Explanatory Memorandum to COM(2020)138 - Amendment of Regulations as regards specific measures to provide exceptional flexibility for the use of the ESIF in response to the COVID-19 outbreak - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2020)138 - Amendment of Regulations as regards specific measures to provide exceptional flexibility for the use of the ESIF in response ... |
|---|---|
| source | COM(2020)138  |
| date | 02-04-2020 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The direct and indirect effects of the COVID-19 outbreak continue to increase in all Member States. The current situation is unprecedented and requires exceptional measures adapted to the situation to be applied in these circumstances.
The first package of measures proposed by the Commission on 13 March 2020 introduced a number of important changes that allow for a more effective response in the current situation. In the meantime, the effects on our economies and societies become ever more serious. It is therefore necessary – as part of the second set of measures – to go beyond what is already possible and provide exceptional additional flexibility to respond to the current unprecedented situation, which led to activating the general escape clause under the Stability and Growth Pact.
In order to ensure that all support from the Funds can be mobilised to address the effects of the the COVID-19 outbreak on our economies and societies, as a temporary and exceptional measure, without prejudice to the rules that should apply under regular circumstances, it is necessary to allow for the temporary possibility of 100% co-financing from the EU budget for the implementation of cohesion policy programmes, as well as additional transfer possibilities between the European Regional Development Fund (ERDF), the European Social Fund (ESF), and the Cohesion Fund, and between categories of regions. Additionally, it is proposed to exempt Member States from the need to comply with thematic concentration requirements, to enable a redirection of resources to the areas most impacted by the current crisis. This derogation will allow all available resources from the ERDF, the Cohesion Fund and the ESF to be mobilised to overcome the unprecedented challenges the Member States are facing because of the COVID-19 outbreak. Member States and regions will be able to mobilise more resources for scaling up and extending short-time work schemes, for support to SMEs working capital and for immediate expenditure in the healthcare sector.
Furthermore, in order to eliminate administrative burden, unnecessary under the present circumstances, on national and European public administrations stemming from the modification of programmes, it is also necessary to refrain from amending Partnership Agreements and to postpone the deadline for the submission of annual implementation reports in 2020 as well as the deadline for Commission reports based on those. Furthermore, certain procedural requirements linked to audits and financial instruments will be simplified. Given the current limitations to perform necessary audit work, in the case of ERDF, ESF, EMFF and the Cohesion Fund, the extension of the possibility to make use of a non-statistical sampling method should be explicitly provided for. In order to enable a quick readjustment of financial instruments to provide an effective response to the COVID-19 outbreak, the review and update of the ex-ante assessment and supporting documents demonstrating that support provided was used for its intended purpose should no longer be required. Also, the possibilities for the support for working capital through financial instruments should be extended to the EAFRD.
Finally, it is proposed to allow for ERDF support to be provided for undertakings in difficulties due to these specific circumstances, thus ensuring consistency with the approach taken under the Temporary Framework for State Aid Measures to support the economy in the current COVID-19 outbreak and with rules for the granting of de minimis aid.
The COVID-19 outbreak is also likely to have serious impacts on the implementation of ongoing operations. National authorities may thus consider adjusting operations (e.g. deliverables, time limit for execution, etc.) in accordance with their national rules where necessary and justified, in a way to minimise the impact of the COVID-19 outbreak on the programmes. National authorities could also consider the possibility to select new operations or to launch new or additional calls for proposals if necessary.
There may be instances in which circumstances resulting from the COVID-19 outbreak qualify as a force majeure event under national law and thus constitute a valid justification for the incapacity to comply with an obligation. The Commission considers that all necessary flexibility should be deployed in dealing with failure by beneficiaries to fulfil obligations in a timely manner for reasons related to the COVID-19 outbreak (for example, the unavailability of staff). Equally, the Commission will display the same flexibility in assessing the compliance of Member States with their obligations. To ensure that Member States and regions can make full use of the support from the Funds, limited adjustments of the maximum amount of contribution from the Funds for each priority and category of regions should be allowed when establishing the amount of the final balance to be paid to the operational programmes.
These measures are complementary and additional to the legislative modifications proposed on 13 March 2020. They result from the close cooperation with Member States through the Coronavirus Response Investment Initiative Task Force where over 200 questions have already been addressed.
• Consistency with existing policy provisions in the policy area
The proposal is consistent with the overall legal framework established for the European Structural and Investment Funds (ESI) Funds and is limited to a targeted amendment of Regulation (EU) No 1303/2013 and of Regulation (EU) No 1301/2013. The proposal complements the Commission’s proposal COM(2020) 113 of 13 March 2020 as regards specific measures to mobilise investments in the health care systems of the Member States and in other sectors of their economies in response to the COVID-19 outbreak (Coronavirus Response Investment Initiative) as well as all other measures aimed at addressing the current unprecedented situation.
• Consistency with other Union policies
The proposal is limited to targeted amendments of Regulation (EU) No 1303/2013 and Regulation (EU) No 1301/2013 and maintains consistency with other Union policies.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Articles 177, 178 and 322 of the Treaty on the Functioning of the European Union.
It provides for possibilities for a co-financing rate of 100% and financial flexibility under the Investment for Growth and Jobs goal between the ERDF, the ESF, and the Cohesion Fund, and between categories of regions. It provides clarity on the eligibility of expenditure affected by the measures put in place as a response to the public health crisis. It finally alleviates some requirements for Member States where these create administrative burdens that could delay implementation of measures to respond to the COVID-19 outbreak. These exceptional changes shall be without prejudice to the rules that should apply under regular circumstances.
• Subsidiarity (for non-exclusive competence)
The proposal aims to allow for derogations from certain limitations pursuant to currently applicable Union provisions in order to allow for the widest possible flexibility to mobilise existing investment resources to address the direct and indirect effects stemming from the unprecedented public health crisis in the context of the COVID-19 outbreak.
• Proportionality
The proposal is a limited and targeted change not going beyond what is necessary to achieve the objective of providing additional flexibility and legal certainty to mobilise investments in response to the widespread public health crises affecting the growth potential of regions and enterprises and the well-being of the general public.
• Choice of the instrument
A Regulation is the appropriate instrument to introduce the additional flexibilities needed to address these unprecedented circumstances.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
• Stakeholder consultations
There was no consultation of external stakeholders. However, the proposal follows extensive consultations with Member States and the European Parliament over recent weeks, and takes account of the more than 200 clarification and advice questions received from national authorities concerning their handling of crisis response measures through the Coronavirus Response Investment Initiative Task Force.
• Collection and use of expertise
• Impact assessment
An impact assessment has been carried out to prepare the proposals for Regulation (EU) No 1303/2013 and Regulation (EU) No 1301/2013. These current limited and targeted changes do not require a separate impact assessment.
• Regulatory fitness and simplification
• Fundamental rights
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 to Regulation (EU) No 1311/2013. The total annual breakdown of commitment appropriations under Regulation (EU) No 1303/2013 remains unchanged.
The proposal will facilitate an acceleration of programme implementation and 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.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The implementation of the measures will be monitored and reported upon in the framework of the general reporting mechanisms established in Regulation (EU) No 1303/2013.
• Explanatory documents (for directives)
• Detailed explanation of the specific provisions of the proposal
It is proposed to amend Regulation (EU) No 1303/2013 (the Common Provisions Regulation) to ensure that Member States may request amendments to operational programmes to enable a 100% EU co-financing rate to apply to the relevant operational programme for the accounting year 2020-2021 (Article 25a(1)). The Commission will assess and may propose on that basis an extension of this measure.
In addition, it is important to ensure that, for amendments to operational programmes following the entry into force of this Regulation, the possibility to transfer allocations for the year 2020 between the ERDF and the ESF as well as the Cohesion Fund under the Investment for Growth and Jobs goal are allowed without limitations (Article 25a(2)). Resources under the European territorial cooperation goal, the additional allocations to outermost regions as well as support to the Youth Employment Initiative and the Fund for European Aid to the most Deprived should not be affected by such transfers.
To accommodate Member States’ needs to tackle the current specific challenges, Member States should be able to request a transfer from their allocations for the year 2020 between categories of regions. In order to ensure continued focus on less developed regions, the Member States should first examine other possibilities for transferring funding before considering transfers from the budget for the less developed regions given the potential negative implications of such transfers for the essential investments in the region of origin or for the completion of operations selected prior to the request for transfer (Article 25a(3) and (4)). For amendments to operational programmes submitted after the entry into force of this Regulation, the thematic concentration requirements should not apply (Article 25a(5)).
In addition, in order to enable Member States to concentrate on the necessary responses to the COVID-19 outbreak and reduce administrative burdens, certain procedural requirements linked to programme implementation and audits should be simplified. In particular, Partnership Agreements should no longer be amended (Article 25a(6)), the deadline for the submission of the annual implementation report should be postponed (Article 25a(8)), and the extension of the possibility for the Funds and the EMFF to make use of a non-statistical sampling method should also be explicitly provided for (Article 25a(12)). In addition, specific modalities for invoking force majeure in the context of decommitment are provided for (Article 25a(8)).
Eligibility of expenditure is also exceptionally allowed for completed or fully implemented operations fostering crisis response capacity in the context of the COVID-19 outbreak (Article 25a(7)). Such operations may be selected even before the necessary programme amendment is approved by the Commission.
In addition, where adjustments are necessary with regards to financial instruments in order to provide an effective response to a public health crisis, the review and update of the ex-ante assessment and supporting documents demonstrating that support provided was used for its intended purpose should not be required. Furthermore, the possibilities for the support for working capital under the EAFRD should be extended (Article 25a(10) and (11)).
Furthermore, it is also proposed to allow for additional flexibility at the closure of programmes to ensure that available resources are used to the largest extent (Article 1(3)).
Finally, it is proposed to amend Regulation (EU) No 1301/2013 to allow for ERDF support to be provided for undertakings in difficulties in these specific circumstances, thus ensuring consistency with the approach taken under the Temporary Framework for State Aid Measures to support the economy in the current COVID-19 outbreak and with rules for the granting of de minimis aid (Article 2).