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Wednesday, January 2, 2019

Implementation of the ESIF in the EU: realities and perspectives

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The European Structural and Investment Funds (ESIF) have been planned on the Multiannual Financial Framework (MFF) to fund, across the European Union, “economically viable projects, especially for projects with a higher risk profile than usually taken on by the Bank. It [focuses] on sectors of key importance for the European economy”. There are five different funds: the ERDF, the ES...

Planification and implementation of the ESIF: overview of the situation
The summary report on the ESIF clearly states that the planification and the implementation of the funds have be... Read more

The European Structural and Investment Funds (ESIF) have been planned on the Multiannual Financial Framework (MFF) to fund, across the European Union, “economically viable projects, especially for projects with a higher risk profile than usually taken on by the Bank. It [focuses] on sectors of key importance for the European economy”. There are five different funds: the ERDF, the ESF (including the Youth Employment Initiative), the Cohesion Fund, the EAFRD and the EMFF. Two years prior to the end of the current MFF, the publication by the European Commission of a summary report on the implementation of the EFSI in the EU provides an opportunity to analyse the progress made on the implementation of the EFSI, but also to initiate discussion about its future after 2020.

Planification and implementation of the ESIF: overview of the situation
The summary report on the ESIF clearly states that the planification and the implementation of the funds have been accelerated. By the end of 2017, 53% of the total investment volume planned over the current MFF period had been allocated to 1.7 million projects selected for support, which amounts to €338 billion, including €240 billion as a part of EU contribution. As for the payments from the EU budget, the amount reached €75 billion by the end of 2017 (16%). The report also shows that this trend should become more marked. However, it is clear that there are disparities between the EU Member States on this subject matter.
This situation can be easily explained by the specific procedures for the payment. Nonetheless, there is a significant risk that the under-programming Managing Authorities of the structural funds will be concerned by the automatic decommitment rule: stated in the Article 86 of the EU Regulation No. 1303/2013, this rule allows the European Commission to cancel EU funds that have not been implemented in the year N+3 after the programme has been adopted. This situation could, unfortunately, be applied to the EMFF, which particularly suffers from the difficulties encountered by Managing Authorities to implement it: by the end of 2017, the selection rate hardly reached 23%, while only 7% of the payments had been performed.

Impact of the ESIF on the EU economy
1.7 million projects have benefited from EU support between 2014 and 2017, including 1 million projects for the sole EAFRD. The report clearly states that 1 million enterprises will benefit from selected projects (50% of the target). This impact must especially be positive for SME competitiveness as well as job creation (with 280,000 expected jobs created as a direct result of the selected projects), but also for Research & Innovation or digital economy. The selected projects under the ESF has also provided positive results, as 15.3 million people already benefited from support as a part of funded projects, including 7.9 million unemployed and 4.9 million inactive. These data are the result of ambitious targets set by the European Union for the use of structural funds.

2021-2027 programming: what will change?
The global budget for this programming period should be similar to the current MFF, as the provisional EU contribution to the budget planned amounts to €458 billion. It must be emphasised that the ESF will become the ESF+, and will include the YEI, the FEAD, the EaSI and the EU Health Programme. However, the future MFF is still subject to a vote by the European Parliament – a vote that might be highly tensed, especially since the chances of seeing any vote on the topic before an uncertain European election are very low.
Some positive changes might occur though, as the European Commission work is focused on the accessibility of the funds for the next MFF Regulation. Indeed, the Commission proposes to make the rules for accessing EU structural funds less complex, with simplified administrative procedures. This objective would clearly help both project owners and Managing authorities in accessing and/or releasing structural funds.

To conclude, although the perspectives show that ESIF priorities tend to evolve, it appears that their implementation provides concrete results across the EU. Even though their part in the EU budget will decrease on the next MFF (36% of the 2021-2027, against 42% for the current period), there are good grounds for optimism about the efficient implementation as well as the impact of these funds in the mid-term future. However, some questions are still pending, such as the capacity of managing authorities to follow the imposed roadmap on the implementation of ESI funds in operational programmes. A similar comment may apply to the validation of this future budget, considered by some EU Member States as too high and inappropriately distributed…

[Photo credit: Continentaleurope; source: Wikimedia Commons] Hide

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