monitoring and reporting procedures and key challenges of jeremie in hungary krisztina szabó edop...
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Monitoring and reporting procedures and key challenges of JEREMIE in Hungary
Krisztina SzabóEDOP MA, NDA Hungary
JEREMIE Networking PlatformBrussels, 20 May 2011
Agenda
1. Summary of the JEREMIE institutional set up in Hungary
2. Compliance of Hungarian practice with the new COCOF note
3. Monitoring and reporting procedures
4. Scope of collected monitoring information and data
5. JEREMIE State of Play
2
Hungary chose the national institutional framework in 2007
- Existing local experience in public financial engineering programs since early 1990’s
- More flexibility in designing the institutional setup
- Faster implementation
Rationale behind a national institutional framework
EU legislation provides two possibilities for the institutional framework
Contracting the European Investment Fund
National
Main
fe
atu
res
In the case of Hungary advantages of the national set-up outweigh the EIF solution
- Took part in the preparation of the JEREMIE Initiative
- Fix institutional structure with less perceived national authority
3
G2 C1Mn
The elaborated four level institutional set-up is in line with the EU legislation
Institutional set-up of the Hungarian Jeremie-type programmes
National Development Agency
EDOP MA CHOP MA
Venture Finance Hungary (VFH) Plc.
Level 1.
Level 2.
Governance
Holding fund manager
Level 3.
Financial intermediaries
Level 4.Final recipients
M1
M -MicrofinanceP - Potfolio guaranteeV - Venture Capital
M2 G1Gn
C2
Cn
SME1
SME2
SME3
SME4SME5
SME6
SME7
SME8 SME9SME
10
SME11
Institutional levels ContractsStructure
Contract 1.
Funding agreement
Contract 2.
Contracts for intermediary services
Contract 3.
Contracts with SMEs
4
Public procurement regulations are fulfilled concerning the selection of the actors
Public procurement and selection of actors
• Venture Finance Hungary appointed by Govt. Decree 4/2011 (I.28.)
• Financial intermediaries selected by open calls
Level 2.Holding Fund Manager
Level 3.Financial intermediaries
5
The Funding Agreement (FA) defines the main responsibilities of the Managing Authority (MA)
Role of the Managing Authority
MA reviews and approves
- the financial engineering programmes
- relevant terms and conditions of the calls for and contracts with intermediaries
- selection of financial intermediaries
- risk taking policy of the Holding Fund
- (re)allocation of resources- audit and control requirements
Level 1.Governance
Contract 1.Funding agreement
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The Funding Agreement also defines the main tasks of the Holding Fund (HF)
Role of the Holding Fund Manager
1) Preparing the Financial Programmes– Description of the programmes– Required funding– Role of intermediaries– Scope of final recipients
2) Implementing the Programmes– Evaluation and accreditation of
intermediaries– Concluding contracts with
intermediaries– Monitoring the use of resources and
recommending reallocations– Preparing policy for terminating risk
takings, withdrawing from investments
Tasks and responsibilities of the HF Manager
Level 2.
Holding Fund Manager
Contract 1.Funding agreement
7
Hungarian procedures and regulations comply with the monitoring rules of the latest COCOF note
Compliance with latest JEREMIE COCOF note1 on monitoring issues (1)
1Guidance Note on Financial Engineering Instruments under Article 44 of Council Regulation (EC) No 1083/2006; COCOF_10-0014-04-EN
COCOF Note – 2.7 Monitoring Prevailing Hungarian rules and practice
2.7.1. – „… The Funding Agreement shall include provisions for monitoring of implementation in accordance with Art. 43(3) (b) of the Implementing Regulation, as well as general reporting requirements under the SF regulations.”
2.7.2 – „…the checks and reporting activities it [a financial engineering instrument] carries out do not replace or waive the functions and verification tasks of the managing authority…”
The Funding Agreement concluded between the MA and HF includes inter alia:•Establishment of a unique information technology system with daily data record and automatic forwarding to the Single Monitoring and Information System•Detailed monthly report of VFH to the MA•Provision on requirement of monitoring of implementation in the contracts with financial intermediaries
MA conducts documentum based checks and on the spot visits regarding the implementation of the FAand prepares a verification report with the HF towards the Certifying Authority
8
Hungarian procedures and regulations comply with the monitoring rules of the latest COCOF note
Compliance with latest JEREMIE COCOF note1 on monitoring issues (2)
1Guidance Note on Financial Engineering Instruments under Article 44 of Council Regulation (EC) No 1083/2006; COCOF_10-0014-04-EN
COCOF Note – 2.7 Monitoring
2.7.3. – „Provisions in the relevant funding agreements should enable monitoring of disbursements of financing at the level of final recipients and financial engineering instruments, as well as returns from equity, loans and other repayable investments, and performance of guarantees for repayable investments…”
2.7.4 – „The Commission will seek to consolidate aggregate monitoring information provided by managing authorities…”
Prevailing Hungarian rules and practice
Available aggregate monitoring information at MA level:– Annual Implementation Report by MA– Quarterly report by MA– Monthly report by VFH– Weekly monitoring report by VFH
The FA concluded between the MA and VFH rules as:•Daily record of data concerning monitoring of disbursements of financing at the level of final recipients and financial engineering instruments•Returns from equity, loans•Performance of guarantees
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Reports on JEREMIE serve to inform stakeholders and substantiate necessary changes
Monitoring and reporting procedures
Daily data record
Quarterly monitoring report
Weekly monitoring report
Delivered by ContentPurposeReport/data provision
VFH
EDOP MA
Annual implementation report by OP
EDOP MA, CHOP MA1
Financial intermediaries
Detailed analytic information
Inform MA and National Development Ministry on status
Progress, results:•Total number of involved SMEs/product total numbers/value of contracts with SMEs•Number of intermediaries involved/product
Provide input to the unique IT system
• Inform National Development Ministry, control and audit authority
• Support the initiation of product changes
Report to the Commission & all relevant stakeholders on progress of the OP
• Overall progress of JEREMIE• Progress of products• Analysis of progress• Recommendations to improve the products
Overall progress of the JEREMIE priority
1Central Hungary Operational Programme Managing Authority
10
Most of the data required in the COCOF Note Annex II are already collected by the MA
Scope of collected monitoring information and data
The MA will be able to produce the COCOF Note Annex II set of data in May 2011
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A. General information on the HF/FEI
B. Contributions to the HF/FEI
C. Investments in FEI/Financial products provided to final recipients
E. National co-financing and leverage sources provided at the level of final recipient
D. Returns and recycling
F. Management costs and fees
G. Exits from the HF/FEI
H. Indicators
EUR 175 million contracted with final recipients 3800 SMEs reached
Current state of play of JEREMIE in Hungary
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• Total amount of EUR 175 million contracted with final recipients• EUR 120 million have been disbursed to 3800 final SMEs up until now from the JEREMIE fund
Credit instruments Portfolio guarantee
Venture capital Total JEREMIE priorities
pcs MEUR pcs MEUR
pcs MEUR pcs MEUR
