INFORSE-Europe What are Structural Funds ?

Update 2018.

Index of this Page:

· What are the Structural Funds: Read

· Structural Funds and Cohesion Fund in the period of 2000-2006: Read

· Structural Funds and Cohesion Fund in the period of 2007-2013: Read

· Structural Funds and Cohesion Fund in the period of 2014-2020: Read

What are the Structural Funds (SF) ?
Structural Funds (SF) are the European Union's basic instruments for supporting social and economic development in EU member states. They account for over a third of the European Union budget. They are the result of the EU's regional policy which is based on financial solidarity where part of Member States contributions to the EU budget goes to the less prosperous regions and social groups.

The European Structural and Investment Funds (ESI funds) consist of five funds: European Regional Development Fund (ERDF); European Social Fund (ESF); Cohesion Fund (CF); European Agricultural Fund for Rural Development (EAFRD); European Maritime and Fisheries Fund (EMFF). Three of the funds fall under the EU's cohesion policy: ERDF, ESF and CF. All EU regions are eligible for ERDF and ESF funding but only less-developed regions are eligible for CF support. All funds work together to support economic, social and territorial cohesion and deliver the objectives of the EU's Europe 2020 strategy to generate smart, sustainable and inclusive growth.

The period of the Structural Funds are: 2000-06, 2007-13, and 2014-20.

Structural Funds and Cohesion Fund in the period of 2000-2006:

For the 2000-2006 period, the total budget of SF was account for one third of the EU budget, or 213 billion EUR. (Part of this budget - 18 billion EUR was spent by the Cohesion Fund.)

Up to 195 billion EUR was spent by the four Structural Funds: European Regional Development Fund (ERDF), European Social Fund (ESF), Guidance Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), later called EAFRD) Financial Instrument for Fisheries Guidance (FIFG), later called EMFF.

ERDF: Principal objective of ERDF is to promote economic and social cohesion within the European Union through the reduction of imbalances between regions or social groups.

ESF: This fund is the EU's financial instrument for investing in people. Its mission is to help prevent and combat unemployment, to equip Europe's workforce to face new challenges, and to keep people in touch with the labour market.

EAGGF: This fund contributes to the structural reform of the agricultural sector and to the development of rural areas. The name of the fund changed to European Agricultural Fund for Rural Development (EAFRD).

FIFG: This is the specific EU Fund for the Structural reform of the fisheries sector. The name of the fund changed to European Maritime and Fisheries Fund (EMFF)

The four funds work together to support economic and social development across EU.

The Structural Funds concentrate on clearly defined priorities:
• 69,7 % of the funding goes to regions whose development is lagging behind (Objective 1);
• 11.5% of the funding assists economic and social conversion in areas experiencing structural difficulties (Objective 2);
• 12.3% of the funding promotes the modernisation of training systems and the creation of employment (Objective 3) outside the Objective 1 regions where such measures form part of the strategies for catching up.

There is a special allocation of funds for the adjustment of Financial Instrument of Guidance in the Fisheries Sector (FIFG) outside the Objective 1 regions (0.5%).

During the 1994-1999 Structural Funds period there were 13 different Community Initiatives which were implemented by more than 500 single programmes (5,35%). In line with the new regulations, these were reduced to a mere total of four:

• INTERREG III: Trans-European co-operation for balanced development (4875 million EUR);
• EQUAL: Human resources development (2847 million EUR);
• LEADER +: Assistance for rural development (2020 million EUR);
• URBAN II: Economic and social regeneration of cities and of urban areas in crisis with a view to promoting sustainable urban development (700 million EUR).

There are also provisions for innovative actions and technical assistance to promote and experiment with new ideas on development (0.65%).

The Structural Funds finance multi-annual programmes and they act on economic and social structures with the aim to:
• develop infrastructure, such as transport and energy;
• extend telecommunications services;
• help firms and provide training workers;
• disseminate the tools and know-how of the information society.

Development activities financed by the SF must meet the specific needs identified on the ground by regions or member states. All initiatives must respect the environment and promote equal opportunities. Implementation is decentralised, which means that it is usually the responsibility of the national and regional authorities.

COHESION FUND
Cohesion Fund (CF) is a structural instrument that helps Member States to reduce economic and social disparities and to stabilise their economies since 1994. The Cohesion Fund finances up to 85 % of eligible expenditure of major projects involving the environment and transport infrastructure. This strengthens cohesion and solidarity within the EU. Eligible are the least prosperous member states of the Union whose gross national product (GNP) per capita is below 90% of the EU-average.

For the Cohesion Fund 15.9 billion EUR (in 2004 prices) are available for the years 2004-2006. More than half of the funding ( 8.49 billion EUR) is reserved for the new Member States.

Based on the regulation No 1164/94 of 16 May 1994, a Member States is eligible for Cohesion Fund, which:
• has a per capita gross national product (GNP), measured in purchasing power parities, of less than 90 % of the Community average,
• has a programme leading to the fulfillment of the conditions of economic convergence as set out in Article 104c of the Treaty establishing the European Community (avoidance of excessive government deficits).

Four Member States: Spain, Greece, Portugal and Ireland were eligible under the Cohesion Fund from 1 January 2000. The Commission`s mid-term review of 2003 deemed Ireland (GNP average of 101 %) as ineligible under the Cohesion Fund as of 1 January 2004. On 1 May 2004 with the EU enlargement, all new Member States (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia) were qualified for the Cohesion Fund.

Cohesion Fund support is conditional. The funding granted to a Member State is liable to be suspended if the country fails to comply with its convergence programme for economic and monetary union (stability and growth pact) running i.e. an excessive public deficit (more than 3% of GDP for Spain, Portugal and Greece, this threshold is being negotiated separately for each of the ten new Member States according to their own public deficit at the moment of the accession). Until the deficit has been brought back under control, no new projects might be approved.

Projects to be eligible must belong to one of the two categories:
a) Environment projects helping to achieve the objectives of the EC treaty and in particular projects in line with the priorities conferred on Community Environmental policy by the relevant Environment and Sustainable Development action plans.
The Fund gives priority to drinking-water supply, treatment of wastewater and disposal of solid waste. Reforestation, erosion control and nature conservation measures are also eligible.
b) Transport infrastructure projects establishing or developing transport infrastructure as identified in the Trans-European Transport Network (TEN) guidelines.
There has to be an appropriate funding balance between transport infrastructure projects and environment projects.

For the years 2000-2006 the European Union provides over 28.212 million EUR (in 2004 prices) for the Cohesion Fund. The funds available for the countries are as follows:

Cohesion Fund for the four eligible Member States in average, 2000–06 (1):

Greece	Spain	Ireland	Portugal
3 388	12 357	584	3 388