1

“ERDF & funding opportunities for Bulgarian businesses 2007-13 in OP

Competitiveness”(HBCB workshop)

“How do the EU Structural & Cohesion Funds function?”

Sofia, 21 June 2010

Nassos SofosDirectorate 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 2014+ are proposed next year!

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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

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EU Cohesion / Regional Policy - Purpose EU-27 GDP per capita in PPS in 2006Source: Eurostat structural indicatorsEU 27= 100

0

50

100

150

200

250

300

7

<50

50 - 75

75 - 90

90 - 100

100 - 125

125

EU Cohesion / Regional Policy -

Purpose

Differences in development in the EU-27

GDP per head as a % of the community average

8Index EU 25 = 100 Source: Eurostat

Geographical Eligibility for Structural Funds Support 2007-2013

Objective 'RegionalCompetitiveness and Employment'Phasing-in regions, "naturally" above 75%

Convergence objectivestatistically affected regions

Objective 'RegionalCompetitiveness and Employment'

Convergence objective(Regions > 75% in EU25)

9

The EU Budget 2007-2013 1/3 of the budget (“1B”) aims at

“Cohesion/Regional Policy” (=Structural & Cohesion Funds): €347 billion over 7 years

6,6

32,1

47,4

0,9

6,5 5,6

35,7

9,9

40,4

6,4

1,5

6,1

0

5

10

15

20

25

30

35

40

45

50

1A Compétitivité 1B Cohésion 2 Ressourcesnaturelles

3 Justice 4 Acteur mondial 5 Administration

2006

2013

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Entrepr./R&D/Innovation

EnvironmentTransport

Information societySocial infrastructureEnergy

TourismCultureInstitutional capacity

Human capital

Employment

Adaptability of workers and firmsSocial inclusionCapacity buildingTechnical assistance

Cohesion/Regional Policy: Structural & Cohesion Funds by sector 2007-13

European Regional Development Fund (ERDF)and Cohesion Fund (CF) - €271 billion

European Social Fund (ESF)- €76 billion

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Multiannual programming: 2007-13

National Strategic Reference Framework

Environment OP Transport OP Compet. OPOther OPs

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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

• http://ec.europa.eu/regional_policy/funds/2007/jjj/

index_en.htm

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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.

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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

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A snapshot of the Greek OPC

AXIS

CODE DESCRIPTION

COMMUNITY FUNDING

NATIONAL CONTRIBUTI

ON

INDICATIVE ANALYSIS OF NATIONAL CONTRIBUTION

PERCENTAGE

TOTAL FUNDING (Base of

calculation of

Community Contribution

) CO-FUNDING %ΕRDFSF TOTAL

NATIONAL PUBLIC

FUNDING

NATIONAL PRIVATE FUNDING

1 2 4 = 1+2+3 5 = 6+7 6 7* 8 = 4+5 9 = 4/8

1

AXIS 1 : CREATION AND EXPLOITATION OF INNOVATION, SUPPORTED BY R&TD 192.083.000   192.083.000 33.897.000 33.897.000   225.980.000 85,00%

2

ΑXIS 2 : STRENGTHENING OF ENTREPRENEURSHIP AND EXTROVERT ORIENTATION 466.020.000   466.020.000 82.238.824 82.238.824   548.258.824 85,00%

3ΑXIS 3 : IMPROVING THE BUSINESS ENVIRONMENT 272.907.000   272.907.000 48.160.059 48.160.059   321.067.059 85,00%

4

ΑXIS 4 : INTEGRATION OF COUNTRY’S ENERGY SYSTEM AND STRENGTHENING OF SUSTAINABILITY 330.990.000   330.990.000 58.410.000 58.410.000   389.400.000 85,00%

5

ΑXIS 5 : TECHNICAL SUPPORT FOR IMPLEMENTATION 29.000.000   29.000.000 5.294.117 5.294.117   34.294.117 84,56 %

                 

TOTAL1.291.000.00

0 0 1.291.000.000 228.000.000 228.000.000  1.519.000.

000 84,99%

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Objective/Fund Budget (billion EUR) %

1. ConvergenceERDF 3.205 ESF 1.185

CF 2.283Total convergence: 6.674

97 %

2. Territorial Cooperation ERDF 0.179 3 %

3. Total 6.852 = 100.0 %

Cohesion Policy Budget for Bulgaria (not including the Funds for Rural Development and Fischeries which are

not “Structural” Funds

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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.

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OPs financial implementation

Operational programme

EU Budget for 2007-

2013(MEUR)

Interim and final payments verified by the

MA

(EU share) 2007-2010(MEUR)

EU funds contractedBy 1 June 2010

(MEUR)

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%

0.1%

1.25%

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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

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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.

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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).

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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.

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THANK YOU!БЛАГОДАРЯ!ΕΥΧΑΡΙΣΤΩ!

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EU Web sites:

e-mail: athanasios.sofos@ec.europa.eu

Useful web sites:

http://europa.eu/index_en.htm

http://europa.eu/pol/index_en.htm

http://ec.europa.eu/regional_policy/index_en.htm

http://europa.eu/policies-activities/funding-grants/index_en.htm

http://cordis.europa.eu/eu-funding-guide/home_en.html

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Bulgarian web sites

• Bulgarian Ministry of Finance: – www.eufunds.bg

• Bulgarian Ministry of Economy, E & T:– http://www.opcompetitiveness.bg/en/

index.html

• Bulgarian SME Promotion Agency:– http://www.sme.government.bg

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European Regional Development Fund – ERDF(1)

a) Investments for creating and safeguarding sustainable jobs. Direct investments in SMEs

b) Investment in infrastructure

c) Development of endogenous potential by measures which support regional and local development through:

– Support for SMEs,

– Financing instruments (venture capital, loan and guarantee funds, local development funds, interest subsidies),

– Networking, cooperation and exchange of experience between regions, towns, and relevant social, economic and environmental actors

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European Regional Development Fund – ERDF (2)

– Research and technological development

– Innovation and entrepreneurship– Information society– Smaller transport (road, rail, etc)– Protection of environment– Tourism, culture and national heritage– Energy investments – Health and social infrastructure

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The Cohesion Fund

Infrastructure environmental and transport projects

• Transport (larger): Trans-European transport networks, rail, river and sea transport intermodal transport systems and their interoperability, management of road, sea and air traffic, clean urban transport and public transport

• Environment: water delivery, waste, energy efficiency and renewable energy

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Financial implementation issues

• Advance payments at OP level (89 million € in OPC)

• Interim payments follow (if compliance assessment OK)

• Structural Funds must be spent in line with the rules (“automatic de-commitment or N+3/2” rule, suspensions, financial corrections are possible) :

– Absorption difficulties with the funds allocated for the 2000-2006: around 40% net implementation in the Environmental ex-ISPA sector (end 2011)

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Total EU funding for research and innovation (annual average funding)

Funding from: 7th FP, CIP and Structural Funds

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Programme implementation cycle

OPs preparationOPs preparation(2)(2)

ProjectsProjects implementationimplementation(4)(4)

Preparation of thePreparation of the NSRFNSRF

(1)(1)

Implementation of OPsImplementation of OPs(3)(3)

Monitoring&Monitoring& ReportingReporting

(5)(5)

Evaluation, auditEvaluation, audit(6)(6)