The sum Of Structural And Investment Funds allocated For 2014 To 2020

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1 Business.hr (CRO business daily) WILL EUR 167 BILLION FROM EUROPEAN FUNDS RESTART SOUTHEAST EUROPE? published on 12 March 2014 Cohesion Policy: EUR 167bn from EU's structural and investment funds has been allocated for the CEE region (Poland, Czech Republic, Hungary, Slovakia, Romania and Croatia) for the period from 2014 to 2020, which makes up approximately half of the total funds in the EU funds European Union's financial aid to central and eastern Europe under EU's Cohesion Policy might have the significance of the "Marshall Plan" for this region, shows Erste Group's recently published analysis that was drawn up by Ceská Sporitelna's EU Office in cooperation with Erste Group Research. Total amount of funds available via structural and investment funds for the period from 2014 to 2020 is EUR billion, which is 1.3% more compared to the period. "The CEE-6 countries have been awarded around half of the total EU funds, which amounts to EUR billion and is 11% more compared to the period. (Croatia was not included in the first Cohesion Policy for the period from 2007 to 2013)," points out the author of the report Jan Jedlicka, head of the EU Office at Ceská Sporitelna. Strategic projects In addition, the independent Connecting Europe Facility (CEF) will offer additional support to strategic projects in transport and energy sectors as well as telecommunication infrastructure. CEF will allow the realization of several important cross-border projects in certain countries, for which a total of EUR 33.3 billion has been allocated. "Assuming that CEE-6 countries manage to draw 90% of the newly allocated funds, that would raise their annual GDP growth by %. In addition, if the countries were to utilize EU funds successfully, the development gap between them would undoubtedly shrink. However, CEE countries have before them a long journey until they improve their absorption rates, which remain low. In order to achieve that, they must cut down on the bureaucracy to a significant degree, introduce more transparent procedures of selecting projects and establish stronger regional cooperation," Jedlicka emphasizes. Poland is the winner of difficult negotiations concerning the billions of euros from EU funds. The biggest economy in the CEE region is expected to receive EUR 77.6 billion, which is approximately the half of the entire sum for the CEE region and the largest overall amount among all EU countries. In addition, Poland is one of a few countries that was allocated a higher sum under the Cohesion Policy compared to the period. Based on annually allocated funds per capita as a representative indicator, Estonia is ranked first with nearly EUR 387 per capita annually, followed by Slovakia with EUR 369 per capita. Looking at the relation between the annually allocated funds and GDP, the largest amount from EU funds should be allocated to Hungary (3.2% of GDP annually), which is ahead of the Baltic countries when it comes to this indicator (2.9%-3.0% of GDP).

2 Golden rule: the more developed a country is, the less funds it receives. In general, the more developed the economy of a country is, the less funds that country receives from EU's structural and investment funds. However, as the least developed members of EU, Romania and Bulgaria were allocated less funds than they should have been. In order to compensate for that, these two countries will receive financial help from other European programmes, such as the Common Agricultural Policy. It is expected that a combination of these policies will ensure sufficient financial aid for these countries. There is a lot of room for improving absorption rates excessive bureaucracy is the main obstacle. Of all the CEE-6 countries, by the end of 2013 only Poland had managed to draw two thirds (67.9%) of EU funds it was allocated for the period. According to the N+2 rule, countries have additional two years (by the end of 2015) to spend the EU funds allocated for the period. The N+3 rule applies only to Slovakia and Romania. Baltic countries are leaders when it comes to EU funds absorption rates. Hungary (59.3%), Slovakia (52.6%) and Czech Republic (51.1%) managed to withdraw more than half of the funds they were allocated while Romania's absorption rate was only 37.8% of available funds. However, Romania is still a new member, having joined the European Union only in "The cause for Romania's poor performance when it comes to utilizing EU funds could be the lack of experience and poor work of the public administration. Still, considering the N+3 rule which gives the country three additional years to spend the funds allocated for the previous period, there is still time for improvement," Jedlicka adds. "Bad pupils" European Commission should regularly publish information about improvements in absorption rates. In order to motivate CEE countries to make full use of EU funds in the period from 2014 to 2020, the European Commission should start naming and shaming "bad pupils". Although European Commission collects all relevant information about individual member countries' absorption rates, these results are not published regularly. Ceská Sporitelna's EU Office believes regular and frequent public publishing of absorption rates would increase the public pressure and force countries to be more efficient in removing obstacles. "In many CEE countries there are too many authorities running numerous operating programmes, which makes the whole system too complicated for final recipients of the funds and discourages some of the potential applicants. This could be improved through fair and transparent distribution of funds," Jedlicka says. In countries like Poland and Slovakia, complicated bureaucratic procedures associated with projects are probably the most frequent reason why potential applicants give up even before starting the application process. In some countries the prolonged process of project assessment and contracting will also pose a problem in the following programme period. CEE countries that find themselves facing similar obstacles should strengthen regional cooperation by sharing best practices or looking to emulate the more successful member countries. Captions European funds: an opportunity for the development of Southeast Europe Structural and investment funds Horizon 2020 EU's budget for research and development In addition to structural and investment funds, EU also approved the seven-year EUR 80bn worth budget for Horizon 2020 EU's biggest research and innovation programme. There are no pre-defined sums for individual member countries, which means projects from all

3 countries must compete for aid from the Horizon programme. The programme supporting research and development in the period from 2014 to 2020 is based on three pillars: support for scientific excellence (including grants from the European Research Council for top scientists, Marie Curie fellowships etc.), support for industrial leadership for small and medium-sized companies, and support for research dealing with social challenges in the area of health, energy efficiency, sustainable agriculture, transport, etc. The example of Croatia Where should CEE-6 countries invest the newly allocated EU funds? Croatia: Total allocated EU funds amount to EUR 8.61bn, which is EUR 289 per capita or 2.8% of GDP. Erste Group analysts believe that transport infrastructure, particularly railways and ports, is the key area that needs improvement. Another important area where more funds should be drawn is energy efficiency and renewable energy sources. Allocated funds could also help to develop IT infrastructure, expand the access to broadband internet or fund projects such as e-health or e-school, that is, improve public services in order to raise efficiency. CEF programme: Erste Group analysts believe that the railway project Rijeka-Zagreb- Hungary border represents a logical extension of existing infrastructure with the aim to connect northern Adriatic, particularly Rijeka Port, with Zagreb (potential logistics centre) and further on with Hungary and Central and Eastern Europe. In addition, this would allow Rijeka Port to substantially expand capacities, considering the geographical competitiveness and the removal of the traffic bottleneck in the vicinity of Rijeka. The project would have long-term benefits for the logistics and transport industry.

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