Co-financing of Structural Funds programmes: Co-financing of Structural Funds programmes Mrs. Judit Törökné Rózsa Pillars Consulting Budapest


What is co-financing?: What is co-financing? The level of Structural Fund contribution is not the same for all regions. It can differ between measures within a single programme. The rate varies according to the region in which the project is launched and, according to the Structural Fund Objective it comes under. The rate is higher in the regions experiencing the greatest development difficulties, i.e. those coming under Objective 1. (Convergence) The rate is subject to particular ceilings applying in certain specific cases. Reduced contribution rates have, for example, been established for investments in firms and infrastructure investments generating "substantial revenue" (i.e. at least 25% of the total cost of the investment concerned). The regulations also encourage the use of part of the Community finance in a form other than direct assistance, such as, for example, repayable assistance, interest-rate subsidies or venture capital holdings. In such cases, the ceilings provided for can be increased by 10%.


Various levels of co-financing: Various levels of co-financing Operational Programme level EU-Bulgaria (national budget) Other public funds (ie. Municipality budget) Private contributions Project level EU funding National funding Local public funding Own contribution (not in all cases!)


Challenges: Challenges National / local budget Secure funding for multi-annual programmes Changes in the political/policy priorities may effect budgetary priorities Ensuring absorption: timely spending and drawing funds from the Commission Project owner Availability of own funds Provision of financial guarantees


Cash-flow issues: Cash-flow issues National level Advance payment from the Commission (new! 7%; 2-3-2), should in principle be sufficient to have a positive cash-flow until…? National budget prefinances payments to beneficiaries in Hungary (post-rata) Project level In principle ex-post financing, but national rules can be introduced to overcome this In Hungary: 25% advance payment Still need of subtantial own resources or loans to run the projects! The biggest danger: delays!


Possible Solutions: Possible Solutions General approach Flexible budgetary provision securing the financing from the national budget, centralised budget mgmt and reallocations Provision of advance payments to beneficiaries Using the EU advance payments for cash-flow Differentiated approach Lighter conditions for „disadvantaged” beneficiaries (ie. NGOs) Considering supplementary tools, such as loan guarantee funds or revolving funds for securing project level cash-flow


Conclusion: Conclusion Awareness on both national and project level is vital! Need / opportunity for flexible arrangements Integrated IT System is a must! National rules are necessary in practice to assist beneficiaries, especially in the undercapitalised sectors / target groups