Procedure : 2016/0193(COD)
Document stages in plenary
Document selected : A8-0292/2016

Texts tabled :

A8-0292/2016

Debates :

Votes :

PV 25/10/2016 - 5.4
Explanations of votes

Texts adopted :

P8_TA(2016)0394

REPORT     ***I
PDF 471kWORD 60k
17.10.2016
PE 587.491v03-00 A8-0292/2016

on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability

(COM(2016)0418 – C8‑0238/2016 – 2016/0193(COD))

Committee on Regional Development

Rapporteur: Iskra Mihaylova

(Simplified procedure - Rule 50(1) of the Rules of Procedure)

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
 ANNEX TO THE LEGISLATIVE RESOLUTION
 EXPLANATORY STATEMENT
 LETTER OF THE COMMITTEE ON BUDGETS
 PROCEDURE – COMMITTEE RESPONSIBLE

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 1303/2013 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability

(COM(2016)0418 – C8‑0238/2016 – 2016/0193(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

–  having regard to the Commission proposal to Parliament and the Council (COM(2016)0418),

–  having regard to Article 294(2) and Article 177 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C8-0238/2016),

–  having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–  having regard to the opinion of the European Economic and Social Committee of 21 September 2016(1),

–  after consulting the Committee of the Regions,

–  having regard to the letter of the Committee on Budgets,

–  having regard to the undertaking given by the Council representative by letter of 21 September 2016 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

–  having regard to Rules 59 and 50(1) of its Rules of Procedure,

–  having regard to the report of the Committee on Regional Development (A8-0292/2016),

1.  Adopts its position at first reading hereinafter set out;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

(1)

Not yet published in the Official Journal.


ANNEX TO THE LEGISLATIVE RESOLUTION

REGULATION (EU) 2016/...

OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of ...

amending Regulation (EU) N° 1303/2013 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 177 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee(1),

After consulting the Committee of the Regions,

Acting in accordance with the ordinary legislative procedure(2),

Whereas:

(1)  Article 24(3) of Regulation (EU) No 1303/2013 of the European Parliament and of the Council(3) provides that the Commission is to examine the increase of interim payments from the European Structural and Investment Funds by an amount corresponding to ten percentage points above the actual co-financing rate for each priority or measure for Member States which were under an adjustment programme after 21 December 2013 and have requested to benefit from that increase until 30 June 2016 and to submit to the European Parliament and the Council a report with its assessment and, if necessary, a legislative proposal before 30 June 2016. The Commission submitted that report to the European Parliament and to the Council on 27 June 2016.

(2)  Five Member States were eligible for an increased payment under Article 24 of Regulation (EU) No 1303/2013, namely Romania, Ireland, Portugal, Cyprus and Greece. Romania, Ireland, Portugal and Cyprus completed their respective economic adjustment programmes. Only Greece is still under an adjustment programme and benefits from related financial assistance until the third quarter of 2018. Given that Greece still faces serious difficulties with respect to its financial stability, the duration of the application of an increase in payments for Member States with temporary budgetary difficulties should be extended.

(3)  However, the possibility for increased payment should end on 30 June of the year following the calendar year in which a given Member State stops receiving financial assistance under an adjustment programme.

(4)  Article 120(3) of Regulation (EU) No 1303/2013 requires the Commission to carry out a review to assess the justification for maintaining a maximum co-financing rate of 85 % at the level of each priority for all operational programmes supported by the European Regional Development Fund (ERDF) and European Social Fund (ESF) in Cyprus after 30 June 2017 and to make, if necessary, a legislative proposal before 30 June 2016.

(5)  Cyprus exited from its adjustment programme in March 2016. However, the economic situation of Cyprus is still fragile as reflected by its low growth rate, declining investment, high unemployment and stressed financial sector. To ease the pressure on the national budget and accelerate much-needed investments, the co-financing rate of 85 % for all operational programmes supported by the ERDF and ESF in Cyprus should therefore be extended until closure of the operational programme.

(6)  In order to allow for the prompt application of the measures provided for in this Regulation, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union,

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EU) No 1303/2013 is amended as follows:

(1)  Article 24 is replaced by the following :

"Article 24

Increase in payments for Member State with temporary budgetary difficulties

1.  On the request of a Member State, interim payments may be increased by 10 percentage points above the co-financing rate applicable to each priority for the ERDF, ESF and the Cohesion Fund or to each measure for the EAFRD and the EMFF.

If a Member State meets one of the following conditions after 21 December 2013, the increased rate, which may not exceed 100 %, shall apply to its payment applications for the period until 30 June 2016:

(a)  where the Member State concerned receives a loan from the Union under Council Regulation (EU) No 407/2010;

(b)  where the Member State concerned receives medium-term financial assistance in accordance with Regulation (EC) No 332/2002 conditional on the implementation of a macro-economic adjustment programme;

(c)  where financial assistance is made available to the Member State concerned conditional on the implementation of a macroeconomic adjustment programme as specified in Regulation (EU) No 472/2013.

If a Member State meets one of the conditions set out in the second subparagraph after 30 June 2016, the increased rate shall apply to its payment applications for the period until 30 June of the year following the calendar year in which the related financial assistance comes to an end.

This paragraph shall not apply to programmes under the ETC Regulation.

2.  Notwithstanding paragraph 1, Union support through interim payments and payments of the final balance shall not be higher than:

(a)  the public expenditure; or

(b)  the maximum amount of support from the ESI Funds for each priority for the ERDF, ESF and the Cohesion Fund, or for each measure for the EAFRD and the EMFF, as laid down in the decision of the Commission approving the programme,

whichever is lower.";

(2)  in Article 120(3) the second subparagraph is replaced by the following:

"For the period from 1 January 2014 until closure of the operational programme the co-financing rate at the level of each priority axis for all operational programmes in Cyprus shall not be higher than 85 %.".

Article 2

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at,

For the European Parliament  For the Council

The President  The President

(1)

  Opinion of 21 September 2016 (not yet published in the Official Journal)

(2)

  Position of the European Parliament of … [(OJ …)/(not yet published in the Official Journal)] and decision of the Council of ...

(3)

  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).


EXPLANATORY STATEMENT

The financial and economic crisis has put pressure on national economies and Member States have undertaken austerity measures to balance their budgets. In this situation, it is important to ensure the smooth implementation of the main EU funding tool, the European Structural and Investment Funds (ESIF). As national budgets are under strain, it may be hard for countries experiencing budgetary difficulty to find sufficient funds for national co-financing of regional policy projects.

Articles 24 and 120(3) of the Common Provisions Regulation (CPR)(1), were designed to help Member States that were undergoing temporary budgetary difficulty and receiving financial assistance to make the most of the investment opportunities offered by the ESI Funds in the 2014-2020 programming period.

The legislation made clear that the Commission would conduct a review before 30 June 2016 and that, in case the economic situation of the countries in question would so require, the time frame in which additional support could be given was open to extension. The Commission made the legislative proposal to the European Parliament and the Council on the extension on 27 June 2016.

Article 24 CPR

Article 24 of the CPR allows the Commission to make increased payments under ESIF programmes - so called “top-ups” - to countries which are experiencing economic difficulties. At the request of a Member State, interim payments may be increased by 10 percentage points above the co-financing rate applicable to each priority for the European Regional Development Fund (ERDF), European Social Fund (ESF) and the Cohesion Fund or to each measure for the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF). The “top-up” does not change the overall ESIF allocations in 2014-2020.

Greece, Cyprus, Ireland, Romania and Portugal were eligible for the top-up provision between 1 January 2014 and 30 June 2016. The financial assistance programmes for Cyprus, Ireland, Portugal and Romania expired during that period: Greece is the only country which has a financial assistance programme currently in place.

Article 24(3) states that the Commission will examine the application of Article 24(1, 2) and if necessary, submit a legislative proposal before 30 June 2016. Given that the economic state of Greece is still very fragile, the Commission has proposed continuation of the top-up provisions. But the extension of these provisions will apply not only to Greece, but also any Member State which could need, and be eligible for, financial assistance after coming under economic adjustment programmes.

The Commission is also proposing a modification to the to the time period over which a country receiving financial assistance is eligible for the top-up. The top-up was first introduced in 2010 and, during the 2007-2013 funding period, the top-up possibility ended on the day the country in question stopped receiving financial assistance. For the 2014-2020 period, eligibility for the top-up was aligned with the end of the accounting year, which currently runs from 1 July to 30 June. The Commission proposes to continue the eligibility of a Member State until 30 June of the year following the calendar year which the Member State stops receiving financial assistance under an economic adjustment programme.

Article 120(3) CPR

Cyprus has the status of a more developed region in the current cohesion policy and it would in normal circumstances receive 50% co-financing for the ERDF and ESF programmes. But, as Cyprus has been experiencing economic hardship and declining investment over a long period, it was granted a higher co-financing rate of 85% between 1 January 2014 and 30 June 2017, based on Article 120(3) CPR.

The Commission was tasked to carry out a review to assess whether maintaining the higher co-financing rate beyond June 2017 would be reasonable; and to present a legislative proposal before 30 June 2016 if an extension of this provision was deemed necessary.

It is clear that increased co-financing would have a positive effect on the Cypriot economy, since this would reduce the sums devoted to national co-financing and thereby support fiscal consolidation and investment efforts.

The Commission has accordingly decided to propose that the period of eligibility for Cyprus for the co-financing rate of 85% will continue until the closure of the 2014-2020 programmes. This will give Cyprus more time to balance its budget and at the same time run ERDF and ESF projects in a successful manner.

It should be noted that according to the Commission, the economic situation in the country has been deteriorating and it is likely that Cyprus will become fully eligible for the Cohesion Fund when the Commission evaluates the GNI figures of the Member States in 2016 (Article 90(5) CPR), since nominal GNI per capita in Cyprus will be less than 90% of the average.

Budgetary implications

The proposed modifications to the legislation might temporarily increase payment appropriations, which would be offset by lower payments towards the end of the 2014-2020 programmes. There should not be any changes to the Multiannual Financial Framework annual ceilings for commitments and payments, which are set out in the Annex I of Regulation 1311/2013.

Position of the rapporteur

Your rapporteur welcomes the Commission proposal as a focussed and budgetary-neutral solution to the temporary liquidity problems faced by two Member States. She therefore recommends that the Committee and Parliament at plenary stage take over the Commission proposal without amendment.

(1)

Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006,

OJ L 347, 20.12.2013, p. 320.


LETTER OF THE COMMITTEE ON BUDGETS

Ms Iskra Mihaylova  

Chair of the REGI Committee

European Parliament

Dear Ms Mihaylova,

I wish to provide you with the views of the Committee on Budgets for your report on certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability.

The proposal of the Commission aims at topping up payments to a Member State under an adjustment programme, applying ten percentage points top-up to the co-financing rates applicable to the priorities (under ERDF, ESF and the Cohesion Fund) or measures (under EAFRD and EMFF) of the programmes. It would apply to the certified expenditure submitted during the period until 30 June of the year following the calendar year in which the Member State stops receiving financial assistance, until the ceiling for payments is reached. Under the proposal, higher co-financing rate for Cyprus would also be extended.

The Committee on Budgets supports this proposal overall.

While being aware of the financial constraints of the Member States, our committee is also alarmed by the so-far insufficient uptake of the ESI Funds by the Member States in the current programming period. We are concerned over a possible build-up of a backlog of unpaid bills at the end of the current MFF, which could result in a strained payment situation possibly affecting other areas of the EU expenditure, too. Therefore, the Committee on Budgets welcomes any attempt ensuring a higher and speedier reimbursement to the Member States, especially those experiencing liquidity difficulties.

The Committee on Budgets notes the positive effect that increased co-financing would have on the economies of the Member States concerned, which would be able to devote more resources to supplementary investment efforts.

The Committee on Budgets notes that the proposal will not have an impact on commitment appropriations since the maximum amounts of ESIF financing provided for in the operational programmes for the current programming period remain untouched. The modification will also not imply any changes in the MFF annual ceilings for commitments and payments, as set out in Annex I of Regulation (EU) No 1311/2013. The budgetary effect of the extension of the top-up provision would therefore be an increase of payment appropriations for the Member States concerned, which would be compensated by lower payments at the end of the life cycle of the 2014-2020.

It is however crucial that the Member States covered by the proposal have sufficient administrative capacity to deliver on a higher uptake of the funds, while strictly respecting the relevant provisions of the Financial Regulation and the provisions governing the ESI Funds, and ensuring that the funding is used efficiently and usefully.

The Committee on Budgets therefore supports your proposal to take over the Commission proposal without amendment in a fast-track approach.

Given the recent developments over the announced suspensions of payments to Spain and Portugal based on Article 23 of the CPR, our committee would however appreciate a joint reflection on the coherence between Article 23 and Article 24 of the CPR.

Sincerely,

Jean Arthuis


PROCEDURE – COMMITTEE RESPONSIBLE

Title

Amending Regulation (EU) No 1303/2013 as regards certain provisions relating to financial management for certain Member States experiencing or threatened with serious difficulties with respect to their financial stability

References

COM(2016)0418 – C8-0238/2016 – 2016/0193(COD)

Date submitted to Parliament

27.6.2016

 

 

 

Committee responsible

       Date announced in plenary

REGI

4.7.2016

 

 

 

Committees asked for opinions

       Date announced in plenary

BUDG

4.7.2016

CONT

4.7.2016

ECON

4.7.2016

EMPL

4.7.2016

 

ENVI

4.7.2016

ITRE

4.7.2016

TRAN

4.7.2016

AGRI

4.7.2016

 

PECH

4.7.2016

CULT

4.7.2016

FEMM

4.7.2016

 

Not delivering opinions

       Date of decision

BUDG

31.8.2016

CONT

13.9.2016

ECON

15.9.2016

EMPL

13.9.2016

 

ENVI

12.7.2016

ITRE

12.7.2016

TRAN

11.7.2016

AGRI

13.7.2016

 

PECH

15.9.2016

CULT

13.7.2016

FEMM

30.8.2016

 

Rapporteurs

       Date appointed

Iskra Mihaylova

14.7.2016

 

 

 

Simplified procedure - date of decision

11.10.2016

Date tabled

17.10.2016

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