BUDGET COUNCIL: COUNCIL PAVES THE WAY FOR FINAL DEAL ON 2004 BUDGET.

After an 11-hour marathon consultation, the means of financing the Euro 200 million promised by the EU at the Madrid Donors Conference for the Reconstruction of Iraq, was agreed as follows:

- Euro 95 million will be provided via the Flexibility Instrument (which permits the financing of precisely defined expenditures which could not be financed within the limits of the thresholds available under one or more of the other Headings);

- in the 2003 Budget, to the Euro 40 million proposed by the Commission is added another sum of Euro 5 to 10 million which Budget Commissioner Michaele Schreyer will have to find amongst the appropriations not used under Heading 4 (External Actions);

- in the 2004 Budget, Euro 30 million are already included under the ad hoc line following Parliaments first reading of the Budget, and the remainder, equivalent to Euro 25 or 30 million, will have to be found by Parliament at second reading by means of redeploying the credits under Heading 4.

Another compromise between Parliament and the Council, also under Heading 4, is that the amount allocated to actions under the Common Foreign and Security Policy (CFSP) will be set at Euro 62.6 million, following an exchange of letters between the Council and the Parliament in the next few days. The two institutions will meet on several occasions in 2004 to take stock of these CFSP actions, in accordance with the agreement of November 25, 2002 on Councils duty to inform Parliament on the matter.

The consultation also made it possible to determine, according to Councils wishes, the rate of increase in payment appropriations in the 2004 Budget. It will be limited to 2.3% for the EU25 (compared with 5.2% after Parliaments first reading)...

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