Challenges of ESIF 2014 - 2020 Implementation. Intermediate Body’s perspective

07.04.2016

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

ESIF architecture in Latvia 2014-2020

3

Partnership Agreement

ESI funds

5.6 billion EUR

Ministry of Finance

CF, ERDF, ESF –

CP funds

Operational programme

«Growth and employment»

4.4 billion EUR

The Ministry of Agriculture

EAFRD, EMFF

Latvian Rural Development

Programme 2014-2020 (EAFRD)

1.1 billion EUR

Action Programme for

Fisheries

Development 2014-

2020

0.1 billion EUR

2014-2020 OP «Growth and employment»

4

Research, technological development and

innovation; 467,5; 11%

Education, training and vocational training for

skills and lifelong learning, [VALUE], [PERCENTAGE]

Enhancing competitiveness of the SMEs, [VALUE],

[PERCENTAGE]

Social inclusion and combating poverty; 418,5;

10%

Employment and labor mobility; 135,4; 3%

Shift towards a low-carbon economy in all sectors,

[VALUE], [PERCENTAGE]

The availability of ICT, e-government and services;

172,8; 4%

Preservation and protection of the environment and

promoting resource efficiency, [VALUE],

[PERCENTAGE]

Sustainable transport system; 1159,8; 27%

TOTAL 4,4 BILLION EUR

2014-2020 OP «Growth and employment» mEUR

5

[CATEGORY

NAME];

[VALUE]

[CATEGORY

NAME];

[VALUE]

[CATEGORY

NAME];

[VALUE]

[CATEGORY

NAME];

[VALUE]

Institutional framework for 2014-2020 OP «Growth and employment»

6

Steps taken to facilitate investments

• 11.11.2014 – European Commission accepts Operational programme «Growth and Employment» (OP)

• 30.04.2015 – Monitoring Committee agrees on Complement of OP which contains detailed description of planned investment

• 30.06.2015 – Cabinet of Ministers (CoM) approves description of functions and procedures

• 14.07.2015 – CoM agrees on time schedule of the implementation of specific objectives (SO)

• 30.07.2015 – 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 2016

7

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

EU funding investment progress until 01.04.2016

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! Each SO is regulated by the Cabinet of Ministers (setting detailed implementation requirements)

Forecast for payments in projects ESIF, sectors, cumulative, mEUR

10

Forecast for payments in projects, ESIF, sectors, cumulative, mEUR

11

Forecast for N+3 and performance framework, January 2016, mEUR

12

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

EU funds budget flow in two programming periods

13

26

189

585

738 780

651 677

769

614

186

14

127

385

710

797 783 774

664

525

257

0

100

200

300

400

500

600

700

800

900

1.gads 2.gads 3.gads 4.gads 5.gads 6.gads 7.gads 8.gads 9.gads 10.gads

29.01.2016. budžeta plūsma 2007.-2013. gada plānošanas periodam (kopā 5 215 milj. euro)

18.01.2016. budžeta plūsma 2014.-2020. gada plānošanas periodam (kopā 5 035 milj. euro)

Yearly expenditure from total expenditure

Period Year

1 Year

2 Year

3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Year 10

2007-2013 0,5% 3,6% 11,2%

14,2% 15,0% 12,5% 13,0% 14,7% 11,8% 3,6%

2014-2020 0,3% 2,5% 7,6% 14,1% 15,8% 15,5% 15,4%

13,2% 10,4% 5,1%

More rapid financial flow for 2007-2013 due to higher advance payments (to reduce the impact of economic crisis) and 100% payments for financial instruments

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

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Monitoring of risks

15

Tight monitoring of risks done for performance framework target of 2018

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

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Preparedness to start investments, 2016

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16 23 5 16 8 5 7 5 1 16 3 4 3 5 13 16 6 11 7

1.428.199

2.106.301 2.181.821

2.907.881

3.168.873

3.218.909

3.486.224 3.735.354

4.081.994

481.714 493.397 517.324 588.464

734.012

1.404.122 1.955.645

2.058.497

2.520.729 2.710.330

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

4.000.000

4.500.000

0

5

10

15

20

25

Planned approval of Cabinet regulation Project selections with signed contracts

Funding of approved Cabinet regulation Funding of initiated projects

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

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E-Cohesion as tool for acceleration

Management information system:

•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

Benefits:

•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 www.latvija.lv

•data verification and requesting from other national registers

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+ e-contracts with Beneficiaries

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)

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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)

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Institutional reform as acceleration tool

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PROCUREMENT MONITORING

BUREAU

10 Responsible Institutions

Co - operation Institution

CFCA

PROCUREMENT MONITORING

BUREAU

FINAL BENEFICIARIES

APPEALING

DELEGATED FUNCTIONS

DELEGATED FUNCTIONS

DELEGATED FUNCTIONS

RESPONSIBLE INSTITUTIONS

DELEGATED FUNCTIONS

CO - OPERATION INSTITUTIONS

APPEALING

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

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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!

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Contact information

Anita Krūmiņa Director anita.krumina@cfla.gov.lv

Central Finance and Contracting Agency

Postal address: Smilsu street 1, Riga, LV-1919

Webpage: www.cfla.gov.lv

E-mail: cfla@cfla.gov.lv

Phone: +371 22306116

Customer Service Centre: Meistaru street 10, Riga

Regional offices: Jana Poruka street 8, Cesis

Liepajas street 48, Kuldiga

18.novembra street 35, Rezekne