Cohesion policy more transparent

Member States have decided to strengthen the monitoring of financial instruments available under Cohesion Policy

This will mean that Member States will have to report once a year on progress made in financing and implementing these instruments. Such reporting will allow the Commission to better assess the overall performance of financial instruments across Member States. Together with additional information to be presented with each statement of expenditure, the Commission will be able to produce accurate and comprehensive accounts, which give a true image of the Union’s assets and of the actual budgetary implementation.

Member States are already utilising these financial instruments. Another alternative to traditional funding, which has proven successful in Member States, are the existing schemes of repayable assistance. But there was a need to provide a clear legal framework and a reassurance for their correct continued usage. With the introduction of these new correction mechanisms, the Commission follows recommendations of the European Court of Auditors.

The Member States have agreed on Monday as well with the possibility to increase the co-financing rate for all structural funds for so called programme countries, which receive special assistance, with a maximum of 10 percentage points. This would not lead to a higher allocation of funding from the European Regional Development Fund, European Social Fund, Cohesion Fund, Fisheries Fund or European Fund for Rural Development, but would make it easier for cash-strapped Member States to co-finance projects, to create growth and jobs. The European Parliament has approved this increase already. This new possibility will enter into force, together with the improved monitoring on financial instruments, on 19 December of this year.

Background
The Commission encourages the use of financial instruments under cohesion policy, moving away from traditional one-off grants and wants to focus more on them in the next financial perspective. In times of scarce public finances the use of guarantee schemes or repayable assistance is the best way to maximise the impact of EU investment on the ground, ensuring in the long term many more projects can be supported. In the current financial perspective from 2007 until 2013 some 10 billion Euro is available for financial instruments under cohesion policy.

The so-called “repayable assistance” can take the form of either reimbursable grants (partially or totally repayable without interest by project holders) or credit lines offered to beneficiaries through financial institutions, acting as intermediaries. For instance, in Portugal, almost all cohesion policy programmes use repayable forms of assistance to support competitiveness and innovation. As an example, the National Institute for the support of Small- and Medium-Sized Enterprises (SMEs ) can provide a reimbursable grant to a beneficiary with a view to a part of this grant being repaid once the project is complete. The investment returned to the national authority is reused for new projects.

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