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

2 Objectives Motives for the Cohesion Fund A 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.

3 Objectives Beneficiary states –GNI < 90% EU average – : 16,750 million (nominal) –Greece, Spain, Ireland, Portugal – : 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. – : 63,000 million foreseen –13 beneficiaries (as above plus Bulgaria and Romania)

4 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)

5 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

6 Mechanisms Delivery Structures: Commission (Appraisal, Adoption, Monitoring) Managing authority (application pre- selection, Monitoring) Intermediate Body Implementing Body Intermediate Body Implementing Bodies Paying authority EIB / Evaluators

7 Mechanisms Project selection: –National Plan –CF Reference Framework (EU, National, regional priorities) –Identification, pre-selection, preparation –Applications –Commission appraisal, decisions.

8 Mechanisms Project 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

9 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

10 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

11 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)

12 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

13 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)

14 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.

15 Future Future of the Cohesion Fund – 1 Reg. (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 …

16 Future 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.

17 References –CF : –CF : –PPP guidelines: s/pppguide.htm –CBA Guide: s/cost/guide02_en.pdf –CF Annual reports: /repor_en.htm