Sofia, 21 June 2010 Nassos Sofos Directorate General “Regional Policy” European Commission

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 Sofos Directorate 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!

5. 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

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

7. <50 50 - 75 75 - 90 90 - 100 100 - 125 ³ 125 EU Cohesion / Regional Policy - Purpose Differences in development in the EU-27 GDP per head as a % of the community average

8. Convergence objective (Regions > 75% in EU25) Objective 'Regional Competitiveness and Employment' Geographical Eligibility for Structural Funds Support 2007-2013 Convergence objective statistically affected regions Objective 'Regional Competitiveness and Employment' Phasing-in regions, "naturally" above 75% Index EU 25 = 100 Source: Eurostat

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

10. Adaptability of workers and firms Social inclusion Capacity building Technical assistance Cohesion/Regional Policy: Structural & Cohesion Fundsby sector 2007-13 European Regional Development Fund (ERDF) and Cohesion Fund (CF) - €271 billion European Social Fund (ESF) - €76 billion Environment Transport Employment Entrepr./R&D/Innovation Human capital Information society Tourism Social infrastructure Culture Energy Institutional capacity

11. Multiannual programming: 2007-13

12. 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 - JointEuropeanSupportfor SustainableInvestmentinCityAreas • http://ec.europa.eu/regional_policy/funds/2007/jjj/index_en.htm

13. 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.

14. 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

15. A snapshot of the Greek OPC

16. Cohesion Policy Budget for Bulgaria (not including the Funds for Rural Development and Fischeries which are not “Structural” Funds Objective/FundBudget (billion EUR)% 1. Convergence ERDF 3.205 ESF 1.185 CF 2.283 Total convergence: 6.674 97 % 2. Territorial Cooperation ERDF 0.179 3 % 3. Total 6.852 =100.0 %

17. 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.

18. OPs financial implementation

19. 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

20. 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.

21. 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).

22. 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.

23. THANK YOU!БЛАГОДАРЯ!ΕΥΧΑΡΙΣΤΩ!