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Road to recovery: the Cohesion package - Questions and Answers on the contribution of Cohesion Policy to the European Economic Recovery Plan

European Commission - MEMO/08/740   26/11/2008

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MEMO/08/740

Brussels, 26 November 2008

Road to recovery: the Cohesion package - Questions and Answers on the contribution of Cohesion Policy to the European Economic Recovery Plan

What is the role of Cohesion Policy in the recovery plan?

  • The EU's Cohesion Policy represents over a third of the EU budget: 347 billion euro will be invested in about two million co-funded projects in regions and Member States throughout the EU in 2007-2013. These investments provide a secure source of financing in the real economy to address long-term challenges. They are focused on creating sustainable jobs and growth through support for Lisbon Strategy priorities such as modern infrastructure networks, access to broadband, backing for small businesses, innovation, the environment, human resources and training.
  • The contribution of Cohesion Policy to the Commission's recovery package consists of a variety of measures, legislative and non-legislative. The main objective is to accelerate payments to Member States and to facilitate access to the Structural Funds, which will help speed up project implementation on the ground and inject confidence and dynamism into the European economy.

How much has already been paid in advances to Member States?

In 2007-08 all the Member States received 5% of their total Structural Funds allocations from the European Regional Development Fund (ERDF) and European Social Fund (ESF). As regards the Cohesion Fund: Spain, Portugal and Greece received advances amounting to 2% in 2007 and 3% in 2008. EU-12 Member States received 2.5% in 2007 and 4% in 2008.

Commission pre-financing
 
 
Relative value 
absolute value (billion€)
 
2007
2008
2007-2008
2007-2008 
Structural Funds
 
 
 
 
EU- 15
2%
3%
5%
 7.60
EU-12
2%
3%
5%
 5.7
EU Cross-Border Co-operation
2%
3%
5%
0.39
Cohesion Fund
 
 
 
 
EU-15 (3 countries)
2%
3%
5%
 0.51
EU-12
2,5%
4%
6,5%
 3.8
TOTAL



18.0

The recovery plan proposes additional advances in 2009. What do they amount to?

The Commission is proposing to modify the general regulations on the ERDF, ESF and the Cohesion Funds to allow an additional advance payments, as follows:

  • For the Structural Funds, the EU-12 Member States will receive additional 2% in 2009 or 2.3 billion euro (on top of the 2% already foreseen) and the EU-15 will receive 2.5% representing some 3.8 billion euro. Programmes under the EU Cross-Border Co-operation will also receive additional 2% of advances in 2009 amounting to some 155 million euro.
  • There are no changes as regards the Cohesion Fund: Spain, Greece and Portugal will receive an advance of 2.5% in 2009 and EU-12 Member States will receive 4%.

In total, for the 27 Member States, these measures will inject an additional 6.25 billion euros within the financial envelope agreed for each Member State.

Commission pre-financing in 2009
Advances in 2009 before the recovery plan, in billion € (in % of total allocation)
Advances in 2009 added by the recovery plan, in billion € (in % of total allocation)
Total advances in 2009 in billion €
Structural Funds
 
 
 
EU- 15
0
3.80 (2.5%)
3.80
EU-12
2.29 (2%)
2.29 (2%)
 4.58
EU Cross-Border Cooperation
0.08 (2%)
0.16 (2%)
0.24
Cohesion Fund
 
 
 
EU-15
(3 countries)
0.26 (2.5%)
0
 0.26
EU-12
2.37 (4%)
0
 2.37
Total
5.0
6.25
11.25

When will the new advances be paid?

In 2009, the advances will be paid as soon as the modified regulation is adopted, normally this should be within 30 days following the adoption of the regulation.

How does the cohesion payments system work in practice?

Payments by the Commission are made in three steps:

  • pre-financing (advances)
  • interim payments
  • payment of the final balance

Following the Commission decision concerning an operational programme, a pre-financing sum is allocated for the 2007-13 period. It is delivered in instalments, as defined in the above tables. The interim payments are made based on documentary evidence of expenditure sent by the Member States to the Commission.

How can Member States afford to match cohesion policy funding received from Brussels when their national treasuries are already under pressure?

The advances aim to provide an immediate cash flow at the initial phase of the programming period in order to facilitate the payments to the project beneficiaries. Member States are obliged to respect the minimum national co-financing rates set by the regulations (these range from 15% to 50%, depending on the programme), but the system is flexible. Member States can vary the Community and national contributions when it comes to individual projects inside a programme: for example some operations could be financed at 100% by Structural Funds in 2009 if they are balanced by operations funded nationally by the end of the programming period.

What other legislative changes could be considered?

The Commission has proposed further modifications in the legislation with the main objective to accelerate the implementation on the ground. In particular, the aim is:

  • to accelerate the implementation of major projects by accepting payment claims before a project has been formally approved by the Commission
  • to simplify eligibility rules to allow flat-rate reimbursements for certain overheads (eg shared cleaning and security services in business parks). This will involve a modification of Article 56 of the general regulation on the structural funds.
  • to simplify the treatment of advances paid to beneficiaries in the form of state aids. In practice, it means that the state aid advances paid to the beneficiaries could reach 100% of the aid, while respecting other conditions.

All legislative changes will have to be agreed by the Council before being put into practice.

What support can Member States receive from the European Investment Bank (EIB) or other financial institutions to prevent the project pipeline from drying up?

The European Commission, the EIB, the European Bank for Reconstruction and Development and the Kreditanstalt für Wiederaufbau Bank have set up a joint initiative called JASPERS ("Joint Assistance in Supporting Projects in European Regions") to support Member States and regions in the preparation of “major projects” (whose total cost exceeds EUR 25 million in the case of an environment project and EUR 50 million in other fields). The Commission wants, together with its partners, to significantly extend the possibility of using the JASPERS facility through a 25% increase in technical assistance manpower from 2009. As a result, it is expected that more than 70 expert staff as compared to the current 58 experts, will be available to assist Member States, in the technical preparation of major projects in order to speed up their implementation.

Is the Commission encouraging Member States to 're-prioritise' cohesion investments in view of the current turbulent economic situation?

The European Commission is inviting Member States to explore possible changes in priorities and objectives with a view to accelerate the spending in the areas with more growth potential. This could include more focus on energy efficiency measures, including in housing and strengthening the focus of support for small and medium enterprises, which are the main motor for growth in the European economy. Therefore the Commission will work closely with the European Investment Fund (EIF) and other partners to accelerate and expand the existing provisions on financial engineering products for small and medium enterprises, under the JEREMIE ("Joint European Resources for Micro to Medium Enterprises") initiative. In addition, the Commission, together with the EIF and the EIB and all the Member States, will launch early next year two specific networking platforms as a forum for exchange of information, guidance and good practice.

The Commission is also proposing to work with Member States to simplify the delivery and content of the programmes to speed up implementation.

[ Figures and graphics available in PDF and WORD PROCESSED ]


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