1. Financial Instruments in ETC programmes 2014-2020
Annual meeting with the Managing Authorities of the European territorial cooperation programmes
Brussels, 22 April 2013
António Gonçalves Financial instruments and IFI Relations
Directorate-General for Regional and Urban Policy

2. Experiences with financial instruments
ERDF support through Financial Instruments is present in the last three programming periods (since 1994)
In and FIs were used in limited cases (in terms of thematic scope, geographical coverage and in terms of money)
In expansion in use of FIs:
592 Financial Instruments
25 Member States
178 OPs,
nearly EUR 7 bln of ERDF paid into FIs (by end of 2011),
extended scope to three types of final recipients
only 1 FI in ETC reported
Some challenges: delays, over-allocations, in some MSs too extensive proliferation, limited leverage

3. Financial Instruments in 2014-2020
Commission encourages more extensive use of FIs
Advantages:
revolving funds will remain in the programme area
leveraged resources increase the impact of OP
financing provided before investment takes place
better quality of projects (investment must be repaid)
Incentives in terms of co-financing of priority axis

4. Financial Instruments in 2014-2020
Some key novelties
Clear and more detailed provisions in the legislative framework (CPR, IA, DA)
Thematic scope without any limitations (BUT: ex-ante assessment! and potentially viable investment !)
Financial allocations and payments must correspond to investment needs (no parking of money, no N+2 easy solution)
Various implementation options possible
Combination of grants and FIs clearly provided for in the regulation
To achieve critical mass and cover broader area more than one OP can contribute to the same FI (but separate record keeping needed)
Take care especially of possible overlaps with national and regional OPs and EU level instruments (as the geographic area might be the same)

5. Financial Instruments in 2014-2020
Ex-ante assessment (gap assessment):
Not to confuse with ex-ante evaluation (which is part of programming)
Detailed elements listed in the Regulation
No formal deadline (not required before adoption of OPs!),
BUT!
Ex-ante assessment before MA decides to make OP contribution
Monitoring committee must be informed
Ex-ante assessment published

6. Financial Instruments in 2014-2020
Implementation options
Traditional implementation possible: MA sets up a FI at national, regional, transnational or cross-border level (with or without fund of funds).
Off-the-shelf instruments in preparation to facilitate set–up
MA can contribute OP allocation to EU level instrument (the phase of a formal set-up skipped, EU level instrument delivery system is used)
MA can implement loans or guarantees directly (or through intermediate body) without formal set-up of a fund

7. Financial Instruments in 2014-2020
Co-financing
In FIs flexibility for national public & private co-financing contributions under operational programmes:
May be provided at the level of the FI (fund of fund or financial intermediary) or at the level of the final recipient (including in-kind contributions where relevant)
National co-financing does not have to be paid to the FI upfront but may be provided at later stages of FI implementation, but before the end of the eligibility period
!!! In many FIs private contribution will be present and is encouraged to increase leverage (also may be required by State aid rules).
Priority axis based on total eligible expenditure may facilitate co-financing and implementation (MA to decide upfront)

8. Financial Instruments in 2014-2020
Combination of grant and FI
Grants and FI can be combined within the same operation. Certain types of grants (interest rate subsidy, guarantee fee subsidy or technical support can be associated with FI and be part of FI. Other types of grants should not be encouraged under a single FI operation.
Grant operation and FI operation support can be combined to finance the same investment at the level of final recipient, however as separate operations.
Combination may involve funds from other OPs or other instrument supported by the budget of the Union. Certain rules must be respected to avoid double financing.

9. Financial Instruments in 2014-2020 - possible challenges in ETC
More than one MS: means more than one national legal framework (banking laws,etc) and different languages
State aid considerations ; e.g.
de minimis and GBER cannot be applied to aid to export-related activities towards third countries or Member States
Reporting of aid is done by Member State
Limited ressources in ETC programmes, critical mass?
Possibly others …
What to do?
Avoid complex structures or sophisticated FI
TA platform might be used to investigate more
If something goes wrong OP allocation can be withdrawn from FI (but it must be reallocated within OP and spent within eligibility period)

10. Additional information on financial instruments
COMMISSION STAFF WORKING DOCUMENT - Financial Instruments in Cohesion Policy cial_instruments_2012_en.pdf
Factsheet: Financial Instruments in Cohesion Policy ments_en.pdf
Panorama Autumn 2012: Using financial instruments to leverage support for regional policy _en.pdf
The 2011 report and annexes

11. Thank you for your attention!