Explanatory Memorandum to COM(2020)113 - Coronavirus Response Investment Initiative

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dossier COM(2020)113 - Coronavirus Response Investment Initiative.
source COM(2020)113 EN
date 13-03-2020


1. CONTEXT OF THE PROPOSAL

The coronavirus crisis, or COVID-19 outbreak, has affected the Member States in a sudden and dramatic manner, with a major potential impact on their societies and their economies. It hampers growth in the Member States as economic activity decelerates sharply. This may be aggravated by liquidity constraints as businesses struggle to pay their suppliers and employees. At the same time, additional public resources are needed to support health care systems and other activities directly linked to the outbreak of the disease.

This has created an exceptional situation which needs to be addressed with specific measures to support and protect Member States’ economies, companies and workers. Sizeable and fast interventions are needed in the health care systems to allow it to operate under considerable stress, for SMEs which often have lower margins, in cushioning the negative consequences on labour markets and other vulnerable parts of their economies. This is a matter for the whole EU that necessitates that all available resources, at EU and Member States level, are mobilised to overcome the unprecedented challenges related to the COVID-19 outbreak.

The Commission therefore proposes a “Coronavirus Response Investment Initiative” directed at promoting investments by mobilising available cash reserves in the European Structural and Investments Funds, to fight the crisis immediately. The investment will be sizable and reach more than €37 billion quickly. To achieve this, the Commisson proposes to the European Parliament and the Council to release about €8 billion of investment liquidity.

In order to quickly direct these €37 billion of European public investment to address the consequences of the coronavirus crisis, the Commission proposes to relinquish this year’s obligation to request refunding of unspent pre-financing for the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF) and the European Maritime and Fisheries Fund (EMFF) until programme closure.

The Member States shall use the amounts not recovered in 2020 to accelerate investments related to the COVID-19 outbreak under the ERDF and the ESF, the CF and the EMFF. In view of the average co-financing rates across Member States, the €8 billion will be able to trigger the release and use of some €29 billion of structural funding across the EU.

It is proposed that the ERDF can support the financing of working capital in SME where necessary as a temporary measure to provide an effective response to a public health crisis. Financial instruments financed by the Funds should also provide support in the form of working capital to SME if necessary as a temporary measure. The ERDF investment priority to strengthen research, technological development and innovation is modified to cover investment in products and services necessary for fostering the crisis response capacities in public health services. Expenditure for operations for fostering crisis response capacities should be eligible as of 1 February 2020.

Where this leads to a need to modify programmes, the proposal identifies non-substantial modifications that do not require approval by a Commission decision. The proposal also makes clear that expenditure for fostering crisis response capacities shall in any event be eligible as of 1 February 2020. Possibilities to speed up the declaration of expenditure through the use of new forms of support as available under Article 67 of the Common Provisions Regulatin introduced since 2018, e.g. simplified cost options, should be used to the maximum extent possible.

A Task Force has been setup to coordinate work with Member States, identify their precise needs and assist them so as to ensure that the money starts flowing as soon as possible.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

It is proposed to:

Amend the ERDF Regulation (EU) No 1301/2013 as follows:

In Article 3 (1) of a sub-paragraph is added clarifying that the ERDF may support the financing of working capital in SMEs where necessary as a temporary measure to provide an effective response to a public health crisis;

Article 5 (1) (b) of the same Regulation is modified so that the ERDF investment priority to strengthen research, technological development and innovation can cover investment in products and services necessary for fostering the crisis response capacities in health services;

Amend Regulation (EU) No 1303/2013 (the Common Provisions Regulation) d as follows:

In Article 30 on programme amendments, a new paragraph (5) is added setting out certain amendments that do not require approval through a Commission decision; Article 96 (10) is amended to reflect this;

In Article 37  i on financial instruments it is added that financial instruments may also provide support in the form of working capital to SMEs if necessary as a temporary measure to provide an effective response to a public health crisis;

In Article 65 (10) a subparagraph is added to clarify that expenditure for operations for fostering crisis response capacities shall be eligible as of 1 February 2020;

An additional sub paragraph is added in Article 139 (7) to provide for non-recovery of amounts normally due in 2020 for 2014-2020 cohesion policy operational programmes under the Investment for Growth and Jobs Goal and for programmes financed from the EMFF;

Amend the EMFF Regulation (EU) No 508/2014 as follows:

Article 35 is modified to make it possible for the EMFF to contribute to mutual funds which provide financial compensation to fishermen for economic losses caused by a public health crisis, and

Article 57 is modified to add the possibility for the EMFF to safeguard the income of aquaculture producers by contributing to an aquaculture stock insurance covering economic losses due to a public health crisis.


3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

There was no consultation of external stakeholders.

4. BUDGETARY IMPLICATIONS

The proposed modification does not imply any changes in the Multiannual Financial Framework annual ceilings for commitments and payments as per Annex I of Regulation (EU) No 1311/2013. The annual breakdown of commitment appropriations for the European Regional Development Fund, the European Social Fund and the Cohesion Fund remains unchanged.

The proposal will facilitate an acceleration of the programme implementation resulting in a frontloading of payment appropriations.

The Commission will carefully monitor the impact of the proposed modification on payment appropriations in 2020 taking into account both the implementation of the budget and revised Member States forecasts.

The non-recovered amounts in 2020 will be cleared at programme closure.