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Directorate General “Regional Policy”

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1 Directorate General “Regional Policy”
“ERDF & funding opportunities for Bulgarian businesses in OP Competitiveness” (HBCB workshop) “How do the EU Structural & Cohesion Funds function?” Sofia, 21 June 2010 Nassos Sofos Directorate General “Regional Policy” European Commission

2 Content EU Structural Funds: what is it ? How does it work?
Challenges in Bulgaria today - benchmarking Issues from implementation of OP Competitiveness

3 EU Funds: Advantages for Member States
NOT ONLY THE MONEY ! but also: Multi-annual planning and programming Of the budget Of the project pipeline Of the implementation & control systems Own administrative capacity (systems). To run programmes-projects smoothly, on time To check the sound management of funds To forecast expenditure and evaluate outcome

4 What does the EU want from Bulgaria?
NOT ONLY A FUND ABSORPTION ! But also: A wise use of the money Invest the money in good projects to leverage development effects EU funds are not a simple transfer of funds to the country’s coffers! EU funds to leverage promising areas of the economy – not prolong the death of anyway dying economic activities Ensure the sound management of funds away from irregularities, corruption and fraud. Prepare for the future: Budget and priorities for are proposed next year!

5 EU Cohesion / Regional Policy - Purpose
The EU is one of the world’s most prosperous economic zones BUT: Huge disparities exist among the 271 EU regions – weakens the EU’s dynamism HENCE: The political goal of reducing the gaps in development

6 EU Cohesion / Regional Policy - Purpose EU-27 GDP per capita in PPS in 2006 Source: Eurostat structural indicators EU 27= 100

7 EU Cohesion / Regional Policy - Purpose
<50 ³ 125 Differences in development in the EU-27 GDP per head as a % of the community average

8 Geographical Eligibility for Structural Funds Support 2007-2013
Objective 'Regional Competitiveness and Employment' Convergence objective (Regions > 75% in EU25) Convergence objective statistically affected regions Objective 'Regional Competitiveness and Employment' Phasing-in regions, "naturally" above 75% Index EU 25 = 100 Source: Eurostat

9 The EU Budget /3 of the budget (“1B”) aims at “Cohesion/Regional Policy” (=Structural & Cohesion Funds): €347 billion over 7 years

10 Cohesion/Regional Policy:
Structural & Cohesion Funds by sector European Regional Development Fund (ERDF) and Cohesion Fund (CF) - €271 billion European Social Fund (ESF) - €76 billion Environment Transport Employment Entrepr./R&D/Innovation Human capital Adaptability of workers and firms Social inclusion Capacity building Technical assistance Information society Tourism Social infrastructure Culture Energy Institutional capacity

11 Multiannual programming: 2007-13

12 JASPERS, JEREMIE and JESSICA
3 joint initiatives (Commission and IFIs) to increase investment, leverage Structural Funds money, and improve regional/national capacities: JASPERS – Joint Assistance to Support Projects in European Regions JEREMIE – Joint European Resources for Micro to Medium Enterprises JESSICA - Joint European Support for Sustainable Investment in City Areas

13 Implementation of Structural Funds in Members States
At national or regional level? BG opted for national level due to organisation of state. Trend towards regionalisation is inevitable: France, Italy, Greece. National-regional subsidiarity: distribution of clear roles and responsibilities (who does what) in the country. Need to develop administrative capacity also in the regions, also outside Sofia.

14 Implementation of Structural Funds in Members States
Operational Programme Competitivenss (OPC) elsewhere: Several M-States with long experience from programming business support, competitiveness or R&D and innovation OPC at central level: Romania, Hungary, Portugal, Estonia OPC at central level and similar measures ate regional level: Greece, Italy, Spain, Poland, Competitiveness measures at regional level: Germany, Ireland, UK, Finland Channels to provide funds to enterprises: A mix of public agencies and banking networks: Greece, Italy, etc A mix of public agencies and Funds: UK, Ireland, Estonia, etc

15 A snapshot of the Greek OPC
AXIS CODE DESCRIPTION COMMUNITY FUNDING NATIONAL CONTRIBUTION INDICATIVE ANALYSIS OF NATIONAL CONTRIBUTION PERCENTAGE TOTAL FUNDING (Base of calculation of Community Contribution) CO-FUNDING % ΕRDF SF TOTAL NATIONAL PUBLIC FUNDING NATIONAL PRIVATE FUNDING 1 2 4 = 1+2+3 5 = 6+7 6 7* 8 = 4+5 9 = 4/8 AXIS 1 : CREATION AND EXPLOITATION OF INNOVATION, SUPPORTED BY R&TD 85,00% ΑXIS 2 : STRENGTHENING OF ENTREPRENEURSHIP AND EXTROVERT ORIENTATION 3 ΑXIS 3 : IMPROVING THE BUSINESS ENVIRONMENT 4 ΑXIS 4 : INTEGRATION OF COUNTRY’S ENERGY SYSTEM AND STRENGTHENING OF SUSTAINABILITY 5 ΑXIS 5 : TECHNICAL SUPPORT FOR IMPLEMENTATION 84,56 % 84,99%

16 Cohesion Policy Budget for Bulgaria
(not including the Funds for Rural Development and Fischeries which are not “Structural” Funds Objective/Fund Budget (billion EUR) % 1. Convergence ERDF 3.205 ESF 1.185 CF 2.283 Total convergence: % 2. Territorial Cooperation ERDF % 3. Total = %

17 Key players National level
Coordination structures (Council of Ministers) Managing Authority for each OP (Directorates within Ministries) Certifying authority – (Min of Finance) Audit Authority (Audit of EU Funds Executive Agency, MinoFin) Monitoring Committees EU level European Commission, European Court of Auditors reports for the Structural funds management to the European Parliament.

18 OPs financial implementation
Operational programme EU Budget for (MEUR) Interim and final payments verified by the MA (EU share) EU funds contracted By 1 June 2010 OP Regional Development 1,361 526,335,496 38.7% OP Transport 1,625 10,047,481 20.8% OP Environment 1,466 323,492,772 32.7% OP Competitiveness 988 485,300,877 29.9% OP Technical Assistance 48 412,713,564 28.1% Total 5,488 1,757,890,190 32.0% Certification rate 2.1% 2.8% 0.1% 2.3% 1.25%

19 Bulgaria: General challenges - selection
Lack of management culture and clear allocation of responsibility: Slow absorption of funding across the sectors Low administrative capacity Redundant reporting and control Complicated or unclear rules and procedures Slow or late payments to projects Project pipeline poor Regularity issues (corruptive environment, weak judiciary, conflict of interest concept not always understood, procurement high risk) New financial perspectives (EU budget review) Budget deficit

20 Bulgaria: Business/Innovation/R&D challenges - selection
Lack of forward-thinking and a well targeted strategy. Weak co-operation and co-ordination between institutions. (eg. Too many universities/research institutes weaken cooperation ties). Very slow implementation of measures in programmes. No or limited regional/local approach to innovation. Difficulties to secure funding for innovation. Slow process for attribution of patents. Knowledge transfer – benchmarking: Learn from others and apply in your region/locally (German Länder example). More effort needed to promote co-operation between private sector and research institutions.

21 Bulgarian OPC – Implementation issues (authorities)
Sustainable (continuous) information/advice/support to beneficiaries (=enterprises): Weak in particular outside Sofia: BSMEPA offices must be upgraded (quality) Networks and information points (Chambers, « Enterprise Europe Network », socioeconomic partners offices) must be used to a maximum. « Learning-by-doing »: not tolerated anymore Improve/simplify rules, procedures, decrees, evaluation, complaints, etc. Delays to certify a payment or proceed to a payment of incurred expenditure. Multiple checks of same expenditure Exchange experience with other Member States and ask help from experienced consultants (TA)! Political will is present – Restructuring started Review of policy along EUROPE 2020 policy Restructuring of systems (needs to accelerate).

22 Bulgarian OPC - Implementation issues (beneficiary enterprises)
Inform yourself - Be proactive ! Do not expect everything from the state. Register in networks, Chambers and information providers, follow specialised web site, benchmark Read carefully details of calls and follow them to the letter! Sound management of EU implies rules must be 100% followed. « Pre-accession » times are over. You are responsible now. Apply early – Do not wait until the last minute. Follow information days and campaigns closely.

23 THANK YOU! БЛАГОДАРЯ! ΕΥΧΑΡΙΣΤΩ!

24 EU Web sites: e-mail: athanasios.sofos@ec.europa.eu Useful web sites:

25 Bulgarian web sites Bulgarian Ministry of Finance:
Bulgarian Ministry of Economy, E & T: Bulgarian SME Promotion Agency:

26 European Regional Development Fund – ERDF(1)
Investments for creating and safeguarding sustainable jobs. Direct investments in SMEs Investment in infrastructure Development of endogenous potential by measures which support regional and local development through: Support for SMEs, Financing instruments (venture capital, loan and guarantee funds, local development funds, interest subsidies), Networking, cooperation and exchange of experience between regions, towns, and relevant social, economic and environmental actors Article 4 Convergence Under the “Convergence” objective, the ERDF shall focus its assistance on supporting sustainable integrated regional and local economic development and employment by mobilising and strengthening endogenous capacity through operational programmes aimed at the modernisation and diversification of regional and local economic structures, and the creation and safeguarding of sustainable jobs. This should be achieved primarily through the following priorities, the precise policy mix depending on the specificities of each Member State: Research and technological development (R&TD), innovation and entrepreneurship, including strengthening research and technological development capacities, and their integration into the European Research Area, including infrastructures; aid to R&TD notably in SMEs and to technology transfer; improvement of links between SMEs, tertiary education, research institutions and research and technology centres; development of business networks; public-private partnerships and clusters; support for the provision of business and technology services to groups of SMEs; and fostering of entrepreneurship and innovation funding for SMEs through financial engineering instruments; Information society, including development of electronic communications infrastructure, local content, services and applications, improvement of secure access to and development of on-line public services; aid and services to SMEs to adopt and effectively use information and communication technologies (ICTs) or to exploit new ideas; 3) Local development initiatives and aid for structures providing neighbourhood services to create new jobs, where such actions are outside the scope of ESFRegulation; 4) Environment, including investments connected with water supply and water and waste management; waste-water treatment and air quality; the prevention, control and fight against desertification; integrated pollution prevention and control; aid to mitigate the effects of climate change; rehabilitation of the physical environment, including contaminated sites and land and brownfield redevelopment; promotion of biodiversity and nature protection, including investments in NATURA 2000 sites; aid to SMEs to promote sustainable production patterns through the introduction of cost-effective environmental management systems and the adoption and use of pollution-prevention technologies;

27 European Regional Development Fund – ERDF (2)
Research and technological development Innovation and entrepreneurship Information society Smaller transport (road, rail, etc) Protection of environment Tourism, culture and national heritage Energy investments Health and social infrastructure 5) Prevention of risks, including development and implementation of plans to prevent and cope with natural and technological risks; 6) Tourism, including promotion of natural assets as potential for the development of sustainable tourism; protection and enhancement of the natural heritage in support of socio-economic development; aid to improve the supply of tourism services through new higher value‑added services and to encourage new, more sustainable patterns of tourism; Investments in culture, including protection, promotion and preservation of cultural heritage; development of cultural infrastructure in support of socio-economic development, sustainable tourism and improved regional attractiveness; and aid to improve the supply of cultural services through new higher added value services Transport investments, including improvement of trans-European networks and links to the TEN-T network; integrated strategies for clean transport which contribute to improving the access to and quality of passenger and goods services, to achieving a more balanced modal split, to promoting intermodal systems and reducing environmental impacts; Energy investments, including in improvements to trans-European networks which contribute to improving security of supply, the integration of environmental considerations, the improvement of energy efficiency and the development of renewable energies; Education investments, including in vocational training, which contribute to increasing attractiveness and quality of life; 11) Investments in health and social infrastructure which contribute to regional and local development and increasing the quality of life.

28 The Cohesion Fund Infrastructure environmental and transport projects
Transport (larger): Trans-European transport networks, rail, river and sea transport intermodal transport systems and their interoperability, management of road, sea and air traffic, clean urban transport and public transport Environment: water delivery, waste, energy efficiency and renewable energy

29 Financial implementation issues
Advance payments at OP level (89 million € in OPC) Interim payments follow (if compliance assessment OK) Structural Funds must be spent in line with the rules (“automatic de-commitment or N+3/2” rule, suspensions, financial corrections are possible) : Absorption difficulties with the funds allocated for the : around 40% net implementation in the Environmental ex-ISPA sector (end 2011)

30 Funding from: 7th FP, CIP and Structural Funds
Total EU funding for research and innovation (annual average funding)

31 Programme implementation cycle


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