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

2. 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. 3 Objectives Beneficiary states –GNI < 90% EU average –1993-99: 16,750 million (nominal) –Greece, Spain, Ireland, Portugal –2000-06: 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. –2007-13: 63,000 million foreseen –13 beneficiaries (as above plus Bulgaria and Romania)

4. 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. 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. 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. 7 Mechanisms Project selection: –National Plan –CF Reference Framework (EU, National, regional priorities) –Identification, pre-selection, preparation –Applications –Commission appraisal, decisions.

8. 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. 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. 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. 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. 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. 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. 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. 15 Future 2007-13 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. 16 Future 2007-13 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. 17 References –CF 2007-13: http://ec.europa.eu/regional_policy/funds/cf/index_en.htm –CF 2000-06: http://ec.europa.eu/regional_policy/funds/procf/cf_en.htm –PPP guidelines: http://ec.europa.eu/regional_policy/sources/docgener/guide s/pppguide.htm –CBA Guide: http://ec.europa.eu/regional_policy/sources/docgener/guide s/cost/guide02_en.pdf –CF Annual reports: http://ec.europa.eu/regional_policy/sources/docoffic/official /repor_en.htm