title: Recommendation for a Council opinion in accordance with the third paragraph of Art. 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 on the updated stability programme of Austria, 2005-2008

text:
Important legal notice

|

52006SC0107

Recommendation for a Council opinion in accordance with the third paragraph of Art. 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of Austria, 2005-2008  /* SEC/2006/0107 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 1.2.2006SEC(2006) 107 finalRecommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Art. 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of Austria, 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 stability programme of Austria was submitted in November 1998. In accordance with the Regulation, the Council delivered an opinion on it on 18 January 1999 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 stability programme of Austria and, based on its assessment below, has adopted a recommendation for a Council opinion on it.Assessment1.  On 30 November 2005 Austria submitted its most recent update of the stability programme, which covers the period from 2005 to 2008. The programme broadly follows the model structure and data provision requirements for stability and convergence programmes specified in the new code of conduct[3].2.  In its opinion of 18 January 2005 on the previous update of the stability programme, covering the period 2004-2008, the Council invited Austria to achieve a higher degree of front-loading in the overall budget consolidation path and to lay out in greater detail the specific measures through which a significant budget consolidation could be achieved in the last two years of the programme.3.  In the last decade, the Austrian economy grew on average by 2.2% per year in real terms, matching the growth rate for the euro zone as a whole. While job creation has been less dynamic than in the euro area, Austria still enjoys one of the lowest unemployment rates in the whole EU. In budgetary terms, the country achieved a “surplus or close-to-balance position” of public finance in 2001 and 2002. However, recent developments have been characterised by a relapse into deficit (1.2% and 1% of GDP in 2003 and 2004 respectively).4.  According to the update, real GDP growth is expected to pick up from annual rates of 1¾% in 2005 and 2006 to 2½% in 2008. Slower than previously assumed growth in 2005 and 2006, resulting in a widening of the negative output gap, is attributed to less buoyant international trade and higher oil prices. The pick up of economic activity in the outer years of the programme is expected on the back of growing investment and private consumption. Both the short-term and medium-term scenario is based on plausible growth assumptions. However, expectation of employment gains would appear somewhat optimistic. Inflation is expected to decline from 2.3% in 2005 to 1.5% in 2008, which seems plausible.5.  According to preliminary results, in 2005 the general government deficit amounted to 1.7% of GDP, which was 0.2 and 0.1 percentage point lower than planned in the updated programme and than forecasted by the Commission services respectively. The better-than-planned result was due to more favourable-than-foreseen developments on the revenue side in spite of substantial tax cuts. The planned expenditure was also exceeded, however, by a smaller margin.6.  The programme describes the budgetary strategy as “three-pronged”. First, it aims at a balanced budget over the economic cycle. Second, the strategy foresees a decline in the tax burden to 40% of GDP by 2010. Third, it envisages raising potential growth by fostering investment in research, education and infrastructure. The update foresees a decline in the general government deficit from 1.9% of GDP in 2005 to 0% in 2008. The fiscal adjustment towards a balanced budget is back-loaded, with only a minor improvement in 2006, followed by two relatively more substantial steps. The profile of the primary surplus is similar. It is expected to rise from 1.1% of GDP in 2005 to 2.7% at the end of the period. Since revenue is expected to fall by 0.9 percentage point of GDP over the period 2005-2008, the planned consolidation is planned to be achieved via expenditure cuts, with the expenditure-to-GDP ratio dropping by 2.8 percentage points. The bulk of the retrenchment on the expenditure side is projected to fall on the categories “other primary expenditure” and “social transfers”. Compared with the previous programme, the new update broadly confirms the planned adjustment against however a less favourable macroeconomic scenario.7.  The structural balance (in cyclically-adjusted terms and net of one-off and other temporary measures) is planned to improve on average by around 0.5 percentage point of GDP per year against the background of negative output gap throughout the period. The programme sets the medium-term objective (MTO) for the budgetary position as meant in the Stability and Growth Pact at 0% of GDP in structural terms and aims at achieving this position by 2008. As the programme’s MTO is more demanding than the minimum benchmark (estimated at a deficit of around 1½% of GDP), its achievement should fulfil the aim of providing a safety margin against the occurrence of an excessive deficit. As regards appropriateness, the programme’s MTO lies within the range indicated for euro area and ERM II Member States in the Stability and Growth Pact and the code of conduct and is more demanding than implied by the debt ratio and average potential output growth in the long term.8.  The budgetary path projected in the update seems plausible for the years 2005 and 2006, when it is based on legislated measures, notably the tax cuts. The consolidation in 2007 and 2008 does not seem fully substantiated by the policy measures discussed in the update. Moreover, the credibility of the projected improvement relies largely on the effectiveness of the Austrian National Stability Pact. Previous experience with the pact offers only limited help in determining whether its targets will be respected. The implementation of envisaged expenditure targets remains the main risk to the budgetary strategy, as has been stressed already in the assessments of previous updates.9.  In view of this risk assessment, the budgetary stance in the programme may not be sufficient to ensure that the programme’s MTO is achieved by 2008. However, as stated above, the programme’s MTO is more demanding than required by the Stability and Growth Pact. The budgetary strategy, if implemented as specified in the programme, seems adequate to achieve a budgetary position in structural terms that can be considered as appropriate under the Pact by the end of the programme period. In addition, the budgetary stance in the programme seems to provide a sufficient safety margin against breaching the 3% of GDP deficit ceiling with normal cyclical fluctuations throughout the programme period. The pace of the adjustment towards the programme’s MTO implied by the programme is fully in line with the Stability and Growth Pact, which specifies that, for euro area and ERM II Member States, the annual improvement in the structural balance should be 0.5% of GDP as a benchmark and that the adjustment should be higher in good economic times and could be lower in bad economic times. While the Commission services are expecting this adjustment to be slower than foreseen in the programme, it would still be compatible with the requirements of the Pact, given the existence of a negative output gap throughout the programme period.10.  The debt ratio is estimated to have reached 63.4% of GDP in 2005, thus slightly above the 60% of GDP Treaty reference value. The programme projects a decline in the debt ratio of 3.9 percentage points over the programme period, thereby returning below the reference value. The contribution from the primary balance is set to increase substantially over the programme period, while those from interest payments and nominal GDP growth are expected to remain largely unchanged. The risks to the projected evolution of the debt ratio appear to be broadly balanced. On the one hand, higher-than-targeted deficits could endanger adherence to the adjustment path presented in the programme. On the other hand, the update does not include the potential of privatisation in Austria. In view of this risk assessment, the debt ratio seems to be sufficiently diminishing towards the reference value.11.  With regard to the sustainability of public finances, Austria appears to be at low risk on grounds of the projected budgetary costs of ageing populations. The level of debt, currently above 60% of GDP, is projected to fall and remain below the reference value up to 2050 on the assumption that the planned budgetary consolidation is implemented. Austria’s recent pension reform should contribute significantly to the containment of future increases in public expenditure. However, the structural deficit in the government finances, if not corrected, could pose a risk to public finance sustainability. Implementing the planned consolidation of public finances over the medium-term is therefore instrumental for reducing the risks to public finance sustainability.12.  The envisaged measures in the area of public finances are broadly consistent with the broad economic policy guidelines included in the integrated guidelines for the period 2005-2008. In particular, the measures are in line with the guidelines recommending safeguarding economic and fiscal sustainability and promoting an efficient allocation of resources geared towards higher growth and employment. However, the downside risks to the future budgetary developments could make the achievement of the country’s medium-term objective more difficult to obtain.13.  The National Reform Programme of Austria, submitted on 19 October 2005 in the context of the renewed Lisbon strategy for growth and jobs, identifies the achievement of sustainable public finances as one of the key challenges for Austria. However, it does not spell out future measures envisaged towards meeting this challenge. In that respect, the stability programme is more detailed, providing information on some of the measures that are to contribute to the consolidation of public finances. The budgetary implications of the actions in the microeconomic and employment areas outlined in the National Reform Programme are broadly reflected in the budgetary projections of the stability programme. The latter outlines measures aimed at making the public administration and the health care system more efficient. It complements these with proposals for changes in the institutional features of the public finances, namely two comprehensive reforms of the legislation governing the budgetary process in Austria, which consist in the introduction of the medium-term budgetary framework from 2007 and shifting from input-dominated to objective-driven budgets from 2011. These measures are in line with the priorities laid out in the National Reform Programme.In view of the above assessment, the ambitious structural adjustment planned over the programme period can be welcomed. However, Austria should make sure that the programme’s MTO is achieved by the end of the update period by further specifying and implementing measures that will support the budgetary consolidation planned for the two final years of the programme.Recommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Art. 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of Austria, 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[4], and in particular Article 5(3) thereof,Having regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:14.  In the last decade, the Austrian economy grew on average by 2.2% per year in real terms, matching the growth rate for the euro zone as a whole. While job creation has been less dynamic than in the euro area, Austria still enjoys one of the lowest unemployment rates in the whole EU. In budgetary terms, the country achieved a “surplus or close-to-balance position” of public finance in 2001 and 2002. However, recent developments have been characterised by a relapse into deficit (1.2% and 1% of GDP in 2003 and 2004 respectively).15.  In its opinion of 18 January 2005 on the previous update of the stability programme, covering the period 2004-2008, the Council invited Austria to achieve a higher degree of front-loading in the overall budget consolidation path and to lay out in greater detail the specific measures through which a significant budget consolidation could be achieved in the last two years of the programme.16.  According to preliminary results, in 2005 the general government deficit amounted to 1.7% of GDP, which was 0.2 and 0.1 percentage point lower than planned in the updated programme and than forecasted by the Commission services respectively. The better-than-planned result was due to more favourable-than-foreseen developments on the revenue side in spite of substantial tax cuts. The planned expenditure was also exceeded, however, by a smaller margin.17.  On [14 February 2006] the Council examined the updated stability programme of Austria, which covers the period 2005 to 2008. The programme broadly follows the model structure and data provision requirements for stability and convergence programmes specified in the new code of conduct[5].18.  According to the update, real GDP growth is expected to pick up from annual rates of 1¾% in 2005 and 2006 to 2½% in 2008. Slower than previously assumed growth in 2005 and 2006, resulting in a widening of the negative output gap, is attributed to less buoyant international trade and higher oil prices. The pick up of economic activity in the outer years of the programme is expected on the back of growing investment and private consumption. Both the short-term and medium-term scenario is based on plausible growth assumptions. However, expectation of employment gains would appear somewhat optimistic. Inflation is expected to decline from 2.3% in 2005 to 1.5% in 2008, which seems plausible.19.  The programme describes the budgetary strategy as “three-pronged”. First, it aims at a balanced budget over the economic cycle. Second, the strategy foresees a decline in the tax burden to 40% of GDP by 2010. Third, it envisages raising potential growth by fostering investment in research, education and infrastructure. The update targets a decline in the general government deficit from 1.9% of GDP in 2005 to 0% in 2008 and an increase in the primary surplus from 1.1% of GDP to 2.7%. Since revenue is expected to fall by 0.9 percentage point of GDP over the period 2005-2008, the planned consolidation is going to rely on expenditure restraint, with the expenditure-to-GDP-ratio dropping by 2.8 percentage points. The bulk of the retrenchment on the expenditure side is to fall on the categories “other primary expenditure” and “social transfers”. Compared with the previous programme, the new update broadly confirms the planned adjustment against a less favourable macroeconomic scenario.20.  Over the programme period, the structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures) calculated according to the commonly agreed methodology based on the programme data is planned to improve on average by about 0.5% of GDP per year. The programme sets the medium-term objective (MTO) for the budgetary position at 0% of GDP in structural terms and aims at achieving this position by 2008. As regards appropriateness, the programme’s MTO lies within the range indicated for euro area and ERM II Member States in the Stability and Growth Pact and the code of conduct and is more demanding than implied by the debt ratio and average potential output growth in the long term.21.  The budgetary path projected for 2005 and 2006 seems broadly plausible as it is based on legislated measures, notably the tax cuts. However, the consolidation in 2007 and 2008 does not seem fully substantiated by the policy measures discussed in the update. Almost half of the expenditure restraint effort falls into the category “other primary expenditure” and no information is provided in the programme on how exactly this is going to be done. On top of that, the credibility of the projected improvement relies largely on the effectiveness of the Austrian National Stability Pact. However, previous experience with the pact offers only limited help in determining whether its targets will be respected.22.  In view of this risk assessment, the budgetary stance in the programme may not be sufficient to ensure that the programme’s MTO is achieved by 2008. However, as stated above, the programme’s MTO is more demanding than required by the Stability and Growth Pact. The budgetary strategy, on the condition that it is implemented as presented in the programme, seems adequate to achieve a budgetary position in structural terms that can be considered as appropriate under the Pact by the end of the programme period. In addition, the budgetary stance in the programme seems to provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations throughout the programme period. The pace of the adjustment towards the programme’s MTO implied by the programme is fully in line with the Stability and Growth Pact, which specifies that, for euro area and ERM II Member States, the annual improvement in the structural balance should be 0.5% of GDP as a benchmark and that the adjustment should be higher in good economic times and could be lower in bad economic times. While according to the Commission services this adjustment is going to be slower on annual average than foreseen in the programme, it would still be compatible with the requirements of the Pact, especially in the face of a negative output gap throughout the programme period.23.  The debt ratio is estimated to have reached 63.4% of GDP in 2005, thus slightly above the 60% of GDP Treaty reference value. The programme projects the debt ratio to decline by 3.9 percentage points over the programme period, thereby returning below the reference value. The risks to the projected evolution of the debt ratio appear to be broadly balanced. On the one hand, higher-than-targeted deficits could endanger adherence to the adjustment path presented in the programme. On the other hand, the update does not include potential privatisation receipts. In view of this risk assessment, the debt ratio seems to be sufficiently diminishing towards the reference value.24.  With regard to the sustainability of public finances, Austria appears to be at low risk on grounds of the projected budgetary costs of ageing populations[6]. The level of debt, currently above 60% of GDP, is projected to fall and remain below the reference value up to 2050 on the assumption that the planned budgetary consolidation is implemented. Austria’s recent pension reform should contribute significantly to the containment of future increases in public expenditure. However, the structural deficit in the government finances, if not corrected, could pose a risk to public finance sustainability. Implementing the planned consolidation of public finances over the medium-term is therefore instrumental for reducing the risks to public finance sustainability.25.  The envisaged measures in the area of public finances are broadly consistent with the broad economic policy guidelines for the period 2005-2008. In particular, the measures are in line with the guidelines recommending safeguarding economic and fiscal sustainability and promoting an efficient allocation of resources geared towards higher growth and employment. However, the downside risks to the future budgetary developments could make the achievement of the country’s medium-term objective more difficult to obtain.26.  The National Reform Programme of Austria, submitted on 19 October 2005, identifies the achievement of sustainable public finances as one of the key challenges for Austria. However, it does not spell out any future measures envisaged towards meeting this challenge. In that respect, the stability programme is more detailed, providing information on some of the measures that are to contribute to the consolidation of public finances. The budgetary implications of the actions in the microeconomic and employment areas outlined in the National Reform Programme are broadly reflected in the budgetary projections of the stability programme. The latter outlines measures aimed at making the public administration and the health care system more efficient. It complements these with proposals for changes in the institutional features of the public finances, namely two comprehensive reforms of the legislation governing the budgetary process in Austria, which consist in the introduction of the medium-term budgetary framework from 2007 and shifting from input-dominated to objective-driven budgets from 2011. These measures are in line with the priorities laid out in the National Reform Programme.In view of the above assessment, the Council welcomes the ambitious structural adjustment planned over the programme period. However, the Council considers that Austria should make sure that the programme’s MTO is achieved by the end of the update period by further specifying and implementing the necessary measures that will support the budgetary consolidation planned for the two final years of the programme.Comparison of key macroeconomic and budgetary projections2004 | 2005 | 2006 | 2007 | 2008 |Real GDP (% change) | SP Nov 2005 | 2.4 | 1.7 | 1.8 | 2.4 | 2.5 |COM Nov 2005 | 2.4 | 1.7 | 1.9 | 2.2 | n.a. |SP Nov 2004 | 1.9 | 2.5 | 2.5 | 2.2 | 2.4 |HICP inflation (%) | SP Nov 2005 | 2.0 | 2.3 | 2.1 | 1.7 | 1.5 |COM Nov 2005 | 2.0 | 2.2 | 2.1 | 1.7 | n.a. |SP Nov 2004 | 2.1 | 1.8 | 1.4 | 1.5 | 1.6 |Output gap (% of potential GDP) | SP Nov 20051 | -0.2 | -0.7 | -1.1 | -0.9 | -0.5 |COM Nov 20053 | -0.2 | -0.7 | -1.0 | -0.9 | n.a. |SP Nov 20041 | -1.3 | -0.8 | -0.4 | -0.1 | 0.2 |General government balance (% of GDP) | SP Nov 2005 | -1.0 | -1.9 | -1.7 | -0.8 | 0.0 |COM Nov 20052 | -1.0 | -1.8 | -1.8 | -1.4 | n.a. |SP Nov 2004 | -1.3 | -1.9 | -1.7 | -0.8 | 0.0 |Primary balance (% of GDP) | SP Nov 2005 | 2.1 | 1.1 | 1.2 | 2.0 | 2.7 |COM Nov 2005 | 1.9 | 1.0 | 1.0 | 1.4 | n.a. |SP Nov 2004 | 1.9 | 1.2 | 1.3 | 2.2 | 2.9 |Cyclically-adjusted balance = structural balance (% of GDP) | SP Nov 20051 | -0.9 | -1.6 | -1.2 | -0.4 | 0.2 |COM Nov 2005 | -0.9 | -1.5 | -1.3 | -1.0 | n.a. |SP Nov 20041 | -0.9 | -1.7 | -1.6 | -0.8 | -0.1 |Government gross debt (% of GDP) | SP Nov 2005 | 63.6 | 63.4 | 63.1 | 61.6 | 59.5 |COM Nov 20052 | 63.7 | 63.6 | 63.5 | 62.8 | n.a. |SP Nov 2004 | 64.2 | 63.6 | 63.1 | 61.6 | 59.1 |Notes: 1 Commission services calculations on the basis of the information in the programme. 2 Commission services’ autumn 2005 forecast projections for the deficit and debt ratios have been adjusted to be comparable with the projections in the stability programme by recalculating the ratios on the basis of the new GDP series. 3 Based on estimated potential growth of 1.9%, 2.2%, 2.2% and 2.1% respectively in the period 2004-2007. Source: Stability programme (SP); 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] “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 provides all compulsory and most optional data prescribed by the latter. A minor gap is the missing calculation of tax burden in Table 2.[4] 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[5] It provides all compulsory and most optional data prescribed by the latter. A minor gap is the missing calculation of tax burden in Table 2.[6] Details on long-term sustainability are provided in the technical assessment of the programme by the Commission services (http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm


title: Commission Recommendation (EU) 2015/976 of 19 June 2015 on the monitoring of the presence of tropane alkaloids in food (Text with EEA relevance)

text:
               23.6.2015

               EN

               Official Journal of the European Union

               L 157/97

         COMMISSION RECOMMENDATION (EU) 2015/976
   of 19 June 2015
   on the monitoring of the presence of tropane alkaloids in food
   (Text with EEA relevance)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
   Whereas:

               (1)

               The Scientific Panel on Contaminants in the Food Chain (‘Contam’) of the European Food Safety Authority (EFSA) adopted an opinion on tropane alkaloids in food and feed (1).

               (2)

               The most studied tropane alkaloids are (-)-hyoscyamine and (-)-scopolamine. Atropine is the racemic mixture of (-)-hyoscyamine and (+)-hyoscyamine of which only the (-)-hyoscyamine enantiomer exhibits anticholinergic activity.

               (3)

               The presence of tropane alkaloids in genus Datura is well known. Datura stramonium is widely distributed in temperate and tropical regions and for this reason seeds of Datura stramonium have been found as impurities in linseed, soybean, sorghum, millet, sunflower and buckwheat and products thereof. The Datura stramonium seeds can not be easily removed from sorghum, millet and buckwheat by sorting and cleaning.

               (4)

               More occurrence data are needed on the presence of tropane alkaloids in food. There is also a need to understand the agricultural conditions under which tropane alkaloids occur in agricultural commodities.

               (5)

               It is therefore appropriate to recommend the monitoring of the presence of tropane alkaloids in food,

         HAS ADOPTED THIS RECOMMENDATION:

               1.

               Member States should, with the active involvement of food business operators, perform monitoring for the presence of tropane alkaloids in food, and particularly in:

                           —

                           cereals and cereal-derived products, in particular (in order of priority):

                                       —

                                       buckwheat, sorghum, millet, maize and buckwheat, sorghum, millet and maize flour,

                                       —

                                       cereal-based food for infants and young children,

                                       —

                                       breakfast cereals,

                                       —

                                       grain milling products,

                                       —

                                       grains for human consumption,

                           —

                           gluten-free products,

                           —

                           food supplements, teas and herbal infusions,

                           —

                           legume vegetables (without pods), pulses and oilseeds and derived products.

               2.

               The tropane alkaloids to be analysed are at least atropine and scopolamine and, if possible, to analyse the hyoscyamine enantiomers separately and also other tropane alkaloids.

               3.

               In order to ensure that the samples are representative for the sampled lot, Member States should follow the sampling procedures laid down in Commission Regulation (EC) No 401/2006 (2).

               4.

               The method of analysis to be used for monitoring is preferably high performance liquid chromatography — mass spectrometry/(mass spectrometry) (HPLC-MS/(MS)) or, if HPLC-MS/(MS) is not possible, gas chromatography — mass spectrometry (GC-MS).
               The Limit of Quantification (LOQ) for atropine (racemic mixture of hyoscyamine enantiomers) and scopolamine should be preferably below 5 μg/kg and not higher 10 μg/kg for agricultural commodities, ingredients, food supplements and herbal teas and should preferably be lower than 2 μg/kg for finished foods (e.g. breakfast cereals) and 1 μg/kg for cereal-based foods for infants and young children.

               5.

               Member States, with the active involvement of the food business operators, should perform investigations to identify the agricultural conditions resulting in the presence of tropane alkaloids in food in case significant levels of tropane alkaloids are observed.

               6.

               Member States should ensure that the analytical results are provided on a regular basis and by the latest by October 2016 to EFSA in the EFSA data submission format in line with the requirements of EFSA's Guidance on Standard Sample Description (SSD) for Food and Feed (3) and the additional EFSA's specific reporting requirements.

      Done at Brussels, 19 June 2015.

            For the Commission

         Vytenis ANDRIUKAITIS

            Member of the Commission

      (1)  EFSA Contam Panel (EFSA Panel on Contaminants in the Food Chain), 2013. Scientific Opinion on Tropane alkaloids in food and feed. EFSA Journal 2013;11(10):3386, 113 pp. doi:10.2903/j.efsa.2013.3386.

      (2)  Commission Regulation (EC) No 401/2006 of 23 February 2006 laying down the methods of sampling and analysis for the official control of the levels of mycotoxins in foodstuffs (OJ L 70, 9.3.2006, p. 12).

      (3)  http://www.efsa.europa.eu/en/datex/datexsubmitdata.htm


title: Council Recommendation of 17 February 2015 concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (ninth EDF) for the financial year 2013

text:
               24.2.2015

               EN

               Official Journal of the European Union

               C 66/2

         COUNCIL RECOMMENDATION
   of 17 February 2015
   concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (ninth EDF) for the financial year 2013
   (2015/C 66/02)
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to the Partnership Agreement between the members of the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000 (1) and amended by the Agreement signed in Luxembourg on 25 June 2005 (2),
   Having regard to the Internal Agreement between Representatives of the Governments of the Member States, meeting within the Council, on the Financing and Administration of Community Aid under the Financial Protocol to the Partnership Agreement between the African, Caribbean and Pacific States and the European Community and its Member States signed in Cotonou (Benin) on 23 June 2000 and the allocation of financial assistance for the Overseas Countries and Territories to which Part Four of the EC Treaty applies (3) (the ‘Internal Agreement’) setting up, amongst others, the ninth European Development Fund (ninth EDF), and in particular Article 32(3) thereof,
   Having regard to the Financial Regulation of 27 March 2003 applicable to the 9th European Development Fund (4), and in particular Articles 96 to 103 thereof,
   Having examined the revenue and expenditure account and the balance sheet relating to the operations of the ninth EDF as at 31 December 2013 and the Annual Report of the Court of Auditors on the activities funded by the 8th, 9th and 10th European Development Funds (EDFs) concerning the financial year 2013, together with the Commission’s replies contained in that Annual Report (5),
   Whereas:

               (1)

               Pursuant to Article 32(3) of the Internal Agreement, the discharge for the financial management of the ninth EDF is to be given to the Commission by the European Parliament on the recommendation of the Council.

               (2)

               The overall implementation by the Commission of the operations of the ninth EDF during the financial year 2013 has been satisfactory,

         HEREBY RECOMMENDS that the European Parliament give the Commission a discharge in respect of the implementation of the operations of the ninth EDF for the financial year 2013.

      Done at Brussels, 17 February 2015.

            For the Council

            The President

         J. REIRS

      (1)  OJ L 317, 15.12.2000, p. 3.

      (2)  OJ L 287, 28.10.2005, p. 4.

      (3)  OJ L 317, 15.12.2000, p. 355.

      (4)  OJ L 83, 1.4.2003, p. 1.

      (5)  OJ C 398, 12.11.2014, p. 289.


title: Recommendation for a Council opinion in accordance with the third paragraph of Article 5 of Council Regulation (EC) n°1466/97 of 7 July 1997 on the updated stability programme of Belgium, 2002-2005

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		52014DC0415

			Recommendation for a COUNCIL RECOMMENDATION on Latvia’s 2014 national reform programme and delivering a Council opinion on Latvia’s 2014 stability programme /* COM/2014/0415 final  - 2014/ () */

Recommendation for a
COUNCIL RECOMMENDATION
on Latvia’s 2014 national reform programme
and delivering a Council opinion on Latvia’s 2014 stability programme
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[2],
Having regard to the resolutions of the
European Parliament[3],
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 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, the Council, on the basis of
the Commission's proposals, 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, 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 9 July 2013, the Council adopted a
recommendation on Latvia's national reform programme for 2013 and delivered its
opinion on Latvia's updated convergence programme for 2012-2016.
(5)
On 13 November 2013, the Commission adopted the
Annual Growth Survey[4],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[5],
in which it did not identify Latvia as one of the Member States for which
an in-depth review would be carried out.
(6)
On 20 December 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 29 April 2014, Latvia submitted its 2014 national
reform programme and on 30 April 2014 its 2014 stability programme. In order to
take account of their interlinkages, the two programmes have been assessed at
the same time.
(8)
The objective of the budgetary strategy outlined
in the 2014 Stability Programme is to gradually reduce the headline deficit and
to maintain a structural balance which is consistent with the medium-term objective
when taking into account the allowed temporary deviation from the medium-term
objective due to the impact of the systemic pension reform. The programme has
changed the medium-term objective from -0.5% to -1.0%; the new medium-term
objective reflects the objectives of the Stability and Growth Pact. The planned
path of the headline balance in Latvia's programme implies a gradual
deterioration of the (recalculated) structural balance, although still within
the margin allowed by the implementation of the pension reform. Taking into
account the allowed deviation from the medium-term objective, the planned
structural deficit is in line with the requirement of the Pact until 2016.
However, the planned increase in the recalculated structural deficit in 2017
leads to a deviation from the required adjustment path towards the medium-term
objective. Overall, the budgetary strategy outlined in the programme is mostly
in line with the requirements of the Stability and Growth Pact. Government debt
is set to remain well below 60% of GDP over the whole programme period,
declining to 31% of GDP by 2017. The macroeconomic scenario underpinning the
budgetary projections in the programme, which has not been formally endorsed by
an independent institution, is plausible. Economic growth is expected to remain
around 4% per year over the programme period, and projected price increases are
moderate. The programme's budgetary scenario envisages a steep decline in the
share of government's revenue and expenditure in GDP, reflecting several
revenue-reducing measures against targeted expenditure restraint. Increasing
spending demands in several policy fields represent a risk to the projected
expenditure reductions in the programme. The Commission 2014 spring forecast
shows that while fiscal policy in 2014 is in line with the requirement of the
Pact, there is a risk of a deviation in 2015. Based on its assessment of the
programme and the Commission Forecast, pursuant to Council Regulation (EC) No
1466/97, the Council is of the opinion that in 2014 the deviation of the
structural deficit from the medium-term objective reflects the impact of the
systemic pension reform, while as of 2015 there is a risk of a deviation from
the required adjustment path.
(9)
Latvia has taken steps to lower the tax burden
for low-income earners and families with dependants and to strengthen property
and environmental taxation, but the level and design of these taxes does not
sufficiently affect the behaviour of economic operators, and some
environmentally harmful subsidies remain in place. While the authorities have
made some progress in improving tax compliance and reducing the proportion of
undeclared economic activity, notably by improving risk assessment and
tightening sanctions against fraudulent behaviour, challenges in the fight
against tax fraud and evasion remain. In particular, despite representing a
significant proportion of total taxation, revenue from consumption taxes has
ample potential for further increase if tax compliance is improved.
(10)
Despite an originally ambitious plan to reform
higher education, Latvia has made no progress in setting up an internationally
approved accreditation system, plans to introduce a new financing model are
uncertain, consolidation of higher education institutes has been weakened and
restrictions on the use of foreign languages remain unchanged. This is despite
the fact that there is significant room for reforming the higher education
system, which is too large in view of the declining population, offers too many
distinct study programmes and has a limited attraction for foreign students and
teaching staff. The results of the first independent assessment of research
institutions shows that only 10% of those evaluated can be considered as high-level
international research centres. Moreover, Latvia had an R&D intensity of
only 0.66% of GDP in 2012 and is not on track to achieve its Europe 2020
objective of devoting 1.5% of GDP to R&D.
(11)
Latvia has made progress in tackling
unemployment, which has fallen considerably. However, youth
unemployment is still relatively high and there is a need for outreach measures
to non-registered inactive youth. Although Latvia has taken measures to address
skills mismatches and the quality of vocational education, these still require
attention, notably in improving the quality of apprenticeships and in
developing comprehensive career guidance. Active labour market policies are
still limited in scope and over rely on public works.
(12)
Working age poverty remains very high in Latvia.
Latvia has taken some steps to reform social assistance and has completed a
large-scale assessment of the social security system providing a solid basis
for an evidence-based reform. It has significantly increased various child-related
benefits, and raised the non-taxable thresholds in personal income tax for
dependants. However, the effectiveness of social protection in terms of poverty
reduction remains poor and designing an effective social safety net remains a
challenge. Overall, a high proportion of population is at risk of poverty or
social exclusion, and such proportion is even higher for children. Families
with children, the unemployed, people with disabilities and people living in
rural areas are at a particularly high risk of poverty and social exclusion. Latvia's
spending on social protection as a percentage of GDP is the lowest in the EU. Access
to healthcare is hampered by costs, including high out-of-pocket payments and
prevalent informal payments, leaving a high proportion of the population with
unmet health-care needs. There is significant room to enhance the efficiency of
the system, ensure cost-effective financing and promote disease-prevention
activities.
(13)
Latvia has made some progress in opening its
electricity market to competition and this will be extended to the household
sector in early 2015. Latvia joined the regional Scandinavian-Baltic Nord Pool
Spot market for electricity contracting in June 2013. Further reinforcement of
interconnections with the EU energy market is needed, as Latvia is currently
import-dependent and the cross-border electricity connection with Estonia is
mostly congested. Development of infrastructure is therefore essential and Latvia
faces considerable challenges in closing infrastructure gaps. Some progress was also achieved in the natural
gas sector as the Parliament approved amendments to the Energy law, defining
gradual opening up of the gas market from April 2014; however, the full market
opening was postponed until 2017. Latvia has put forward a balanced mix of
policy measures addressing energy savings for the main sectors of the economy
and in coming years more than 70% of energy savings will be generated in the
buildings sector. However, efficiency in transport, buildings and heating
systems still needs to be improved.
(14)
Latvia has taken significant action to improve
capacities in the judiciary to reduce the backlog and length of proceedings.
However, the high judicial backlog still poses a threat to business and reforms
to improve the efficiency and quality of the judiciary need to be completed,
including as regards insolvency, mediation and arbitration. Latvia has proposed
ambitious public administration reforms; however their implementation is slow
and not applied to local governments and the reform of state-owned enterprises
has been significantly delayed. Amendments to the
Competition Law are needed to give the Competition Council greater institutional
and financial independence to intervene effectively against actions of public
and private bodies restricting competition.
(15)
In the context of the European Semester, the
Commission has carried out a comprehensive analysis of Latvia’s economic
policy. It has assessed the stability programme and the national reform
programme. It has taken into account not only their relevance for sustainable
fiscal and socio-economic policy in Latvia 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 (5) below.
(16)
In the light of this assessment, the Council has
examined Latvia’s stability programme, and its opinion[6] is reflected in
particular in recommendation (1) below.
(17)
In the context of the European Semester the
Commission has also carried out an analysis of the economic policy of the euro
area as a whole. On the basis of this analysis the Council has issued specific recommendations
for the Member States whose currency is the euro. Latvia should also ensure the
full and timely implementation of these recommendations.
HEREBY RECOMMENDS that Latvia take
action within the period 2014-2015 to:
1.
Preserve a sound fiscal position in 2014 and
strengthen the budgetary strategy as of 2015, ensuring that the deviation from
the medium-term objective remains limited to the impact of the systemic pension
reform. Pursue efforts to further reduce the tax burden on low-income earners in
the context of a shift towards more growth-friendly property and environmental
taxes and by improving tax compliance and collection.
2.
Step up implementation of the higher education
reform, in particular through the establishment of an independent accreditation
agency and a financing model that rewards quality. Provide career guidance at
all education levels, improve the quality of vocational education and training,
including by strengthening apprenticeship, and make progress in employability
of young people including by putting in place outreach measures for
non-registered youth not in employment education or training. Take steps for a
more integrated and comprehensive research system also by concentrating
financing towards internationally competitive research institutions.
3.
Reform social assistance and its financing
further to ensure better coverage, adequacy of benefits, strengthened
activation and targeted social services. Increase coverage of active labour
market policies. Improve the cost-effectiveness, quality and accessibility of
the health care system.
4.
Accelerate the development of gas and
electricity interconnections to neighbouring Member States to diversify energy
sources and promote competition through improved integration of the Baltic
energy markets. Pursue efforts to further increase energy efficiency in
transport, buildings and heating systems.
5.
Complete judicial reforms including the pending
reforms of insolvency, arbitration and mediation frameworks to ensure a more
business- and consumer- friendly legal environment. Step up public
administration reforms, including by implementing state-owned enterprise
management reform and increasing institutional and financial independence of
the Competition Council.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               COM(2014) 415 final.
[3]               P7_TA(2014)0128 and P7_TA(2014)0129.
[4]               COM(2013) 800 final.
[5]               COM(2013) 790 final.
[6]               Under Article 5(2) of Council Regulation (EC) No
1466/97.


				|

		52014DC0418

			Recommendation for a COUNCIL RECOMMENDATION on Hungary’s 2014 national reform programme and delivering a Council opinion on Hungary’s 2014 convergence programme /* COM/2014/0418 final - 2014/ () */

Recommendation for a
COUNCIL RECOMMENDATION
on Hungary’s 2014 national reform
programme
and delivering a Council opinion on Hungary’s 2014 convergence programme

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,
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 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, the Council, on the basis of
the Commission's proposals, 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, 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 9 July 2013, the Council adopted a
recommendation on Hungary’s national reform programme for 2013 and delivered
its opinion on Hungary’s updated convergence programme for 2013-2016.
(5)
On 13 November 2013, the Commission adopted the
Annual Growth Survey[5],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[6],
in which it identified Hungary as one of the Member States for which an
in-depth review would be carried out.
(6)
On 20 December 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 5 March 2014, the Commission published the
results of its in-depth review for Hungary[7],
under Article 5 of Regulation (EU) no 1176/2011. The Commission's analysis leads
it to conclude that Hungary continues to experience macroeconomic imbalances,
which require monitoring and decisive policy action. In particular, the ongoing
adjustment of the highly negative net international position, the high level of
public and private debt in the context of a fragile financial sector and
deteriorating export performance continue to deserve very close attention with
a view to reducing the important risks of adverse effects on the functioning of
the economy.
(8)
On 30 April 2014, Hungary submitted its 2014
national reform programme and its 2014 convergence programme. In order to take
account of their interlinkages, the two programmes have been assessed at the
same time.
(9)
The objective of the budgetary strategy outlined
in the 2014 Convergence Programme is to bring down the headline deficit from
2.9% of GDP in 2014 to 1.9% by the end of the programme period. This is to be
achieved with a strongly back-loaded consolidation path, while the deficit
targets have been significantly revised upwards compared to the previous
programme. The programme confirms the medium-term objective of -1.7% of GDP,
which reflects the objectives of the Stability and Growth Pact. However, on the
basis of the recalculated structural balance, the medium-term objective is not expected
to be attained by the end of the programme period. The (recalculated)
structural balance planned to deteriorate by 1.5 pps in 2014, thereby
significantly deviating from the medium-term objective, and is set to stabilize
in 2015, implying a shortfall of 0.5% of GDP from the required improvement
towards the medium-term objective. The expenditure benchmark shows a
significant deviation in both 2014 and 2015. The (recalculated) structural balance
is planned to deteriorate further in both 2016 and 2017. Overall, a significant
deviation from the adjustment path towards the medium-term objective is planned
as of 2014. The programme projects a gradual but continuous decrease in
government debt from 79% of GDP in 2013 to around 75% of GDP in 2017. The
macroeconomic scenario underpinning the budgetary projections in the programme
is broadly plausible for 2014-2016, with GDP projected to grow by 2.3% and 2.5%
this year and next, against 2.3% and 2.1% according to the Commission 2014 spring
forecast. However, the programme is too optimistic for 2017. Risks to the
budgetary targets are broadly balanced in 2014, but there are increasing risks
that the deficit may turn out higher than targeted as from 2015. Particular
risks stem from the fact that the planned reduction in the expenditure ratio is
foreseen to be achieved by instituting across-the-board nominal freezes or
restraining increases below the inflation rate for most of the discretionary
spending items. The Commission 2014 spring forecast projects a headline deficit
for 2014 and 2015 identical to the targets of the programme. With a projected
structural deficit of 2.2% of GDP in 2014 and 2.3% in 2015, the Commission forecast
confirms the risk of significant deviation from the medium-term objective as
from 2014. Moreover, the Commission forecast also points to non-compliance with
the debt reduction benchmark in 2014 and 2015. Based on its assessment of the
programme and the Commission forecast, pursuant to Council Regulation (EC) No
1466/97, the Council is of the opinion that there is a need for additional
structural consolidation efforts in view of the risks of significant deviation
from the medium-term objective as well as of non-compliance with the debt rule
as from 2014.
(10)
The medium-term budgetary framework has been
strengthened by extending the planning horizon beyond the current budget year. Its
effectiveness and binding nature are however not yet ensured. New numerical
fiscal rules have been introduced, but design weaknesses have not been corrected,
linked mainly to the absence of systematic ex-post monitoring, the lack of a
maximum permissible deviation levels and sound correction mechanisms. The
Fiscal Council's narrow list of mandatory tasks and its analytical capacity are
still not commensurate with its budgetary veto right. Further strengthening the
medium-term budgetary framework and broadening the Fiscal Council's mandatory
mandate would help improve the credibility, transparency and effectiveness of
the overall fiscal framework.
(11)
Notwithstanding the Central Bank's subsidised 'Funding
for Growth' scheme for small and medium-sized enterprises, normal lending to
the economy has not picked-up in a sustainable manner. The regulatory burden on
the financial sector has been further increased, thus limiting the capacity for
capital accumulation. Measures like the increase of the financial transaction
duty have contributed to a pick-up in the cash usage of the economy. The
household portfolio has further deteriorated and the high proportion of
non-performing loans currently represents one of the biggest challenges for the
financial sector. Portfolio cleaning is hindered by the weak efficiency of
resolution proceedings. No substantial new measure has been taken to remove bad
assets from banks' balance sheets. The combination of a heavy regulatory burden
and a high share of non-performing loans have led to a squeeze on available
credits. The government repeatedly announced its intention to introduce a new relief
scheme to assist foreign currency borrowers; in most cases, these have not
targeted distressed borrowers and have a negative impact on the payment culture
of households, due to the expectation of further government help. Financial
regulation and supervision has been strengthened by integrating the Financial
Supervisory Authority into the central bank structure and giving the central
bank the responsibility for macroprudential oversight. Preparatory work has
started on establishing bank resolution regime.
(12)
Although the frequency of tax changes has
decreased compared to the previous year, no substantial progress was made in making
the corporate tax system more balanced. Some of the existing sector-specific
taxes were even increased. The application of different tax rates across
sectors is an obstacle to the effective allocation of resources and thus
negatively affects growth. To make taxation more employment-friendly, Hungary has widened eligibility for the personal income tax family tax credit, which can
help low-wage earners. The tax wedge on single
low-income earners is one of the highest in the EU. The
eligibility criteria for the Job Protection Act have remained in essence unchanged,
even though a significant proportion of low earning workers remain outside the
scope of the measure. It will be important to evaluate the impact and
cost-effectiveness of the scheme and to adapt it as necessary to enhance its
capacity to bring people into employment. Some progress was made in shifting
taxation away from labour towards environmental taxes, but additional measures
are needed. The online connection of cash-registers to the tax authority is
gradually being implemented, after repeated delays in the past. However, Hungary still suffers from a high level of tax non-compliance, with a sustained level of
undeclared work and VAT compliance gap. Control measures should be strengthened
in particular with a view to improving the efficiency of combatting VAT fraud.
(13)
The youth unemployment rate has decreased in
2013, while the rate of young people who are not in employment, education or
training has increased. An efficient coordination of the Public Employment
Service branch offices with educational institutions and local stakeholders could
increase outreach. Capacity-building in the public employment service,
including preparation of a client profiling system, has started, while active
labour market policies for the open labour market should be evaluated to assess
their efficiency and effectiveness and if necessary adapted to improve access
to the labour market for some disadvantaged groups. The activation element in
different labour market and social measures (Public Work Scheme, unemployment
benefits, and social assistance) needs to be strengthened. The Public Work
Scheme attracts the bulk of budgetary resources available for employment
measures, but in 2013 less than 10% of its participants were able to return to
the open labour market after exiting the scheme. This raises the question of
whether the scheme should be adapted, for example by building stronger links to
activation, training and job search support, to secure a more lasting
employment impact. Women's labour market participation has been encouraged by
increased flexibility in the paid parental leave system and the provision of
childcare capacities, but further efforts are needed as employment levels among
women remain below 60%. The period of eligibility for unemployment benefit is shorter
than the average time required by job seekers to find employment. The number of
people at risk of poverty or social exclusion in Hungary is growing steadily
and currently represents close to a third of the whole population. Poverty
continues disproportionately to affect disadvantaged groups, in particular
children and the Roma. While a National Social Inclusion Strategy is in place,
policy measures in most fields do not systematically promote the goals defined
by that strategy. Integrated and streamlined policy
measures are needed to reduce poverty effectively.
(14)
The business environment
in Hungary is characterised by frequent changes in the regulatory framework and
limited competition in an increasing number of sectors. New barriers have been introduced
in the services sector and existing ones have not been removed (e.g. pharmacies,
waste management, mobile payment, retail tobacco and textbooks). Overall
investment has declined particularly strongly in those sectors where
sector-specific surtaxes have been imposed in recent years. Between 2010 and
2013, nominal investment declined by 44 % in energy, 28 % in
finance and 18 % in the communication sectors, while increasing by
3.4 % overall. Some progress has been made in improving competition in
public procurement, but further efforts are needed. For example, greater
reliance on e-procurement could generate significant cost savings, improve the
transparency of public procurement and increase competition. Steps have been
taken to implement integrity strategies and to promote better transparency
standards in the public administration, but further efforts are needed to
tackle corruption effectively.
(15)
The proportion of early school leavers is on the
rise and the adoption of an early school leaving prevention strategy has been
repeatedly delayed. Further efforts are needed to equip pupils with basic
skills, competences and qualifications that are relevant for the labour market.
Equal access to mainstream quality education still remains a major problem for
disadvantaged children, in particular Roma. A new law
on vocational training, which inter alia introduces a new 'dual model', has been enacted to reduce the still-difficult transition from
education to the labour market, the effects of which need to be closely
monitored.
(16)
Hungary continued to
implement reductions in end-user electricity and gas prices in 2013 and 2014.
These price cuts, coupled with the extra tax burden on energy companies, have
negatively affected energy providers' capacity to recover costs and energy
investments and network maintenance. At present, households' energy intensity is
among the highest in the EU and energy efficiency could be improved in
particular in the residential sector. The lack of independence of the energy
regulator in setting access-to-network conditions and tariffs still raises
concerns. Some steps have been taken to streamline the organisation of public
transport companies, but sustainability could be further improved by tackling
operating costs and changing the tariff system.
(17)
In the context of the European Semester, the
Commission has carried out a comprehensive analysis of Hungary’s economic policy. It has assessed the convergence programme and the national
reform programme. It has taken into account not only their relevance for
sustainable fiscal and socio-economic policy in Hungary 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 (7) below.
(18)
In the light of this assessment, the Council has
examined Hungary’s convergence programme, and its opinion[8] is reflected in
particular in recommendation (1) below.
(19)
In the light of the Commission's in-depth review
and this assessment, the Council has examined the national reform programme and
the convergence programme. Its recommendations under Article 6 of Regulation
(EU) No 1176/2011 are reflected in recommendations (1), (2), (3) and (5) below.
HEREBY RECOMMENDS that Hungary take action within the period 2014-2015 to:
1.           Reinforce
the budgetary measures for 2014 in the light of the emerging gap of 0.9% of GDP
relative to the Stability and Growth Pact requirements, namely the debt
reduction rule, based on the Commission 2014 spring
forecast. In 2015, and thereafter, significantly strengthen the
budgetary strategy to ensure reaching the medium-term objective and compliance
with the debt reduction requirements in order to keep the general government
debt ratio on a sustained downward path. Further enhance the binding nature of
the medium-term budgetary framework through systematic ex-post monitoring of
compliance with numerical fiscal rules and the use of corrective mechanisms. Improve
the transparency of public finances, including through broadening the mandatory
remit of the Fiscal Council, by requiring the preparation of regular
macro-fiscal forecasts and budgetary impact assessments of major policy
proposals.
2.           Help restore normal lending
flows to the economy, inter alia by improving the design of and reducing the
burden of taxes imposed on financial institutions. Adjust the financial
transaction duty in order to avoid diverting savings from the banking sector
and enhance incentives for using electronic payments. Investigate and remove
obstacles to portfolio cleaning inter alia by tightening provisioning rules for
restructured loans, removing obstacles to collateral foreclosure as well as
increasing the speed and efficiency of insolvency proceedings. In this respect,
closely consult stakeholders on new policy initiatives and ensure that these are
well-targeted and do not increase moral hazard for borrowers. Further enhance
financial regulation and supervision.
3.           Ensure a stable, more
balanced and streamlined corporate tax system, including by phasing out distortive
sector-specific taxes. Reduce the tax wedge for low-income earners, inter alia by
improving the efficiency of environmental taxes. Step up measures to improve
tax compliance – in particular to reduce VAT fraud – and reduce its overall
costs.
4.           Strengthen well-targeted
active labour market policy measures, inter alia by accelerating the
introduction of the client profiling system of the Public Employment Service.
Put in place the planned youth mentoring network and coordinate it with education
institutions and local stakeholders to increase outreach. Review the public
works scheme to evaluate its effectiveness in helping people find subsequent
employment and further strengthen its activation elements. Consider increasing
the period of eligibility for unemployment benefits, taking into account the
average time required to find new employment and link to activation measures.
Improve the adequacy and coverage of social assistance while strengthening the
link to activation. In orderv to alleviate poverty, implement streamlined and
integrated policy measures to reduce poverty significantly, particularly among
children and Roma.
5.           Stabilise the regulatory
framework and foster market competition, inter alia by removing barriers in the
services sector. Take more ambitious steps to increase competition and
transparency in public procurement, including the introduction of
e-procurement, and further reduce corruption and the overall administrative
burden.
6.           Implement a national
strategy on early school leaving prevention with a focus on drop-outs from
vocational education and training. Put in place a systematic approach to reducing
educational segregation and to promote inclusive mainstream education for
disadvantaged groups, in particular Roma. Support the transition between
different stages of education and towards the labour market, and closely
monitor the implementation of the vocational training reform. Implement a
higher-education reform that enables greater tertiary attainment, particularly
by disadvantaged students.
7.           Review the impact of
energy price regulation on incentives to invest and on competition in the electricity
and gas markets. Take further steps to ensure the autonomy of the national
regulator in establishing network tariffs and conditions. Take measures to
increase energy efficiency in particular in the residential sector. Further
increase the sustainability of the transport system, inter alia by reducing
operating costs and reviewing the tariff system of state owned enterprises in
the transport sector.
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(2014) 418 final.
[4]               P7_TA(2014)0128 and P7_TA(2014)0129.
[5]               COM(2013) 800 final.
[6]               COM(2013) 790 final.
[7]               SWD(2014) 85 final.
[8]               Under Article 9(2) of Council Regulation (EC) No
1466/97.


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52004SC0817

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 convergence programme of Hungary, 2004-2008  /* SEC/2004/0817 final */

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 convergence programme of Hungary, 2004-2008(presented by the Commission)EXPLANATORY MEMORANDUMCouncil Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies [1] stipulates that non-participating Member States, that is, those which have not adopted the single currency, have to submit convergence programmes to the Council and the Commission for the purpose of multilateral surveillance at regular intervals under Article 99 of the Treaty.[1]  OJ L209, 2.8.1997. All the documents referred to in this text can be found at the following websitehttp://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htmIn accordance with Article 9 of this Regulation, the Council has to examine each convergence programme based on assessments prepared by the Commission and the Committee set up by Article 114 of the Treaty (the Economic and Financial Committee). On the basis of a recommendation from the Commission and after consulting the Economic and Financial Committee, the Council is required to deliver an opinion, following its examination of the programme. According to the Regulation, Member States need to submit annual updates of their convergence programmes, which may also be examined by the Council in accordance with these same procedures.The ten countries that joined the EU on 1 May 2004 have a derogation and thus do not yet participate in the single currency. They committed themselves to submitting their convergence programmes by 15 May 2004 and a first update thereof towards the end of 2004.Hungary's convergence programme covering the period 2004-2008 was submitted on 14 May 2004. The Commission services have carried out a technical evaluation of this programme, taking into account the results of the Spring 2004 forecasts and having regard to the Code of Conduct [2] and the principles laid down in the Communication from the Commission to the Council and the European Parliament of 27 November 2002 on strengthening the co-ordination of budgetary policies [3]. This evaluation warrants the following assessment:[2]  Revised Opinion of the Economic and Financial Committee on the content and format of stability and convergence programmes, endorsed by the ECOFIN Council on 10.7.2001.[3]  COM (2002) 668 final, 27.11.2002.On 14 May 2004, Hungary submitted its first convergence programme, which was adopted by the government on 13 May and covers the period from 2004 to 2008. It largely complies with the code of conduct on the content and format of stability and convergence programmes. The programme makes reference to the planned adoption of the euro in 2010 (possibly in 2009 if economic conditions turn out more favourable than expected). Accordingly, the fulfilment of the convergence criteria is foreseen by 2008.The general government deficit decreased from 9.3% of GDP in 2002 to 5.9% of GDP in 2003, but it is still well above the 3% of GDP Treaty reference value. On 12 May 2004, the Commission initiated an excessive deficit procedure for Hungary, with the adoption of a report in accordance with Article 104(3) of the Treaty. The Economic and Financial Committee issued its opinion on this report on 25 May. On 5 July 2004, the Council is expected, on the basis of two Commission recommendations, to decide that an excessive deficit exists in Hungary and to make recommendations to Hungary to bring this situation to an end.The convergence programme contains two different scenarios for the macroeconomic and budgetary projections: a "baseline" and a "more optimistic" scenario. The budgetary projections are based on the baseline scenario. It foresees real GDP growth of about 3½-4% in 2004 and 2005, followed by an increase in the growth rate by some ½ percentage point each year until 2008. The recovery in economic activity is expected to be driven by strong growth in exports and fixed investment, compensating for lower private consumption growth, based on the significant deceleration of the previously high real wage growth. This would be also reflected in a gradual though moderate narrowing of the current account deficit. The briefly outlined "more optimistic" scenario shows higher growth rates based on higher exports. Taking as a benchmark the Commission 2004 Spring forecast confirms that the "baseline" scenario should be considered as the reference scenario reflecting the more plausible growth assumptions. However, while on the basis of currently available information, this seems reasonable in the short term, even this scenario seems to be somewhat optimistic as far as the medium-term is concerned. In line with the robust growth and measures to increase employment, unemployment is anticipated to decrease further to around 5½% by 2008 and the participation rate is expected to increase up to 64% in 2008 (from somewhat below 6% and 60% respectively in 2003).The convergence programme assumes a resumption of disinflation after a peak of 6½% annual average inflation in 2004 and projects inflation at about 3% by 2008. While the sharp drop in inflation in 2005 would be the result of tapering off price hikes due to indirect taxes, disinflation would be supported during the entire period by moderate real wage growth (in particular in the public sector) and restrictive fiscal policies. These projections are broadly in line with the Commission's assumptions. The convergence programme does not give indications of planned changes in the monetary or exchange rate regime for the observed period (consisting of an inflation targeting framework in combination with a +/-15% fluctuation band around the central parity). Moreover, contrary to the 2003 pre-accession economic programme, the convergence programme does not declare the aim of achieving ERM II membership immediately after EU accession. It rather acknowledges that ERM II participation needs to be supported by a credible and sustainable fiscal adjustment path.The medium-term budgetary strategy represents a considerable departure from that in the 2003 pre-accession economic programme. While the latter aimed for a deficit below 3% of GDP by 2005, this target is postponed until 2008 in the convergence programme. The consolidation envisaged in the programme is frontloaded with the deficit decreasing from 5.9% of GDP in 2003 to 4.6% of GDP in 2004, followed by a yearly adjustment of some ½ percentage point (4.1% of GDP in 2005, 3.6% in 2006, 3.1% in 2007 and 2.7% of GDP in 2008). The consolidation strategy is expenditure-based, underpinned by structural reforms, in particular in the areas of public administration, education and health. However, neither the impact of these reforms, nor the state of their implementation is known with the necessary precision. The projected decline of the overall expenditure ratio by more than 4 percentage points between 2003 and 2008 [4] would allow for a rise in the GDP share of public investment, supported by EU funding. At the same time, the fiscal consolidation is planned to be accompanied by a reduction of the weight of the public sector in the economy. This would manifest itself also in a reduction of the overall tax burden from 39% in 2004 to 37% in 2008.[4]  This would occur abstracting from the expenditure effects of EU transfers (which are expected to increase from some 0.5% of GDP in 2004 to 2.5% of GDP in 2008).A consolidation pace of some ½ percentage points of GDP annually from 2005 onwards may appear relatively modest, in particular against the background of robust growth forecast over the entire period, the relatively high level of deficit and debt ratios and the expected decline in the interest rate burden. However, this has to be set against at least three offsetting considerations. First, it is important for Hungary to restore the credibility of fiscal policy by setting objectives that are within reach and achieving them. Second, the structural reforms underpinning the strategy would, once further specified and carried out, enhance the sustainability of the fiscal consolidation and improve the quality of public finances. Third, the government budget is burdened by the costs of the pension reform (which are expected to rise from 0.7% in 2003 to 0.9% of GDP by 2008).Nevertheless, the fact that the planned deficit should be reduced below 3% of GDP only in 2008, and then only by a small margin, is a source of concern. Any unfavourable development on the macroeconomic or on the budgetary side would compromise the achievement of this objective, with a potentially serious impact on the government's overall adjustment strategy. Therefore, the budgetary stance in the programme may not be sufficient to reduce the deficit to below the 3% of GDP deficit reference value by the end of the programme and all opportunities should be seized to accelerate the fiscal adjustment. In this context, both the experience of expenditure overruns in the past two years and the absence of clear indications about the ambitious expenditure-reducing measures for 2005-2008 are worrying signs. In addition, the whole adjustment strategy depends crucially on the success of carrying out the planned ambitious adjustment in 2004. Missing the budgetary target this year would set the whole strategy at risk. Given that unexpected expenditures, such as those seen in recent years cannot be excluded, it is important that the government sticks to its intention as announced in the convergence programme, and adopts additional and timely corrective measures if necessary in order to ensure that the 2004 deficit target is met.Overall, the consolidation strategy in the convergence programme seems conducive to a better quality of public finances. It is generally acknowledged that fiscal consolidation is more sustainable when based on expenditure cuts, especially if underpinned by structural reforms. Also a reduction of the high tax burden, especially on labour, seems appropriate. However, for a virtuous circle to be set in motion, it is essential that the expenditure targets are respected. Therefore, a cautious approach seems advisable regarding tax cuts, making them conditional upon the implementation of the planned reforms and the achievement of the deficit targets. Furthermore, should economic growth fall short of the expectations in the programme, additional measures are likely to be needed to keep the consolidation on track.After peaking at nearly 60% of GDP in 2004, the debt ratio is projected in the programme to decline in line with the planned budgetary adjustment but also benefiting from a falling interest burden and negative stock-flow adjustments. Provided that the consolidation takes place as planned, and assuming no significant weakening of the exchange rate and a reduction of the interest burden as forecast in the programme, this seems plausible. The need for the consolidation to take place as planned is underscored by the necessity to ensure that public borrowing requirements continue to be met smoothly, and that debt service costs are well-contained.Especially in view of the relatively high debt level, Hungary faces some risk of budgetary imbalances in meeting the projected costs of an aging population. While the pension reform dating back to 1998 and establishing a progressive three-tier pension system - including parametric changes to the pay-as-you-go pillar e.g. increase in the retirement age, pension indexation - has significantly mitigated the risks of long-term budgetary imbalances, it has not removed them entirely. Securing an adequate primary surplus in the medium term together with the implementation of measures to further stem the rise of age-related expenditure, particularly concerning health care, is essential to place public finances on a sustainable basis.Comparison of key macroeconomic and budgetary projections>TABLE POSITION>Based on this assessment, the Commission has adopted the attached recommendation for a Council Opinion on the convergence programme of Hungary and is forwarding it to the Council.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 convergence programme of Hungary, 2004-2008THE 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 [5], and in particular Article 9(3) thereof,[5]  OJ L209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following websitehttp://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htmHaving regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:On [5 July 2004] the Council examined the convergence programme of Hungary, which covers the period 2004 to 2008. The programme largely complies with the data requirements of the revised "code of conduct on the content and format of stability and convergence programmes".The budgetary strategy underlying the programme aims at reducing the general government deficit to below 3% of GDP by 2008, while at the same time reducing the weight of the public sector in the economy. To this end, the programme envisages a frontloaded consolidation with the government deficit decreasing from 5.9% of GDP in 2003 to 4.6% of GDP in 2004, followed by a yearly adjustment of some ½ percentage point of GDP (4.1% of GDP in 2005, 3.6% in 2006, 3.1% in 2007 and 2.7% of GDP in 2008). The consolidation is expenditure-based, underpinned by structural reforms, predominantly in the areas of public administration, health and education. However, these reforms still have to be specified and implemented. The decline of the overall expenditure ratio would allow for a rise in the GDP share of public investment, supported by EU funding. At the same time, a reduction of the overall tax burden is planned from 39% of GDP to 37% of GDP.The programme contains two different scenarios for the macroeconomic and budgetary projections: a "baseline" scenario and a "more optimistic" scenario. The baseline scenario should be considered as the reference scenario for assessing budgetary projections as reflecting the more plausible growth assumptions of real GDP growth about 3½-4% in 2004 and 2005, followed by a rather optimistic rise in the growth rate by about ½ percentage point each year until 2008. The projection of rapid disinflation after 2004, when indirect tax hikes taper off, appears broadly realistic, provided that real wage growth is moderating significantly to be in line with productivity.The programme foresees the general government deficit to be reduced to below the 3% of GDP reference value only in 2008. The deficit reduction foreseen in the programme seems within reach. Risks to the budgetary outcome stem from possibility that growth could turn out lower than forecast, from the experience with expenditure overruns in the past, and the lack of information on the envisaged expenditure-reducing measures in the outer years of the programme. The achievement of the frontloaded adjustment in the first year of the programme is crucial for the credibility of the adjustment strategy; missing it, might put the whole adjustment path at a risk. Therefore, the budgetary stance in the programme may not be sufficient to reduce the deficit to the below 3% of GDP deficit threshold by the end of the programme period and all opportunities should be seized to accelerate the fiscal adjustment. At the same time, the projected balances reflect to a significant extent the implementation of an intensive programme of public investment, bringing the government investment-to-GDP ratio up from 4.0% of GDP in 2004 to 5.5% of GDP in 2008.After peaking at nearly 60% of GDP in 2004, the debt ratio is projected in the programme to fall to 54% of GDP by 2008. This would be in line with the planned budgetary adjustment but also benefiting from a falling interest burden and negative stock-flow adjustment. While this seems plausible, the positive development might be put in danger by a slower-than-forecast lowering in interest rates.Hungary faces some risk of budgetary imbalances in meeting the projected costs of an aging population. While the pension reform dating back to 1998 and establishing a progressive three-tier pension system - including parametric changes to the pay-as-you-go pillar e.g. increase in the retirement age and pension indexation - has mitigated the risks of long-term budgetary imbalances, it has not entirely removed them. Securing an adequate primary surplus in the medium-term together with the implementation of measures to further stem the rise of age-related expenditure, particularly concerning health care is essential to place public finances on a sustainable basis.[On 5 July 2004], on the basis of recommendations from the Commission, the Council decided that an excessive deficit existed in Hungary in accordance with Article 104(6) of the Treaty and made recommendations under Article 104(7) to Hungary with a view to bringing that situation to an end, in which the Council expresses its policy advice.Key projections from the convergence programme of Hungary>TABLE POSITION>


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31965H0300

65/300/EEC: Commission Recommendation of 26 May 1965 is addressed to the Grand Duchy of Luxembourg on the subject of the agricultural guidance law (Loi d'orientation agricole) (Only the French text is authentic)

Official Journal 105 , 15/06/1965 P. 1810 - 1821

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