2014 as regards increased pre-financing from REACT-EU resources - Main contents

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dossier	COM(2022)145 - Amendment of Regulation (EU) No 1303/2013 and Regulation (EU) No 223/2014 as regards increased pre-financing from REACT-EU ...
source	COM(2022)145
date	23-03-2022

1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

This proposal provides for exceptional and targeted changes to the 2014-2020 legal framework established for the European Structural and Investment Funds and for the Fund for the European Aid to the Most Deprived (FEAD) in response to the invasion of Ukraine by the Russian Federation and the subsequent impact on the European Union and several of its eastern regions in particular.

As a result of the unprovoked and unjustified military aggression by Russia, the EU, and several of its eastern regions in particular, are faced with immediate challenges, notably as regards third country nationals fleeing Ukraine following the invasion of the country by Russia.

The Commission has already taken action to assist Member States in this regard, via its Cohesion’s Action for Refugees in Europe (CARE) initiative of 8 March 2022. This proposed a number of surgical amendments to Regulations (EU) No 1303/2013 and (EU) No 223/2014 in order to make it easier for Member States to use their remaining European Regional Development Fund (‘ERDF’), European Social Fund (‘ESF’) and FEAD allocations under the 2014-2020 multiannual financial framework, as well as resources stemming from the Recovery Assistance for Cohesion and the Territories of Europe (‘REACT-EU’), in a more flexible manner, in particular by enabling the ERDF and the ESF to fund actions eligible under the other Fund, to address the migratory challenges as effectively and as rapidly as possible, and by introducing the possibility of 100% EU co-financing for an additional accounting year in order to alleviate the burden on national budgets.

Notwithstanding the flexibilities offered by the CARE package of measures, it is clear that Member States are facing immediate additional budgetary pressures stemming from the management of massive arrivals of persons fleeing Ukraine. Member States sharing a land border with Ukraine are particularly impacted, having to provide support such as housing, social and transport services, while several other Member States are also coping with significantly high numbers of arrivals compared to the size of their own population, as countries of final destination. This additional shock further undermines the capacity of Member States to build a resilient recovery from the COVID-19 pandemic.

Consequently, support from the Funds should be mobilised quickly to alleviate the burden on national budgets. It is therefore necessary, as a temporary and exceptional measure and without prejudice to the rules that should apply under regular circumstances, to increase the amount of pre-financing that is paid out under REACT-EU, for all Member States. A higher share of these increased pre-financing resources should be allocated to those Member States which are confronted with the largest arrivals of persons fleeing Ukraine, either as transit countries or as countries of final destination. As the number of people fleeing the war is increasing by the hour and Member States are currently in the process of registering people, the situation is very dynamic. To create a situational picture approximating the pressure with which Member States are being confronted due to the large scale of arrivals, the Commission calculated the share of arrivals relative to the population based on information from Member States obtained through the Blueprint Network, international organisations, and other reliable open sources.

In order to have a light level of reporting from Member States with regard to this additional pre-financing, reporting on how it has been used to alleviate the situation of persons fleeing Ukraine and its contribution to the recovery of the economy should only be made in the final implementation reports of the operational programmes concerned.

• Consistency with existing policy provisions in the policy area

The proposal is consistent with the overall legal framework established for the European Structural and Investment Funds and FEAD and is limited to targeted and exceptional amendments of Regulations (EU) No 1303/2013 and (EU) No 223/2014. The proposal also complements the preceding amendment proposal to these regulations under the Commission’s CARE proposal of 8 March 2022 as well as all other measures aimed at addressing the current unprecedented situation.

• Consistency with other Union policies

The proposal is limited to targeted and exceptional amendments of Regulations (EU) No 1303/2013 and (EU) No 223/2014 and maintains consistency with other Union policies.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal is based on Articles 175(3) and 177 of the Treaty on the Functioning of the European Union.

• Subsidiarity (for non-exclusive competence)

Since addressing the challenges created by very high arivals of those fleeing Ukraine cannot be sufficiently achieved by the Member States alone and can therefore be better achieved at Union level, the Union may provide for an increased amount of pre-financing to be paid out under REACT-EU, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union.

• Proportionality

The proposal is an exceptional and targeted change not going beyond what is necessary to achieve the objective of providing for an increased amount of pre-financing to be paid out under REACT-EU to support measures to address migratory challenges as a result of the military aggression by the Russian Federation and to alleviate the corresponding burden on public budgets to enable in turn mobilising investment in response to the widespread public health crisis affecting the growth of regions.

• Choice of the instrument

A Regulation is the appropriate instrument to provide for an increased amount of pre-financing to be paid out under REACT-EU needed to address these unprecedented circumstances.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

N/A

• Stakeholder consultations

The proposal follows high level exchanges with other institutions and Member States. A public consultation is not required given that there is no need for an impact assessment.

• Collection and use of expertise

N/A

• Impact assessment

An impact assessment has been carried out to prepare the proposal for Regulations (EU) No 1303/2013 and (EU) No 223/2014. This current targeted change to respond to a critical situation does not require a separate impact assessment.

• Regulatory fitness and simplification

N/A

• Fundamental rights

N/A

4. BUDGETARY IMPLICATIONS

This proposal only concerns REACT-EU, which is financed by the European Recovery Instrument NextGenerationEU (as set out in Council Regulation (EU) 2020/2094).

The total annual breakdown of commitment and payment appropriations for the European Regional Development Fund, the European Social Fund and the Fund for European Aid to the Most Deprived remains unchanged.

The proposal will result in additional initial pre-financing to be paid under REACT-EU, financed by the European Recovery Instrument NextGenerationEU.

The additional initial pre-financing payments in 2022 will be financed from external assigned revenues. All amounts will be available as external assigned revenues, within the meaning of Article 21 i of the Financial Regulation stemming from the Next GenerationEU borrowing operations.

The amount paid as additional initial pre-financing shall be totally cleared from the Commission accounts not later than when the operational programme is closed, such that the total amount of payments made under REACT-EU will remain unchanged with this proposal. Similarly, the total commitment appropriations under REACT-EU will not be modified.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The implementation of the measure will be monitored and reported upon in the framework of the general reporting mechanisms established in Regulations (EU) No 1303/2013 and (EU) No 223/2014.

• Explanatory documents (for directives)

N/A

• Detailed explanation of the specific provisions of the proposal

It is proposed to amend Regulations (EU) No 1303/2013 and (EU) No 223/2014 in order to provide for an increased percentage of pre-financing to be paid out under REACT-EU and for related reporting (amendment of Article 92b of Regulation (EU) No 1303/2013 and Article 6a of Regulation (EU) No 223/2014).