2 March 2016 INFO(2016) 11 Active Monitoring and Forecast of Budget Implementation – 2015 Information Note Contents 1. SUMMARY AND CONCLUSIONS .......................................................................... 2 2. INTRODUCTION AND METHODOLOGY ............................................................. 3 3. IMPLEMENTATION OF THE BUDGET 2015 ........................................................ 4 3.1. Implementation at the end of December 2015 .................................................. 4 3.2. Reprogrammed commitments ........................................................................... 5 3.3. Adjustments of payment appropriations (Global Transfer and End of Year Transfer) ................................................................................................... 6 3.4. Programmes with significant under-implementation ........................................ 7 3.4.1. Commitments ...................................................................................... 7 3.4.2. Payments .............................................................................................. 8 4. IMPLEMENTATION OF APPROPRIATIONS CARRIED FORWARD FROM 2014 ................................................................................................................. 8 5. IMPLEMENTATION OF ASSIGNED REVENUE ................................................... 9 6. EVOLUTION OF RAL ............................................................................................. 11 7. LATE INTEREST PAYMENTS .............................................................................. 11 8. COHESION POLICY: COHESION POLICY: LATEST SUBMISSION OF MEMBER STATES' PAYMENTS FORECASTS FOR YEAR 2016 ..................... 12 8.1. State of play at end 2015 ................................................................................. 12 8.2. January submission of Member States' payment forecasts for 2016 ............... 14 8.3. Implications of Member States' forecasts for Budget 2016............................. 15 8.4. Cohesion policy decommitments .................................................................... 17 8.5. Conclusions ..................................................................................................... 17 ANNEX 1: 2015 IMPLEMENTATION – COMMITMENTS AND PAYMENTS ......... 19 ANNEX 2: HEADING 1B LATEST FORECASTS FROM MEMBER STATES (JANUARY 2016) ..................................................................................................... 23 ANNEX 3: COHESION POLICY DECOMMITMENTS IN 2015 .................................. 25
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2 March 2016 INFO(2016) 11
Active Monitoring and Forecast of
Budget Implementation –
2015 Information Note
Contents
1. SUMMARY AND CONCLUSIONS .......................................................................... 2
2. INTRODUCTION AND METHODOLOGY ............................................................. 3
3. IMPLEMENTATION OF THE BUDGET 2015 ........................................................ 4
3.1. Implementation at the end of December 2015 .................................................. 4
- 2014-2020 programming period. All the 417 operational programmes were
adopted before the end of 2015 and the corresponding tranches of pre-financing
have been paid over the last two years. The first interim payment applications
were already received and paid in 2015.
2007-2013 programmes
In the 'payments plan' of May 20156, the European Parliament, the Council and the
Commission agreed to progressively phase out the 'abnormal' backlog of outstanding
3 End of January is the deadline for Member States submissions of their updated forecasts. Data as of 24/02/2016.
4
The 95% ceiling in payments is set out in Art. 79 of the Council Regulation 1083/2006: "The cumulative total of pre-financing and interim payments made
shall not exceed 95% of the contribution from the Funds to the operational programme. When this ceiling is reached, the certifying authority shall continue
transmitting to the Commission any certified statement of expenditure on 31 December of year n, as well as the amounts recovered during the year for each
Fund, at the latest by the end of February of year n+1".
5
Regulation 2015/1839, amending Regulation (EU) No 1303/2013 as regards specific measures for Greece.
6
Joint statement on a payment plan 2015-2016 agreed on 19 May 2015.
In €
Heading 2014 2015
1a Competitiveness for grow th and jobs 1 116 318 865 303
1b Economic, Social and Territorial Cohesion 25 810 0
payment claims for the 2007-2013 Cohesion programmes by the end of 2016, to a
maximum level of EUR 2 billion (depending on the actual level of remaining
suspensions and late submission of applications).
The backlog of unpaid claims for the Cohesion policy by end-2015 stands at
EUR 8,2 billion, significantly lower than the EUR 17 billion expected on the basis of
Member States forecasts7. The faster than expected phasing-out of the abnormal
backlog consolidates the objective defined in the 'payment plan'. It also makes it
possible to avoid cash-flow constraints and delays in reimbursing the Member States
in the first part of the year, which would have been experienced with a larger
backlog.
This lower than expected backlog is explained partly by a reinforcement of
appropriations for the 2007-2013 programmes by some EUR 2 billion through
transfers coming from the 2014-2020 programmes, for the reasons explained below.
However, most of the difference is due to submission of payable claims which were
some EUR 7 billion lower than expected (EUR 25 billion received instead of an
expected EUR 32 billion8). This is the first time for years that the summer Member
States' forecasts present such an important deviation from the actual outcome9. While
the pattern in the submission of claims was comparable to previous years until mid-
December, submission of claims in the last two weeks of December was far lower
(14% of the annual claims compared to 36% in 2014). The absence of N+2/N+3
automatic decommitments deadlines for most Member States (with the exception of
Romania, Slovakia and Croatia) might explain this delay, as claims can be sent till 31
March 201710
.
2014-2020 programmes
Concerning the 2014-2020 programming period, the Commission already expected in
its autumn report11
that the submission of payment claims would progress at a slower
pace than indicated by Member States' July forecasts, but the actual submission of
claims has been even lower than predicted (i.e. EUR 1,5 billion, of which
EUR 1,3 billion of payable claims12
). This is explained by the slow progress in the
designation of the managing and certifying authorities of the programmes, which is a
7 See information provided in the autumn information note on Active Monitoring and Forecasts of Budget Implementation of 14.10.2015, based on the
Member
States' forecasts as submitted by 31 July 2015.
8
Including the impact of the removal of the 95% capping for Greece and the 100% co-financing, which has been estimated at around EUR 0,5 billion in 2015.
9
Over-estimation of 27% for the programmes that had not yet reached the 95% ceiling compared to the over-estimation of around 2% to 3% on average over
the last years for forecasts submitted in summer.
10
Art. 93 of Council Regulation No 1083/2006. However, in the Commission decision C(2015) 2771 (guidelines on the closure), it is recommended that the
certifying authority submits the last interim payment claim by 30 June 2016, at the latest.
11 Autumn information note on Active Monitoring and Forecasts of Budget Implementation of 14.10.2015
12 Forecasts have been adjusted to take into account the 10% retention amount set in Art. 130 of the Council Regulation 1303/2013: "The Commission shall
reimburse as interim payments 90 % of the amount resulting from applying the co-financing rate for each priority, laid down in the
decision adopting the
operational programme, to the eligible expenditure for the priority included in the payment application".
14
pre-requisite for sending interim payment applications13
. At end of 2015, only 67
authorities had been designated (for 417 adopted programmes).
Out of EUR 1,3 billion of payable claims submitted, EUR 0,8 billion were paid as
interim payments, while a few claims were sent too late in the year to be properly
processed and paid, leading to a 'normal' backlog of around EUR 0,5 billion to be
paid in 2016.
8.2. January submission of Member States' payment forecasts for 2016
Every year14
, national authorities are invited to submit by 31 January the forecasts of
payment claims they expect to send for the current and following year (see Annex 2).
The table below summarises the expected interim claims in 2016 for both the 2007-
2013 and 2014-2020 programming period.
2007-13 programmes
Member States forecast to submit in 2016 some EUR 11,4 billion of payable claims,
more than doubling the previous forecasts submitted in July 2015.
Furthermore, Member States also expect that 96% of these payable claims (some
EUR 11 billion) will be submitted in the first part of 2016, while only the remaining
4% would be sent in the last two months of the year. Consequently, the claims
arriving too late to be properly processed and paid should be negligible.
The current forecasts seem to confirm that the Member States are on the right path for
catching-up with most of the EUR 7 billion payable claims not submitted in 2015
(see Chapter 8.1 above), of which some EUR 6,4 billion are expected in 2016, while
13
CPR, Art. 124 states that the Member State shall notify the Commission of the date and form of the designations of the managing authority and, where
appropriate, of the certifying authority, prior to the submission of the first application for interim payment to the Commission. 14 In accordance with Article 112 of the Council Regulation 1303/2013, covering the programming period 2014-2020 for the following Funds: ERDF, CF, ESF.
Forecasts regarding FEAD are required on a voluntary basis. Forecasts related to the 2007-2013 programming period are required by the Council Regulation
1083/2006 once a year and Member States are required to update them on a voluntary basis.
15
the rest shall be submitted by 31 March 2017 (the legal deadline for the submission
of closure documents)15
.
2014-20 programmes
Member States forecast to submit EUR 18,9 billion in payable claims in 2016. With
respect to their previous forecasts in July 2015, they have reduced their predictions
by EUR 4 billion. This may be explained by the fact that the managing authorities of
350 programmes still need to be designated in 201616
.
However, the lack of formal designation of the responsible authorities does not
prevent starting the implementation of projects; thus, an acceleration of the
submission of payment claims in the last part of the year cannot be excluded. In this
regard, Member States currently forecast to submit around 40% of their claims
(EUR 7,7 billion) in the last two months of 2016.
The absence of N+3 decommitment deadline17
is probably another reason for the
reduced estimate for 2016 claims. The N+3 deadline will apply in 2017 for the first
time.
8.3. Implications of Member States' forecasts for Budget 2016
2007-13 programmes
Whereas Budget 2016 (EUR 21,5 billion payment appropriations) had been prepared
under an assumption of a backlog around EUR 17 billion at the end of 2015, to be
paid in 2016, as mentioned above the actual backlog was some EUR 9 billion lower.
In their January forecasts, Member States envisage to submit in 2016
EUR 11,4 billion of payable claims, EUR 6,4 billion more than expected during the
preparation of the 2016 budget, therefore partially counterbalancing the substantial
reduction in the remaining backlog.
A limited number of programmes which did not reach the 95% ceiling by end of 2015
did not submit a 2016 forecast as requested. The Commission takes then into account
the possibility to receive payable claims for those programmes, up to a maximum
amount of some EUR 0,5 billion.
In addition, unlike in the latest years, Member States forecast a quite different pattern
in the distribution of the claims during the year: 96% of the payable claims are
forecast to be sent in the first part of 2016, drastically reducing the risk of a high
amount of unpaid claims at end 2016 due to late submission.
Consequently, the January forecasts of Member States seem to point towards the
following outlook:
the objective of fully phasing out, by the end of 2016, the 'abnormal' backlog
of unpaid claims will be reached within the available appropriations;
15
The open commitments will be automatically decommitted in case this date is not respected.
16
Data as 31/12/2015.
17
YEI and Greece additional pre-financing is the exception to the rule, having deadline in 2016.
16
the 'normal' backlog at the end of 2016 should mostly include the latest
interruptions and suspensions not yet lifted before the closure; this amount
should be quite limited but cannot be assessed at this stage.
At this early stage of the year many uncertainties still affect the pace of
implementation of 2007-2013 programmes. Based on the latest forecasts received
from Member States by 24 February 2016, the payable claims at the end of 2016
could be some EUR 2 billion below the payment appropriations. However, the actual
level of submission of claims remains uncertain, especially as some forecasts are still
missing. Furthermore, the outlook of the 2007-2013 programmes cannot be
considered independently from the 2014-2020 programmes, as transfers between
programming periods cannot be excluded.
2014-20 programmes
Member States have reduced their previous expectations for 2016 (the forecasts are
down from EUR 22,8 billion to EUR 18,9 billion) but their estimate remains higher
than the budget available for interim payments after taking into account pre-financing
by some EUR 2,7 billion. Taking into account the backlog from the end of 2015
(EUR 0,5 billion), the payment needs, as forecasted by the Member States, would
exceed the available budget by some EUR 3 billion, as illustrated by the table below.
In € billion
(a)
Budget 2016 for
interim payments
(b)
End-2015 backlog
(c)
Capped forecasts
2016
(d)=(a)-(b)-(c)
Difference
8,7 9,0
2,2 3,6
4,9 5,9
0,5 0,4
16,3 0,5 18,9 -3,2
Period
2014-2020
Total
ESF+YEI
Comparison between payment appropriations in Budget 2016 and payment expectations
0,4
0,1
-2,1
-1,1
ERDF
CF
FEAD
17
However, two factors may reduce the gap between forecasts and appropriations:
Member States forecasts tend to be over-estimated. For instance, corrected by
the over-estimate experienced on average over the last five years18
, the
expected claims would be some EUR 2 billion lower.
Some payment applications are always submitted too late in the year to be
paid in the same year and a residual backlog is recurrent. However, the recent
experience of 2015 demonstrates that, in absence of a legal deadline at the end
of the year, a large concentration of the submission of the payment
applications in the very last days of December is not the most plausible
scenario19
.
Accordingly, a reinforcement of the 2014-2020 budget lines, reversing the transfer
made at the end of 2015, is not certain at this stage.
8.4. Cohesion policy decommitments
In 2015 EUR 1,14 billion was decommitted for the Cohesion policy, of which
EUR 0,45 billion was linked to closure of the 2000-06 period programmes,
EUR 0,5 billion was linked to the consequences of the N+2/N+3 automatic
decommitments, while the remaining EUR 0,2 billion is related to programmes prior
2000, technical assistance and preparatory actions (see tables in Annex 3).
8.5. Conclusions
The payment forecasts submitted in January by Member States provide relatively
clear picture in relation to the 2007-2013 programmes, while the outlook is more
uncertain with regard to the 2014-2020 programmes.
At the end of 2016, the 2007-2013 programmes will be left with a negligible 'normal'
backlog, and the budgeted payment appropriations will be more than sufficient to
cover needs; the unused appropriations could be some EUR 2 billion, though the
precise amount will become clearer as implementation progresses in the course of
2016. Three main factors can influence it: the relevance of interruptions and
suspensions not lifted at the end of 2016 (whose precise extent will be known only
later in the year); a possible reinforcement for the 2014-2020 programmes (though its
need and potential size are still undefined on the basis of current data); and the
accuracy rate in the Member States' payment forecasts, including the role played by
the programmes which have not submitted forecasts by the last deadline. The
Commission closely monitors the situation, with a special focus on the Member
States which have experienced the largest error rates in forecasting, and it will
reassess its current estimates after the receipt of the summer update of payment
forecasts.
In relation to the 2014-2020 programmes, a limited 'normal' backlog (some
EUR 1,5 billion) may be expected at the end of 2016, with a near balance between
available budget appropriations and payment claims. Taking into account the high
18
The correction has been made applying the average error rate (14%) experienced in the period 2011-2015 for the same year forecasts.
19
For instance, only some 10% of the overall claims for 2007-2013 programming period have been submitted in the last ten calendar days in 2015.
18
degree of divergence in Member States` payment forecasts for 2015 compared to the
real outcome, and the uncertainty related to the timing in the designation of managing
and certifying authorities, this scenario will have to be reassessed on the basis of the
summer forecasts from Member States20
; on that basis, the Commission may propose
to amend the budget, as appropriate. The Commission will continue to monitor the
submission of claims and the designation of the authorities, to adjust its expectations