels in 2005, but extra efforts are still needed in terms of the absorption capacity of Community funding in the new member states.

The EU Commissioner for Financial Programming and the Budget, Dalia Grybauskaite, presented two annual reports in Brussels on 21 September. These reports - the 2005 Financial Report and the Report on the Allocation of 2005 EU Expenditure by Member State - made it possible to draw lessons from the 2005 budget.

The data show that the total volume of the EU budget only rose slightly compared with 2004, with an increase of 4.7 billion (0.01%), despite the EU's enlargement from 15 to 25 member states. And yet, the rate of execution of the budget reached record levels: 99.2% of Community funding was put to use in 2005 and only 900 million of the total 104 billion were unspent. Grybauskaite attributed this "huge success" to the reforms that were put in place, including the Commission's new accounting system and the new follow-up and monitoring rules agreed on with the member states.

With regard to the breakdown of the budget, no major changes were made in 2005. The lion's share, as always, was allocated to the key policies: the preservation of natural resources (41%) and the Cohesion Policy (34%). Although attempts were made to allocate more resources to competitiveness, research, growth and job creation, any progress made is purely symbolic.

A REVISION IS VITAL

In terms of the breakdown between member states, those that benefit the most remain the main' countries: Spain, France, Italy, Germany and the United Kingdom. In relative terms, and excluding Luxembourg and Belgium, both of which receive significant funding to cover administration costs (EU institutions), the main beneficiaries are Lithuania, Greece and Malta.

Although the new member states are currently integrated in both the budget and Community policies, it is nonetheless limited since between the ten of them, they received less than 10% of the 2005 budget. This represents an increase compared with 2004 but is a clear indication that the catching up process is gradual. The difference in commitments signed on 1 May 2004, the day of their accession, and the amount of funding actually received by the EU10 in September 2006, shows that further improvements (particularly with respect to red tape) need to be made in order to facilitate better absorption of Community funds.

The commissioner feels that the 2005 budget has effectively revealed the need to conduct an in-depth review of the system in 2008-2009. Firstly, in terms of policies, it will be necessary to define which policies should be maintained at a European level and which policies need to be reformed. Secondly, in terms of own resources, it will be necessary to review the system based on rebates.

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Publication:European Report
Geographic Code:4E
Date:Sep 22, 2006
Words:466
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