PURPOSE: definitive adoption of amending budget No 5 of the European Union for the financial year 2010.

LEGISLATIVE ACT: 2010/775/EU, Euratom.

CONTENT: the European Parliament has definitively adopted amending budget No 5/2010 of the European Union, in accordance with its resolution of 22 September 2010 (please refer to the summary of the resolution).

This amending budget covers the necessary modifications concerning the creation of a new budget item 01 04 01 03 for the guarantee provided by the European Union in accordance with the provisions of Article 122(2) of the Treaty on the Functioning of the European Union and, correspondingly, a new Article 802 on the revenue side. This item is granted a token entry (p.m.).

It should be noted this amending budget was initially presented as draft amending budget 7/2010.

The European Parliament adopted by 467 votes to 41, with 19 abstentions, a resolution approving unamended the Council’s position on Draft amending budget No 7/2010 of the European Union for the financial year 2010, Section III - Commission.

Parliament recalled that this draft amending budget covered the necessary modifications concerning the creation of a new budget item 01 04 01 03 for the guarantee provided by the European Union in accordance with the provisions of Article 122(2) of the Treaty on the Functioning of the European Union and, correspondingly, a new Article 802 on the revenue side. The purpose of the draft amending budget was to formally enter these adju stments into the 2010 budget.

On 13 July 2010, the Commission submitted draft amending budget (DAB) No 7 to the general budget for 2010. This DAB covered the setting up of the budget structure for the European Financial Stabilisation mechanism based on Article 122(2) of the TFEU. A new budget item (01 04 01 03) on the expenditure side and a corresponding new budget article on the revenue side (802) are created, with a token entry (p.m.) for commitment and payment appropriations as well as for revenue.

No financial provisions were therefore requested for this DAB. If necessary, the Commission would propose to make available the appropriations needed by means of transfers or amending budgets.

The Council reached an agreement on the Commission proposal.

On 13 September 2010, the Council adopted its position on draft amending budget No 7 of the European Union for the financial year 2010 as set out in the technical annex to its explanatory memorandum (see Council Doc 13476/10 ADD 1 ).

The Committee on Budgets adopted the report drafted by László SURJÁN (EPP, HU) which recommends that the European Parliament approve the Council’s position on Draft amending budget No 7/2010 of the European Union for the financial year 2010, Section III- Commission.

The committee recalls that this draft amending budget covers the necessary modifications concerning the creation of a new budget item 01 04 01 03 for the guarantee provided by the European Union in accordance with the provisions of Article 122(2) of the Treaty on the Functioning of the European Union and, correspondingly, a new Article 802 on the revenue side.

These adjustments shall be formally entered into the 2010 budget.

On 13 July 2010, the Commission submitted draft amending budget (DAB) No 7 to the general budget for 2010. This DAB covered the setting up of the budget structure for the European Financial Stabilisation mechanism based on Article 122(2) of the TFEU. A new budget item (01 04 01 03) on the expenditure side and a corresponding new budget article on the revenue side (802) are created, with a token entry (p.m.) for commitment and payment appropriations as well as for revenue.

No financial provisions were therefore requested for this DAB. If necessary, the Commission would propose to make available the appropriations needed by means of transfers or amending budgets.

The Council reached an agreement on the Commission proposal.

On 13 September 2010, the Council adopted its position on draft amending budget No 7 of the European Union for the financial year 2010 as set out in the technical annex to its explanatory memorandum (see Council Doc 13476/10 ADD 1 ).

PURPOSE: presentation of Draft Amending Budget No. 7 to the 2010 general budget – section III – Commission.

CONTENT: DAB 7/2010 covers the creation of a new budget item 01 04 01 03 for the guarantee provided by the European Union in accordance with the provisions of Article 122(2) of the Treaty on the Functioning of the European Union (TFEU) and, correspondingly, a new article 802 on the revenue side.

On 9 May 2010, the Council decided on a comprehensive package of measures to preserve financial stability in Europe, including a European Financial Stabilisation mechanism based on Article 122(2) of the TFEU. This Article foresees financial support for Member States in difficulties caused by exceptional circumstances beyond Member States’ control. The mechanism will operate without prejudice to the existing facility providing medium term financial assistance for non euro area Member States' balance of payments.

To grant this financial assistance the Commission will borrow on the capital markets or with financial institutions on behalf of the European Union. In order to honour its obligations should the debtors default, the Commission may draw on its cash resources to service the debt provisionally. Article 12 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 2000/597/EC, Euratom on the system of the Communities’ own resources shall apply. Subsequently, it may be necessary to budget the operation.

Reimbursements after an initial default or any other revenue arising from the exercise of rights in connection with the guarantee may also need to be budgeted as revenue.

It is therefore proposed to create a new budget item on the expenditure side and a corresponding new budget article on the revenue side as the budget structure for the guarantee provided by the European Union .

As it is of use for budgetary items linked to lending operations without a specific guarantee fund, the new item 01 04 01 03 and new article 8 0 2 will receive a token entry (p.m.). If necessary, the Commission will propose to make available the appropriations needed by means of a transfer or an amending budget.

DAB No 7 to the 2010 general budget has no financial implications.