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MOBILIZING EU FUNDS

MOBILIZING EU FUNDS. Lessons Learned in a Pre-Accession Country Hachemi Bahloul, UNDP Bulgaria. EU pre-accession support. 3 pre-accession instruments: Phare, ISPA and SAPARD Mirror the Structural & Cohesion Funds (SCFs) and aim at strengthening institutional capacity for SCFs

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MOBILIZING EU FUNDS

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  1. MOBILIZING EU FUNDS Lessons Learned in a Pre-Accession Country Hachemi Bahloul, UNDP Bulgaria

  2. EU pre-accession support • 3 pre-accession instruments: Phare, ISPA and SAPARD • Mirror the Structural & Cohesion Funds (SCFs) and aim at strengthening institutional capacity for SCFs • EC support is accession driven: APs, NPAA and NEDP (2000-2006) • EC Regular Reports monitor progress towards accession

  3. Institutional set up of Phare support • Centralized national overall substantive co-ordination of Phare assistance • Coordination, monitoring and assessment of Phare (National Aid Coordinator) • Centralized national overall financial management of Phare assistance • A National Fund requests, redistributes, controls and reports to the EC on use of funds (National Authorizing Officer) • Limited number of Implementing Agencies • Line ministries expected to manage structural funds designated as IAs (Programme Authorizing Officer) • CFCU implements programmes which are multi-sectoral (PAO)

  4. Phare Programming Cycle Package of proposals MF NAC EC Brussels DG Enlargement Line ministry 1 Project Fiche Proposals General comments on the package Line ministry 2 • Programming Missions • Start of programming Phare 2002 (September 2001) • Programming missions by EC Commission (December 2001, February 2002) • Financing Proposal by Government (April 2002) • Phare Management Committee approval (June 2002) • Financing Memorandum Phare 2002 signed (November 2002) • Phare programme 2002 funds received (June 2003)

  5. Phare Project Implementation Funds transfer/Reports EC Brussels Beneficiary Line ministry Technical management Technical inputs Funds transfer Funds transfer National Fund Reports Reports Impl. Agency Technical Management Tendering and contracting CFCU Tendering and contracting EC Delegation Monitoring • Technical monitoring • Payments • Payments Technical monitoring Contractor Contractor

  6. Bottlenecks in Phare Absorption • Large volume of resources (EURO 250 million per year) • Limited Govt administrative capacity (project formulation and implementation) • Slow disbursement of EU funds/partial achievement of objectives • Critical EC Regular Reports (delayed accession) • Looks bad on Government/Delegation/DG Enlargement

  7. Opportunities for UNDP Strong motivation of Government to improve delivery/results BUT mixed feelings on the part of the EC Delegation on UNDP support: • UNDP viewed as not raising institutional capacity • Government dependency on UNDP of a future EU member • No EC guidelines for the selection of UNDP as “sole source”

  8. Conditions/entry points for UNDP General conditions: • General capacity/credibility/track record of the UNDP CO • Strong relationship of trust with line ministry through strong UNDP presence and credibility in the sector Project specific condition:Government/EU must clearly see the value added of UNDP involvement • Limited Govt substantive capacity: support for the conceptualization/formulation of the project • Limited Govt management capacity/complex/sensitive project: management support • Limited EU technical expertise (Roma issues) • Need for additional flexible financing: cost-sharing for preparatory activities (project maturity), cost-sharing for PMU costs

  9. What UNDP must do 1. Phare programme formulation cycle about to start • Propose/discuss project ideas with ministries with which track record of co-operation (in line with accession priorities) • Consult informally with the EC Delegation • Feel the mood in Brussels through the UNDP Liaison Office 2. Phare programme formulation cycle has started • Identify projects in preparation in areas of interest to UNDP whose formulation is problematic (problematic implementation) • Propose assistance to Government, inform EC Delegation, feel the mood in Brussels (through the UNDP Liaison Office)

  10. What UNDP must do In all cases • UNDP must be actively involved in the project formulation cycle at some stage • The Government must be ready to provide strong arguments in front of the EC for UNDP involvement • UNDP’s exact role and how UNDP involvement will be formalized must be clearly stated in the Project Fiche Remark: the more politically sensitive and/or the more complex the project, the more likely that the Government and/or the EC will want UNDP to be involved

  11. Arguments to use UNDP support guarantees: • Relevant technical expertise (Roma issues) • Efficient and timely achievement of objectives • High delivery (99% in Bulgaria) • Transparency and accountability • Contributes to institutional strengthening • UNDP support is cheap or free (when compensated by TRAC) • UNDP can provide project co-financing • EU visibility will be ensured

  12. Formalization of UNDP support • EU Funding: “Community Contribution Agreement with an International Organisation” (2003 EC/UN Framework Agreement) signed with the Govt IA/CFCU and endorsed by the Delegation • Project Fiche annexed to the Agreement • All project funding (UNDP/EU/Govt): UNDP Prodoc signed with the IA

  13. Specific implementation features in Bulgaria In a pre-accession country the EU funds are managed by the Govt (National Fund + the designated IA) 2003 Framework Agreement is a EC/UN agreement and it is not binding for the Govt - but it was accepted It resolved a number of procedural problems (exchange rate risk, tendering procedures, reporting etc.) BUT • Funds are paid to UNDP by the Government IA • UNDP reports to the Government IA

  14. Specific implementation features in Bulgaria The Government IA may have specific requirements: • EU funds paid to UNDP in EURO by the IA in installments on the basis of a UNDP request for transfer of funds • EU funds advanced by UNDP in EURO to the IA special project account on the basis of a NEX request for advances of funds (project must be NEX) • Project payments with EU funds made from that account (double signature Govt/UNDP)

  15. Implementation with UNDP Support EC Brussels National Fund CFCU Tendering and contracting Line ministry Technical management CA Prodoc Transfer of EU funds Transfer of Government funds UNDP Transfer of Government and UNDP funds Transfer of funds EU EUR Project Account PMU LC Project Account Payments Payments

  16. Flow of funds Transfer of funds CFCU UNDP EUR Account NEX Financial Report Request for funds Transfer of funds Payments EUR Project Account Transfer of funds UNDP New York UNDP USD Account Replenishment Management Consultants Training Equipment Works PMU Conversion of USD in LC LC Project Account Transfer of funds Payments Transfer of funds Government UNDP LC Account NEX Financial Report C/S as per prodoc Direct payments

  17. Recent developments • The closer the country is to EU accession the less likely for the EC to endorse UNDP overall project management support (UNDP supporting the IA) • The EC insists on full Govt responsibility and institutional strengthening for the SCFs • UNDP role acceptable as provider of technical assistance (even this type of UNDP involvement perceived as a factor of project success) Implications for UNDP • Try for overall project management support, but if strong resistance, settle for the TA component of the project

  18. THANK YOU

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