They agree to set up a procedure for interinstitutional collaboration in the budgetary sector. The details of this collaboration are set out in Annex II that forms an integral part of this Agreement.

17. The two arms of the budgetary authority agree to accept for each of the financial years from 1993 to 1999, the maximum rates of increase for non compulsory   expenditure deriving from the budgets established within the ceilings set by the financial perspective.

18. The Commission will present each year, within the limits of the financial perspective, a preliminary draft budget based on the Community's actual financing requirements.

It will take into account:

The capacity for utilizing appropriations, endeavouring to maintain a strict relationship between appropriations for commitments and appropriations for payments;

The possibilities for starting up new policies or continuing multiannual operations which are coming to an end, after assessing whether it will be possible to secure a proper legal basis.

19. For the purposes of sound financial management, the European Parliament, the Council and the Commission will, without prejudice to paragraph 21, ensure as far as possible during the budgetary procedure and at the time of the budget's adoption that margins are left available beneath the ceilings for the various headings so that, if necessary, additional appropriations can be entered in the course of the financial year without the financial perspective having first to be revised.

20. The Commission will specify in its quarterly reports on budget implementation the budget items where underutilization is foreseeable.

21. Within the maximum rates of increase for non compulsory expenditure specified in paragraph 17, the European Parliament and the Council undertake to respect the allocations of commitment appropriations provided in the financial perspective for the Structural Funds and the Cohesion Fund.

They also undertake to bear in mind the assessment of the possibilities for executing the budget made by the Commission in its preliminary drafts.

22. The institutions agree to treat food aid expenditure in accordance with the rules laid down in Annex III that forms an integral part of this Agreement.

<6>