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!