EU Funds investments and projections,

preparation for the 2014-2020 period March, 2014

1.Implementation progress

2.Risks

3.Progress of 2014-2020

Content

21.03.2014 2

21.03.2014 3

1.1. 2007-2013 absorption by 31.01.2014. (M EUR, % of EU funding, progress % since 31.03.2013.)

553,9 (95% + 12%)

914,2 (59% + 10%)

1 520,3 (63% + 10%)

2 988,4 (66% + 11%)

534,5 (92% + 11%)

944,1 (61% + 10%)

1 574,6 (65% + 7%)

3 053,2 (67% + 9%)

638,2 (109% + 5%)

1 489,3 (97%; 0%)

2 435,3 (101% + 8%)

4 562,8 (101% + 5%)

583,1 (100%)

1 539,8 (100%)

2 407,6 (100%)

4 530,4 (100%)

74,9 (12,9%)

49,8 (3,2%)

279,9 (11,6%)

404,6 (8,9%)

0 1 000 2 000 3 000 4 000 5 000 6 000

0 1 000 2 000 3 000 4 000 5 000

ESF

CF

ERDF

Total

Millions

Approved projects

Payments to fianl beneficiaries

Recieved advance and interim payments from

EC

EU funding

Overcommittments

Total: 2 687,5 (111,6%)

Total: 1 589,6 (103,2%)

Total: 658 (112,9%)

Total: 4 935 (108,9%)

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1.2. Contracts by industries

(M EUR, % of EU funding till 31.01.2014.)

1 273,5

688,8

488,1

407,0

377,1

330,3

256,1

231,7

187,6

109,1 50,622,0

15,3Transport / ICT (28,7%); 93,1%*

Environment (15,5%); 91,7%

Education (11,0%); 103,9%

Entrepreneurship and Innovation (9,2%); 88%

Employment and social inclusion (8,5%); 113,6%

Urban environment (7,4%); 120,3%

Science (5,8%); 96,1%

Health (5,2%); 105,6%

Energetics (4,2%); 94,3%

Support for EU funds management (2,5%); 98,2%

Culture (1,1%); 140,4%

Administrative capacity (0,5%); 96%

Tourism (0,3%); 88,7%

* - Contracts as % of available EU funding for industry

21.03.2014 5

1.3. Progress by Ministries by 31.01.2014

(M EUR, % of EU funding)

746,2 (100%)

729,4 (100%)

1 193,5 (100%)

1 222,9 (100%)

51,3 (6,9%)

80,9 (11,1%)

74,5 (6,2%)

117,7 (9,6%)

750,4 (100,6%)

681,3 (93,4%)

1 194,5 (100,1%)

1 238,0 (101,2%)

501,3 (67,2%)

449,9 (61,7%)

746,0 (62,5%)

952,1 (77,9%)

0 500 1000 1500

MoES

MoE

MoT

MoEPRD

Available EU funding; Total 4 403,6 mEUR (without technical assistance - 126,8 mEUR)

Overcommittments; Total 404,6 mEUR

Approved projects; Total 4 438,1 mEUR

Payments to the funding recipient; Total 3 106,6 mEUR

Total: 1 340,6 (109,6%)

Total: 810,3 (111,1%)

Total: 1 268 (106,2%)

102,6

48,1;129

73,5

270,8; 388,5

279,5; 360,4

447,5; 522

Total: 797,5 (106,9%)

47,1

244,9; 296,2

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1.4. EC payments by 10.02.2014% of Member state’s allocation

18,27 %

38,07 %

50,28 %

51,12 %

52,30 %

52,62 %

59,26 %

62,90 %

65,96%

66,96 %

67,86 %

78,77 %

84,15 %

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0%

Croatia

Romania

Bulgaria

Czech Republic

Malta

Slovakia

Hungary

Slovenia

Latvia

Cyprus

Poland

Estonia

Lithuania

1st place within ESF

21.03.2014 7

1.5. EU funds budget execution in the division of

Responsible Institutions in 2013, M EUR

263

214

127120

49 46

2211

3

236

175

93 94

4335

1910

2

236

170

83 84

4235

1710

20

50

100

150

200

250

300

Ministry ofTransport

Ministry of theEnvironmentalProtection and

RegionalDevelopment

Ministry ofEducation and

Science

Ministry ofEconomics

Ministry ofWelfare

Ministry ofHealth

Ministry ofFinance

Ministry ofCulture

StateChancellery

Ministry forecasts of 02.12.2012. (856,1 M EUR) Available budget expenditure on 31.12.2013. (705,9 M EUR)

Budget expenses of 2013 (677,4 M EUR)

1. Responsible Institutions forecast - 856,1 M EUR; Law of Budget*– 745,3 M EUR.

2. State budget expenditure fulfilment - 96,0% or 677,4 M EUR of total available budget 705,9

M EUR, non-performance – 28,4 M EUR.

3. Main non-performances in the division of Responsible Institutions:

- Ministry of Economics 9,8 M EUR – Measures Regarding The Increase of Efficiency of

Centralised Heat Supply Systems, Innovations, Promotion of Entrepreneurship, Improvement

of Heat Insulation of Multi-apartment Residential Buildings ;

- Ministry of Education and Science 9,6 M EUR – Priority „Science and Innovations”,

Modernisation of Equipment and Improvement of Infrastructure for Implementation of

Vocational Education Programmes;

- Ministry of the Environmental Protection and Regional Development 5,9 M EUR – ICT

projects, Rehabilitation of Inherited Contaminated Sites;

- Ministry of Finance 2,2 M EUR – Tehnical assistance projects of all ministries.

21.03.2014 8

1.6. Cash flow

2007-2013 and 2014-2020 M EUR

98151

425464

512

714

624

530

590

195227

26

189

585

738780

651

677

779

613

44

154

245

307

66

198280

342

574

745

439

307

845811

342

550

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Finalpayment (~

2018.g.)Forecasted payments from EC for 2007-2013 planning period (4 530 M EUR)

Planned state budget expenditure for 2007-2013 planning period (5 039 M EUR)

Forecasted payments from EC for 2014-2020 planning period (4 389 M EUR), incl. 2014-2017 (749 M EUR)

Planned state budget expenditure for 2014-2020 planning period (4 835 M EUR), incl. 2014-2017 (886 M EUR)

Total forecasted payments from EC in 2014-2017 (2 065 M EUR)

Total planned state budget expenditure in 2014-2017 (2 279 M EUR)

Payments from EC set in the Annual State Budget Law for 2014 (549.7 M EUR)

21.03.2014 9

1.7.Targets for payments in 2013

M EUR, % of target

82,2

85,8 (104,5%)

359,5

360,3 (100,2%)

260,7

210,4 (80,7%)

702,3

656,5

(93,5%)

0

100

200

300

400

500

600

700

800

Feb. March April May June July August September October November December

ESF target ESF fulfillment ERDF target ERDF fulfillment

CF target CF fulfillment Total target Total fulfillment

45,8

50,3

1.Implementation progress

2.Risks

3.Progress for 2014-2020

Content

21.03.2014 10

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2.1. 1 OP - ESF The risk of losing EU funding

350

462

554 554 554583

76

158

373

475

0

100

200

300

400

500

600

700

2011 2012 2013 2014 2015 Programme

closureActual payments (EUR) until 31.12.2013. and forecast for further years ESF "red line" (EUR)

No risk!

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2.2. 3 OP – ERDF The risk of losing EU funding

542

820

1 120

1 438

1 660 1 711

234

488

1 021

1 335

1 523

1 711

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2011 2012 2013 2014 2015 Closure

Actual payments (EUR) until 31.12.2013. and forecast for further years ERDF "red line"

No risk!

21.03.2014 13

2.3. 2 OP - ERDF The risk of losing EU funding

101

211

456

591

644

696

304

375

457 536580

623

0

100

200

300

400

500

600

700

800

Till 2011 2012 2013 2014 2015 Closure

ERDF "red line" (EUR)

Actual payments (EUR) till 31.12.2013. and forecast for futher years

2DP ERAF N+2/N+3Main problems:

- Too optimistic cash

flow modeling;

- Many cancelations

of projects

Measures to be taken:

- MoE and MoES

develops plan of

actions to acquire

EU funds 100%;

- MA strongly

monitors

intermediate terms

of action plan

Worst case scenario:

2014 – losses of EU funds up to 55

mEUR

2015 – losses of EU funds total up to

73 mEUR

21.03.2014 14

• MoE measures:

– New call (4th) of an activity «high value-added investments»;

– New call (2th) of an activity «Sub-activity "Support for construction or reconstruction of industrial premises«;

– Strict terms for every financial beneficiary to submit 35% of declarable expenses till 1st of December, 2014;

– Other actions (prolongation of agreements).

• MoES plans new calls within activity «Support for science and research» and«Support for international cooperation projects in science and technology»(additional 30 mEUR of EU funds absorption).

• A solid plan of measures with intermediate terms should be created andapproved for both line ministries. MA will evaluate the actions already taken andproposals given, as well as will strongly monitor every step to be taken withinthe defined terms.

2.5. Measures to be taken:

21.03.2014 15

2.4. 3 OP - CF The risk of losing EU funding

- Problems in environmental and transport sector infrastructure projects

- Government assignment for the ministries to carry out immediate arrangements

953,85

1 237,13

1 539,78

965

1 333

1 583

1 265

1 522

900

1 300

1 700

2 013 2 014 2 015

CF "red line" (EUR) CF forecast Projection of payment requests

Risk in 2015 - neto loss in total for the period

aprox. 18 M EUR

1.Implementation progress

2.Risks

3.Progress for 2014-2020

Content

21.03.2014 16

17

3.1. Functions in 2014-2020

• Develops planning documents

• Develops criteria and evaluation

methodology

• Develops rules for specific support

goals (SSG)

• Provides SSG results and control

3.2. Allocation of the functions

Responsible institution Co-operation institution

• Develops project selection

regulations

• Advises project applicants and

beneficiaries

• Performs project selection

procedures

• Enters into contracts and

agreements with the

beneficiaries

• Monitors the implementation

of projects

2007-2013 2014-2020

9 RI and 6 CI 10 RI and 1 CI (CFLA)

RI functions can delegate to CI Clear RI and CI allocation of functions

RI and CI both approve projects and enter into

agreements

Only CI approve projects and enter into

agreements

CI decisons can be challenged in RI CI decisions can be challenged in Managing

Authority

Unjustified expenditures can be recovered in

administrative procedure

Unjustified expenditures can be recovered

only in civil procedure

Unclear dispute resolution if the beneficiary is

a public body

Clear dispute resolution if the beneficiary is a

public body

Evaluation criteria in regulations of the

activities

Evaluation criteria etc. in selection rules

Unequal conditions on freedom of

information about the project

More equal conditions, more freedom of

information

3.3. Comparison

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The main documents used for developing of PA and OP

• Latvian National Development plan 2014 – 2020

• Latvian National Reforms Programme for Implementation of „Europe 2020”

Strategy

• European Commission Position Document, presented on 4 December 2012

• EU's Europe 2020 strategy for smart, sustainable and inclusive growth and

its flagship initiatives (f.e. Resource efficient Europe, Digital agenda for

Europa).

• Recommendation of the EU Council

• National strategies and etc.

3.4.Partnership Agreement and Operational

programme «Growth and Employment» for 2014-2020

21.03.2014 21

3.5.EU funds financing by thematic objectives

11%

5%

7%

11%

2%

12%27%

3%

10%

12%0%

Strengthening research, technological

development and innovation

Enhancing access to, and use and quality

of, information and communication

technologies;Enhancing the competitiveness of small and

medium-sized enterprises

Supporting the shift towards a low-carbon

economy in all sectors

Promoting climate change adaptation, risk

prevention and management

Protecting the environment and promoting

resource efficiency

Promoting sustainable transport and

removing bottlenecks in key network

infrastructures;Promoting employment and supporting

labour mobility

Promoting social inclusion and combating

poverty

Investing in education, skills and lifelong

learning;

Enhancing institutional capacity and an

efficient public administration.

Total EU financing (ESF, CF, ERDF) 2014-2020 for Latvia is 4.43 billion EUR

• Partnership Agreement has been submitted to EC on 15th of January 2014 (approved by Cabinet of Ministers in 17th of December 2013)

• Operational Programme has been submitted to EC on 4th of March (approved by Cabinet of Ministers in 11th of February 2014)

• In 3rd and 4th quarter of 2014 implementation of first specific objectives will be launched

• Design of the National legislation base and improvement ofmanagement and control system (Guidelines and methodology)within 2014

• 28th of March, 2014 – meeting of the Provisional MonitoringCommittee

3.6. Time schedule for 2014-2020

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Thank you

Any Questions?

www.esfondi.lv

www.fm.gov.lv

esfondi@fm.gov.lv - e-mail for suggestions on LV EU funds system improvement