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		52013PC0388

			Recommendation for a COUNCIL DECISION abrogating Decision 2004/918/EC on the existence of an excessive deficit in Hungary /* COM/2013/0388 final */

			   	Recommendation for a
COUNCIL DECISION
abrogating Decision 2004/918/EC on the
existence of an excessive deficit in Hungary
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union,
and in particular Article 126(12) thereof,
Having regard to the recommendation from
the Commission,
Whereas:
(1)       The Council has decided on
5 July 2004, in accordance with Article 104(6) of the Treaty establishing the
European Community (TEC), that an excessive deficit exists in Hungary and adopted
a recommendation under Article 104(7) TEC with a view to bringing the excessive
deficit situation to an end by 2008[1].
(2)       On 18 January 2005, in
accordance with Article 104(8) TEC, the Council considered that Hungary had not
taken effective action in response to its recommendation and issued another
recommendation based on Article 104(7) TEC on 8 March 2005, confirming the 2008
deadline for the correction of the excessive deficit. On 8 November 2005, the
Council decided that Hungary had for the second time failed to comply with the
recommendations under Article 104(7) TEC. Accordingly, it addressed a third
recommendation under Article 104(7) TEC to Hungary on 10 October 2006,
postponing the deadline for the correction of the excessive deficit to 2009. On
7 July 2009 the Council concluded that the Hungarian authorities could be
considered to have taken effective action in response to the recommendation
from October 2006 and, against the background of the severe economic downturn,
issued a revised recommendation under Article 104(7) TEC, setting once more a
new deadline for correction, i.e. 2011. On 27 January 2010 the Commission
concluded that Hungary had taken effective action in response to the latest
Council recommendations, with which the Council concurred in its conclusions on
16 February 2010, but alerted about considerable risks.
(3)       According to the
provisions of Article 126(8) TFEU, the Council decided on 24 January 2012 that
Hungary had not taken effective action in response to the July 2009 Council
recommendation within the period laid down in this recommendation. While the 3%
of GDP Treaty reference value was not breached in 2011, this was not based on a
structural and sustainable correction and hinged upon substantial one-off revenues.
This was accompanied by an estimated cumulative structural deterioration of
over 2% of GDP in 2010 and 2011 compared to a recommended cumulative fiscal
improvement of 0.5% of GDP. Moreover, while the authorities were implementing
structural measures in 2012, which were expected to largely offset the previous
deterioration, the 3% of GDP Treaty reference value would again be respected in
2012 only thanks to one-off measures of close to 1% of GDP and would be
breached in 2013.
(4)       On 13 March 2012, the
Council adopted a new recommendation in accordance with Article 126(7) TFEU for
Hungary to bring the excessive deficit to an end by 2012. The Hungarian
authorities were asked to undertake the following steps in particular: (i) to
put an end to the excessive deficit situation by 2012 in a credible and
sustainable manner; (ii) to undertake an additional fiscal effort of at least
½% of GDP to ensure the attainment of the 2012 deficit target of 2.5% of GDP;
and (iii) to take the necessary additional measures of a structural nature to
ensure that the deficit in 2013 remains well below the 3% of GDP threshold. At
the same time, the government debt ratio was recommended to be brought back on
a declining path as soon as possible so that it represents sufficient progress
towards compliance with the debt reduction benchmark. The budgetary adjustment
also needed to be supported by the proposed improvements in the fiscal
governance framework. The Council established the deadline of 13 September 2012
for the Hungarian government to take effective action. Also on 13 March 2012,
the Council decided to suspend a part of the Cohesion Fund commitment
appropriations for the year 2013 for Hungary (in line with Article 4 of Council
Regulation (EC) No 1084/2006).
(5)       On 30 May 2012, based on
the 2012 convergence programme and further specification of the savings
measures, the Commission concluded that Hungary had taken effective action
regarding the correction of the excessive deficit. In particular, the general
government deficit was expected to reach 2.5% of GDP in 2012 and remained well
below the 3% of GDP Treaty reference value in 2013 as recommended by the
Council in March. Moreover, it was acknowledged that some progress had been
made on enhancing the fiscal governance framework even though in this area
overall progress could have been considered slow. Against this background, the
Commission adopted on 30 May a proposal for lifting the suspension of the
Cohesion Fund commitment appropriations. On 22 June 2012 the Council concurred
with this assessment and adopted a decision lifting the suspension of the Cohesion
Fund commitment appropriations.
(6)       In accordance with Article
4 of the Protocol on the excessive deficit procedure annexed to the Treaties,
the Commission provides the data for the implementation of the procedure. As
part of the application of this Protocol, Member States have to notify data on
government deficits and debt and other associated variables twice a year,
namely before 1 April and 1 October, in accordance with Article 3 of Council
Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol
on the excessive deficit procedure annexed to the Treaty establishing the
European Community[2].

(7)       When considering whether a
decision on the existence of an excessive deficit should be abrogated, the
Council should take a decision on the basis of notified data. Moreover, a
decision on the existence of an excessive deficit should be abrogated only if
the Commission forecasts indicate that the deficit will not exceed the 3% of
GDP Treaty reference value over the forecast horizon[3].
(8)       Based on data provided by
the Commission (Eurostat) in accordance with Article 14 of Regulation (EC) No 479/2009
following the notification by Hungary before 1 April 2013, the Commission 2013 Spring
Forecast and the assessment of additional corrective measures adopted on 13 May
2013 in a government decree, the following conclusions are warranted:
–
In 2012, on the basis of a considerable fiscal
effort, the general government deficit reached 1.9% of GDP. This was also
thanks to one-off revenues amounting to ¾% of GDP, including the higher than budgeted one-off revenues of 0.2% of GDP related
to further transfer of assets from the private to the public pension pillar.
The adopted 2012 budget targeted a deficit of 2.5% of GDP on the basis of a
0.5% growth. The budget contained an extraordinary reserve of 1.1% of GDP and numerous
consolidation measures, most notably: (i) revenue-increasing measures of around
1¾% of GDP, including hikes in indirect taxes and social security
contributions; (ii) structural measures on the expenditure side of ¾% of GDP,
such as a review of social benefits; and (iii) expenditure constraints of ¼% of
GDP in the public sector, including a nominal wage freeze in most sectors. In
order to counterbalance the constantly deteriorating growth outlook, the
government adopted two main additional corrective packages in April and October
(totalling 0.7% of GDP), comprising mainly further cuts in the appropriations
of the budgetary institutions, of which around half was implemented. In
addition, the balance of the local government sector improved by around 0.7% of
GDP compared to the budgeted plans, mainly due to their low investment
activity. In the context of the October 2012 EDP Progress Report, the official 2012 deficit target was revised upwards from 2.5% to
2.7% of GDP. Overall, effectively implemented corrective
measures of around 3% of GDP adopted by the central government and the
improvement of the local government sector's balance eventually resulted in a
deficit of 1.9% of GDP, i.e. an overachievement of the original deficit target
by 0.6% of GDP. The activation
of the budgeted extraordinary reserves counterbalanced the budgetary slippages,
partly related to the worse than earlier expected macroeconomic environment.
–
The Hungarian 2013 convergence programme projects
the general government deficit to stay at 2.7% of GDP in both 2013 and 2014. However,
the Commission 2013 Spring Forecast foresees a deficit of 3.0% of GDP in 2013
and 3.3% of GDP in 2014, which suggests that the excessive deficit has not been
brought to an end in a durable way. On 13 May 2013, following the release of
the Commission 2013 Spring Forecast, the Hungarian government adopted further
corrective measures amounting in gross terms to about 0.3% and 0.7% of GDP for 2013
and 2014, respectively. The Commission's updated fiscal assessment, which takes
into account the net deficit improving effect of these additional corrective
measures, projects a deficit of 2.7% and 2.9% in 2013 and 2014, respectively.
Thus, the deficit is expected to remain below the Treaty reference value of 3%
of GDP over the forecast horizon. In addition, according to the Commission's
estimation, the cyclically-adjusted budget balance, net of one-off and other
temporary measures, will stand at -¾% and -1½% of GDP in 2013 and 2014, and
hence will be consistent with the Hungarian medium-term objective of -1.7% of
GDP.
–
The debt-to-GDP ratio was reduced from a peak of
close to 82% in 2010 to 79.2% in 2012, thanks to substantial one-off capital
transfers linked to the abolition of the mandatory private pension pillar and a
number of consolidation measures. According to the 2013 convergence programme,
the debt-to-GDP ratio will continue to decline, falling to 78.1% and 77.2% in
2013 and 2014, respectively, and remaining on a downward path thereafter. Even
after incorporating the impact of the new consolidation measurres adopted on 13
May 2013, the Commission forecasts a higher trajectory for the debt-to-GDP
ratio by around 1 pp for both 2013 and 2014.
(9)       As to fiscal governance,
the Council asked the Hungarian authorities to establish a truly binding
medium-term framework and broaden the analytical remit of the Fiscal Council in
view of its veto right over the annual budget. The 2013 convergence programme announces
the intention to move forward in this area in autumn 2013. Progress will
continue to be closely monitored in the context of the European Semester.
(10)     The Council recalls that,
starting from 2013, which is the year following the correction of the excessive
deficit, Hungary should maintain a fiscal stance in line with its medium-term
objective, including respecting the expenditure benchmark, and make sufficient
progress towards compliance with the debt criterion in accordance with Article
2(1a) of Council Regulation (EC) 1467/97 of July 1997 on speeding up and
clarifying the implementation of the excessive deficit procedure.[4]
(11)     In accordance with Article
126(12) of the Treaty, a Council Decision on the existence of an excessive
deficit is to be abrogated when the excessive deficit in the Member State
concerned has, in the view of the Council, been corrected.
(12)     In the view of the Council,
the excessive deficit in Hungary has been corrected and Decision 2004/918/EC should therefore be abrogated,
HAS ADOPTED THIS DECISION:
Article 1
From an overall assessment it follows that the
excessive deficit situation in Hungary has been corrected.
Article 2
Decision 2004/918/EC is hereby abrogated.
Article 3
This Decision is addressed to Hungary.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               All documents related to the excessive deficit
procedure of Hungary can be found at:
http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/countries/hungary_en.htm
[2]               OJ L 145, 10.6.2009, p. 1.
[3]               In line with the “Specifications on the
implementation of the Stability and Growth Pact and Guidelines on the format
and content of Stability and Convergence Programmes”, as agreed by the Economic
and Financial Committee on 3 September 2012. See:
http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf

[4]               OJ L 209, 2.8.1997, p. 6.


title: Recommendation for a Council opinion in accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 on the updated convergence programme of Hungary, 2005-2008

text:
Important legal notice

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52006SC0024

Recommendation for a Council opinion in accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated convergence programme of Hungary, 2005-2008  /* SEC/2006/0024 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 11.1.2006SEC(2006) 24 finalRecommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated convergence programme of Hungary, 2005-2008(presented by the Commission)EXPLANATORY MEMORANDUMBackgroundThe Stability and Growth Pact, which entered into force on 1 July 1998, is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. In 2005, the Pact was amended for the first time. The reform acknowledged the Pact’s usefulness in anchoring fiscal discipline but sought to strengthen its effectiveness and economic underpinnings as well as to safeguard the sustainability of the public finances in the long run.Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies[1], which is part of the Pact, stipulates that Member States have to submit, to the Council and the Commission, stability or convergence programmes and annual updates thereof (Member States that have already adopted the single currency submit (updated) stability programmes and Member States that have not yet adopted it submit (updated) convergence programmes. The first convergence programme of Hungary was submitted in May 2004. In accordance with the Regulation, the Council delivered an opinion on it on 5 July 2004 on the basis of a recommendation from the Commission and after having consulted the Economic and Financial Committee. In accordance with the same procedure, updated stability and convergence programmes are assessed by the Commission and examined by the Committee mentioned above, while the Council may examine them.In these programmes, Member States need to specify their medium-term objective for the budgetary position and set out the policy measures to achieve and maintain it, including the accompanying economic assumptions. Following the reform of the Pact, the medium-term objective should be differentiated for individual Member States in the light of the economic and budgetary heterogeneity in the Union, including as regards the fiscal risk to sustainability. Other elements of the reform are that a more symmetrical approach to fiscal policy over the cycle through enhanced budgetary discipline in economic good times should be achieved, while “major structural reforms” with a verifiable impact on long-term sustainability should be taken into account for a temporary deviation from the medium-term objective or the adjustment path towards it.Taking into account the Commission services’ autumn 2005 forecast, the code of conduct[2], the commonly agreed methodology for the estimation of potential output and cyclically-adjusted balances and the broad economic policy guidelines, included in the integrated guidelines for the period 2005-2008, the Commission has examined the recently submitted update of the convergence programme of Hungary and, based on its assessment below, has adopted a recommendation for a Council opinion on it.Assessment(1) The 2005 update of the Hungarian convergence programme was submitted on 1 December to the Council and the Commission. The period covered by the programme is from 2005 to 2008. The update broadly follows the model structure for stability and convergence programmes specified in the new code of conduct. The update provides all compulsory and most optional data prescribed by the new code of conduct; however, there are some inconsistencies with ESA95, concerning the treatment of FISIM and the recording of military expenditure. The programme does not provide detailed data on previous and foreseen one-off items. It also does not explicitly identify the medium-term objective (MTO) for the budgetary position as required by the code of conduct.(2) On 5 July 2004, the Council decided that Hungary was in excessive deficit and issued a recommendation for its correction under Article 104(7). Following a decision of no compliance in January 2005, the Council issued new recommendations under Article 104(7) on 8 March 2005, reiterating that the excessive deficit had to be corrected by 2008, the target year set by the Hungarian authorities in the convergence programme of May 2004 and confirmed in its December 2004 update, in line with the path set out in this update. In particular, the Council recommended to the Hungarian authorities to take effective action in order to achieve the deficit target for 2005 and to make the timing and implementation of any tax cuts conditional upon the achievement of the deficit targets for 2005 to 2008. The same was reflected in the Council opinion of the 2004 update of the convergence programme also adopted on 8 March 2005. On 8 November 2005 based on Article 104(8) the Council decided that Hungary did not comply with the March Council recommendations. A new Council recommendation under Article 104(7) for the correction of the excessive deficit will have to be issued.(3) Following the adoption of a comprehensive economic reform package in the mid-nineties, sound macroeconomic policies and appropriate structural reforms supported stable and high rates of growth and a reduction in inflation. However, starting in 2001, public expenditure increased significantly and generous wage settlements resulted in large macroeconomic imbalances. While growth has become more balanced and inflation and wage growth have decelerated as from 2003, Hungary continues to struggle with high budget and external deficits. In the update, real GDP growth is projected to stabilise at around 4%, driven by investment and export in the programme period. This growth scenario is broadly in line with the projections of the Commission services autumn forecast[3]. However, the last year of the programme horizon, showing a positive output gap based on Commission calculations using the commonly agreed methodology, seems to be on the optimistic side. Against this background, the growth assumptions included in the update seem to be plausible, but rather favourable towards the end of the programme period. The update’s medium-term projection for the external deficit appears to be plausible, although the projected reduction is conditional upon the fulfilment of the strict fiscal tightening outlined in the update together with the implementation of structural reforms boosting potential output. The update’s inflation projections are fully in line with those of the Commission.(4) Hungarian monetary policy continues to combine inflation targeting with an exchange rate peg. The convergence programme confirms that Hungary maintains 2010 as the target year to join the euro area. After peaking at above 7% year-on-year in mid-2004, inflation fell rapidly to below 4% in the first half of 2005. The slowdown of real wage growth, weaker domestic demand, as well as intensified import competition following EU accession contributed to stabilise inflation at a lower rate. The forint/euro exchange rate appreciation trend was reversed in October 2005, as heightened worries among investors about fiscal slippages and increased uncertainty about the euro adoption date initiated a gradual depreciation. Compared to the beginning of the year, the forint was 3% lower in mid-December 2005. Hungarian long-term interest rates remain significantly higher than in other new Member States. Following a gradual decrease from 7.2% in January to 5.6% in September 2005, helped by an improved risk perception in the markets, bond yields (and spreads) with the euro area increased sharply in October and stood around 7% since then, partly in response to increased worries on the part of investors about fiscal slippages.(5) The update continues to target ending the excessive deficit by 2008. The foreseen deficit path is 6.1% in 2005, 4.7% in 2006, 3.3% in 2007 and 1.9% of GDP in 2008, representing a yearly cut of 1.4 percentage point of GDP. The time profile of the primary surplus is similar. These budgetary projections exclude one-offs (in particular military purchases of 0.3 percentage point of GDP in both 2006 and 2007) and the impact of the Eurostat decision of 2 March 2004 on the classification of funded pension schemes, ranging from 1 to 1.5% of GDP, which will be taken into account by the time of the spring 2007 notification[4]. The strong decline in the revenue ratio of some 3½ percentage points of GDP, mainly the result of the newly introduced five-year tax cut strategy, is projected to be overcompensated by a reduction of the expenditure-to-GDP ratio by some 7½ percentage points of GDP between 2005 and 2008.(6) The 2005 target was increased in September 2005 by the Hungarian authorities from the 3.6% of GDP contained in the 2004 December update to 6.1% of GDP. The Commission services’ autumn 2005 forecast indicated that such revised target for 2005 was within reach. Latest available cash data support this view.(7) The update foresees an improvement in the structural balance from -5.7% of GDP in 2005 to -2.1% of GDP in 2008 (excluding the effect of the pension reform and one-offs). The MTO cannot be inferred from the budgetary projections presented in the programme.(8) However, the structural measures outlined in the programme regarding in particular the public, health and education sectors lack the necessary quantifications to judge their short- and medium-term budgetary effects. Moreover, the budgetary outcome could be much worse than projected in the programme, also in view of the repeatedly missed targets in the past. The Commission services autumn forecast projected a 2005 deficit of 6.7% of GDP (including the accounting of military fighters) which may mean that the trend deficit for 2006 may be higher than in the programme. In 2006, tightening expenditure by 4 percentage points of GDP compared to the 2005 budget is not based on clearly defined and quantified measures. In the outer years, the shift of public motorway investment to PPP schemes might be subject to accounting problems and related costs; the projected decline in interest rates may not materialise; there is uncertainty regarding the effects of the tax reform, possibly resulting in lower revenue income.(9) Taking into account the risk assessment above, the budgetary strategy in the programme needs to be substantiated to ensure its consistency with the correction of the excessive deficit by 2008 as recommended by the Council.(10) The debt ratio is forecast to increase to 58.4% of GDP in 2006 and to decline thereafter to 56.2% of GDP by the end of the programme period triggered by the continuous decrease of the general government deficit. Including the cumulated pension reform burden ranging from 3% in 2004 to 6% in 2008 the debt level would surpass the 60% reference value. The comparison between the Commission services autumn 2004 forecast and the current update confirms that the main differences in the evaluation of the path of the debt-to-GDP ratio arise from the higher optimism of the budgetary projections of the update.(11) With regard to the sustainability of public finances, Hungary appears to be at high risk on grounds of the projected budgetary costs of ageing populations. The gross debt-to-GDP ratio is currently close to the reference value and is projected to increase in the period up to 2050. Hungary reformed its pension system in the late 1990s, aimed at contained future rises in expenditure on pensions, which helped to reduce the budgetary impact of ageing. However, increases in government expenditure on pensions could be higher than projected in the update, suggesting that a close monitoring of factors that are assumed to offset such higher expenditures as well as developments in pension and other age-related expenditures is important. Moreover, the currently high structural deficit contributes to increasing sustainability risks. It is therefore necessary to carry out a large consolidation of public finances over the medium-term and to further strengthen the budgetary position in order to reduce risks to public finance sustainability[5].(12) The envisaged measures in the area of public finances are not consistent with the broad economic policy guidelines, included in the integrated guidelines for the period 2005-2008. Hungary has not complied with the second 104(7) recommendations of the Council of 8 March 2005 under the excessive deficit procedure, as decided by the Council on 8 November 2005 based on Article 104(8) of the Treaty. The update retains a multi-annual framework for correcting the excessive deficit by 2008, although a worse-than-projected budgetary outcome is likely and the necessary detailed specifications and quantifications are missing to judge the short- and medium-term budgetary effects of the structural measures.(13) The National Reform Programme of Hungary submitted on 14 October 2005 in the context of the renewed Lisbon strategy for growth and jobs identifies the gradual and continued decrease of the size and deficit of the general government sector as a main challenge. The budgetary implications of the reform measures of the National Reform Programme are reflected in the budgetary projections of the convergence programme as far as the tax reductions are concerned. The update explains the recently adopted five-year tax cut programme and presents a number of plans for the reform of the public sector without, however, providing the necessary specifications and quantifications. These plans are broadly in line with the National Reform Programme submitted on 14 October 2005.(14) In view of the above assessment, it would be appropriate for Hungary to present by 1 September 2006 at the latest a revised convergence programme update that identifies concrete and structural measures that are fully consistent with its medium-term adjustment path. In the meantime, Hungary should do the necessary to achieve its budgetary objectives for 2006 and beyond.Recommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Art. 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated convergence programme of Hungary, 2005-2008THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies[6], and in particular Article 9(3) thereof,Having regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:1.  On [24 January 2006] the Council examined the updated convergence programme of Hungary, which covers the period 2005 to 2008. The update broadly follows the model structure for stability and convergence programmes specified in the new code of conduct. It provides all compulsory and most optional data prescribed by the new code of conduct; however, there are some inconsistencies with ESA95, concerning the treatment of FISIM and the recording of military expenditure. The programme does not provide data on previous and foreseen one-off items. It also does not explicitly identify the medium-term objective (MTO) for the budgetary position as required by the code of conduct.2.  Following the adoption of a comprehensive economic reform package in the mid-nineties, sound macroeconomic policies and appropriate structural reforms supported stable and high rates of growth and a reduction in inflation. However, starting in 2001, public expenditure increased significantly and generous wage policies were implemented resulting in large macroeconomic imbalances. While growth has become more balanced and inflation and wage growth have decelerated in recent years, Hungary continues to struggle with high budget and external deficits. The macroeconomic scenario presented in the 2005 December update envisages that real GDP growth remains stable at about 4% over the rest of the programme period, driven by investment and exports. Assessed against currently available information, this scenario appears to be based on plausible growth assumptions, while it seems to be favourable in the outer year. The projected reduction in the external deficit is conditional upon the fulfilment of fiscal tightening together with the implementation of structural reforms boosting potential output. The programme’s projections for inflation appear realistic.3.  On 5 July 2004, the Council decided that Hungary was in excessive deficit and issued a recommendation under Article 104(7) that this situation should be corrected by 2008 at the latest in line with the adjustment path contained in Hungary’s May convergence programme. Following a decision in January 2005 of no compliance under Article 104(8), the Council issued for the second time recommendations under Article 104(7) on 8 March 2005, maintaining 2008 as the target year by which the excessive deficit should be corrected. The Council recommended the Hungarian authorities to take effective action in order to achieve the deficit target for 2005 as set in the updated convergence programme, and to make the timing and implementation of any tax cuts conditional upon the achievement of the deficit targets of the same convergence programme update. The same was reflected in the Council opinion of the 2004 update of the convergence programme also adopted on 8 March 2005. The update continues to target ending the excessive deficit by 2008. The foreseen deficit path is 6.1% of GDP in 2005, 4.7% of GDP in 2006, 3.3% of GDP in 2007 and 1.9% of GDP in 2008, representing a yearly cut of 1.4 percentage point of GDP. The time profile of the primary surplus is similar. These budgetary projections exclude one-offs and the impact of the Eurostat decision of 2 March 2004 on the classification of funded pension schemes, ranging from 1 to 1.5% of GDP, taken into account by the time of the spring 2007 notification[7]. The 2005 target was increased in September 2005 by the Hungarian authorities from the 3.6% of GDP contained in the 2004 December update to 6.1% of GDP. The Commission services’ autumn 2005 forecast indicated that such revised target for 2005 was within reach. Latest available cash data support this view.4.  The update foresees an improvement in the structural balance from -5.7% of GDP in 2005 to -2.1% of GDP in 2008 (excluding the effect of the pension reform). The MTO cannot be inferred from the budgetary projections presented in the programme.5.  The budgetary outcome could be much worse than projected in the programme as the tightening of expenditure in 2006 as well as the structural retrenchment for the outer years of the programme are not based on clearly defined and quantified measures. Moreover, a number of risks surrounding the strategy may materialise.6.  In view of this risk assessment, the budgetary stance in the programme needs to be substantiated to ensure its consistency with a correction of the excessive deficit by 2008 as recommended by the Council, which is the end-year of the programme.7.  The debt ratio is estimated to have reached 57.7% of GDP in 2005. The programme projects the debt ratio to decline by about 1½ percentage points over the programme period. The evolution of the debt ratio is likely to be less favourable than projected in the programme given the risks to the budgetary targets mentioned above.8.  With regard to the sustainability of public finances, Hungary appears to be at high risk on grounds of the projected budgetary costs of ageing populations. The gross debt-to-GDP ratio is currently close to the reference value and is projected to increase in the period up to 2050. Hungary reformed its pension system in the late 1990s, aimed at contained future rises in expenditure on pensions, which helped to reduce the budgetary impact of ageing. However, increases in government expenditure on pensions could be higher than projected in the update, suggesting that a close monitoring of factors that are assumed to offset such higher expenditures as well as developments in pension and other age-related expenditures is important. Moreover, the currently high structural deficit contributes to increase sustainability risks. It is therefore necessary to carry out a large consolidation of public finances over the medium-term and to further strengthen the budgetary position in order to reduce risks to public finance sustainability[8].9.  The envisaged measures in the area of public finances are not consistent with the broad economic policy guidelines, included in the integrated guidelines for the period 2005-2008. Hungary has not complied with the second 104(7) recommendations of the Council of 8 March 2005 under the excessive deficit procedure, as decided by the Council on 8 November 2005 based on Article 104(8) of the Treaty. The update retains a multi-annual framework for correcting the excessive deficit by 2008, although a worse-than-projected budgetary outcome is likely.10.  The National Reform Programme of Hungary submitted on 14 October 2005 in the context of the renewed Lisbon strategy for growth and jobs identifies the gradual and continued decrease of the size and deficit of the general government sector as a main challenge. The budgetary implications of the reform measures of the National Reform Programme are reflected in the budgetary projections of the convergence programme as far as the tax reductions are concerned. The update explains the recently adopted five-year tax cut programme and presents a number of plans for the reform of the public sector without, however, providing the necessary specifications and quantifications. These plans are broadly in line with the National Reform Programme.In view of the above assessment, the Council is of the opinion that Hungary should present by 1 September 2006 at the latest a revised convergence programme update that identifies concrete and structural measures that are fully consistent with its medium-term adjustment path. In the meantime, Hungary should do the necessary to achieve its budgetary objectives for 2006 and beyond.Comparison of key macroeconomic and budgetary projections 12004 | 2005 | 2006 | 2007 | 2008 |Real GDP (% change) | CP Dec 20056 | 4.2 | 4.0 | 4.1 | 4.0 | 4.0 |COM Nov 2005 | 4.2 | 3.7 | 3.9 | 3.9 | n.a. |CP Dec2004 | 3.9 | 4.0 | 4.2 | 4.3 | 4.6 |HICP inflation (%) | CP Dec 2005 | 6.8 | 3.5 | 2.1 | 3.0 | 2.4 |COM Nov 2005 | 6.8 | 3.7 | 2.0 | 3.0 | n.a. |CP Dec2004 | 6.8 | 4.5 | 4.0 | 3.5 | 3.0 |Output gap (% of potential GDP) | CP Dec 20052 | -1.3 | -1.0 | -0.5 | -0.1 | 0.4 |COM Nov 20057 | -0.9 | -0.7 | -0.3 | 0.2 | n.a. |CP Dec20042 | n.a. | n.a. | n.a. | n.a. | n.a. |General government balance (% of GDP) | CP Dec 2005 | -5.4 | -6.1 | -4.78 | -3.38 | -1.9 |COM Nov 2005 | -5.4 | -6.1 | -6.7 | -6.9 | n.a. |CP Dec2004 | -4.5 | -3.6 | -2.9 | -2.2 | -1.6 |Primary balance (% of GDP) | CP Dec 2005 | -1.1 | -2.5 | -1.5 | -0.3 | +0.8 |COM Nov 2005 | -1.5 | -2.2 | -3.0 | -3.4 | n.a. |CP Dec2004 | -0.5 | 0.0 | 0.2 | 0.6 | 1.0 |Cyclically-adjusted balance (% of GDP) | CP Dec 20052 | -4.8 | -5.7 | -4.5 | -3.3 | -2.2 |COM Nov 2005 | -5.3 | -5.8 | -6.6 | -7.0 | n.a. |CP Dec20042 | n.a. | n.a. | n.a. | n.a. | n.a. |Structural balance3 (% of GDP) | CP Dec 20054 | n.a | n.a | n.a | n.a | n.a |COM Nov 20055 | -5.3 | -6.3 | -7.6 | -8.5 | n.a |CP Dec2004 | n.a. | n.a. | n.a. | n.a. | n.a. |Government gross debt (% of GDP) | CP Dec 2005 | 57.2 | 57.7 | 58.48 | 57.98 | 56.28 |COM Nov 2005 | 57.4 | 57.2 | 58.0 | 59.2 | n.a. |CP Dec2004 | 57.3 | 55.5 | 53.0 | 50.6 | 48.3 |Notes: 1 The budgetary projections exclude the impact of the Eurostat decision of 2 March 2004 on the classification of funded pension schemes, which needs to be implemented by the time of the spring 2007 notification. Including this impact, the general government balance according to the updated programme would be 6.5% of GDP in 2004, 7.4% in 2005, 6.1% in 2006, 4.7% in 2007 and 3.4% in 2008, while government gross debt would be 60.3% of GDP in 2004, 61.5% in 2005, 63.0% in 2006, 63.2% in 2007 and 62.3% in 2008 (see also footnote 8). 2 Commission services calculations on the basis of the information in the programme. 3 Cyclically-adjusted balance (as in the previous rows) excluding one-off and other temporary measures. 4 The programme provides no information on one-off and other temporary measures. 5 One-off and other temporary measures taken from the Commission services’ autumn 2005 forecast. 6 Before FISIM allocation (after FISIM allocation 4.6 % in 2004; 4.2 % in 2005; 4.3% in 2006; 4.1% in 2007 and 4.1% in 2008). 7 Based on estimated potential growth of 3.7%, 3.5%, 3.5% and 3.4% respectively in the period 2004-2007. 8 Not including military purchase of 0.3% of GDP in both 2007 and 2008. Source: Convergence programme (CP); Commission services’ autumn 2005 economic forecasts (COM); Commission services’ calculations. |[1] OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). All the documents referred to in this text can be found at the following website:http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm[2] Opinion of the Economic and Financial Committee on the “Specifications on the implementation of the Stability and Growth Pact and guidelines on the format and content of stability and convergence programmes”, endorsed by the ECOFIN Council of 11 October 2005.[3] It should be noted that the Commission forecast was still made on the basis of time series not including the FISIM allocation while the update shows a growth break-down including the FISIM allocation (while simultaneously also showing the headline growth rate without FISIM for comparison reasons). The deficit and debt ratios are calculated on the basis of the GDP series before the FISIM allocation.[4] Including this impact, the general government balance according to the updated programme would be 7.4% of GDP in 2005, 6.1% in 2006, 4.7% in 2007 and 3.4% in 2008, while government gross debt would be 60.3% of GDP in 2004, 61.5% in 2005, 63.0% in 2006, 63.2% in 2007 and 62.3% in 2008. This does, however, still not include the purchase of military airplanes of an additional 0.3 percentage point of GDP in both 2006 and 2007.[5] Details on long-term sustainability are provided in the technical assessment of the programme by the Commission services, to be published at the website: http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm[6] OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). The documents referred to in this text can be found at the following website:http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm[7] Including this impact, the general government balance according to the updated programme would be 7.4% of GDP in 2005, 6.1% in 2006, 4.7% in 2007 and 3.4% in 2008, while government gross debt would be 60.3% of GDP in 2004, 61.5% in 2005, 63.0% in 2006, 63.2% in 2007 and 62.3% in 2008. This does, however, still not include the purchase of military airplanes of an additional 0.3 percentage point of GDP in both 2006 and 2007.[8] Details on long-term sustainability are provided in the technical assessment of the programme by the Commission services, to be published at the website: http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm


Important legal notice

|

52008PC0835

Recommendation from the Commission to the Council authorising the Commission to open negotiations on behalf of the Community with a view to concluding a Fisheries Partnership Agreement with the Republic of Guinea  /* COM/2008/0835 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 3.12.2008COM(2008) 835 finalRECOMMENDATION FROM THE COMMISSION TO THE COUNCILauthorising the Commission to open negotiations on behalf of the Community with a view to concluding a Fisheries Partnership Agreement with the Republic of GuineaRECOMMENDATION FROM THE COMMISSION TO THE COUNCILauthorising the Commission to open negotiations on behalf of the Community with a view to concluding a Fisheries Partnership Agreement with the Republic of GuineaEXPLANATORY MEMORANDUMOn 28 March 1983 the Community and the Republic of Guinea concluded a Fisheries Agreement on fishing off the Guinean coast[1]; the most recent Protocol[2] thereto, which entered into force on 26 April 2004, defining the fishing opportunities and the financial contribution provided for in the Agreement, is due to expire on 31 December 2008.The Commission proposes negotiating a new Protocol which is more in line with the opportunities and recognised requirements of Member States' fleets, in accordance with the 2004 Council Conclusions on Fisheries Partnership Agreements. Initialling a new Protocol before the date of expiry of the existing Protocol would allow fishing activities to continue without interruption.In addition, in order to take account of the 2004 Council Conclusions on Fisheries Partnership Agreements, a new Fisheries Partnership Agreement should be negotiated to replace the existing Fisheries Agreement with the Republic of Guinea.The Council is accordingly requested to approve the negotiating instructions in the Annex hereto.RECOMMENDATIONIn the light of the above, the Commission consequently recommends that:-  the Council authorise the Commission to open and conduct negotiations with a view to concluding a Fisheries Partnership Agreement with the Republic of Guinea;-  the Commission conduct those negotiations in accordance with the Treaty establishing the European Community;-  the Council approve the negotiating instructions in the Annex hereto.Done at Brussels,For the CommissionMember of the CommissionANNEXNegotiating instructionsThe negotiations are aimed at concluding a Fisheries Partnership Agreement between the Community and the Republic of Guinea in accordance with the Council Conclusions of 15 July 2004 based on the Commission Communication of 23 December 2002.With a view to promoting responsible fishing and sustainable fisheries through that Partnership Agreement, the Commission will base those negotiations on the following objectives:-  define fishing opportunities for Community vessels, taking account of the use actually made of fishing opportunities by operators under the existing Protocol, the future prospects for fishing activities, the state of resources and the Republic of Guinea’s capacity for implementing a sustainable resource management policy;-  take account of the best available scientific advice;-  reinforce the dialogue on sectoral policy in order to encourage the implementation of a responsible fisheries policy, in keeping with the country’s development objectives, particularly as regards fisheries control and surveillance, resource management and improving the health and hygiene conditions of fishery products.[1] Council Regulation (EC) No 971/83 of 28 March 1983 (OJ L 111, 27.4.1983, p. 1).[2] Council Regulation (EC) No 830/2004 of 26 April 2004 on the conclusion of the Protocol defining for the period 1 January 2004 to 31 December 2008 the fishing opportunities and the financial contribution provided for in the Agreement between the European Economic Community and the Government of the Republic of Guinea on fishing off the Guinean coast (OJ L 127, 29.4.2004, p. 31).


				|

		52013DC0377

			Recommendation for a COUNCIL RECOMMENDATION on Sweden’s 2013 national reform programme and delivering a Council opinion on Sweden’s convergence programme for 2012-2016 /* COM/2013/0377 final */

Recommendation for a
COUNCIL RECOMMENDATION
on Sweden’s 2013 national reform programme
and delivering a Council opinion on Sweden’s convergence programme for
2012-2016

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning
of the European Union, and in particular Articles 121(2) and 148(4) thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular Article 9(2)
thereof,
Having regard to Regulation (EU) No
1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances[2], and in particular Article 6(1)
thereof,
Having regard to the recommendation of the
European Commission[3],
Having regard to the resolutions of the
European Parliament[4],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)       On 26 March 2010, the
European Council agreed to the Commission’s proposal to launch a new strategy
for growth and jobs, Europe 2020, based on enhanced coordination of economic
policies, which will focus on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.
(2)       On 13 July 2010, on the
basis of the Commission's proposals, the Council adopted a recommendation on
the broad guidelines for the economic policies of the Member States and the
Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines
for the employment policies of the Member States[5],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)       On 29 June 2012, the Heads
of State or Government decided on a Compact for Growth and Jobs, providing a
coherent framework for action at national, EU and euro area levels using all
possible levers, instruments and policies. They decided on action to be taken
at the level of the Member States, in particular expressing full commitment to
achieving the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.
(4)       On 6 July 2012, the
Council adopted a recommendation on Sweden’s national reform programme for 2012
and delivered its opinion on Sweden’s updated convergence programme for 2011-2015.
(5)       On 28 November 2012, the
Commission adopted the Annual Growth Survey[6],
marking the start of the 2013 European Semester for economic policy
coordination. Also on 28 November 2012, the Commission, on the basis of
Regulation (EU) No 1176/2011 on the prevention and correction of macroeconomic
imbalances, adopted the Alert Mechanism Report[7],
in which it identified Sweden as one of the Member States for which an in-depth
review would be carried out.
(6)       On 14 March 2013, the
European Council endorsed the priorities for ensuring financial stability,
fiscal consolidation and action to foster growth. It underscored the need to
pursue differentiated, growth-friendly fiscal consolidation, to restore normal
lending conditions to the economy, to promote growth and competitiveness, to tackle
unemployment and the social consequences of the crisis, and to modernise public
administration.
(7)       On 10 April 2013, the
Commission published the results of its in-depth review[8] for Sweden, under Article 5 of
Regulation (EU) No 1176/2011 on the prevention and correction of macroeconomic
imbalances. The Commission’s analysis leads it to conclude that Sweden is experiencing macroeconomic imbalances, which deserve monitoring and policy
action. In particular, macroeconomic developments regarding private sector debt
and deleveraging, coupled with remaining inefficiencies in the housing market
deserve continued attention. Although the large current account surplus does
not raise risks similar to large deficits the Commission will continue
monitoring the developments of the current account in Sweden.
(8)       On 19 April 2013, Sweden submitted its 2013 convergence programme covering the period 2012-2016 and its 2013
national reform programme. In order to take account of their interlinkages, the
two programmes have been assessed at the same time.
(9)       Based on the assessment of
the 2013 convergence programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the macroeconomic scenario underpinning the
budgetary projections in the programme is plausible for 2013. The government
projects a GDP growth of 1.2% and 2.2% in 2013 and 2014, respectively, whereas
the Commission forecasts 1.5% and 2.5%. The objective of the budgetary strategy
outlined in the programme is to ensure long-term sustainability of public
finances by respecting the rules of the Swedish fiscal framework, including the
target of having a surplus in general government net lending of 1% of GDP on
average over the business cycle. General government balance slipped from a
small surplus of 0.2% of GDP in 2011 to a deficit of 0.5% in 2012. The
programme confirms the previous medium-term budgetary objective (MTO) of -1.0 %
of GDP. The MTO is in line with the requirements of the Stability and Growth Pact.
The programme foresees a structural general government balance, as recalculated
by the Commission, to improve from a minor deficit around 0.4% of GDP in
2012-13 to a surplus in 2014 and onwards. Therefore, the MTO is likely to be
met over the programme period. According to the information in the programme,
the growth rate of government expenditure, net of discretionary revenue
measures, would exceed the reference medium-term rate of potential GDP growth
in 2012 and 2013, but would be below that rate in 2014. Even taking into
account the possibility of further expansionary discretionary measures in 2014,
the risks to the budgetary targets are limited. According to the programme, the
debt ratio, which is below the 60% of GDP reference value, is projected to
increase temporarily to 42% of GDP in 2013, but fall back below 40% of GDP in
2015. The Commission forecasts the debt ratio to decline to 39% in 2014.
(10)     The high indebtedness of
the private sector (at 235 % of GDP in 2012) continues to be a matter of
concern. Household debt, hovering around 80 % of GDP or roughly 170 %
of disposable income, has only recently stabilised and is not likely to decline
in the near future given continued credit growth and a slow pace of mortgage
amortisation. The current tax deductibility of interest payments and low
recurrent property taxes contribute to a debt bias in Swedish housing taxation,
contributing to high debt levels. Moreover, the relatively big gap between the
effective marginal tax rate on debt and on equity for new investment suggests a
continued bias towards debt-financing for corporations. Sweden has recently restricted the deductibility of intra-group interest expenses but has
no comprehensive system to correct the debt-equity tax bias. Corporate debt
remains substantial at 149% of GDP.
(11)     Although the Swedish
housing market has been stable in the recent past, it remains a potential
source of instability. On the supply side, the Swedish housing market is
characterised by some inefficiencies which may contribute to drive house prices
upwards and create undesirable lock-in effects. Swedish construction
investments are only half of those of other Nordic countries, both in relation
to GDP as well as population. At present, it often takes several years to
launch a new project, due to lengthy processes at the municipal level. Streamlining
these processes would increase the flexibility of housing supply, foster
competition in the construction sector and decrease construction costs. Further
reforms to the rent-setting system are needed to allow market forces to
establish an optimal supply of rental housing at an adequate price. Addressing
the inefficiencies of the housing market is likely to also help reduce
household debt levels, as these issues are interlinked.
(12)     In Sweden, unemployment rates for youth, people with a migrant background and the low-skilled
in general remain far above those of the rest of the working-age population and
above the EU average. Sweden has taken a large number of new relevant measures
to address this issue. Measures targeting the integration of people with a
migrant background into the labour market have already produced initial results
in lowering the unemployment rate, but continued efforts are needed to reduce
the gap between them and the rest of the population. Young people have so far
not noticeably benefited. However, a number of promising measures have been put
in place or are in the pipeline; these include supporting work introduction agreements
within the context of the Swedish model of wage setting by fully independent
social partners. Efforts to strengthen apprenticeships and other types of
work-based vocational education are also fully relevant but these will have to
be more ambitious if they are to have the desired impact. Continued progress
would be warranted in reviewing employment-protection legislation and
exploiting the benefits of the job guarantee for young people. More
narrowly-defined measures targeting those in most need should be preferred to general
subsidies. Under the Swedish Job guarantee, young people who are seeking work
through the Public Employment Service and who have already been unemployed for
90 days are offered targeted services to help improving their chances of
finding employment and education opportunities. However, the guarantee currently
seems less effectively targeted towards young people who are not in education
or training, nor registered with the Public Employment Service. In line with
the 2012 recommendation, Sweden has commissioned a review of the effects of the
reduced VAT rate for restaurants and catering services on prices, wages and
employment of young people, which should deliver preliminary results in January
2014 and final conclusions in 2016. This review will be important, given the
concerns raised about the cost-effectiveness of this measure.
(13)     In the context of the
European Semester, the Commission has carried out a comprehensive analysis of Sweden’s economic policy. It has assessed the convergence programme and national reform
programme, and presented an in-depth review. It has taken into account not only
their relevance for sustainable fiscal and socio-economic policy in Sweden but
also their compliance with EU rules and guidance, given the need to reinforce
the overall economic governance of the European Union by providing EU-level
input into future national decisions. Its recommendations under the European
Semester are reflected in recommendations (1) to (4) below.
(14)     In the light of this
assessment, the Council has examined Sweden’s convergence programme, and its
opinion[9]
is reflected in particular in recommendation (1) below,
(15)     In the light of the
Commission’s in-depth review and this assessment, the Council has examined Sweden’s national reform programme and convergence programme. Its recommendations under Article
6 of Regulation (EU) No 1176/2011 on the prevention and correction of
macroeconomic imbalances are reflected in recommendations (2) and (3) below.
HEREBY RECOMMENDS that Sweden should take action within the period 2013-2014 to:
1.           Implement the measures
necessary to pursue a growth-friendly fiscal policy and preserve a sound fiscal
position ensuring compliance with the medium-term objective over the programme
horizon.
2.           Continue addressing risks
related to private debt by reducing the debt bias in housing taxation by
phasing out tax deductibility of interest payments on mortgages or/and
increasing property taxes. Take further measures to foster prudent lending by
measures promoting amortisation of mortgages. Further reduce the debt-bias in
corporate taxation.
3.           Improve the efficiency of
the housing market by phasing out remaining elements of rent control and
strengthening the freedom of contract between individual tenants and landlords.
Promote increased competition in the construction sector and review the
planning, zoning and approval processes with the aim of increasing transparency,
shortening lead times and reducing entry barriers for construction companies.
4.           Reinforce efforts to
improve the labour-market integration of low-skilled young people and people
with a migrant background by stronger and better targeted measures to improve
their employability and the labour demand for these groups. Step up efforts to
facilitate the transition from school to work, including via a wider use of work-based
learning, apprenticeships and other forms of contracts combining employment and
education. Complete the Youth Guarantee to better cover young people not in
education or training. Complete and draw conclusions from the review of the effectiveness
of the current reduced VAT rate for restaurants and catering services in
support of job creation.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ L 306, 23.11.2011, p. 25.
[3]               COM(2013) 377 final.
[4]               P7_TA(2013)0052 and P7_TA(2013)0053.
[5]               Council Decision 2013/208/EU of 22 April 2013.
[6]               COM(2012) 750 final.
[7]               COM(2012) 751 final.
[8]               SWD(2013) 124 final.
[9]               Under Article 9(2) of Council Regulation (EC) No
1466/97.


title: 2013/99/EU: Commission Recommendation of 19 February 2013 on a coordinated control plan with a view to establish the prevalence of fraudulent practices in the marketing of certain foods

text:
               21.2.2013

               EN

               Official Journal of the European Union

               L 48/28

         COMMISSION RECOMMENDATION
   of 19 February 2013
   on a coordinated control plan with a view to establish the prevalence of fraudulent practices in the marketing of certain foods
   (2013/99/EU)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to Regulation (EC) No 882/2004 of the European Parliament and of the Council of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules (1), and in particular Article 53 thereof,
   Whereas:

               (1)

               Article 53 of Regulation (EC) No 882/2004 empowers the Commission to recommend coordinated plans where considered necessary, organised on an ad hoc basis, in particular with a view to establishing the prevalence of hazards in feed, food or animals.

               (2)

               Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of foodstuffs (2) sets out Union rules on food labelling applicable to all foods.

               (3)

               According to Directive 2000/13/EC, the labelling and methods used should not mislead the consumer, particularly as to the characteristics of the food, including its true nature and its identity. Furthermore, in the absence of specific Union or national rules, the name under which a food is sold should be the name customary in the Member State in which it is sold, or a description of the food which is clear enough to let the purchaser know its true nature.

               (4)

               Moreover, all ingredients must be mentioned on the label of pre-packaged foodstuffs intended for the final consumer or mass caterers. In particular, foods containing meat as an ingredient, when intended for the final consumer or mass caterers, must also indicate the animal species from which the meat originates directly on the package or on a label attached thereto. If an ingredient is mentioned in the name of the food, its quantity expressed as a percentage must also be provided in the list of ingredients in order to avoid the consumer being misled as regards the identity and the composition of the food.

               (5)

               Regulation (EC) No 853/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific hygiene rules for food of animal origin (3) provides for additional labelling requirements applicable to specific foods. In particular, it provides that packages intended for supply to the final consumer containing minced meat, amongst others, from solipeds are to bear a notice indicating that such products should be cooked before consumption, if, and to the extent that, national rules in the Member State in the territory of which the product is placed on the market so require.

               (6)

               Section III of Annex II to Regulation (EC) No 853/2004 requires the food business operators operating slaughterhouses to request, receive, check and act upon food chain information in respect of all animals, other than wild game, sent or intended to be sent to the slaughterhouse. The relevant food chain information is to cover, in particular, veterinary medicinal products administered to the animals within a relevant period and with a withdrawal period greater than zero, together with their dates of administration and withdrawal periods. Regulation (EC) No 854/2004 of the European Parliament and of the Council of 29 April 2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption (4) requires, inter alia, the official veterinarian to perform auditing and inspection tasks. In particular, the official veterinarian is to check and analyse relevant information from the records of the holding of provenance of animals intended for slaughter, including food chain information and to take account of the documented results of this check and analysis when carrying out ante- and post-mortem inspection.

               (7)

               Following official controls being carried out since December 2012 in a number of Member States, the Commission was informed that certain pre-packaged products contained horsemeat, which was not declared in the list of ingredients appearing directly on the package or on a label attached thereto. Instead, the name of certain such foods and/or the accompanying list of ingredients misleadingly referred solely to the presence of beef.

               (8)

               In accordance with Article 17 of Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety (5), food business operators at all stages of production, processing and distribution within their businesses under their control must ensure that foods satisfy the requirements of food law which are relevant to their activities and must verify that such requirements are met.

               (9)

               Horses are animal species that can be ‘food producing’ or ‘non-food producing’. Phenylbutazone is a veterinary drug whose use is allowed only in non-food producing animals pursuant to Commission Regulation (EU) No 37/2010 of 22 December 2009 on pharmacologically active substances and their classification regarding maximum residue limits in foodstuffs of animal origin (6). Accordingly, non-food producing horses, which have been treated with phenylbutazone at some point in their life, cannot enter the food chain. Considering the fraudulent practices relating to the unlabelled presence of horsemeat in certain food products, it is appropriate, for preventive purposes, to ascertain whether non-food producing horses treated with phenylbutazone have entered the food chain.

               (10)

               It is therefore necessary for the Commission to recommend to the Member States to carry out a coordinated control plan with a view to establish the prevalence of fraudulent practices in the marketing of certain foods for a period of one month. This period may be extended by an additional period of two months.

               (11)

               The recommended control plan should consist of two actions.

               (12)

               The first action should consist of appropriate controls carried out at retail level, on foods destined for the final consumer or mass caterers, which are marketed and/or labelled as containing beef. These controls could also be extended to other establishments (e.g. cold stores). The objective of these controls would be to establish whether such products contain horsemeat, which is not properly labelled on the packaging or, in the case of non-pre-packaged foodstuffs, whether information relating to its presence is not made available to the consumer or mass caterers. Such controls should be carried out on a representative sample.

               (13)

               Reliable methods exist which allow with a sufficient degree of accuracy the detection of the presence of proteins of undeclared species in a sample. The European Union Reference Laboratory for animal proteins in feedstuffs can provide useful advice on those methods and their use. The competent authorities should be invited to rely on the advice of that laboratory as to the methods that can be used.

               (14)

               The second action should consist of appropriate controls being carried out in establishments handling horsemeat destined for human consumption, including foods originating from third countries, for the detection of phenylbutazone residues. These controls should also be carried out on a representative sample, taking into account production and import figures. It is appropriate in this case to refer to methods provided for by Commission Decision 2002/657/EC of 12 August 2002 implementing Council Directive 96/23/EC concerning the performance of analytical methods and the interpretation of results (7).

               (15)

               The Member States should communicate the results of these controls to the Commission on a regular basis, in order to assess the findings and decide on an appropriate course of action.

               (16)

               After consulting the Standing Committee on the Food Chain and Animal Health,

         HAS ADOPTED THIS RECOMMENDATION:
   Member States should apply a coordinated control plan, in accordance with the Annex to this Recommendation, consisting of the following actions:

               (a)

               official controls on foods destined for the final consumer or mass caterers, which are marketed and/or labelled as containing beef; and

               (b)

               official controls on horsemeat destined for human consumption to detect phenylbutazone residues.

      Done at Brussels, 19 February 2013.

            For the Commission

         Tonio BORG

            Member of the Commission

      (1)  OJ L 165, 30.4.2004, p. 1.

      (2)  OJ L 109, 6.5.2000, p. 29.

      (3)  OJ L 139, 30.4.2004, p. 55.

      (4)  OJ L 139, 30.4.2004, p. 206.

      (5)  OJ L 31, 1.2.2002, p. 1.

      (6)  OJ L 15, 20.1.2010, p. 1.

      (7)  OJ L 221, 17.8.2002, p. 8.

      ANNEX

         Coordinated control plan with a view to establish the prevalence of fraudulent practices in the marketing of certain foods

      I.   ACTIONS AND SCOPE OF COORDINATED CONTROL PLAN
      The coordinated control plan should consist of two actions:

         ACTION 1:   Controls of foods marketed and/or labelled as containing beef

      A.   Product scope

                  1.

                  Foodstuffs marketed and/or labelled as containing beef (e.g. minced meat, meat products, meat preparations) falling within the following categories:

                              (a)

                              Pre-packaged foodstuffs destined for the final consumer or mass caterers, which are labelled as containing beef;

                              (b)

                              Foodstuffs offered for sale to the final consumer or to mass caterers without pre-packaging and foodstuffs packaged on the sales premises at the consumer’s request or pre-packaged for direct sale, which are marketed and/or otherwise indicated as containing beef.

                  2.

                  For the purpose of this coordinated control plan, the definition of ‘pre-packaged foodstuff’ in Article 1(3)(b) of Directive 2000/13/EC shall apply.

                  3.

                  For the purpose of this coordinated control plan, the definitions of ‘minced meat’, ‘meat preparations’ and ‘meat products’ in points 1.13, 1.15 and 7.1 of Annex I to Regulation (EC) No 853/2004 shall apply.

            B.   Objective

      Competent authorities should carry out official controls in order to establish whether the products referred in point A contain horsemeat, which is not properly labelled on the packaging or, in the case of non-pre-packaged foodstuffs, whether information relating to its presence is not made available to the consumer or mass caterers, in accordance with Union and, where appropriate, national provisions.
      C.   Sampling points and procedure

                  1.

                  The sample should be representative of the products concerned and covering a variety of products.

                  2.

                  The sampling of the products should be carried out at retail level (e.g. supermarkets, smaller shops, butchers) and could also be extended to other establishments (e.g. cold stores).

            D.   Sample numbers and modalities

      The table below gives an overview on the indicative recommended minimum number of samples to be taken within the period provided in Section II. Competent authorities are invited to take more samples when possible. The distribution of samples per Member State is based on population figures with a minimum number of 10 samples of the products concerned per Member State per calendar month as indicated in Section II.

                  Foodstuffs marketed and/or labelled as containing beef

                  Country of sale

                  Indicative monthly recommended sample numbers

                  France, Germany, Italy, the United Kingdom, Spain, Poland

                  150

                  Romania, the Netherlands, Belgium, Greece, Portugal, Czech Republic, Hungary, Sweden, Austria, Bulgaria

                  100

                  Lithuania, Slovakia, Denmark, Ireland, Finland, Latvia

                  50

                  Slovenia, Estonia, Cyprus, Luxembourg, Malta

                  10

            E.   Methods

      Competent authorities should preferably use the method(s) recommended by the European Union Reference Laboratory for animal proteins in feedstuffs, at http://eurl.craw.eu/en/164/legal-sources-and-sops

         ACTION 2:   Controls of horsemeat destined for human consumption

      A.   Product scope

      Meat of horses, asses, mules or hinnies, fresh chilled or frozen, classified under the Combined Nomenclature Code 0205 and which are destined for human consumption.
      B.   Objective

      Competent authorities should carry out official controls in order to detect the possible presence of phenylbutazone residues in the products referred to in point A.
      C.   Sampling points and procedure

      The sampling of the products should be carried out in establishments handling the products referred to in point A (e.g. slaughterhouses, border inspection posts).
      D.   Sample numbers and modalities

      The recommended minimum number of samples to be taken within the period provided in Section II should be set at 1 sample every 50 tonnes of the products referred to in point A, with a minimum of 5 samples per Member State.
      E.   Methods

      Competent authorities should use methods validated according to Decision 2002/657/EC. Such methods are available at the website of the European Reference Laboratory for the residues of veterinary medicines and contaminants in food of animal origin for residues listed in Annex I, Group A (5) and Group B (2)(a), (b), (e) to Council Directive 96/23/EC (1), at http://fis-vl.bund.de/Public/irc/fis-vl/Home/main
      II.   DURATION OF COORDINATED CONTROL PLAN
      The coordinated control plan should be carried out for a period of one month starting from the date of adoption of this Recommendation or at the latest by 1 March 2013.
      III.   REPORTING OF RESULTS

                  1.

                  Competent authorities should report the summary of the following information for each of the actions referred to in Section I of this Annex:

                              (a)

                              number of samples taken, per category of products;

                              (b)

                              the method(s) used for the analysis and the type of analysis performed;

                              (c)

                              number of positive findings;

                              (d)

                              follow-up controls performed with respect to positive findings in products referred to in point A under Action 1 in cases where the detected presence of horsemeat exceeds 1 %;

                              (e)

                              follow-up controls performed with respect to positive findings in products in point A under Action 2;

                              (f)

                              results of follow-up controls;

                              (g)

                              with respect to positive findings in products referred to in point A under Action 2, the country where the animal concerned was certified for slaughter.

                        The report should be communicated to the Commission within 15 days from the end of the one-month period referred to in Section II.
                  The report should be presented in accordance with the format to be provided by the Commission.

                  2.

                  Competent authorities should immediately report to the Commission any positive results of the official controls carried out with respect to Actions 1 and 2 mentioned in Section I through the Rapid Alert System for Food and Feed.

                  3.

                  Competent authorities should also report to the Commission the results of any own checks carried out at their request by food business operators. Such information should be accompanied by the details referred to in point 1 and presented in accordance with the format to be provided by the Commission.

         (1)  OJ L 125, 23.5.1996, p. 10.


title: Council Recommendation of 12 July 2016 on the 2016 National Reform Programme of Slovakia and delivering a Council opinion on the 2016 Stability Programme of Slovakia

text:
               18.8.2016

               EN

               Official Journal of the European Union

               C 299/61

         COUNCIL RECOMMENDATION
   of 12 July 2016
   on the 2016 National Reform Programme of Slovakia and delivering a Council opinion on the 2016 Stability Programme of Slovakia
   (2016/C 299/15)
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
   Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the resolutions of the European Parliament,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

               On 26 November 2015, the Commission adopted the Annual Growth Survey, marking the start of the 2016 European Semester for economic policy coordination. The priorities of the Annual Growth Survey were endorsed by the European Council on 17-18 March 2016. On 26 November 2015, on the basis of Regulation (EU) No 1176/2011 of the European Parliament and of the Council (2), the Commission adopted the Alert Mechanism Report, in which it did not identify Slovakia as one of the Member States for which an in-depth review would be carried out. On the same day, the Commission also adopted a recommendation for a Council Recommendation on the economic policy of the euro area. This Recommendation was endorsed by the European Council on 18-19 February 2016 and adopted by the Council on 8 March 2016 (3). As a country whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, Slovakia should ensure the full and timely implementation of the Recommendation.

               (2)

               The 2016 country report for Slovakia was published on 26 February 2016. It assessed Slovakia's progress in addressing the country-specific recommendations adopted by the Council on 14 July 2015 and Slovakia's progress towards its national Europe 2020 targets.

               (3)

               On 29 April 2016, Slovakia submitted its 2016 National Reform Programme and its 2016 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

               (4)

               Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds for the 2014-2020 period. As foreseen in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council (4), where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of this provision in guidelines on the application of the measures linking effectiveness of the European Structural and Investment Funds to sound economic governance.

               (5)

               Slovakia is currently in the preventive arm of the Stability and Growth Pact. In its 2016 Stability Programme, the Government plans to improve the headline balance to — 1,9 % of GDP in 2016 and further gradually to — 1,3 % of GDP in 2017. According to the Stability Programme, the medium-term budgetary objective — a structural deficit of 0,5 % of GDP — would be reached in 2019. According to the Stability Programme, the government debt-to-GDP ratio is expected to reach 52,9 % in 2016 and to continue decreasing to 47,3 % in 2019. The macroeconomic scenario underpinning these budgetary projections is plausible. However, the measures needed to support the planned deficit targets from 2017 onwards have not been sufficiently specified. Based on the Commission 2016 spring forecast, Slovakia is at risk of some deviation from the medium-term budgetary objective in 2016, while it is expected to comply with the recommended adjustment in 2017 under unchanged policies. Based on its assessment of the Stability Programme and taking into account the Commission 2016 spring forecast, the Council is of the opinion that Slovakia is expected to broadly comply with the provisions of the Stability and Growth Pact. Nevertheless, further measures will be needed to ensure compliance in 2016. To this end, the long-delayed adoption of binding expenditure ceilings and the implementation of the ‘value for money’ programme to increase efficiency of public expenditure, with planned expenditure reviews in selected areas, would be of critical importance.

               (6)

               The long-term sustainability of public finance in Slovakia remains a challenge. This is mainly due to the projected growth of ageing-related costs on healthcare and pensions. The increase in Slovakia's pension spending up to 2060 is expected to be one of the highest in the Union, driven by population ageing. The statutory retirement age in Slovakia is comparatively low, partly due to life expectancy factors. Healthcare expenditure is the main driver of ageing-related costs. Public healthcare expenditure is projected to grow substantially in the long term, albeit from a comparatively low level. Despite some improvement, health indicators remain very low in Slovakia. To raise the cost-effectiveness of the healthcare sector, the Government has been taking measures in both inpatient and outpatient care. Efforts to introduce an integrated model of care continue. The success of this reform is likely to depend on ownership by the key stakeholders, the integration of healthcare centres and hospitals, and appropriate staffing. Despite measures adopted to limit a further build-up of debt in public hospitals, several are still in a poor financial situation. Challenges remain in fully reversing the negative expenditure trends, such as restructuring hospital capacity, introducing a prospective reimbursement system and increasing competition in public procurement in the area of healthcare. Regarding outpatient care, the weak gatekeeping role of general practitioners is partly due to a suboptimal division of competences between general practitioners and specialists and favours recourse to more costly specialised care. With regard to taxation, government measures to fight tax fraud have contributed to better tax collection, in particular in the area of value added tax (VAT). However, the VAT gap remains high, indicating an ongoing compliance challenge. A strong emphasis on VAT collection in recent years has lessened attention to other important areas of taxation such as income taxation. In addition, a focus on auditing has left other roles of tax administration such as tax debt collection underdeveloped. This suggests that there is scope to improve resource allocation within the taxation system. A strategy to define compliance goals has not yet been developed.

               (7)

               Despite improvements in the labour market resulting from the good economic recovery and recent policy measures, long-term unemployment remains a problem. The rate of long-term unemployment continues to be one of the highest in the Union (7,6 % vs. 4,3 % in the Union as a whole in the third quarter of 2015). It particularly affects marginalised Roma, the low-skilled and young people. Measures to address unemployment have been taken in the area of vocational education and training, subsidised jobs and job counselling. However, the successful implementation of most of these reforms will depend on the capacity of the public employment service. Despite reorganisation of the Central Labour Office and improved access to training, there are still difficulties in introducing individualised support to the long-term unemployed and to vulnerable groups. Roma participation in the Slovak labour market remains very low and progress in increasing their employment rate is slow. Low levels of education and skills and discrimination are factors influencing their poor labour market participation. The low employment rate of women of childbearing age reflects the long parental leave (up to three years), lack of childcare facilities, especially for children under the age of three, high childcare costs and the limited use of flexible working-time arrangements. In addition, regional disparities persist — the unemployment rate in Eastern Slovakia is still twice that in Bratislava. Regarding governance of labour market services, measures taken in recent months do not provide for a tailored approach in addressing the structural challenges of the Slovak labour market.

               (8)

               The education system is insufficiently geared to increasing Slovakia's economic potential. Educational outcomes are low by international standards and have deteriorated further. This is largely linked to the inadequacy of teachers' education and the low attractiveness of the teaching profession. Despite the 4 % salary increase for teachers in 2016, low pay and insufficient practical training are among the factors making the profession unattractive to young people. Recently adopted anti-segregation legislation has yet to be implemented to bring about positive change and increase Roma participation in mainstream education, including pre-school education.

               (9)

               Public administration is still burdened by inefficiency. Effective coordination is wanting, due to the fragmented and rigid organisation of the public administration. The adoption of the Strategy on Human Resource Management in October 2015 is a positive step forward. However, the new Act on Civil Service, which is a necessary prerequisite for its successful implementation, has not been adopted yet. The Government has taken several measures to tackle corruption, but their impact so far has been limited. In particular, Slovakia has a limited track record on initiating criminal proceedings and prosecuting corruption cases, including illicit practices in public procurement. Building permit procedures for large-scale investment and infrastructure projects have been shortened. Unconsolidated governance, lack of evidence-based design of public procurement procedures, weak professionalism, conflicts of interest, tailor-made tender specifications and excessive use of lowest price award criteria result in limited quality-based competition. Public procurement weaknesses are persistently reported as affecting the efficiency of public resources allocation. Frequent changes to legislation and burdensome administrative procedures and requirements affect businesses in Slovakia. High administrative and regulatory barriers with respect to some professional services and network industries, weaknesses in some areas such as contract enforcement and insolvency resolution and long-standing concerns regarding the quality of the judicial system harm the business environment and discourage investment. Some measures to ease doing business have been taken, such as the Centre for Better Regulation, which was set up in October 2015, and the launch of the National Business Centre in early 2016. However, the adoption of the Small Business Act (SBA) under the SMEs Development Strategy has been postponed.

               (10)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of Slovakia's economic policy and published it in the 2016 country report. It has also assessed the Stability Programme and the National Reform Programme and the follow-up given to the recommendations addressed to Slovakia in previous years. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Slovakia but also their compliance with EU rules and guidance, given the need to strengthen the EU's overall economic governance by providing EU-level input into future national decisions. The recommendations under the European Semester are reflected in recommendations (1) to (3) below.

               (11)

               In the light of this assessment, the Council has examined the Stability Programme, and its opinion (5) is reflected in particular in recommendation (1) below.

         HEREBY RECOMMENDS that Slovakia take action in 2016 and 2017 to:

               1.

               Achieve an annual fiscal adjustment of 0,25 % of GDP towards the medium-term budgetary objective in 2016 and of 0,5 % of GDP in 2017. Improve the cost-effectiveness of the healthcare system. Take measures to increase tax compliance.

               2.

               Improve activation measures for the long-term unemployed and other disadvantaged groups, including individualised services and targeted training. Facilitate the employment of women, in particular by extending the provision of affordable, quality childcare. Improve educational outcomes by making the teaching profession more attractive and by increasing the participation of Roma children from early childhood in mainstream education.

               3.

               Consolidate governance, reinforce the shift from price only to quality-based competition and improve the prosecution of illicit practices in public procurement. Improve the transparency, quality and effectiveness of human resources management in public administration, in particular by adopting a new civil service act, and the effectiveness of the justice system. Adopt a comprehensive plan to address administrative and regulatory barriers for businesses.

      Done at Brussels, 12 July 2016.

            For the Council

            The President

         P. KAŽIMÍR

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (OJ L 306, 23.11.2011, p. 25).

      (3)  OJ C 96, 11.3.2016, p. 1.

      (4)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

      (5)  Under Article 5(2) of Regulation (EC) No 1466/97.