Explanatory Memorandum to COM(2011)482 - Amendment of Council Regulation (EC) No 1083/2006 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2011)482 - Amendment of Council Regulation (EC) No 1083/2006 as regards certain provisions relating to financial management for certain ... |
|---|---|
| source | COM(2011)482  |
| date | 01-08-2011 |
· Reasons and objectives for the proposal
The sustained financial and economic crisis is increasing the pressure on national financial resources as Member States are reducing their budgets. In this context ensuring a smooth implementation of cohesion policy programmes is of particular importance as a tool for injecting funds into the economy.
Nonetheless, the implementation of the programmes is often challenging as a result of the liquidity problems resulting from budget constraints. This is particularly the case for those Member States which have been most affected by the crisis and have received financial assistance under a programme from the European Financial Stabilisation Mechanism (EFSM) for the EURO countries or from the Balance of Payments (BoP) mechanism for non EURO countries. To date, six countries - including Greece which has received financial assistance outside the EFSM - have requested financial assistance under these mechanisms and have agreed with the Commission a macro-economic adjustment programme. These countries are Hungary, Romania, Latvia, Portugal, Greece and Ireland, hereafter called 'programme countries'. It should be noted that Hungary which has entrered the BoP mechanism in 2008 has already exited in 2010.
In order to ensure that these Member States (or any other Member State which maybe concerned by such assistance programmes in the future) continue the implementation of the Structural Fund and Cohesion Fund programmes on the ground and disburse funds to projects, the current proposal contains provisions that would allow the Commission to make increased payments to these countries, for the period they are under the support mechanisms, without modifying their overall allocation under cohesion policy for the period 2007-2013. This will provide additional financial resources to the Member States at a critical juncture and will facilitate the continuation of the implementation of the programmes on the ground.
· General context
The deepening of the financial crisis in some of the Member States is undoubtedly affecting substantially the real economy due to the amount of debt and the difficulties encountered by the Governments to borrow money from the market.
The Commission has put forward proposals in response to the current financial crisis and to its socio-economic consequences. In the framework of its recovery package, the Commission proposed in December 2008 a number of regulatory changes aiming to simplify the implementation rules for Cohesion Policy and to provide additional pre-financing through advance payments to ERDF and ESF programmes. The additional advance payments paid out to the Member States in 2009 have provided an immediate cash injection of EUR 6.25 billion, within the financial envelope agreed for each Member State for the 2007-2013 period. This amendment brought the total of advance payments to EUR 11.25 billion. A proposal presented by the Commission in July 2009, provided for additional measures of simplification of the implementation of the Structural Funds and the Cohesion Fund. The adoption of these measures in June 2010 has contributed significantly towards the simplification of the implementation of the programmes and boosted the absorption of the funds, while reducing administrative burdens on beneficiaries.
· Provisions in force in the policy sphere of the proposal
Article 77 of Council Regulation (EC) No 1083/2006 (hereinafter the General Regulation) provides that the interim paymensts and the final balance shall be calculated by applying the co-financing rate for each priority axis laid down by the Commission decision adopting the operational programme concerned.
· Consistency with other policies and objectives of the Union
The proposal is consistent with other proposals and intitiatives adopted by the European Commission as a response to the financial crisis .
· Consultation of interested parties
· Procurement and use of expertise
Use of external expertise has not been necessary.
· Impact analysis
The proposal would allow the Commission to increase payments to the countries concerned, for the period they are under the support mechanisms. The increase will be an amount calculated by applying ten percentage points top-up to the co-financing rates applicable to the priority axis of the programmes to the newly certified expenditure submitted during the period in question.
This will not impose additional financial requirements to the overall budget since the total financial allocation for the period from the Funds to the countries and the programmes in question will not change.
Contents
· Summary of the proposed measures
It is proposed to modify article 77 of the General Regulation in order to allow the Commission, upon request of the Member States concerned, to reimburse the newly declared expenditure for the period in question by an increased amount calculated by applying a 10 percentage points top-up of the applicable co-financing rates for the priority axis.
In applying the top-up, the co-financing rate of the programme cannot exceed by more than 10 percentage points the maximum ceilings of Annex III to the General Regulation. In any case contribution from the funds to the priority axis concerned cannot be higher than the amount mentioned in the Commission decision approving the operational programme.
Following the adoption of a Council decision granting assistance to a Member State under the support mechanisms, the Commission upon request of the Member States concerned will be applying the above mentioned calculation for all the newly declared expenditure under an operational programme for the Member State concerned.
This will be a temporary measure which will be terminated once the Member State exits the support mechanism.
· Legal basis
Council Regulation (CE) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 defines the common rules applicable to the three Funds. Based on the principle of shared management between the Commission and the Member States, this Regulation includes provisions for the programming process as well as arrangements for programme (including financial) management, monitoring, financial control and evaluation of projects.
· Subsidiarity principle
The proposal complies within the subsidiarity principle to the extent that it seeks to provide increased support through Structural Funds and Cohesion Fund for certain Member States which experience serious difficulties, notably with problems in their economic growth and financial stability and with a deterioration in their deficit and debt position, also due to the international economic and financial environment. In this context, it is necessary to establish at the European Union level a temporary mechanism which allows the European Commission to increase the reimbursement on the basis of the certified expenditure under Structural Funds and the Cohesion Fund.
· Proportionality principle
The proposal conforms to the proportionality principle:
The current proposal is indeed proportionate since it provides increased support from the Structural Funds and the Cohesion Fund to the Member States in difficulties or threatened with severe difficulties caused by exceptional occurrences going beyond their control and falling under the conditions of Council Regulation (EU) No 407/2010 (establishing the European financial stabilization mechanism), or in difficulties or seriously threatened with difficulties as regards its balance of payments and falling under the conditions of Council Regulation (EC) No 332/2002, as well as to Greece, which received financial assistance ouside the EFSM under the Inter-creditor Agreement and the Euro Area Loan Facility Act.
· Choice of instruments
Proposed instrument: regulation.
Other instruments would not be appropriate for the following reasons:
The Commission has explored the scope for manoeuvre provided by the legal framework and considers necessary, in the light of the experience up to now, to propose modifications to the General Regulation. The objective of this revision is to further facilitate the co-financing of projects thereby accelerating both their implementation and the impact of such investments on the real economy.
There is no impact on commitment appropriations since no modification is proposed to the maximum amounts of Structural Funds and Cohesion Fund financing provided for in the operational programmes for the programming period 2007-2013.
For payment appropriations, the proposal can result in a higher reimburserment to the Member States concerned. The additional payment appropriations for this proposal will imply an increase of payment appropriations (for 2012 approximatly EUR 2,304 million) which may be compensated by the end of the programming period. Therefore, the total payment appropriations for the whole programming period remains unchanged.
In the light of Member State's request to benefit from the action and taking into account the evolution in regard to the submission of interim payments, the Commission will in 2012 review the need for additional payment credits and if necessary propose the necessary actions to the Budgetary Authority.
The proposal shows the willingness on the part of the Commission to assist the efforts of the Member States to deal with the financial crisis. The amendment will provide the Member States concerned with the funds necessary to support projects and the recovery of the economy.