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Coronavirus crisis: More flexibility for European structural and investment funds
06/05/2020

On 23 April 2020, the European Union adopted Regulation (EU) N° 2020/558 on specific measures to provide exceptional flexibility in the use of European Structural and Investment Funds in response to the spread of COVID-19. The initial proposal of the Regulation presented by the European Economic and Social Committee (EESC) planned the elimination of all possible administrative burdens and a more active involvement of the social partners and relevant civil society organisations to ensure effective crisis management.

The Regulation has been published in the Official Journal of the EU and is available here.

On 30 March 2020, the European Union had already adopted Regulation (EU) N° 2020/460, known as "CRII" (Corona Response Investment Initiative), including three flagship measures namely easing the application of EU spending rules, extending the scope of the EU Solidarity Fund but also freeing up around EUR 8 billion of immediate liquidity to trigger more than EUR 37 billion of European public investment.

However, the deepening of the crisis and its impact on the economy are such that additional measures were indispensable. Regulation (EU) n°2020/558, known as "CRII plus" (Corona Response Investment Initiative Plus), implements therefore a second set of measures.

This new package maximises the mobilisation of all unused European Structural and Investment Fund assistance by providing greater flexibility. This flexibility is reflected in four main lines of action set out in the Regulation:

  1. It provides for the possibility of receiving 100% EU funding, whereas in principle the rate of this EU funding is 40% maximum for cohesion policy, the remainder being financed by national contributions. This funding is only possible for crisis-related measures and for the financial year 2020-2021.
  2. The Regulation provides for transfer possibilities between the three Cohesion Policy Funds - the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund (CF).
  3. It also facilitates the transfer of funds from one programme to another and from one region to another, with the Member States themselves deciding which programme/area to allocate the funds received.
  4. On the basis of this Regulation, Member States will be able to apply the new rate of EU funding specified above without having to devote a certain part of the funding to key themes (with examples such as research, climate, etc.).

Along with these considerations, the Regulation will also simplify the procedural steps related to the implementation of the programme, the use of financial instruments and auditing.

The rules for the European Fund for Aid to the Most Deprived Persons (FEAD) as well as for the European Fund for Maritime Affairs and Fisheries (EMFF) have been amended in order to support these two particular Funds. This includes support with food, material and medical aid and guarantees for the temporary cessation of fishing activity (with a more flexible reallocation of financial resources within operational programmes).

These complementary measures are intended to counteract the consequences of the health crisis. At a time when European businesses are facing severe liquidity shortages, the number of public investments needed to support many sectors of the economy is increasing significantly. It is therefore crucial to facilitate these investments with favourable temporary rules.

It should be noted that, according to the European Court of Auditors, this easing of burdens on national budgets must result in a balance between the flexibility provided by these new measures and accountability. The allocation of funds must be as transparent as possible.

As accountability for Member States' use of the funds is always required (even in times of crisis and adaptation of the rules), the European Commission will have to maintain its control in this respect. This will be even more complicated as the Commission will not have easy access to reliable information on the funding under the ESIF.

The European Commission is also responsible for the proper implementation of these measures and will have to closely monitor developments in order to ensure that the temporary and exceptional measures taken remain in place only for the time required by this extraordinary situation.

These measures complement the aid from States whose budgets are unfortunately not extensible.

 

Annabelle Lepièce, Partner, Brussels
 

Eléonore Mertens de Wilmars, Junior Associate, Brussels

 

Related : CMS Luxembourg

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