Explanatory Memorandum to COM(2013)301 - Amending regulation 1083/2006 as regards to financial management for Member States experiencing financial difficulties and to decommitment rules for Member States - Main contents
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| dossier | COM(2013)301 - Amending regulation 1083/2006 as regards to financial management for Member States experiencing financial difficulties and ... |
|---|---|
| source | COM(2013)301  |
| date | 21-05-2013 |
· Reasons and objectives for the proposal
a) Extension of increased co-financing for Member States threatened with serious difficulties with respect to their financial stability
The sustained financial and economic crisis has put national financial resources under pressure as Member States pursue necessary policies of fiscal consolidation. In this context, ensuring a smooth implementation of cohesion policy programmes is of particular importance for investment in growth and jobs.
Programme implementation is often challenging, not least as a result of the liquidity problems resulting from fiscal consolidation. This is particularly the case for those Member States which have been most affected by the crisis and have received financial assistance under an adjustment programme. To date, seven countries have received financial assistance and have agreed a macro-economic adjustment programme with the Commission. These countries are Cyprus, Hungary, Romania, Latvia, Portugal, Greece and Ireland, hereafter called 'programme countries'. Hungary, Romania and Latvia are no longer under an adjustment programme.
To ensure that these Member States (and any other Member State which may benefit from such assistance programmes in the future) continue to implement cohesion policy programmes on the ground and continue to 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 continued implementation of programmes on the ground.
The European Council has invited the Commission to explore practical solutions to reduce the risk of automatic decommitment of funds from the 2007-2013 envelopes for Romania and Slovakia, including through an amendment of Regulation (EC) No 1083/2006[1] (hereinafter the General Regulation) (conclusions of 8 February 2013, paragraph 87). The provisions of the European Council agreement of 8 February on the capping of 2014-2020 allocation at 110% of the 2007-2013 allocation in real terms will affect both Slovakia and Romania (paragraph 46 of the conclusions). This will be reflected in paragraph [13 of annex III bis of the Common Provisions Regulation (CPR) concerning the financial framework].
The above elements are dependent on the on-going negotiations between the European Parliament, the Council and the European Commission and the legislative process and approval of the Multi-annual Financial Framework (MFF) and the CPR regulations.
Having explored practical solutions to reduce the risk of automatic decommitment for Romania and Slovakia, it is clear that the risk cannot be substantially reduced without an amendment of the General Regulation. In order, therefore, to implement the agreement reflected in the European Council Conclusions, and to facilitate the absorption of the 2007-2013 funds for Romania and Slovakia, it is necessary to extend the decommitment deadline for these two Member States. Taking into account paragraph 8 of the European Council Conclusions – which retains as an integral part of the MFF agreement a strict application of decommitment rules in all headings, in particular the rules for automatic decommitments - the extension proposed covers the 2011 and 2012 commitments. In this case, the automatic decommitment of the 2011 commitment will not be at the end of 2013 but at the end of 2014 and the automatic decommitment of 2012 will not be at the end of 2014 but at the end of 2015.
The end date for eligibility of expenditure for the programming period remains unchanged as 31 December 2015. These extended deadlines should help Romania and Slovakia to overcome any difficulties in implementation and reduce the risk of decommitment in 2013 and 2014, while maintainng the necessary discipline and incentive to complete the 2007-2013 programming period in timely manner. This will allow to concentrate on the implementation of the 2014-2020 programmes without delay.
· General context and provisions in force in the policy sphere of the proposal
Article 77 of the General Regulation provides that the interim payments 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. It also provides for the application of an increased co-financing rate for programme countries. This provision currently applies until 31 December 2013.
Article 93 of the General Regulation provides that the Commission shall automatically decommit amounts for which an application for payment has not been submitted before the end of the second year (third year for countries whose GDP from 2001 to 2003 was below 85% of the EU average for commitments made into the programmes between 2008 and 2010) with a special treatment of the 2007 commitment.
· Consistency with other policies and objectives of the Union
The proposal is consistent with other proposals and initiatives adopted by the 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 top up payments to programme countries until the end of the 2007-2013 period. The increase will be an amount calculated by applying ten percentage points top-up to the co-financing rates applicable to the priority axes of the programmes to the newly certified expenditure submitted during the period in question until the ceiling for payments is reached.
At the same time, it will allow Romania and Slovakia to submit expenditure claims up to the end of 2014, rather that up to the end of 2013, for the 2011 commitment and up to closure, rather than up to the end of 2014, for the 2012 commitment. This will reduce the risk of automatic decommitment of the 2011 and 2012 commitments.
The total financial allocation for the period from the Funds to the countries and the programmes in question will not change.
Contents
- Legal elements of the proposal
- a) Extension of increased co-financing for Member States threatened with serious difficulties with respect to their financial stability
- b) Follow-up of European Council conclusions of 8 February 2013, paragraph 87
- 2. CONSULTATION OF INTEREST PARTIES AND IMPACT ANALYSIS
- There was no consultation of external stakeholders
- 4. Budgetary impact
· Summary of the proposed measures
It is proposed to modify article 77 of the General Regulation to allow the Commission to continue, until the end of the 2007-2013 period, to reimburse the newly declared expenditure 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 of the General Regulation. In addition, contribution from the funds to the priority axis concerned cannot be higher than the amount mentioned in the Commission decision approving the operational programme.
It is also proposed to modify Article 93 of the General Regulation to allow a one-year extension of the automatic decommitment period of the 2011 and 2012 commitments for Romania and Slovakia.
· Legal basis
The General Regulation 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 the Cohesion Fund for certain Member States which are experiencing serious difficulties, notably with respect to economic growth and financial stability and with a deterioration in their deficit and debt position, also as a result of the international economic and financial environment. In this context, it is necessary to establish at the Union level a temporary mechanism which allows the Commission to increase the reimbursement on the basis of the certified expenditure under Structural Funds and the Cohesion Fund.
The proposal also complies with the subsidiarity principle to the extent that it allows more time for certain Member States to spend their 2011 and 2012 commitments. This rule has already been set at Union level.
· Proportionality principle
The proposal conforms to the proportionality principle:
The extension of the application of the increased co-financing rates is proportional in relation to the sustained economic crisis and to the other efforts undertaken to help these Member States.
The extension of the deadline for automatic decommitment is also proportional in that it is focused on those Member States which would see their financial allocations under the 2014-2020 period capped by the European Council agreement, to limit the risk of losing further allocations from the 2007-2013 period due to automatic decommitments.
· Choice of instruments
Proposed instrument: amendment of the current regulation.
The Commission has explored the scope for manoeuvre provided by the legal framework and considers it necessary, in the light of experience up to now, to propose modifications to the General Regulation.
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 2007-2013 programming period.
For payment appropriations, the proposal relating to the top-up is budget neutral. However, it can result in a higher reimbursement to the Member States concerned in 2014, but will be balanced out at closure in 2017. The additional payment appropriations for this proposal will imply an increase of payment appropriations (for 2014 of approximately EUR 484 million) which will be compensated by the end of the programming period. Therefore, the total payment appropriations for the whole programming period remain unchanged.
The budgetary impact of the proposal to extend the automatic de-commitment by one year for Romania and Slovakia does not change the total amount of commitment appropriations. However, it could have a net positive impact on total payment appropriations in future years linked to the reduced decommitment risk.