Ministero del Lavoro e delle Politiche Sociali Direzione Generale per le Politiche per l’Orientamento e la Formazione ESF TWG meeting Brussels, 1 June 2010 ARTICLE 44 OF REGULATION (EC) No 1083/2006 instruments of financial engineering 1

First proposals on that matter; Presentation subject A proper study of instruments of financial engineering as envisaged by Article 44 of Council Regulation (CE) 1083/2006 (General Regulation); First proposals on that matter; System action of NOP Ministero del Lavoro; 2

Main regulatory references Article 44 of Council Regulation (EC) No 1083/2006 (General Regulation): As part of an operational programme, the Structural Funds may finance expenditure in respect of an operation comprising contributions to support financial engineering instruments for enterprises, primarily small and medium-sized ones, such as venture capital funds, guarantee funds and loan funds, and for urban development funds, that is, funds investing in public-private partnerships and other projects included in an integrated plan for sustainable urban development. Implementation forms: - the award of a public contract in accordance with applicable public procurement law (services public procurement procedure); - the award of a direct financial contribution if this is pursuant to a national law compatible with the Treaty; - the award of a contract directly to the EIB or to the EIF. 3

Main regulatory references Article 11 of Regulation (EC) No 1081/2006 of the European Parliament and of the Council (ESF Regulation): “(…) the assistance shall take the form of non-reimbursable individual or global grants, reimbursable grants, loan interest rebates, micro-credits, guarantee funds and the purchase of goods and services in compliance with public procurement rules”. Article 3 of Regulation (EC) No 1081/2006 of the European Parliament and of the Council (ESF Regulation): The ESF shall support actions under the priorities listed in this Article, defining the scope of assistance 4

Main regulatory references Article 78 of Council Regulation (EC) No 1083/2006 (General Regulation) : By way of derogation from paragraph 1, as regards financial engineering instruments as defined in Article 44, the statement of expenditure shall include the total expenditure paid in establishing or contributing to such funds or holding funds; However, at the partial or final closure of the operational programme, eligible expenditure shall be the total of: (a) any payments from urban development funds for investment in public private partnerships or other projects included in an integrated plan for urban development; or (b) any payments for investment in enterprises from each of the abovementioned funds; or (c) any guarantees provided including amounts committed as guarantees by guarantee funds; and (d) eligible management costs" 5

Main regulatory references Articles 43-46 of the Implementing Regulation N°1828/2006: In particular, the operating expenses for the lenght of the intervention cannot exceed on an year average the figures presented below, unless - following a public contract bid – a higher percentage is needed in compliance with the applicable law: - 2% of the operative programme contribution to the participation funds or of the operative programme contribution or of the participation funds contribution to the security funds; - 4% of the operative programme contribution or of the participation fund contribution to the microcredit instruments in favour of microentreprises. If the structural Funds finance financial engineering instruments put in place through participation funds, the MS or MA seals a financial deal with the participation fund establishing the financing terms and objectives 6

The management authority, for Implementing the operation, has to select the areas of assistance (e.g.: social cooperatives, micro-enterprises, disadvantaged workers, etc.) and define the operation strategy, i.e. objectives, contents, beneficiaries, in accordance with OP priorities and territory needs. 7

Financial instruments currently envisaged Loan facilities or micro-credtis to provide financial assistance to persons in social distress or to micro or small firms undergoing financial difficulties; Guarantee funds to cover losses (capital and interests) on certain loans granted by financial intermediaries to certain beneficiaries. 8

Main operations' objectives To support labour market regulation; To improve women access to employment and reduce gender disparities; To increase enterprises effectiveness, efficiency, quality and inclusion; To develop integration pathways and improve working insertion, in order to fight against all kinds of labour market discrimination. 9

Further aims of the financial engineering operations To increase flexibility of the European Social Fund management through the settlement of durable and revolving financial resources (reducing not reimbursable ESF grants), which regenerate themselves with the paying back of employed sums of moneys; To function as a levy, allowing the likely attraction of other financial resources (EIB, national and regional funds, banking finance, etc.) 10

Operations likely to be undertaken with credit allowed Investments on necessary equipment (instrumental goods); Investments on immaterial goods; Acquisition of goods and services for production; Firm spin off; … 11

Who does what The players are: the Region as MA (managing authority) of the ESF ROP; the Manager of the Fund, selected by the MA according to procedures laid down by Article 44 of Regulation (EC) No 1083/2006; the Financial Intermediaries, responsible for credits and guarantees allowance, which will be identified by the Manager of the Fund through a public display of interest. 12

Operational and management aspects Article 78, paragraph 6 of Council Regulation (EC)No 1083/2006 (General Regulation): The statement of expenditure by the MA shall include the total expenditure paid in establishing or contributing to the funds. Eligibility of expenditure: at the final closure of the operational programme, the statement of expenditure submitted to the EC should correspond to: the total amount of payments for investment in enterprises made by the Fund as micro-credits/loans allowances; the total amount of guarantees provided. For both financial instruments, statements of expenditure shall identify the elements allowing the track keeping of financial resources used. 13

Operational and management aspects (!) It is worth to point out that the certified expenditure does not need to be supported by any accounting document relative to final beneficiaries of resources allowed by financial intermediaries. In fact, such evidence is not required for the eligibility of expenditure since we are operating in the context of a reimbursable global grant. 14

Main monitoring activities The physical and financial monitoring activities of financial engineering instruments are entrusted to the Manager of the Fund, A stock-taking of financial engineering operations will be submitted periodically to the Monitoring Committee, together with a survey of results achieved.

System action of NOP Ministero del Lavoro Within the framework of the Project “Valutazione politiche del lavoro” (labour market policies assessment), the Italian Ministry of Labour – Labour Market DG – , has promoted monitoring and evaluation activities of the all micro-credit initiatives started up in Italy, to support employment and social inclusion for persons/organizations which couldn’t get any loan.

System action of NOP Ministero del Lavoro The National Permanent Committee for the micro-credit will monitor and assess the risults of the relevant initiatives started up in Italy; The ISFOL (Institute for the Development of Vocational Training of Workers, a Ministero del Lavoro’s Agency) will analyse the characteristics of the beneficiaries, of the supporting services provided, and the risults for these disadvantaged persons/organizations (statisfied/unsatisfied, level of integration in the labour market etc.).

System action of NOP Ministero del Lavoro Stages of the project: Stage 1 - establishment of a monitoring group: it will give directions for the implementation of the project; Stage 2 – identification of the istitutions and persons organising and implementing micro-credit initiatives, Stage 3 – persons beneficiary survey: a questionnaire will be given to the beneficiaries to understand the accessibility of the intruments, if the relevant services are satisfactory, the level of improvement of the social inclusion etc.; Stage 4 – discolosure of the results: monitoring report publishing and presentation in a relevant conference.

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