52009DC0465

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 15.9.2009

COM(2009) 465 final

REPORT FROM THE COMMISSION

ANNUAL REPORT ON THE COHESION FUND (2008) [SEC(2009) 1159 final]

TABLE OF CONTENTS

ANNUAL REPORT ON THE COHESION FUND (2008) 3

1. Financial execution of the 2000-2006 period in 2008 and closure of projects 3

2. Economic environment and conditionality 8

3. Audits and financial corrections 8

4. Irregularities notified by the Member States 12

5. Evaluation 13

6. Information and publicity 14

Regulation (EC) No 1084/2006 establishing a Cohesion Fund and repealing Regulation (EC) No 1164/94 does not require the presentation of an annual report on the Cohesion Fund.

Therefore this report is presented in conformity with Article 14(1) of Regulation (EC) No 1164/1994 and thus covers the implementation during 2008 of Cohesion Fund projects adopted under the 2000-2006 period as well as ex-ISPA projects in the Member States concerned, including Bulgaria and Romania.

As a consequence, this report covers Cohesion Fund operations in the thirteen beneficiary Member States as of end-2006, i.e. Greece, Spain, Portugal, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, as well as Bulgaria and Romania.

Details on the implementation in 2008 of projects adopted under the 2000-2006 period for each Member State are presented in the Annex to this report.

1. FINANCIAL EXECUTION OF THE 2000-2006 PERIOD IN 2008 AND CLOSURE OF PROJECTS

In 2008, fifteen Member States were eligible to receive assistance from the Cohesion Fund (the 12 Member States who acceded in 2004 and 2007 plus Greece, Portugal and Spain). It must be recalled that, as a result of economic growth, Ireland has not been eligible since 1 January 2004.

Given that all commitments for the Cohesion Fund projects financed under 2000-2006 programming period have been executed by 31 December 2006, the financial resources available for the Cohesion Fund in 2008 were made only of payment appropriations.

Payments made in 2008 for projects adopted under the 2000-2006 period

The 2008 initial budget amounted to € 1,937 million. However, the submission pace of payment requests quickly required reinforcements in terms of payment appropriations. The Directorate General for Regional Policy requested increases of payment appropriations for a total amount of around € 553 million. The increase of the credits was the result of an overall good performance of Member States and in particular for four beneficiary Member States that exceeded their forecasts, namely Slovenia, Slovakia, Lithuania and Estonia.

As far as the ex-ISPA budget lines are concerned, at the end of the year, the situation resulted in 100 % execution rate of the available appropriations.

At the end of 2008, the average absorption rate (payments vs. commitments) of all current beneficiary countries for both the Cohesion Fund and former ISPA projects was 66.3 %. Bulgaria presents the lowest absorption rate (39.8 %), whereas Malta shows the highest absorption rate at 79.8 %. The other Member States range from 50.9 % to 76.1 % of the decided amount.

Table 1: Implementation of the Cohesion Fund and ex-ISPA payments in 2008 (Euro)

Ex-ISPA | 650.000.000 | -100.000.000 -10.000.000 | 540.000.000 | 531.454.029 |

Portugal | 121.124.899 | 62,3% | 73.149.733 | 37,6% | 181.537 | 194.456.170 | 6,4% |

Spain | 401.570.546 | 62,3% | 242.969.772 | 37,7% | 644.540.318 | 21,3% |

Czech Republic | 86.699.762 | 50,3% | 84.954.613 | 49,3% | 633.784 | 172.288.158 | 5,7% |

Estonia | 38.398.994 | 54,6% | 29.140.155 | 41,4% | 2.765.566 | 70.304.714 | 2,3% |

Hungary | 40.777.254 | 51,3% | 36.533.591 | 46,0% | 2.110.617 | 79.421.462 | 2,6% |

Latvia | 64.544.604 | 64,5% | 32.774.486 | 32,8% | 2.746.852 | 100.065.942 | 3,3% |

Lithuania | 114.458.156 | 62,2% | 61.109.392 | 33,2% | 8.370.251 | 183.937.800 | 6,1% |

Malta | 5.212.565 | 99,4% | 0,0% | 29.765 | 5.242.331 | 0,2% |

Poland | 528.130.703 | 67,3% | 247.053.953 | 31,5% | 9.419.180 | 784.603.837 | 26,0% |

Slovakia | 82.362.076 | 53,1% | 71.696.734 | 46,3% | 927.381 | 154.986.191 | 5,1% |

Slovenia | 22.326.262 | 45,3% | 26.911.481 | 54,7% | 49.237.743 | 1,6% |

Romania | 180.683.377 | 56,5% | 122.030.336 | 38,2% | 16.947.321 | 319.661.035 | 10,6% |

Greece | 2.503.744.174 | 2.450.738.235 | 1.152.286.728 |

Spain | 11.788.531.423 | 9.838.026.775 | 3.094.434.304 |

Ireland | 573.575.321 | 570.010.223 | 55.745.185 |

Portugal | 3.156.539.424 | 2.427.127.170 | 1.077.862.318 |

EU 4 | 18.022.390.343 | 15.285.902.403 | 5.380.328.535 |

Cyprus | 54.014.695 | 31.793.262 | 22.221.433 |

Czech Republic | 1.228.077.241 | 796.786.963 | 431.290.278 |

Estonia | 427.034.848 | 289.151.602 | 137.883.246 |

Hungary | 1.482.597.185 | 780.102.018 | 702.495.167 |

Latvia | 713.862.336 | 499.522.087 | 214.340.249 |

Lithuania | 846.449.583 | 559.974.524 | 265.380.251 |

Malta | 21.966.289 | 17.529.702 | 4.436.587 |

Poland | 5.634.539.614 | 2.871.741.538 | 2.762.798.076 |

Slovakia | 766.250.297 | 539.212.844 | 227.037.453 |

Slovenia | 254.198.103 | 162.579.583 | 91.618.520 |

EU 10 | 11.428.990.190 | 6.548.394.123 | 4.859.501.260 |

Bulgaria | 879.941.333 | 350.021.546 | 529.813.137 |

Romania | 2.043.037.858 | 1.040.128.078 | 1.002.599.040 |

EU 2 | 2.922.979.191 | 1.390.149.624 | 1.532.412.177 |

TOTAL | 32.374.359.723 | 23.224.446.150 | 11.772.241.972 |

Closure of projects from the 2000-2006 period

During 2008, 49 Cohesion Fund and ex-ISPA projects were closed, representing around € 750 million of payments. At the end of 2008, the total number of closed CF projects for the 2000-2006 period (including ex-ISPA projects) reached 216 and the number of projects remaining open decreased to 976 out of 1.192 projects. Table 4 provides information on the projects closed until the end of 2008 per Member States.

Table 4: Number of CF projects closed until the end of 2008 (including ex-ISPA)

Member State | Total number of CF projects | Projects closed as of end 2008 | Number of open projects as of end 2008 |

Number of Projects | Total Paid in Euro |

Period 2000-2006 | Period 1994-1999 |

Greece | 23,405,436 | 5,674,477 | 29,079,913 |

Spain | 19,927,164 | 32,483,151 | 52,410,315 |

Ireland | - | - | - |

Portugal | 11,062,188 | - | 11,062,188 |

EU 4 | 63,259,764 | 38,157,628 | 92,552,416 |

Cyprus | - | - | - |

Czech Republic | - | - | - |

Estonia | 125,073 | - | 125,073 |

Hungary | - | - | - |

Latvia | - | - | - |

Lithuania | 65,833 | - | 65,833 |

Malta | - | - | - |

Poland | 123 | - | 123 |

Slovenia | - | - | - |

Slovakia | - | - | - |

EU 10 | 191,029 | - | 191,029 |

Bulgaria | 6,156 | - | 6,156 |

Romania | - | - | - |

EU 2 | 6,156 | - | 6,156 |

TOTAL | 54,591,973 | 38,157,628 | 92,749,601 |

Management and Control systems

In the Directorate General's Annual Activity Report for 2008, for the functioning of the management and control systems (2000-2006), an unqualified opinion, signifying that there are no material deficiencies in key elements of the system, was given for the Cohesion Fund systems in seven Member States (Cyprus, Estonia, Hungary – transport sector, Latvia, Malta, Portugal and Slovenia) corresponding to 15.45% of payments made in 2008 as a proportion of total payments for the Cohesion Fund.

For ten Member States, representing 84.55% of CF payments made in 2008, the opinion was qualified, signifying the existence of material deficiencies in key system elements. This concerned Bulgaria, the Czech Republic, Greece, Hungary (environment sector), Ireland, Lithuania, Poland, Romania, Slovakia and Spain. In all cases the impact of the deficiencies was judged to be moderate, except for the road sector in Bulgaria.

For the road sector in Bulgaria the opinion was qualified with the impact of the material deficiencies affecting key elements of the system being judged significant. Accordingly, a reservation was made for the road sector in Bulgaria in the Directorate General's Annual Activity report for 2008. The Commission suspended payments to the Bulgarian road sector projects between July 2008 and May 2009 for this reason.

Details on the audits and the financial corrections for each Member State are presented in the Annex to this report.

4. IRREGULARITIES NOTIFIED BY THE MEMBER STATES

In 2008, the Member States communicated to the Commission, in accordance with Regulation (EC) No 1831/94, 140 notifications of irregularities involving a total affected amount of € 56,328,911 in respect of co-financed projects. Out of this amount, € 19,768,042 has been recovered, and the remaining amount is to be recovered. The Member States reporting the majority of cases are Spain, Portugal, Hungary and Greece (64, 22, 13 and 12 respectively). Spain reported more than 46% of the total of the cases and 44% of the involved amount. However, it is to be pointed out that Ireland, with three notifications relating to the 1994-1999 period, stands on the second highest level in terms of amount involved, followed by Lithuania.

The number of notifications shows an increase, with a radical decrease of the involved amount, compared to the previous year. The main types of irregularities reported are ineligible expenditure, and infringements to public procurement rules. These two typologies cover almost 75% of all cases reported. However, the Lithuanian authorities reported two cases of "suspected fraud". The involved amount concerning both cases is yet to be calculated.

Table 6 illustrates the number of irregularities and the related financial amounts communicated by Member States under Regulation (EC) No 1831/94 in 2008.

Table 6: Irregularities communicated by Member States in 2008 (in EUR)

Member State | Number of irregularities | Financial amounts | Amounts awaiting recovery |

Greece | 12 | 4,937,771 | 326,398 |

Spain | 64 | 24,827,955 | 14,442,900 |

Ireland | 3 | 9,498,140 | 0 |

Portugal | 22 | 5,655,879 | 2,602,188 |

EU 4 | 101 | 44,919,745 | 17,371,486 |

Cyprus | 0 | 0 | 0 |

Czech Republic | 2 | 88,210 | 0 |

Estonia | 2 | 129,614 | 0 |

Hungary | 13 | 1,400,938 | 1,033,292 |

Latvia | 5 | 86,279 | 86,279 |

Lithuania | 8 | 8,280,568 | 47,056 |

Malta | 0 | 0 | 0 |

Poland | 7 | 214,754 | 65,550 |

Slovenia | 0 | 0 | 0 |

Slovakia | 2 | 1,208,803 | 1,164,379 |

EU 10 | 39 | 11,409,166 | 2,396,556 |

TOTAL | 140 | 56,328,911 | 19,768,042 |

5. EVALUATION

The Commission and the Member States carry out appraisal and evaluation of all co-financed projects. The projects to be financed by the Fund are adopted by the Commission in agreement with the beneficiary Member States.

Each request for assistance is accompanied by a cost-benefit analysis (CBA) of the project. The CBA has to demonstrate that the socio-economic benefits in the medium term are proportionate to the financial resources mobilised. The Commission examines this CBA on the basis of the principles set out in the guide for cost-benefit analysis. The guide, first published in 2003, was updated in 2008 to incorporate the development of Community policies, financial instruments and the new regulatory framework under which major projects will be financed during the 2007-2013 programming period.

In 2008, the Commission continued to assist Member States through actions of capacity building aiming to improve the consistency of the ex-ante financial and economic analysis of the projects. As a result, the Guide rapidly achieved a wider circulation, both within civil servants in Member States and candidate countries as well as within the staff of financial institutions and consultants involved in the preparation and evaluation of major projects. A printed version of the Guide was therefore published, providing methodological guidance to project promoters in the Member States and candidate countries, while serving as a reference to Commission officials involved in the appraisal of major projects.

In addition, the Commission carries out ex-post evaluation on samples of projects co-financed by the Cohesion Fund. The last evaluation was published in 2005 and looked at a sample of 200 projects implemented over the 1993-2002 period. The next ex-post evaluation will be launched in the last quarter of 2009 and will look at a sample of both Cohesion Fund and ISPA projects implemented during the 2000-2006 period.

6. INFORMATION AND PUBLICITY

As indicated in the annual report for 2007, issues concerning the Cohesion Fund are, as from 1 January 2007, dealt within the Coordination Committee of the Funds (COCOF, according to Regulation (EC) No 1083/2006).

Apart from issues of common interest for ERDF and Cohesion Fund, some issues of specific interest for the Cohesion Fund were presented or discussed during the following meetings of the COCOF: in February the revised "Guidelines for the amendment of Cohesion Fund projects 2000-2006", and in April the "Guidelines on the closure of Cohesion Fund and Ex-ISPA projects 2000-2006", which were adopted by the Commission on 4 April (No (SEC(2008)415).

As regards the Commission measures on information and publicity, the focus in 2008 was on implementation of the publicity requirements for the 2007-2013 period. One of the biggest challenges was the examination of compatibility of the communication plans, as requested by Commission Regulation (EC) No 1828/2006. A network of communication officers responsible for implementation of the information and publicity rules for ERDF and Cohesion Fund ("INFORM") met in June and in November. DG Regional Policy published a " Review of EU Cohesion Policy Communication Plans 2007-2013 - Activities of national and regional managing authorities in the field of communication" . The review, materials from the INFORM meetings, as well as various information and publicity tools prepared for both Cohesion Fund and ERDF, are available at a dedicated website[3].

[1] Based on Article 6 of Council Regulation (EC) No 1164/94.

[2] Council Regulation (EC) No 1084/2006 of 11 July 2006.

[3] http://ec.europa.eu/regional_policy/country/commu/index_en.cfm?nmenu=1