Eurada News nº401 - June 2020

Flexible Cohesion Policy

Regional Development Agencies are modifying their programmes supported with European Structural and Investments Funds. Following the outbreak of COVID-19 the regulations provided additional advantages to redirect resources to the areas most impacted by the crisis and to simplify the management procedures 

Important changes in cohesion policy rules 

Over recent months the European Union has approved two important changes in the regulations of structural funds, allowing managing authorities to modify their spending priorities as regards European Structural and Investment Funds (ESIFs). The first package of measures, released in Mach 2020 through the Coronavirus Response Investment Initiative (CRII), concentrated on the immediate mobilisation of structural funds to allow for a prompt response to the crisis. The purpose for this was to provide immediate liquidity and facilitate programme amendments. The first CRII package consisted of three main elements: about €8 billion of immediate liquidity to accelerate up to €37 billion of European public investment, flexibility in applying EU spending rules, and an extension of the scope of the EU Solidarity Fund. 

Launched in April 2020, the Coronavirus Response Investment Initiative Plus (CRII+) complements its predecessor by introducing extraordinary flexibility to allow all non-utilised support from the European Structural and Investment Funds to be mobilised. CRRI+ simplifies procedural steps linked to programme implementation, use of financial instruments and audit. This flexibility is provided by:  

  1. Making it possible for Member States to request 100% EU co-financing for their cohesion policy programmes 
  1. Easing the transfer of resources between funds, as well as between categories of regions 
  1. Giving full flexibility to redirect resources to the areas most impacted by the current crisis 
  1. Simplifying procedures linked to programme implementation and audit 

How are development agencies implementing CRII?  

Regional Development Agencies concentrated their efforts during March and April 2020 to immediately mobilise their own resources and structural funds so as to allow for a prompt response to the crisis. The first package of measures of the Coronavirus Response Investment Initiative provided funds for liquidity. In this regard, several important changes were introduced that extended the conditions of the loans and grants provided in order to launch immediate relief support measures to provide immediate liquidity to SMEs and the self-employed.   

IDEA Agency  Andalusia 

Companies benefiting from loans granted by the Andalusia Regional Development Agency (IDEA) can apply for a moratorium on payments. This measure affects 73 companies (or self-employed people) which currently hold a debt worth 55.04 million through these loans issued by the regional government of Andalusia the Andalusian Public Fund for Business Financing and Economic Development and the Jeremie Fund. These funds and their interest will begin being repaid again without penalty from 2021, at the latest, in as many instalments as are pending after the moratorium. 

The development agency has signed an agreement with three financial intermediaries (Caixabank, Unicaja, and Caja Rural de Granada) to provide €100 million using €20 million in public guarantees.    

Companies hosted by business incubators and other IDEA Agency premises have the possibility to defer the payment of rents by up to four months. The measure is aimed at SMEs and freelancers who have seen their activity suspended or reduced their turnover. The payment of these monthly payments will be paid back in two years without penalties or interest.  

IDEA Agency has launched calls for a Program on Industrial Research, Experimental Development, and Business Innovation worth €43 million with a more flexible administrative procedure. The time limits have been extended, an additional period of 15 months is provided to be able to implement and justify the investment projects. Requirements for eligibility for this comprehensive programme have been reduced and simplified. The agency has increased its programme for digital transformation by €9 million, to a total of €22 million. The aim is to make it easier for SMEs to implement technical means of enabling their staff to telework.  

More information: Agencia IDEA.  Junta de Andalucia  

ADI Nouvelle Aquitaine  

In France ESIF funds are managed regionally by the state and regional councils. To date, around 80% of the funds have already been consumed over the period 2014-2020. Consumption also varies from region to region. The French region Nouvelle Aquitaine has set up a multi-faceted scheme with more than €90 million as follows: 

  • €38 million committed to the national solidarity fund co-managed by the State and the Regions for SMES and self-employed workers whose turnover plunged by more than 50% between March 2019 and March 2020;  
  • €20 million in loans to SMEs in cooperation with financial intermediaries for zero interest credits and reduced guarantees; 
  • €1 million in direct loans for entities working in social economy and solidarity; 
  • €12 million in working capital loans for companies related to retail, services, and artisans; 
  • €15 million in working capital from an emergency support fund for business; 
  • €5 million for associations, to overcome the loss of activity caused by Covid-19 with assistance for payments from €1 500 to €20 000. 

 More information: ADI Nouvelle Aquitaine  

Małopolska Regional Development Agency (MARR)   

MARR has changed credit conditions to accommodate the difficult economic situation companies are experiencing and aims to ensure liquidity in SMEs and to maintain jobs. Borrowers will receive an additional delay of up to 6 months in the repayment of loan principle instalments and/or 4 months of deferral on the repayment of principle and interest instalments.  

The Agency offers specific services to the regional companies supporting investors, attracting foreign direct investment, providing loans and guarantees and to industrial parks. The Agency works to increase the investment attractiveness of the region and undertakes activities that build a strong economic brand for the region. It provides support related to intellectual property protection, innovation funds, cooperation with regional R&D centres, and public-private partnerships, as well as supporting broader business promotion. 

 More information: MARR 

Agentia Pentru Dezvoltare Regionala Centru  

The Romanian Regional Development Agency (ADR Centru) has informed that the Romanian National Management Authority for the Regional Operational Programme has extended the project submission period for the call for enterprises POR/2019/9/9.1/1/Enterprises (priority axis 9) until the 31st of July. The Managing Authority for Regional Operational Programme is the Ministry of Regional development, Public Administration and European Funds.  Additionally, the agency issues a monthly newsletter with different opportunities for SMEs, from information on measures undertaken by national government to support employees and employers, to business opportunities, funding opportunities for SMEs. With the support of Enterprise Europe Network, ADR Centru is part of the campaign #EENCanHelp, as part of the actions of the agency to intensify support to SMEs in order to make the companies aware of the different opportunities they can rely on in order to overcome the crisis.  

ADR Centru has the role of contributing to the sustainable and equitable development of the Centre Region by removing disparities and imbalances between the areas of the region for the benefit of its inhabitants. The activity of the Agency for Regional Development is coordinated by the Council for Regional Development, composed of the presidents of the 6 county councils (Alba, Brasov, Covasna, Harghita, Mures, and Sibiu), and representatives of the municipalities. ADR Centru elaborates the regional development plan and manages European Regional Development funds as an intermediate body. 

More information: ADR Centru  

Conclusions 

Development agencies are implementing new programmes (or giving additional firepower to previous ones) to provide relief to companies in their territories. The allocated resources come from their own regional budgets and structural funds. Despite the flexibility given by CRII and CRII+, Cohesion Policy is not designed to provide an economic response to an urgent crisis. The Structural and Investment Funds are constructed to address long-term investments, providing for regions’ social and economic development through long-term planning. 

The previous financial crisis and the current health crisis show the need to establish new rules for the period 2021-2027 that will allow more flexibility to the programmes. This is especially important for the European Regional Development Fund (ERDF) that provides direct support to SMEs. The establishment of priorities should be aligned constantly with the priorities established in a continuous entrepreneurial discovery process of the smart specialisation strategies. Utilising the possibilities of information and communication technologies, we should aim to realise a more flexible reprogramming, better monitoring of the programmes, easier rules for audits and control, and more accurate impact measurement.  

In general, this crisis shows the importance of having strong EU Cohesion Policy able to provide an economic response to crisis and guarantee future competitiveness on climate actions, digitalisation, and economic resilience. 

More information: 


By Esteban PELAYO, Director of EURADA.