Challenges of ESIF Implementation. Intermediate Body s perspective
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1 Challenges of ESIF Implementation. Intermediate Body s perspective
2 CFCA of Latvia Established in 1997 as Central Finance and Contracting Unit (CFCU) implementing agency to manage the EC Phare programme in DIS environment At the moment Central Finance and Contracting Agency (CFCA) has more than 18 years experience in project administration and vast portfolio of financial programmes and instruments managed: Pre-accession programmes, ESIF and other financial instruments financial envelope of close to 6 BIL EUR 212 employees 2
3 ESIF architecture in Latvia Partnership Agreement ESI funds 5.6 billion EUR Ministry of Finance CF, ERDF, ESF CP funds The Ministry of Agriculture EAFRD, EMFF Operational programme «Growth and employment» 4.4 billion EUR Latvian Rural Development Programme (EAFRD) 1.1 billion EUR Action Programme for Fisheries Development billion EUR 3
4 OP «Growth and employment» TOTAL 4,4 BILLION EUR Sustainable transport system; 1159,8; 27% Research, technological development and innovation; 467,5; 11% Education, training and vocational training for skills and lifelong learning, [VALUE], [PERCENTAGE] Preservation and protection of the environment and promoting resource efficiency, [VALUE], [PERCENTAGE] The availability of ICT, e- government and services; 172,8; 4% Shift towards a low-carbon economy in all sectors, [VALUE], [PERCENTAGE] Enhancing competitiveness of the SMEs, [VALUE], [PERCENTAGE] Social inclusion and combating poverty; 418,5; 10% Employment and labor mobility; 135,4; 3% 4
5 OP «Growth and employment» meur [CATEGORY NAME]; [VALUE] [CATEGORY NAME]; [VALUE] [CATEGORY NAME]; [VALUE] [CATEGORY NAME]; [VALUE] 5
6 Institutional framework for OP «Growth and employment» 6
7 Steps taken to facilitate investments European Commission accepts Operational programme «Growth and Employment» (OP) Monitoring Committee agrees on Complement of OP which contains detailed description of planned investment Cabinet of Ministers (CoM) approves description of functions and procedures CoM agrees on time schedule of the implementation of specific objectives (SO) accreditation of MA (CFCA as IB) and CA Line ministries continue work on preparing initial evaluations, project criteria and regulations of CoM for SOs SO implementation time schedule is updated for
8 Preconditions for initiating investment Progress in fulfilling ex-ante conditionalities At the time of approving Partnership Agreement, there were 15 unfulfilled/partially fulfilled ex-ante conditionalities (ExAC) So far fulfilment of 11 ExAC has been ensured in sectors of transport, education and science, health, social inclusion, strengthening the capacity, risk management systems and three general ExAC on public administration To fulfil remaining 3 ExAC necessary documentation is submitted to EC for evaluation in fields of waste, water management and also general ex-ante conditionality regarding implementation of e-procurement To fully carry out obligations in fulfilment of ex-ante conditions, Latvia plans to submit to EC materials on prevention and intervention measures to reduce early school leaving (planned to submit to EC in April) 8
9 EU funding investment progress until ! Each SO is regulated by the Cabinet of Ministers (setting detailed implementation requirements) 9
10 Forecast for payments in projects ESIF, sectors, cumulative, meur 10
11 Forecast for payments in projects, ESIF, sectors, cumulative, meur 11
12 Forecast for N+3 and performance framework, January 2016, meur Forecast POSITIVE no risk of loosing the funding, just with pre-condition that there are no significant deviations from the forecast. No negative tendencies can be allowed as the «red line» is quite close 12
13 900 EU funds budget flow in two programming periods More rapid financial flow for due to higher advance payments (to reduce the impact of economic crisis) and 100% payments for financial instruments Period Year ,5% 3,6% 11,2 % Yearly expenditure from total expenditure Year Year Year 4 Year 5 Year 6 Year 7 Year 8 Year gads 2.gads 3.gads 4.gads 5.gads 6.gads 7.gads 8.gads 9.gads 10.gads budžeta plūsma gada plānošanas periodam (kopā milj. euro) budžeta plūsma gada plānošanas periodam (kopā milj. euro) Year 10 14,2% 15,0% 12,5% 13,0% 14,7% 11,8% 3,6% ,3% 2,5% 7,6% 14,1% 15,8% 15,5% 15,4 % 13,2% 10,4% 5,1%
14 EU funds budget flow in two programming periods Programme start-up cycle shows that first 2 years of programme start-up phase is always spent for programming and setting the rules: - sectoral development strategies, ex-ante conditionalities - EC guidance (implementing rules, guidelines) - national level rules (if considering the lessons learnt) - SO rules and criteria (if in dialog with social partners) - changes in system set-up, institutional reforms - establishing MIS adjusted to the requirements - phase out of the previous programming period Next 2 years intensive project start-up phase with time pressure 14
15 Monitoring of risks Tight monitoring of risks done for performance framework target of
16 Current environment. Need for acceleration Acceleration highly demanded by the potential beneficiaries Time schedule for elaboration of SO regulations and selection criteria - responsibility brought to ministers level (target 90% for 2016) Boosting EU investment main common priority! All institutions invited to facilitate constructive and productive discussions among ministries, partners and the EC balance between quality of investment and respecting deadlines Ministries timely preparation of qualitative initial evaluations, project selection criteria and Regulations of the Cabinet of Ministers Selection to be ensured in shortened deadlines; priority to SO s having more significant impact on the performance framework or construction; selection criteria giving higher scores for projects with higher readiness Beneficiaries suggested to start implementation earlier, where possible IB assists Beneficiaries with earlier start-up of their projects, e.g. ex-ante procurement checks 16
17 Preparedness to start investments, Planned approval of Cabinet regulation Funding of approved Cabinet regulation Project selections with signed contracts Funding of initiated projects 17
18 Acceleration measures taken for boosting implementation Strict deadlines for main processes: announcement of the Call (set by CoM regulation) within 2 months from approval of SO rules (CoM) and selection criteria (MC) Project assessment max 3 months (set by the Law) Approval of advance request 10 days (set by regulation of CoM) Approval of interim reimbursement claim 20 days; final payment 60 days (set by regulation of CoM) Regular monitoring of progress on OP and SO level on monthly basis by CoM on SO level by sectoral ministries on project level by IB on quarter basis (high risk projects monthly) requirement introduced for absorption of advance payment in 6 months Fitting in set deadlines regular internal monitoring summaries and alerts in the MIS 18
19 E-Cohesion as tool for acceleration Management information system: Benefits: accumulates all project data according to the requirements of EC; customer self-service portal; submission of project applications; submission of reports; information on planned payment requests and procurement; uploadading of supporting documentation; correspondence with CFCA saving time and resources data verification - logical control document status control data security system free of charge (no need for special software) accessibility - works with most popular web browsers user identification using a single tool via data verification and requesting from other national registers + e-contracts with Beneficiaries 19
20 E-cohesion E-cohesion might be answer to different challenges if used for simplifying the processes and reduction of mistakes and time (but not as parallel system for work done on paper) and if interoperability and the «once only» principle ensured BUT can t be developed in just couple of months - needs careful and detailed work on data fields to be monitored and collected to help the daily work, reduce the administrative burden on beneficiaries and IBs can be developed just when all the requirements are clear (not just regulations, but also the guidelines) 20
21 Other new challenges Simplified costs options simplification regarding the administration (no controls required on collection and checks of supporting documents) BUT challenging regarding the methodology (uncertainty from the IBs is the methodology will not be questioned by any auditors ex-post) Focus on results smart to ensure real results and targets BUT challenging regarding controls as expenditure eligibility checks are not reduced but additional controls have to be performed regarding results and sufficiency of progress (not to end up with financial corrections) 21
22 Institutional reform as acceleration tool PROCUREMENT MONITORING BUREAU PROCUREMENT MONITORING BUREAU DELEGATED FUNCTIONS APPEALING RESPONSIBLE INSTITUTIONS CO - OPERATION INSTITUTIONS DELEGATED FUNCTIONS DELEGATED FUNCTIONS DELEGATED FUNCTIONS 10 Responsible Institutions Co - operation Institution CFCA FINAL BENEFICIARIES APPEALING 2 2
23 Gained benefits from change of institutional set-up Unified approach to: project evaluation project controls controls of reimbursement claims (deadlines) requirements for data storage and exchange of information + Regional accessibility + «One stop» agency for applicants and beneficiaries Simplification measures: reduced number of administrative bodies simplified control system risk-based controls standardised project application and reporting forms unified explanations and «interpretation» of the requirements 23
24 Lessons learnt and future expectations Timely preparatory work needed on all sides Clear, precise and easy understandable «rules of the game» from the EC side to eliminate possible «interpretation» Management control systems (incl. MIS) can be effectively put in place just after all the EC level regulations and explanations are available (delegated regulations, implementing regulations, guidelines) Maximum use of the off-the-shelf instruments, standardised templates, available examples, best practises An active assistance and prompt responses are expected from the EC in cases of new implementation schemes and investment measures are proposed (giving «legal security» to start the programmes a.s.a.p.) Simplified options for application of simplified costs The major projects should be supported just in case of high readiness, time reserve, clear approach and sufficient project management capacity It s important to continue (and simplify) the result based Cohesion policy! 24
25 Contact information Anita Krūmiņa Director Central Finance and Contracting Agency Postal address: Smilsu street 1, Riga, LV-1919 Webpage: Phone: Customer Service Centre: Meistaru street 10, Riga Regional offices: Jana Poruka street 8, Cesis Liepajas street 48, Kuldiga 18.novembra street 35, Rezekne
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