The EU Cohesion Policy: Challenges and Solutions
The European Union’s Cohesion Policy, which represents a significant portion of its funds, is still plagued by poor control and persistent errors. This is the conclusion reached by auditors from the European Court of Auditors, who conducted a “Review of the framework for providing assurance and the key factors contributing to errors in spending under the Cohesion Policy for the period 2014 – 2020.” Both levels of protection for the spending of European funds – national managing authorities and member states – have been found to have shortcomings in ensuring proper use of the funds.
The Lack of Control over EU Spending
The EU struggles to impose sufficient control over the spending of funds from Brussels, which are not being utilized in compliance with national and European rules. What are the mistakes being made? The level of errors in spending for cohesion for the 2014-2020 period is lower than for the 2007-2013 period, but still significant, according to the report. In addition, auditors note that the “assurance framework” – a set of measures aimed at reducing the “error rate” in spending compared to previous budgets – has helped to reduce the level of improper expenditure.
Challenges in Administrative Management of EU Funds
Despite a decrease of 6% to 4.8%, the error rate in managing EU funds remains significantly above the target of 2% set by the European Union. The European Court of Auditors identified three main reasons for these errors: issues related to insufficient administrative capacity within the member states’ authorities; problems linked to negligence or (alleged) fraud; and issues related to the regulatory framework at the beneficiary level. Half of the additional errors detected by the European Court of Auditors fall into the category of “insufficient administrative capacity” and manifest in inappropriate decision-making practices and controls by the authorities.
Challenges in EU Cohesion Policy
EU cohesion policy faces challenges due to errors in the management and implementation of funds by governing bodies, as well as weaknesses in the work of audit authorities. Where are the mistakes? In most member states that receive the majority of funding for cohesion, significant error rates are present. Italy and Hungary have the highest share of violations in the field of public procurement during this period. The Commission and member states work together to achieve benefits for citizens from the EU cohesion policy, but they must make more efforts to ensure that expenses follow the rules,” stated Mrs. Helga Berger.
The European Structural and Investment Funds: Review and Recommendations
When discussing control measures, there are many participants in this area, but simply no results. The review conducted by the European Structural and Investment Funds on the findings of previous reports and information published by the Commission for the 2014-2020 expenditure period shows that the framework for providing confidence in the field of cohesion policy has not led to effective error reduction. Therefore, this indicates the need for further improvements in the way the framework is implemented by both the authorities of the Member States and the European Commission.
The EU Auditors Recommend Clearer Guidelines and Simplified Rules for Cohesion Policy
The European Court of Auditors has recommended providing clearer guidelines to member states, simplifying the rules, and conducting more compliance checks. Approximately one-third of the EU budget is allocated to Cohesion Policy, making it a key expenditure area for the period 2014-2020. Its objective is to promote the development of the EU through measures to strengthen economic, social, and territorial cohesion and reduce disparities between regions.
European Union Funding Programs
The European Union provides funding through various funds, including the European Regional Development Fund (ERDF), the Cohesion Fund (CF), and the European Social Fund (ESF). This is further supplemented by the Youth Employment Initiative (YEI) and the European Fund for European Aid to the Most Deprived (FEAD).
Financing under the cohesion policy usually requires co-financing from member states, whose aim is to ensure that the funds are spent correctly. In the period 2014-2020, a total of 409 billion euros were allocated for all member states under the Cohesion Policy. By the end of 2023, the levels of funding are expected to increase.
European Union Funds Absorption Rates
The absorption rates of European Union funds vary significantly among member states, ranging from 74% in Spain to 100% in Hungary, Cyprus, Lithuania, and Estonia. By the end of 2023, Bulgaria still has 852 million euros or 11% of funds unabsorbed. Nine member states account for 76% of the expenditure under the cohesion policy: Poland, Italy, Spain, Portugal, Hungary, Czech Republic, Romania, Greece, and Germany. These member states report 91% of errors calculated by the European Structural and Investment Funds. Furthermore, they also have the majority (90%) of errors with significant impact. Co-financed by?
The European Union
The European Union is a political and economic union of 27 European countries. It was established to promote peace, stability, and economic prosperity in Europe.
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