BUDGET COUNCIL: FINAL HEATED EXCHANGE WITH PARLIAMENT OVER 2003 BUDGET.

The Council's starting point is virtually unchanged from its position at first reading (see European Report No 2703, same Section). Payment appropriations are even slightly lower on the whole at Euro 96.911 billion, compared to 96.957 billion last July, so as to take account of the Letter of Amendment cutting the appropriations needed in Heading 1 (Agriculture). Increases in expenditure are nevertheless foreseen on a sectoral basis in Heading 3 (internal policies), where payments increase by some 10 million and in Heading 4 (external actions), where they rise by around 15 million. These figures reflect the special attention attached to certain priorities expressed by the European Parliament at first reading, accepting the inclusion in Heading 3 of appropriations in the areas of justice and home affairs and immigration (European Refugee Fund) and transport (Marco Polo programme and Trans-European Networks) and in Heading 4 for the World Health Fund and the anti-personnel mine programme. This is still a far cry from the Euro 99.933 billion of Parliament's first reading, however.

The consultation negotiation with Parliament's Budgets Committee delegation is expected to lead to solutions being found for the outstanding difficulties. COREPER has thus informally mandated the Presidency to accept the division of the budget line in Heading 1 on refunds for exports of live animals. Likewise, it seems agreed that the flexibility instrument will be enacted at 12 or 13 million in Heading 2 (structural actions) to finance part of the Euro 27 million for the restructuring of the Spanish and Portuguese fishing fleets after the demise of the Fisheries Agreement with Morocco, with the balance complemented by appropriations foreseen within the ceiling. Concerning Heading 5 (administration), there should not be any major problems given the agreement reached on the principle of anticipation of 2003 expenditure thanks to under-implemented appropriations in 2002...