1 THE COHESION FUND Objectives, Mechanisms, Procedures, Future DG REGIO – Unit B.1 - Coordination.

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THE COHESION FUNDObjectives, Mechanisms,

Procedures, Future

DG REGIO – Unit B.1 - Coordination

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Objectives

• Motives for the Cohesion FundA dilemma …

– Member States with lagging development must invest to increase capacity for growth -> modern infrastructure is prerequisite.

– However, to join the euro zone public deficit must be kept under control.

solution proposed …– Maastricht Treaty - created a new fund to

channel financial assistance to the least prosperous Member States.

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Objectives• Beneficiary states– GNI < 90% EU average– 1993-99: €16,750 million (nominal)

– Greece, Spain, Ireland, Portugal– 2000-06: €18,000 million (1999 prices)

– Greece, Spain, Portugal (+ Ireland -> 2003)– and from 1/5/2004: €7,590 million (1999 prices)– Cyprus, Czech Republic, Estonia, Hungary,

Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia.

– 2007-13: €63,000 million foreseen– 13 beneficiaries (as above plus Bulgaria and

Romania)

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Main Features

• Features of the Cohesion Fund - I– MS are beneficiaries not regions => not

strictly speaking a regional policy – "Additionality" test of the SFs not

applied but "conditionality" test => macro-economic objective to keep public deficit into limits (3% of GDP for euro area MS, a specific % for other MS)

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Main Features

• Features of the Cohesion Fund - 2– Coordination with SF programmes– MS chooses projects to propose in line

with strategic plans– Sectoral targeting (ratio of 50:50)

– Objectives of the environmental acquis – contributing to the TEN-Transport projects

– Project based - with specific Commission appraisal and approval

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Mechanisms

• Delivery Structures:

Commission (Appraisal, Adoption, Monitoring)

Managing authority (application pre-selection, Monitoring)

Intermediate Body Intermediate Body

Implementing Body

Implementing Body

Implementing Bodies

Paying authority

EIB / Evaluators

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Mechanisms

• Project selection:– National Plan– CF Reference Framework (EU, National,

regional priorities) – Identification, pre-selection, preparation– Applications– Commission appraisal, decisions.

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MechanismsProject Lifecycle – Different roles

Objectives/ Strategy

Programming

Identification

Appraisal

Financing

Implementation

Evaluation

Regulation, Commission Guidelines

Member State

MS

MS / EC [+EIB]

EC / MS

MS

MS / EC Monitors

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Procedures• Application / Appraisal (1)– Application form

– Description (implementing body, project, location)– Feasibility studies– Financing aspects (co-financing, financial table)– Financial analysis (presence of revenue)– Cost-benefit analysis - CBA (value for money)– Indicators (physical, socio-economic)– Compliance: EIA / Natura 2000 / Procurement / State

aids

– Quality Appraisal– Value for money– Contribution to policies in environment and transport– Compatibility and consistency with EU policy and other

funding instruments– respect of sectoral targeting 50:50

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Procedures

• Application / Appraisal (2)– Grant rate calculation

– respect of “polluter pays” principle– revenue generation – Public Private Partnership

– Internal consultations – DG TREN, ENV, COMP, etc.

– Complex appraisals – EC may involve EIB, or own consultants

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Procedures• Decision procedure– Reception to adoption – 3 months (Reg. 1164/94)– Internal Commission consultations – Legal verification / adoption / commitment

procedures– Decisions signed on behalf of the Commission

and notified to MS – Decision content:

– description (eligible elements)– start and end date of eligible period– grant, grant rate, financing plan – compliance conditions (publicity, financial control,

procurement, eligibility rules)

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Procedures

• Monitoring– National responsibility – Monitoring committee – bi-annual– DG REGIO on-site visits– Special evaluations – problem projects– Coherence with payments– Proactive management to avoid delays /

overruns / multiple modifications

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Procedures

• Payment procedure– National system of financial management notified to

Commission– Advance payment of 20% when procurement contract

signed– Standard payment declaration (Reg. 1386/02)– Reimbursement of expenditure incurred normally within

60 days of receipt – Financial rules: M+12 , M+24 – Balance of 20% normally retained until completion. – Closure requirements (confirm compliance, expected

benefits, revenues)

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Procedures

• Financial Control (Reg. 1386/2002)– National responsibility in first place– System of financial management

notified to Commission – If national detection of irregularities –

grant can be retained– If detection by EU controllers – net

corrections, i.e. loss of grant.

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Future 2007-13

• Future of the Cohesion Fund – 1Reg. (EC) 1084/2006 of 11 July 2006

– Major increase in CF resources as proportion of total -> €63,000 million

– Retaining special features of the CF …– the macro-economic conditionality;– the 90% GNI eligibility threshold;– broader sectoral targeting of the assistance;

– … but with a major reform in implementation …

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Future 2007-13

• Future of the Cohesion Fund - 2– Future CF implementation

– a switch from EU-level project-based support to programme-based support;

– Greater role for national authorities in project approval (major projects to be treated as currently under SF rules);

– ERDF and CF eligibility rules will be set nationally with limited restrictions in the EU Regulation on each Fund;

– Uniform financial management and control systems.

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References• References– CF 2007-13:

http://ec.europa.eu/regional_policy/funds/cf/index_en.htm

– CF 2000-06: http://ec.europa.eu/regional_policy/funds/procf/cf_en.htm

– PPP guidelines: http://ec.europa.eu/regional_policy/sources/docgener/guides/pppguide.htm

– CBA Guide: http://ec.europa.eu/regional_policy/sources/docgener/guides/cost/guide02_en.pdf

– CF Annual reports: http://ec.europa.eu/regional_policy/sources/docoffic/official/repor_en.htm