__MAIN_TEXT__

Page 1

April / 2018. special edition

Informative Magazine of Office of Member of the European Parliament Ivana Maletić

EUROPEAN FUND FOR STRATEGIC INVESTMENTS

– Status of implementation, challenges and opportunities in the EU with a special review of Croatia and neighbouring non-member countries

1


April / 2018. special edition

Informative Magazine of Office of Member of the European Parliament Ivana Maletić

EUROPEAN FUND FOR STRATEGIC INVESTMENTS

– Status of implementation, challenges and opportunities in the EU with a special review of Croatia and neighbouring non-member countries

Content 4

Introduction: Investment Plan for Europe – encouragement for the creation of workplaces and faster growth and development

6

European Fund for Strategic Investments – institutional framework and project examples

19

State of play with regard to use of EU funds in the Republic of Croatia

24

State of play with regard to use of EFSI funds in six candidate and potential candidate countries for EU membership

27

Technical assistance for preparation and increasing the visibility of projects

31

Activities of the Office

Impressum

Publisher Office of Member of the European Parliament Ivana Maletić Editor-in-Chief Ivana Maletić, MA (Econ) Authors Ivana Maletić Ivana Petričko Tea Japunčić Alen Halilović Domagoj Badžim Benjamin Kardum Ema Brnardić Kristina Kosor Maja Butorac

Graphic design Blanka Poljak Franjković

Write to us ZAGREB Trg žrtava fašizma 4 10 000 Zagreb

STRASBOURG Parlement européen Bât. Louise Weiss T09033 1, avenue du Président Robert Schuman CS 91024 F-67070 Strasbourg Cedex +33(0)3 88 1 75734 +33(0)3 88 1 79734 BRUXELLES Parlement européen Bât. Altiero Spinelli 14E165 60, rue Wiertz / Wiertzstraat 60 B-1047 Bruxelles/Brussel +32(0)2 28 45734 +32(0)2 28 49734

www.ivana-maletic.com ivana.maletic@europarl.europa.eu facebook.com/ivana.maletic.cro www.twitter.com/maleticivana www.youtube.com/user/MEPOfficeMaletic


to actively promote those projects and invite investors. Financing sources are available, the funds exist, and it is important to connect them with projects. The European Investment Bank, in addition to managing EFSI and providing guarantees and loans, also organizes technical assistance for the preparation of projects and a portal for publication and promotion of projects with the aim of attracting private investors who will be more ready to take risks and initiate new businesses with the support of funds – EFSI guarantees and favourable loans.

Introductory word

Since the beginning of the 2008-2013 economic crisis, the level of investment in the EU dropped by more than 18 % due to decreased availablity of financing sources. As the answer to that problem, the European Commission decided to change the former direction of policies from stability and savings to investment, growth and creation of workplaces. The Investment Plan for Europe was designed, for the realization of which the European Fund for Strategic Investments was established, which issues guarantees for the financing of high risk profile projects which could not obtain funds without them and would never be realized. The objective is to mobilize as many private sources as possible for financing high risk profile investments and investments into SMEs. Sound and successful businesses with potential for growth and development do not need subsidies but capital and favourable loans, and that is precisely what EFSI is intended to provide.

The objective of the Investment Plan for Europe is achieving economic growth and development of the European Union, which does not require only available financing sources but also well prepared projects, a set of measures regarding structural reforms and creation of favourable conditions for doing business and strengthening the Single Market. Without an adequate number of projects ready for implementation and a safe and stable market in which investors have confidence, it is impossible to raise the level of investment and successfully use any financing source, from ESI funds to EFSI guarantees. Due to a lack of quality projects and their promotion, private investors are bypassing Europe although it is favourable for investments. That is an important message to all Member States, including Croatia; we cannot wait for investors to come on their own and inquire about the possibilities for investment, it is important to prepare and publish a list of projects for which we are inviting investors to Croatia and

In addition to establishing EFSI, the European Commission presented new guidelines on the application of existing rules of the Stability and Growth Pact in order to strengthen the link between structural reforms, investments and fiscal responsibility in encouraging economic growth and creation of new workplaces. The guidelines applied by the Commission have three main objectives: to strengthen successful implementation of structural reforms, promote projects, especially in the context of EFSI, and pay more attention to the economic cycle in Member States. Based on a clear and quality structural reform plan, Member States undergoing an Excessive Deficit Procedure can gain an extenuation of the deadline for making corrections, that is, the possibility of slower fiscal consolidation because it is important to leave enough room for new investments and expenses for implementing reforms. There are many opportunities for financing; thereby Croatia, in addition to 10,7 billion euros from ESI funds, can also use numerous other financing sources such as Union programmes (Erasmus+, Horizon 2020, COSME, CEF, Wifi4EU etc.), favourable EIB and EBRD loans and the latest instrument – EFSI. The successfulness of using all these sources and inverting economic trends depends solely on ourselves, that is, our good organization, timely and quality preparation of projects, favourable conditions for doing business and a fast and efficient administration. The objective of this special issue is to draw closer the opportunities of financing projects in the Republic of Croatia through the use of EFSI guarantees and thereby increase the level of use of that source. The European Commission is continually pointing out that EFSI cannot implement itself; that is the task of Member States. Intermediaries for SMEs, that is, for active financial institutions, and establishment of national and regional investment platforms are required. Companies can contact EIB directly with regard to the opportunities for financing or preparation of their projects. Only in this way EFSI will encourage growth and development, as well as allow for the creation of new workplaces.

Member of the European Parliament Ivana Maletić


Introduction: Investment Plan for Europe – encouragement for the creation of workplaces and faster growth and development The Investment Plan for Europe is not a single stimulating measure or fund, it is a process and a complete programme which needs to be implemented as a whole in order to encourage growth and development of the European economy. It consists of three basic pillars: 1. Mobilization of funds for investments, 2. Project identification and preparation, 3. Simplification of the legislative framework and strengthening of the Single Market.

With the aim of mobilizing funds, the European Fund for Strategic Investments (EFSI) was established in cooperation with the European Investment Bank (EIB). In the first phase, EIB allocated five billion euros to the Fund, and another 2,5 billion euros in the second phase, after bringing the decision on the extenuation of EFSI, the socalled EFSI 2.0. In addition, 16 billion euros of investment potential is based on guarantees from the European budget, from which eight billion euros were allocated, specifically from Horizon 2020 programme, Connecting Europe Facility (CEF) and budgetary reserves, and after the decision on extenuation of EFSI was brought, the allocation was increased from 16 to 26 billion euros. The purpose of EFSI is investment into high risk profile projects in the areas of research, innovation, energy, transport and social infrastructure, education and science, and with extenuation of EFSI these areas were extended to include agriculture, fisheries, forestry, as well as climaterelated measures.

In order to be able to invest funds, well prepared, structured projects are required. Private investors are bypassing Europe precisely because of the lack of presentation and structuring of quality projects, although it is a favourable place for investment. In cooperation with Member States, EIB prepares projects for attracting private investors who will, supported by EFSI funds, that is, guarantees, be more ready to take risks and start new businesses. The third part of the programme for investments, growth and new workplaces is reduction of the administrative burden, creation of a favourable and encouraging business

4

environment, simplification of legislation and creation of a more quality Single Market with emphasis on the capital market. These are European structural reforms which the European Commission has been placing at the forefront and wanting to implement as of 2014, and without which there can be no growth, development and investment.

The very creation of the list of projects and their implementation is a kind of reform, because Member States are requested to change their attitudes and become more active in communication with private investors. Some are far ahead than others with regard to that, however, Europe should change in that direction as a whole. Member States must have development strategies and projects in order to realize the set growth and development objectives. Those who have that use EFSI guarantees, but also all other project funding instruments, to a greater extent and faster. The success and result of the Investment Plan for Europe depends on everyone, but it is a fact that by launching this Plan Europe has turned another page: from stability and savings to investments, growth and creation of workplaces.

As the main part of the Investment Plan for Europe, EFSI is directed at financing projects with higher risk levels than projects eligible for financing in common business transactions. Projects valued at over 50 million euros are eligible for direct EIB financing with EFSI gurantees, whereas SME and MidCap projects valued at up to 50 million euros are financed through financial intermediaries operating in the Member State concerned under EIB’s Infrastructure and Innovation Window (IIW) and Window for Small and Medium Enterprises (SMEW). The instruments EFSI offers to potential investors include loans, equity type products, guarantees and products for increasing lending and stimulating the capital market. Micro, small and medium-sized enterprises, public companies and institutions, national investment banks and contractual investment platforms can apply for EFSI financing.


With the aim of increasing the visibility of projects and faster attracting of investors, the European Commission established the European Investment Project Portal (EIPP).

At a plenary discussion on EFSI 2.0 held at the European Parliament in December 2017, Vice President Jyrki Katainen pointed out that EFSI managed to initiate additional investments in the amount of 250 billion euros. According to EIB data, EFSI’s investments will increase the European GDP by 0,67 % by the end of 2017, and the number of workplaces by 690.000 by 2020. An important message to entrepreneurs relating to the realization of EFSI guarantees is that they do not need the approval of or support from the government and local units, but can contact EIB directly, whose experts will help them, evaluate projects and direct them at available sources of financing. Another important message is that implementation also requires local intermediaries for financing SMEs, through which loans, but also other financial instruments, will be realized. This is an opportunity for the Republic of Croatia to enhance the financing of SMEs.

Furthermore, private equity funds can also apply for EFSI financing in order to finance their beneficiaries. In cooperation with EIB, the European Commission strongly supports Member States and regions in establishing national and regional, and even cross-border investment platforms which will serve as a kind of fund into which public funds, funds from promotional banks, pension funds and insurance companies could be invested. An investment platform will be able to receive EFSI’s support and thereby invest into high risk profile projects or publicprivate partnerships with a guarantee.

Following that, in the third part an overview of the system for using EFSI funds in the Republic of Croatia with examples of projects being implemented there and instructions for entrepreneurs and public enterprises on where to apply to and how to obtain EFSI guarantees are provided. Entrepreneurs, but also public institutions in candidate countries and potential candidate countries for EU membership can also use EFSI guarantees, so in the fourth part an overview of the prescribed framework for using EFSI funds by those institutions is provided. Unfortunately, there are no project examples as yet, although from the analysis of usage of other EU financing sources it may be concluded that there is more than enough need and potential for using EFSI funds. Promotional and educational activities for encouraging the use of EFSI funds in non-member countries are lacking. In the final, fifth part, the mode of functioning of the European Investment Advisory Hub, which is the single contact point for investors and project holders, as well as the easiest way for realization of technical assistance for the preparation and/or implementation of projects, but also for obtaining advice on the eligibility of a particular project for obtaining an EFSI guarantee are provided. Furthermore, the European Investment Project Portal, where projects seeking investors are presented and promoted and which does not relate exclusively to financing from EFSI, but, of course, wherein the part lacking for the realization of investments intended to be attracted can be covered by an EFSI guarantee, that is, an EIB loan is also described.

Lack of awareness represents the greatest challenge in the implementation of EFSI, because 85-90 % of potential investors still do not know enough about the opportunities offered by EFSI. That is precisely why it is important to prepare materials and organize events in Member States in cooperation with European Commission and EIB representatives. It is necessary to ensure direct contact with entrepreneurs, regional and local authorities, and financial intermediaries with regard to spreading information on EFSI and presenting good practice examples. Based on this recommendation the material facing you has been prepared, where, in the second part, the manner in which EFSI is organized and the way of using it are explained, project examples per particular financed areas set out, and an overview of the level of usage of EFSI guarantees per Member States put forward.

5


European Fund for Strategic Investments – institutional framework and project examples For the purpose of recovery of the European Union from the consequences of the 2007 economic crisis, in 2014 the European Commission launched an initiative under the title of Investment Plan for Europe, the so-called Juncker Plan. It is an initiative for increasing investments across the EU and encouraging long-term economic growth, thereby supporting the existing efforts of Member States undertaken in that direction. The Investment Plan for Europe is not a single stimulating measure, but a complete programme consisting of three main elements (pillars): 1) European Fund for Strategic Investments (EFSI) – mobilization of funds for investments, 2) European Investment Advisory Hub (EIAH) and European Investment Project Portal (EIPP) – identification and preparation of projects and 3) improvement of the investment environment by removing regulatory obstacles on the national and EU level – simplification of the legislative framework and strengthening of the Single Market. EFSI is the backbone of the so-called Juncker Plan. It was established in 2015 for the following three-year period together with bodies from the second pillar by Regulation (EU) 2015/1017 of the European Parliament and of the Council on the European Fund for Strategic Investments, the European Investment Advisory Hub and the European Investment Project Portal and amending Regulations (EU) No 129/20131 and (EU) No 1316/20132 (hereinafter: Regulation 2015/1017). Funds from EFSI are intended for encouraging and supporting strategic investments with higher risk profiles than projects supported by the common operations of the European Investment Bank (EIB), which are directed at key areas such as

infrastructure, research and innovation, energy efficiency and renewable energy sources, digital technologies, environmental protection etc. In addition, the purpose of EFSI is also to support access to financing for subjects with up to 3000 employees, with special emphasis on MidCaps, as stated in Article 3, paragraph 2 of Regulation 2015/1017. Table 1: Categorization of MidCaps according to Commission Reccomendation 2003/361/EC3 Company category

Number of employees

Turnover

Total balance

Small

< 50

≤ € 10 milion

≤ € 10 milion

Medium Micro

< 250 < 10

≤ € 50 milion

≤ € 2 milion

≤ € 43 milion

≤€2 milion

An EFSI guarantee is a European Union budgetary guarantee ensuring protection of the EIB Group from initial losses, that is, insuring high risk profile projects which could not obtain a loan from EIB according to the usual benchmarks.

Established by a joint initiative of the European Commission and the EIB Group, EFSI has a separate management structure.4 An independent Investment Committee consisting of eight experts and a Managing

__________________________________________ 1 Commission Implementing Regulation (EU) No 129/2013 of 14 February 2013 amending Regulation (EC) No 1121/2009 as regards the transitional national aid to be granted to the farmers in 2013 and Regulation (EC) No 1122/2009 as regards the reduction related to the voluntary adjustment of direct payments in 2013. This regulation is no longer in force. 2 Regulation (EU) No 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Regulation (EU) No 913/2010 and repealing Regulations (EC) No 680/2007 and (EC) No 67/2010. This regulation is still in force. 3 The Small Business Development Promotion Act was drawn up in accordance with Commission Recommendation 2003/361/EC of 6 May 2003. Taking that into account, the definitions of subjects within the framework of small economy were taken over from the mentioned recommendation. 4 Grupu EIB-a čine EIB i Europski investicijski fond (EIF), čiji je EIB najveći dioničar. U sklopu Junckerova plana, Grupa EIB-a dio je šire strategije za smanjenje rizika koji snose ulagači, a koji su povezani s projektima. 5 EFSU djeluje u okviru EIB-a, čije je odobrenje potrebno za svaki projekt koji se iz Fonda podupire. 6 Procjene projekata koje provede osoblje EIB-a ne obvezuju Odbor za ulaganje na odobravanje jamstva EU-a. 6


Scheme 1: Project cycle Project identification

Project evaluation

Investment Committee approval

EIB Director approval

The loan has been approved

Payment

Financial monitoring

Drawing of funds

Contract signing

Negotiations on contractual documentation

Source: drawn up by the author based on „Implementation of the Investment Plan for Europe in the Republic of Croatia“ by the Croatian Bank for Reconstruction and Development, available at: https://www.hbor.hr/wp-content/uploads/2016/11/ Provedba-Plana-ulaganja-za-Europu-u-RH__Prezentacija2.pdf, viewed on 8 April 2018. Director is in charge of consideration of projects which will potentially be financed from EFSI.

With the exception of a requirement from Article 9 of Regulation 2015/1017 relating to the general objectives which projects should promote, in Article 6 several eligibility criteria which a project must fulfil in order to obtain an EU guarantee are listed: 1) economic sustainability, 2) conformity with EU policies (including the Europa 2020 strategy), 3) provision of additionality5, 4) mobilization of private sector capital to the largest possible extent and 5) technical sustainability. There are no limitations with regard to the size of an eligible project. Upon receiving project documentation, the Investment Committee transparently and independently brings a decision on allocation of EFSI funds. It is important to note that there are no thematic or geographical quotas for allocation of those funds. EFSI financing is based exclusively on demand6. In addition to the Investment Committee and the Managing Director, the EFSI management structure also includes a Steering Committee, which is in charge of monitoring the realization of its objectives. For financing smaller projects under EFSI, so-called investment platforms were established. According to Article 2, paragraph 4 of Regulation 2015/1107, an „investment platform“ means a special purpose vehicle, managed account, contractual co-financing, risk-sharing arrangement or an arrangement established in any other way through which subjects

direct financial contributions with the aim of financing a series of investment projects. Such platforms allow for pooling funds from different sources, and smaller or local investments can be rendered more attractive for new groups of investors (for example, institutional investors or pension funds). As stated in Point 21 of the preamble of Regulation 2015/1017, many SMEs and Mid-Caps require assistance in order to attract market financing, especially with regard to high risk profile investments. EFSI should help those subjects solve the problems of lack of capital, market shortcomings and financial fragmentation, which are causing unequal conditions on the market across the Union, by enabling EIB, EIF and national development banks or institutions, investment platforms or investment funds to provide direct and indirect recapitalisation and guarantees for high-quality securitisation of loans and other products approved for the purpose of realization of EFSI objectives. Investment platforms are flexible, and can be established by public and private actors. Thereby, where appropriate, co-investors, public bodies, experts, educational and research institutions, institutions dealing with training, relevant social partners and representatives of the civil society, as well as all other relevant subjects on EU level and the national and regional level can join together. According to the manner of project grouping, platforms can be: national or subnational (several investment projects on the territory of a single Member State), cross-border, multinational, regional or macro-regional (grouping partners from several Member States or third countries) and thematic (projects in a particular sector).

__________________________________________ 4 EFSI operates within the framework of EIB, whose approval is required for each project supported from the Fund. 5 According to Article 1, Paragraph 3 of Regulation 2017/2396, „additionality” means EFSI support for operations resolving market shortcomings or unoptimal investment situations, which could not be carried out in the period in which an EU guarantee can be used, or at least not to the same extent, through EIB, EIF or existing Union financial instruments without EFSI support. 6 During the presentation of the Investment Plan for Europe, European Commission President Juncker and Vice President Katainen often pointed out that the problem in the EU was not inadequate sources of financing, but the lack of well-structured projects ready for financing. The new investment plan is intended precisely to encourage all Member States to open up to business and investments and to define what kinds of investments and in which areas they will promote. 7


The legal form and structure of financing an investment platform depends on project requirements and the main interests of investors. Through investment platforms, third parties can also participate in financing projects in cooperation with EFSI, of which more will be said later.

According to the Draft report on the implementation of EFSI drawn up by the Committee on Budgets and Committee on Economic and Monetary Affairs of the European Parliament from January 2017, a serious problem with regard to establishing investment platforms was perceived (one year after Regulation 2015/1017 had entered into force no such platforms were established7).

Furthermore, the role of EIB in those platforms is not clear to all stakeholders. Interviewed subjects also stated that there is a great demand for innovative projects which are below the EFSI project threshold under the part for innovation and infrastructure. At the moment it seems that the need for financing smaller projects is not fulfilled to an adequate extent by establishing platforms or allocation of resources through financial intermediaries.

In order to make better use of the opportunities provided by EFSI, potential beneficiaries have tools comprising the second pillar of the Investment Plan for Europe initiative at their disposal. EIAH is the European point of access to investment support (where, inter alia, specialized counseling regarding the structure of investment platforms is provided), and EIPP is an internet market and a meeting place for investors and promoters of EU projects. Both tools serve to provide greater visibility of investment projects and enhance the flow of investment funds to the real economy. As regards the investment environment, the third pillar of the so-called Juncker Plan, according to Point 12 of the preamble to Regulation 2015/1017 the investment environment in the EU should be improved by eliminating obstacles to investment and by ensuring non-discrimination with regard to whether projects are managed privately or publicly. Furthermore, the internal market should be strengthened and regulatory visibility increased, which implies implementation of structural reforms.

Amendment to Regulation (EU) 2015/1017 – EFSI 2.0 Considering the success EFSI achieved in the first year of its operation, in his 2016 State of the Union Address, European Commission President Jean-Claude Juncker announced a proposal for its extenuation and modification. Following that, at the end of 2016 the Council agreed on its negotiating position on the new regulation proposal planning for extenuation of EFSI by 31 December 2020, but also on a series of technical improvements of both EFSI and EIAH. Regulation (EU) 2017/2396 of the European Parliament and of the Council of 13 December 2017 amending Regulations (EU) No 1316/2013 and (EU) 2015/1017 as regards the extenuation of the duration of the European Fund for Strategic Investments as well as the introduction of technical improvements in that Fund and the European Investment Advisory Hub (hereinafter: Regulation (EU) 2017/2396) was brought in December 2017 and entered into force on 1 January 2018.

The novelties introduced by Regulation (EU) 2017/2396, in addition to extenuation of EFSI, include: 1) increase of the investment target from initial 315 to 500 billion euros, 2) increase of guarantees from the EU budget from 16 to 26 billion euros (of which 16 billion are available for activating guarantees by mid 2018) and 3) increase of EIB contribution from initial 5 billion to 7,5 billion euros.

Furthermore, Regulation (EU) 2017/2396 is intended to ensure that EFSI support covers as many EU Member States as possible, especially those in less developed transitional regions8, and that at the same time the range of activities covered by that support be extended. Thereby, for example, the „new“ EFSI also covers the sectors of agriculture, fisheries, forestry, as well as climaterelated measures9. In addition, the objective of the new Regulation is also improvement of transparency with regard to investment decisions and management actions. The Investment Committee now must substantiate its decisions on allocation of funds and issue a table of indicators10 for each operation.

__________________________________________ 7 The first investment platform was established as late as in the third trimester of 2016. It was the Equity platform, launched by EIF and the European Commission, which was intended to facilitate cooperation between EIF and national development institutions (NDIs) or banks across EU Member States. The Equity EIF-NDI platform will help EIF and NDIs to mutually promote each other and exhange knowledge and best practices. On 29 September 2016 CBRD joined that platform, whose objective is actually linking national, EU and private financing sources and development of new standardized equity products in cooperation with EIF. The platform is intended to facilitate access to funds for SMEs (up to 250 employees) and MidCaps (250-3000 employees) operating on EU territory through the development of new opportunities and equity model investments into innovative projects, in their early phase as well as in their growth phase. Almost 30 NDIs from 18 EU Member States are included in the EIF-NDI platform (list available at http://www.eif.org/what_we_do/equity/NPI/members-list.pdf), including institutions active on the national as well as on the regional level). 8 In that sense the European Commission will attempt to facilitate the combination of EFSI funds with other financing sources on EU level. In addition, EIAH will focus its actions and funds on projects contributing to sectoral and geographical diversification of EFSI. 9 Until then EFSI funds were used for financing projects from the sectors of transport, energy and broadband infrastructure, education, healthcare, research and risk financing for SMEs. 10 http://eur-lex.europa.eu/legal-content/HR/TXT/PDF/?uri=CELEX:32015R1558&from=HR, viewed on 7 April 2018. 8


Scheme 2: EFSI 2.0

EU budget 16 + 10 = 26 billion euros

EIB 5 + 2,5 = 7,5 billion euros

Infrastructure and innovation projects

SMEs

EFSI 21 + 12,5 = 33,5 billion euros

Source: drawn up by the author

All signed projects which will last after 2020 will continue to be financed from EFSI until their completion. For the period after 2020 the Commission intends to present proposals intended to ensure the continuation of strategic investments on a sustainable level, which should ensure stability and security for project investors and promoters.

Overview of past use of EFSI funds per sectors

By March 2018, as the financial component of the Juncker Plan, EFSI mobilized 274 billion euros in investments, which constitutes 87% of the set investment target amounting to 315 billion euros. Most of the funds were invested into strategic infrastructure (including, for example, digital, transport and energy sectors), with over 274 approved infrastructure and innovation projects.

Market absorption was especially fast with regard to SMEs, where EFSI performed above expectations – a total of 389 financing contracts were approved, which will bring benefit to cca. 600.000 SMEs. In July 2016, in accordance with the existing framework of Regulation (EU) 2015/1017, the EFSI Steering Committee increased the amount of funds for SMEs and MidCaps in all Member States by 500 million euros. That amount was transferred to the part for SMEs from the part for infrastructure and innovation, and will be used for InnovFin11 and COSME12 loan guarantee instruments, EU Programme for Employment and Social Innovation13, and for development of new products. According to data from 26 May 2017, 224 transactions were also approved under the Infrastructure and Innovation Window (IIW), as well as 275 under the

Window for Small and Medium Enterprises (SMEW). IIW and SMEW are two specific frameworks within EFSI – the first one is managed by EIB and is intended for projects valued at over 50 million euros and whose holders report directly to EIB, while the second one is managed by EIF through financial intermediaries (intermediary banks which concluded a contract with EIB on allocation of funds to interested applicants) and is intended for financing SME and MidCap projects valued at less than 50 million euros. Those projects are financed through EIF. It is expected that these two frameworks will encourage investments in the amount of 264,3 billion euros. Transactions approved so far cover all EU Member States. „EFSI is a great example of what EU’s bank is able to do in order to help achieve more with deficient public funds“, pointed out EIB’s President Werner Hoyer. „It shows that transition from grants and subsidies to loans and guarantees can be a powerful tool of public policy. We welcome the extenuation of the Juncker Plan which was approved earlier this year. On the basis of lessons learned during this period and our favourable past achievements, we offered to undertake even greater responsibility under the Multiannual Financial Framework for the period after 2020.”14

__________________________________________ 11 InnovFin is a guarantee instrument financially backed by the European Commission within the framework of the Horizon 2020 financial instrument and EFSI. It is intended for SMEs focused on research, development and innovation, or having innovation potential. 12 COSME 2014 – 2020 is a programme for increasing competitiveness of companies and SMEs, established with the aim of promoting competitiveness. In addition to SMEs, the target groups of the programme are current and potential enterprises and business organizations supporting enterprises. COSME ensures better access to financing, provides services of support to doing business and promotes entrepreneurship in general. 13 Employment and Social Innovation Programme (EaSI) is a financial instrument for promoting a high level of quality and sustainable employment on EU level, and guaranteeing appropriate and decent social protection, fight against social exclusion and poverty, as well as improvement of working conditions. 14 http://www.eib.org/infocentre/press/releases/all/2018/2018-006-eu-bank-tackles-investment-gaps-in-innovation-and-development. htm?lang=-hr, viewed on 7 April 2018. 9


Chart 1: EFSI investments per sectors, according to the last results, on 15 March 2018. 35%

29%

30% 25%

23%

21%

20% 15%

11% 8%

10% 5% 0%

SMEs

R&D

Energy

Digital infrastructure

Transport

4%

4%

Social infrastructure

Environment and resource efficiency

Source: EFSI investments per sectors, European Commission, 2018. Available at: http://www.eib.org/efsi/efsi_dashboard_ en.jpg, viewed on 10 April 2018. From Finland to Greece, from Ireland to Croatia, from high quality industrial projects to rehabilitation of the agrofood industry carried out by SMEs and MidCaps, from wind power plants to introduction of new healthcare technologies, EFSI brings concrete benefit to innovative projects contributing to growth on the local level and opening of new workplaces. In that sense EFSI is also • SMEs:

Member State

Spain

Total expenses

97 million euros

Project title

Project holder Financing

Description

Objective

10

very important for solving the problem of unemployment. Hereafter follow examples of implemented projects for each of the sectors presented earlier:

INCARLOPSA AGRO FOOD INVESTMENTS

INDUSTRIAS CARNICAS LORIENTE PIQUERAS SA

EFSI guarantee for an EIB loan in the amount of 35 million euros

This project will alllow for expansion, upgrading and modernization of existing plants and facilities of the Industrias Cárnicas Loriente Piqueras (INCARLOPSA) company in the regions of Tarancón and Corral de Almaguer.

Introducing the best available processing and automatization technology, which will allow for significant improvements regarding energy and water consumption, as well as an increase of production capacity and efficiency. By introducing new technologies INCARLOPSA will be able to optimize its energy efficiency and improve employees’ working conditions through improved automatization of production processes. The new investment will improve the level of safety control and visibility of all products. The project will allow for the creation of 1000 workplaces through expansion of production capacities in the mentioned regions.


Member State Project title Project holder Total expenses Financing Description

Objective

Member State Project title

Project holder

Total expenses Financing

Description

Objective • R&D

Member State Project title

Project holder Total expenses Financing Description

Objective

Germany

VIKING HEAT ENGINES

VIKING HEAT ENGINES GERMANY GMBH 89 million euros

EFSI guarantee for an EIB loan in the amount of 30 million euros

This project was designed in order to commence production of innovative equipment for using energy from a low-temperature (waste) heat source and converting it into electrical energy suitable for re-use. VHE develops and commercializes technologies enabling industry to convert waste heat into useful electrical energy.

The project is intended to allow the VHE company to implement planned activities, increase investments and reduce expenses for increasing production processes, as well as to further develop technologies allowing for conversion of waste heat into useful electrical energy in the period 2017-2019. The project will contribute to reduction of CO2 emissions. Small innovative companies such as VHE are the basis for future growth and creation of workplaces in Europe. Viking Heat Engines is a perfect example of a project which is smart, sustainable and cost-effective – instead of wasting energy, waste is converted into energy and CO2 emissions are reduced. Poland

NEW FURNITURE PRODUCTION PLANT (SITS) SITS SP ZOO

33 million euros

EFSI guarantee for an EIB loan in the amount of 16 million euros

The project will contribute to capital investments for the construction of a new production facility for producing upholstered furniture, procuring, setting up and raising the quality of corresponding equipment for the production of furniture, as well as construction of a new, fully equipped storage space in the period 2017-2019. It is expected that in time the investment will create up to 500 new workplaces. The new production facility will be located on a 13-hectare parcel and will be developed using the most innovative technologies available in the furniture production industry. These investments are part of plans designed for achieving growth of the SITS company, which exports 95% of its products. The SITS company intends to realize planned growth through increasing production and storage capacities, because existing capacities and available space do not allow for that. Portugal

PARENTERAL SOLUTIONS INDUSTRIAL PROJECT PORTUGAL Laboratórios Basi – Indústria Farmacêutica, S.A 40 million euros

EFSI guarantee for an EIB loan in the amount of 20 million euros

Investments related to medical technology for Basi pharmaceutical company in the municipality of Mortágua, district of Viseu. Basi is a company for development and production of medical and other products for human use. Establishment of a new unit within Basi pharmaceutical company which will increase its production capability and lead to the creation of 109 new workplaces. At the moment when the new unit becomes operational, it will be able to produce up to 110 million doses of parenteral medical drugs for curing digestive system diseases. This modernization will increase the company’s growth, as well as encourage its internationalization by increasing its export capacity.

11


Member State Project title Project holder Total expenses Financing

Description

Objective

Member State Project title Project holder Total expenses Financing Description

Objective

â&#x20AC;˘ Energetics

Member State Project title

Project holder Total expenses Financing Description

Objective

12

Bulgaria

BIOVET PESHTERA

HUVEPHARMA INTERNATIONAL BV 222 million euros

EFSI guarantee for an EIB loan in the amount of 100 million euros

The project consists of construction of new production facilities, as well as financing research, development and innovation activities of the Bulgarian agro-pharmaceutical company Huvepharma in the area of animal health. The project covers construction of two new facilities: a new fermentation facility for the production of active substances, nutritional supplements, enzymes, probiotics and finished medical preparations for animal health, as well as a new factory for the production of animal vaccines. Strengthening innovation in the European pharmaceutical sector through the creation of 210 new workplaces in rural areas of Bulgaria, as well as strengthening the competitiveness of the leading company in the Bulgarian veterinary sector. Latvia

UNIVERSITY OF LATVIA RESEARCH AND STUDY CENTRE LATVIJAS UNIVERSITATE 90 million euros

EFSI guarantee for an EIB loan in the amount of 30 million euros

The project finances construction and equipment of two university buildings in the new Tornakalns campus, located immediately near the historical centre of the town of Riga.

Supporting modernization of university infrastructure through construction of a new research, technological and study centre. Directing research activities towards one place at Tornakalns campus instead of using existing isolated buildings surrounding the town of Riga will contribute to the overall quality of academic life. This modern campus will help Latvia provide more research and development activities and produce a qualified cadre. Belgium

NORTHER OFFSHORE WIND

ENECO HOLDING NV, NETHYS SA 1.1 billion euros

EFSI guarantee for an EIB loan in the amount of 219 million euros

Construction and management of a wind power plant 22 km off the Belgian coast with a projected capacity of up to 370 MW.

Production of renewable energy sources and contributing to the safety of energy supply and environmental protection objectives. Upon completion, 44 wind turbines will supply 324.000 Belgian families with renewable electrical energy. The wind power plant is estimated to reduce greenhouse gas CO2 emissions by cca. 593.000 tons annually. The project is directed at ensuring a safe, accessible and ecologically acceptable energy source.


Member State Project title Project holder Total expenses Financing Description

Objective

Member State Project title Project holder Total expenses Financing Description

Objective

• Digital infrastructure Member State Project title Project holder Total expenses Financing

Description

Objective

Finland

SATO ENERGY EFFICIENT BUILDINGS SATO OYJ

322 million euros

EFSI guarantee for an EIB loan in the amount of 150 million euros

The project ensures funds for financing construction of new and improving energy efficiency of existing buildings in the Helsinki town area to the SATO company.

The main objective intended to be achieved with the project is construction of new energy efficient buildings and adaptation of existing ones in order to reduce energy consumption and CO2 emissions, contributing to the safety of supply and EU objectives with regard to mitigation of the consequences of climate change. Due to interventions regarding energy efficiency in new and existing buildings, it is expected that the project will generate primary energy savings of up to 2.461 MWh annually, which is equal to about 460,5 tons of annual CO2 emission savings. Reconstruction of buildings is one of the key sectors of the scenario for reducing CO2 emissions from the EU Agenda 2030, considering that buildings account for 40% of energy consumption in the EU.

Italy

TOSCANA ENERGIA GAS NETWORK & METERING TOSCANA ENERGIA SPA 140 million euros

EFSI guarantee for an EIB loan in the amount of 90 million euros

Toscana Energia SPA represents a consortium in charge of management and distribution of gas and production of electrical energy from renewable energy sources. The project includes replacement, upgrading and expansion of the gas distribution network, in addition to setting up smart measurement systems across the entire network, which is mostly located in the Tuscany region.

The project should increase the safety of the network, improve its reliability and reduce gas drain, that is, gas leaking. Setting up smart measurement systems will allow for easier access to data on consumption in real time, which will potentially allow for increasing the efficiency of network management. France

TELCO

Telco OI

52 million euros

EFSI guarantee for an EIB loan in the amount of 25 million euros

TELCO is a telecommunication services provider seated in France. The project includes upgrading and expansion of mobile networks (3G and 4G) in the French overseas departments of La Réunion and Mayotte. The project includes reconstruction of existing locations, setting up modern access nodes, including basic network elements and upgrading of the transmission network in order for it to be able to cope with the expected high increase in mobile data transfer. The objective of the investment is to increase the availability (coverage) and quality of fast mobile broadband services based on 3G / Universal Mobile Telecommunications System (UMTS) and 4G / Long-term Evolution (LTE) technologies in the departments of La Réunion and Mayotte, as well as mobile broadband services in rural and distant areas of the country. The project is intended to allow for achieving 95% coverage of the population with the 4G network within 5 years from launching the service. The project supports the initiative of Europa 2020 strategy for the Digital Agenda for Europe and its specific objectives in order to allow for fast (over 30 Mbps) use of broadband services to all citizens by 2020.

13


Member States Project title Project holder Total expenses Financing

Description

Objective

• Transport

Member State Project title

Project holder Total expenses Financing Description

Objective

Member State Project title Project holder Total expenses Financing Description

Objective

14

Sweden and the Netherlands

LTE VOLTE – HIGH SPEED MOBILE INTERNET ROLLOUT TELE2 AB

252 million euros

EFSI gurantee for an EIB loan in the amount of 125 million euros The project relates to investment into expanding and increasing the capacity of 4G mobile networks in Sweden and the Netherlands. In Sweden the plan is to expand geographical coverage by 2019, which would lead to complete 4G network coverage in Sweden. In the Netherlands the objective is to increase 4G network coverage in open spaces by the end of 2018 and 4G network coverage in households in densely populated areas. The project will result in increased quality and coverage of mobile networks, allowing for provision of advanced broadband mobile services in rural and distant areas. Telecommunications have a direct and indirect impact on increasing growth and allowing for high-quality employment based on innovation. In line with this, it is expected that the project will have a positive impact on the overall achievement of sustainable growth and employment in the Netherlands and Sweden. Slovenia

DARS – FREE FLOW TOLLING SYSTEM

DARS – DRUZBA ZA AVTOCESTE V REPUBLIKI SLOVENIJI DD 105 million euros

EFSI guarantee for an EIB loan in the amount of 51 million euros

The project includes setting up and putting into operation an electronic toll collection system (ETCS) for vehicles weighing over 3,5 tons, which will replace the existing toll collection infrastructure. The project also includes dismantling and restructuring the existing physical toll collection stations. Upgrading and replacement of the existing toll collection system for heavy vehicles along a 610 km network of roads and highways in Slovenia, which is currently based on toll collection at stations. This will lead to reduction of waiting time on highways, as well as to reduction of fuel consumption, gas emissions and noise. Italy

FNM NEW REGIONAL ROLLING STOCK FNM SPA

101 million euros

EFSI guarantee for an EIB loan in the amount of 50 million euros

Procurement of ten new trains for provision of regional services in Lombardy (Italy) and cross-border regional services between Lombardy and Ticino (Switzerland).

The project is intended to contribute to increasing the quality of rail passenger services in Lombardy and the cross-border service between Lombardy and Ticino. It is expected that new trains will allow for more efficient work, reduce energy consumption and increase the level of comfort for passengers. Indirectly, through improvement of services, reconstruction of railway vehicles will help railways become competitive to other means of transport, especially private vehicles. Transition of passenger flows from other forms of transport to railways may result in reduction of use of personal vehicles, increased safety and environmental protection.


Member State Project title Project holder Total expenses Financing

Description

Objective • Social infrastructure Member State Project title Project holder Total expenses Financing Description

Member State Project title Project holder Total expenses Financing Description

Objective

France

ROLAND GARROS AIRPORT – REUNION

AEROPORT DE LA REUNION ROLAND GARROS 250 million euros

EFSI guarantee for an EIB loan in the amount of 100 million euros

This projects is part of a plan for development of Roland Gaross Airport for the period 2011 – 2022. Two main investment schemes of this project, relating to expansion and reconfiguration of the passenger terminal and construction of safety areas on the runway cover a part of the plan for Réunion Island Roland Garros Airport development 2011– 2022, with the common objective of reduction of current transport congestion and harmonization of transport growth with improvement of environmental and safety conditions. Expansion and reconfiguration of the existing passenger terminal, construction of four new safety areas on the runway. Investment into the construction of the new terminal will increase the airport’s capacity to cca. 3,5 million passengers annually. Great Britain

MIDLAND METROPOLITAN HOSPITAL PPP

SANDWELL AND WEST BIRMINGHAM HOSPITALS NHS TRUST 435 million euros

EFSI guarantee for an EIB loan in the amount of 147 million euros

The project includes construction of a new hospital in Birmingham in the Middland region, replacing two existing obsolete buildings, and is part of a comprehensive integrated healthcare plan for elderly population.

The new hospital, covering 80.000 m2, will allow for integration of hospital services, support the development of improved primary healthcare services and palliative care, and replace the existing inappropriate hospital institutions. Ireland

PRIMARY CARE CENTRES PPP

NATIONAL DEVELOPMENT FINANCE AGENCY (NDFA) 142 million euros

EFSI guarantee for an EIB loan in the amount of 70 million euros

The holder of this project, which is implemented as a public-private partnership, is the National Development Finance Agency as the financial advisor of public bodies on all public investment projects with capital value of over 20 million euros.

The project is intended to achieve better access to primary healthcare protection in Ireland. It is expected that through construction of new primary healthcare protection centres new services, which are currently unavailable on the territory of Ireland, will be introduced, and the quality of services provision and ability of introduction of new models of healthcare services provision increased, which will lead to an increase in the efficiency of provision of healthcare services, as well as cost reduction.

15


â&#x20AC;˘ Environment and resource efficiency Member State Project title Project holder Total expenses Financing

Description

Objective Member State Project title Project holder Total expenses Financing

Description

Objective

16

Germany

HKM STEEL MANUFACTURING MODERNISATION Huettenwerke Krupp Mannesmann GmbH 120 million euros

EFSI guarantee for an EIB loan in the amount of 60 million euros

Huettenwerke Krupp Mannesmann is a private company dealing with production of steel. The project will finance a new hot furnace which will be set up on the existing highquality steel installation, which will contribute to improvement and modernization of production technology, and thereby to strengthening competitiveness in relation to other steel producers. Increasing energy efficiency and reduction of CO2 emissions, as well as more efficient production of steel with less resources than required in current steel production. Romania

ROMANIA RECYCLING AND CIRCULAR ECONOMY PROJECT GREENFIBER INTERNATIONAL SA 20 million euros

EFSI guarantee for an EIB loan in the amount of 7,5 million euros

The project includes investment into increasing the storage capacity for material suitable for recycling of the private company Greenfiber, the leading recycling company in Romania and one of the largest recycling companies in Europe. Affairs of the mentioned company include collection of recycling materials, production of polyester fibres from PET packagings and recycling electrical and electronic equipment The project is intended to create 280 new workplaces, as well as increase the capacities for collected and processable recycling waste by more than 50.000 tons annually. The project will contribute to Romaniaâ&#x20AC;&#x2122;s transition to a circular economy and to fulfiling national recycling objectives.


Overview of past use of EFSI funds per Member States

In the following table approved amounts in the areas of infrastructure and innovation projects, financing of SMEs, overall EFSI investments per Member States and the share of EFSI funding in the overall GDPs of Member States are set out.

In this part an overview of use of available EFSI funds per Member States, as well as of expected added value of invested funds is provided, and good practice examples regarding the use of EFSI funds are presented.

Table 2: EFSI funding per Member States (in billion euros)

Expected added value from financing of SMEs

Total Total EFSI expected EFSI share investment EFSI (6) in GDP (2+4) added (%) value

Member State

Infrastructure and innovation projects

1.

2.

3.

4.

5.

6.

7.

8.

Greece

1,900

5,800

0,350

2,800

2,200

8,600

19,16

Estonia Portugal Malta Spain Bulgaria Finland Italy Latvia Lithuania Poland France Croatia Slovenia Sweden Slovakia Ireland Czech Republic Belgium Netherlands Hungary United Kingdom Austria Germany Denmark Romania Luxembourg Cyprus

0,043

1,100

0,005

Expected Financing added of SMEs value

0,111

3,100 0,017

4,900

24,000

4,800

15,000

2,700

8,500

0,281

1,400

0,164

0,265

0,652

5,500

0,370

0,099

1,000

2,100

0,101 2,100

0,863

0,102

1,000

2,900 0,312

4,700

7,600

1,300

14,800 2,400

4,600

17,000

0,014

0,053

0,327

0,274

0,035

0,075

0,035

0,900

0,705

0,053

0,691

3,000 0,017

9,200

0,944

0,369

2,300

24,000

0,156

1,400

0,019

0,099

1,000

0,785

0,889

0,494

0,308

0,450

0,006

0,029

30,800

0,051

1,000

0,596

7,200

0,120

0,069

0,245

0,250

0,138 -

0,602

0,109 0,633

0,205

0,083

0,063 0,010

0,356 1,400 7,100 0,182

0,219

7,000

0,470

5,800

0,342

2,000

0,249

0,011

0,294

10,600

0,037

2,100

0,294

2,000

0,015

0,112

0,635

0,267

2,900 9,200 0,066 2,300 0,487

1,300

1,034

0,654

2,200

2,400

1,400 -

4,100

0,452 5,000

0,720

0,471

0,196 0,028

0,569 1,200 0,101 2,700 0,972 5,200 0,531 0,357 0,077 0,045

0,803

6,100 0,034

13,07 12,47 12,17 10,86

33,000 1,600

10,69

39,000 0,615

8,54

5,500

9,37 8,67

0,890

8,12

0,836

6,94

9,900

41,400 0,738 8,000

1,300

7,44 6,99 6,55 6,41 5,87

4,300

5,36

8,200

4,29

2,800 6,000

5,19 5,16

1,300

3,81

22,000

2,65

19,000 2,800

1,600

1,200

0,249 0,081

3,24 2,9 2,17 2,15 1,67 1,65

Source: drawn up by the author based on â&#x20AC;&#x17E;Investment Plan resultsâ&#x20AC;&#x153;, European Commission, 2018. Available at: https:// ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan/investmentplan-results_hr , viewed on 5 April 2018.

17


In the area of infrastructure and innovation projects France is the Member State with the largest amount of approved funds, 7,2 billion euros, whereas Hungary is the country with the smallest amount of approved funds, 101 million euros. With regard to funding SMEs, Italy is the Member State which has realized the largest amount of financing, 2,3 billion euros, whereas on the other side is Hungary, where no financing has been recorded in the area of SMEs. The Member State with the largest total amount of EFSI financing is France with 41,4 billion euros, whereas Malta is the country with the smallest total financing amount, 11 million euros.

The share of EFSI funds in GDP is largest in Greece, 19,16 %. The share of EFSI funds in the GDP of Greece is 6,09 percentage points larger than its share in the GDP of Estonia (the second country according to the share of EFSI funds in GDP), and 6,69 percentage points compared to Portugal (the third Member State according to the share of EFSI funds in GDP). Cyprus is the country with the smallest share of EFSI funds in GDP, as little as 1,65%, which is 17,51 percentage points less compared to Greece. Total financing within the framework of EFSI in Croatia amounts to 219 million euros, and 836 millions of additional financing is foreseen. In the area of infrastructure and innovation projects, five projects amounting to 120 million euros have been approved, financed by EIB with support from EFSI. It is considered that allocation of those 120 million euros will lead to an increase in additional investments by 494 million euros. In the area of financing SMEs, seven agreements with intermediary banks have been approved, financed by EIF with EFSI support in the total amount of 99 million euros.

It is predicted that additional investments in the amount of cca. 342 million euros will be generated by about 914 SMEs. The share of EFSI funds in Croatia’s GDP amounts to 6,94 %. Hereafter follows a table showing the percentage of the share of EFSI funds in GDPs of Member States from the fifth wave of enlargement.

Of the total amount of EFSI funds amounting to 49,579 billion euros, 88,50 %, that is, 43,880 billion euros, were used by senior and most developed Member States, whereas 13 newer Member States used 11,50 %, that is, 5,699 billion euros. This shows that technical assistance and promotional activities need to be intensified in order to significantly increase the level of use of EFSI guarantees in EU13 countries, that is, in less developed Member States.

18

Table 3: Overview of EFSI share in GDPs of Member States from the fifth wave of enlargement, in percentage No.

Member State

EFSI share in GDP (%)

1.

Estonia

13,07

2.

Malta

12,17

3.

Bulgaria

10,69

4.

Latvia

8,54

5.

Lithuania

8,12

6.

Poland

7,44

7.

Croatia

6,94

8.

Slovenia

6,55

9.

Slovakia

5,87

10.

Czech Republic

5,19

11.

Hungary

3,81

12.

Romania

2,15

13.

Cyprus

1,65

Source: drawn up and calculated by the author based on „EU-wide results as of March 2018“, European Commission, 2018. Available at: https://ec.europa.eu/commission/ priorities/jobs-growth-and-investment/investment-planeurope-juncker-plan/investment-plan-results_hr, viewed on 9 April 2018. Estonia has the largest share of EFSI funds in GDP, 13,07 %, whereas on the other side Cyprus has the smallest share, 1,65 %. According to the table, Croatia is ranked seventh according to the share of EFSI funds in GDP, 6,94 %. It is a rather good position considering that the available envelope from ESI funds is considerable.


State of play with regard to use of EU funds in the Republic of Croatia With membership in the EU Croatia gained a framework for economic development through European policies which are applied to all Member States. Those policies bring with them significant financing sources from EU funds, which is especially significant in the context of the six-year long economic crisis in which more than 12 % of Croatian GDP was lost. Within the framework of the Investment Plan for Europe, 12 projects in the total amount of 219 million euros have been approved to the Republic of Croatia so far, which should generate a total of 836 million euros in investments. Of the total number of approved projects, five are EIB’s, relating to SMEs, tourism, energetics and research and development, whereas seven are EIF’s, also relating to SMEs and research and development. More will be said on this subject later.

Institutional implementation of EFSI in the Republic of Croatia

Affairs related to cooperation with EIB and EIF for the purpose of implementation of the Investment Plan for Europe in the Republic of Croatia have been assigned to the Croatian Bank for Reconstruction and Development (HBOR).

As mentioned, EIF is a part of the EIB Group, and its main objective is to provide support to European SMEs by facilitating their access to financing. EIF designs and develops venture capital and growth capital, guarantees and microfinancing instruments directed precisely at that segment of the market. In this role, EIF supports EU objectives supporting innovation, research and development, entrepreneurship and growth and development.

In line with Decision of the Government of the Republic of Croatia1 of 23 September 2015, with regard to to implementation of the Investment Plan for Europe on the territory of Croatia, the following affairs have been assigned to HBOR as the national development bank:

• Participation in implementation of the Investment Plan for Europe through cooperation on the level of investment platforms and individual projects, as well as making direct contact with members of the EIB Group; • Functioning as the national access point for possible project holders; • Creation of new financial products in accordance with requirements of the Croatian economy; • Identification of economically and technically sustainable projects in key sectors, especially in innovative, ecologically aware and social areas which will be proposed for financing within the framework of EFSI; • Attracting private subjects for investment in combination with public resources; • Participation in financing infrastructure projects and SME projects through different programmes aimed at promoting economic growth; • Establishment of the Croatian Investment Project Portal2 (CIPP), covering current and future investment projects in Croatia; • Functioning as the national contact point for cooperation with EIAH; and • Establishment of bilateral cooperation with other national development banks (NDBs) in implementation of the Investment Plan for Europe as well as carrying out all other activities with the purpose of implementation and/or relating to implementation of the Regulation, the Investment Plan for Europe and all other existing and subsequent EU acts with regard to that.

In the implementation of the Juncker Plan, HBOR cooperates with relevant state administration bodies, agencies and other legal entities with public authority which support implementation of the Investment Plan for Europe through national coordinators. Ministries, agencies and legal entities with public authority in the Republic of Croatia which assign one of their representatives as the

__________________________________________ 1 Decision on assigning affairs related to cooperation with European Investment Bank and European Investment Fund on implementation of the Investment Plan for Europe, OG, No. 102/2015. 2 The portal has not yet been established. 19


national coordinator are: Ministry of Finance, Ministry of Economy, Entrepreneurship and Crafts, Ministry of Construction and Physical Plannning, Ministry of Culture, Ministry of Agriculture, Ministry of the Sea, Transport and Infrastructure, Ministry of Foreign and European Affairs, Ministry of Environmental Protection and Energy, Ministry of Health, Ministry of Science and Education, Agency for Investments and Competitiveness, Center for Monitoring Business Activities in the Energy Sector and Investments and Croatian Agency for SMEs, Innovations and Investments (HAMAG BICRO). The Ministry of Regional Development and EU Funds coordinates the operation of relevant state administration bodies, agencies and other legal entities with public authority precisely through national coordinators, and ensures cooperation of those bodies with HBOR .

Overview of use of EFSI funds in Croatia

In May 2015 Member States sent to the European Commision a list of projects valued at a total of approximately 1300 billion euros. Among 2000 projects were Croatian projects valued at 21,5 billion euros – a total of 77 projects were initially on the list of projects intended for financing from the Investment Plan for Europe, however, the list was narrowed down to cca. 25 projects of strategic importance valued at 9 billion euros, foreseeing participation of the private sector, that is, public-private partnerships. Croatian projects applied for financing were mostly from the sectors of transport infrastructure, energy and environmental protection3.

Among Croatian projects listed there were projects intended for co-financing from European funds, including a list of major projects from „Competitiveness and Cohesion 2014-2020“4 Operational Programme. This is precisely what should be avoided. With the help of EFSI guarantees and loans, the state should finance high risk profile projects ready for implementation which cannot obtain financing from ESI funds or can use EFSI funds to obtain funds for co-financing EU projects, thereby realizing synergy with European Structural and Investment (ESI) funds. The objective is not using EFSI funds and leaving Cohesion Policy, that is, ESI funds, unused. EFSI must not represent a competition to ESI funds.

According to the Government of the Republic of Croatia’s second report on implementation of the Investment Plan for Europe in the Republic of Croatia for the period from 1 August 2016 to 31 July 2017, seven projects were approved, five of which during the mentioned second reporting period (projects 3–8). Approved projects within the framework of EFSI in Croatia are5:

1. Risk-sharing for MidCaps and other priorities (HBOR) – EFSI guarantee amounting to 50 million euros; 2. InnovFin guarantee instrument for SMEs (HBOR) – EFSI guarantee in the amount of 20 million euros; 3. An infrastructure project (private investor); 4. EL-TO Zagreb – Highly efficient combi-cogeneration power plant (HEP PLC) – EFSI gurantee in the amount of 150 million euros; 5. Guarantees within the framework of COSME programme (Privredna banka Zagreb PLC) – EFSI guarantee in the amount of 46 million euros; 6. InnovFin guarantee instrument for SMEs (Zagrebačka banka PLC) – EFSI guarantee in the amount of 10 milion euros; and 7. InnovFin guarantee instrument for SMEs (Erste&Steiermärkische Bank and Erste&Steiermärkische S-Leasing) – EFSI guarantee in the amount of 100 million euros.

On 14 June 2016 EIF and HBOR signed the first agreement on SMEs within the framework of InnovFin programme, with ensured EFSI support. The agreement is intended for innovative companies in Croatia which are offered guarantees for bank loans in the following two years, as the result of a guarantee provided by EIF and supported by Horizon 2020 programme.6 According to that agreement, it is expected that EU support to innovative Croatian companies will generate a loan portfolio valued at 20 million euros by the middle of this year. On 21 November 29016 HBOR and EIB signed a RiskSharing Model7 guarantee contract, with which EIB provides HBOR with support amounting to 50 million euros through a guarantee for financing the so-called MidCap (companies with 250 to 3000 emloyees) projects in Croatia. This is the first EIB project of this kind in Croatia, and is implemented under an EFSI guarantee. Within the framework of the Risk-Sharing Model, EIB provides

__________________________________________ 3 It is important to note that inclusion of a project on the European Commission indicative list does not represent a guarantee for obtaining funds from EFSI. For projects ready for implementation EIB initiates an evaluation process, in line with its standard procedure. The overall project approval process usually lasts six months. 4 Competitiveness and Cohesion 2014-2020“ Operational Programme is the basic programmatic document for implementing EU Cohesion Policy, which also contributes to investment for growth and workplaces through encouraging investment into infrastructure and providing support to development of entrepreneurship and research activities. Croatia has 6,831 billion euros at its disposal within the framework of the Programme 5 Furthermore, eight potential investment projects which could be realized in the following three years have been identified in the reporting period, however, there is no detailed information on them as yet. 6 Horizon 2020 programme is an EU framework programme for research and innovation. 7 The Risk-Sharing Model implies a mode of implementation of the loan programme by HBOR in cooperation with commercial banks wherein HBOR and the commercial bank share the risk of recovery of placed loans in the following manner: (a) the commercial banks provides a loan in the amount of 50 % of the total loan amount at the least, from its own funds as a rule; (b) HBOR provides a loan of up to 50 % of the total loan amount, with insurance instruments common in banking operations. 20


HBOR with a guarantee in the amount of 50 million euros for partial coverage of the risk according to the existing portfolio of loans approved to MidCap companies, which can amount to 100 million euros at the most and which meets criteria agreed on in advance between HBOR and EIB. The final list of existing loans which will be covered by an EIB guarantee has not yet been defined, but is expected to be prepared during this quarter.8

Considering that this is an indirect Risk-Sharing Model, the EIB guarantee will cover the existing loan portfolio in accordance with the corresponding guarantee rate for MidCap companies and other priorities. Therefore, for now EIB will not assume the risk of new, but exclusively existing, directly approved MidCap loans, which will allow HBOR to assume additional risks and increase credit activity in the amount of 100 million euros towards MidCap companies and other priorities. As for the selection procedure of projects from the existing portfolio, a financial and legal in-depth analysis of projects proposed to EIB by HBOR is in progress and it will soon be known which projects meet all EIB criteria for entering the portfolio for which EIB is ready to provide a guarantee. HBOR has more than enough loans in its ledgers which it can propose for an EIB guarantee. On the other side, the Risk-Sharing Model implies that HBOR approve new loans to MidCap companies and other priorities 36 months after the guarantee contract between EIB and HBOR has entered into force at the latest. In other words, HBOR will allocate 50 million euros of the EIB guarantee to loans already approved, whereas, on the other side, EIB stipulates that in the following 36 months HBOR approve new loans in the amount of up to 100 million euros which will not be covered by an EIB guarantee, but for which HBOR will find new financing sources.

The criteria according to which new loans will be approved are not defined at this moment, however, it is already known that the requirements will be almost identical to requirements EIB usually sets when HBOR uses EIB funds for financing MidCap companies. Although HBOR approves loans in line with its loan programmes, EIB requirements are already incorporated into most of its programmes.

sectors of industry, services and tourism, as well as public and private companies investing in infrastructure and environmental protection, and knowledge-based projects. In July 2016 HBOR and EIB signed the second financing contract in the amount of 250 million euros for the needs of financing SME projects. By signing this contract, HBOR also became involved in the implementation of a European Commission and EIB programme for youth employment (Jobs for Youth Initiative). Furthermore, within the framework of cooperation with EIF, Privredna banka Zagreb PLC signed a contract on implementation of COSME in the amount of 46 million euros, allowing SMEs to access loan products. Furthermore, UniCredit Group signed an agreement with EIF within the framework of InnovFin – guarantee instrument for SMEs programme in the amount of 160 million euros. For Croatia, 10 million euros for SMEs aimed at research and development activities were ensured through Zagrebačka banka PLC. EIF, Erste&Steiermärkische Bank and Erste&Steiermärkische S-Leasing signed a guarantee contract within the framework of InnovFin programme, which will allow Erste bank to ensure loans and leases for SMEs in Croatia in the amount of 100 million euros. In 2017 the EIB Group ensured 590 million euros for new loans, guarantees and equity investments in Croatia – EIB ensured loans in the amount of 538 million euros, whereas 50 million euros related to guarantees and equity investments into SMEs by EIF. It was precisely in 2017 that EIB’s results in the Republic of Croatia reached the highest level since 2013, with payments in the amount of 729 million euros, that is, 28 % more in relation to the preceding year. As to financing within the framework of EFSI in 2017 (data until January 2018), financing in the amount of 187 million euros was approved to Croatia from that fund, whereas expected EFSI-related investments are estimated at 745 million euros.

According to HBOR’s financial report for 2016, at the start of 2014 EIB and HBOR also signed two financing contracts within the framework approved by EIB in the amount of 800 million euros for financing SMEs and MidCaps in the Republic of Croatia. The first contract on financing MidCap projects was signed on 17 February 2016 in the amount of 150 million euros. The funds are intended for financing the mentioned companies’ projects, primarily in the

__________________________________________ 8 After the initially carried out due diligence process, there was no success in the preparation of the list of acceptable exposures, and thereby during the first quarter of this year HBOR recommenced the procedure of review of acceptable exposures in cooperation with EIB representatives. HBOR’s expert services are now systematically considering potential exposures which would be proposed for the new round of the due diligence process. 21


In 2018 last yearâ&#x20AC;&#x2122;s business momentum related to financing in different sectors such as tourism (Istrian Riviera Development Project) and green entrepreneurship9 will continue. Hereafter follows a short overview of several projects in the Republic of Croatia financed with EFSI support, based on data available at the official website: Project title

Project holder Project status

Total expenses Financing

Description

Project title Project holder Project status Total expenses Financing

Description

Project title Project holder Project status Total expenses Financing

Description

DUBROVNIK AIRPORT RECONSTRUCTION AND DEVELOPMENT Dubrovnik Airport Ltd.

The first phase of the project (development phase) has been completed and the new airport was put in operation on 15 May 2017. The contract for the commencement of the second phase (reconstruction phase) was signed on 7 September 2017, and its completion is planned for April 2019. 220 million euros (cca. 172 million euros for the first phase and 50 million for the second phase). EFSI guarantee for an EIB loan in the amount of 32,5 million euros

On 23 April 2015 EIB brought a Decision on co-financing Dubrovnik Airport Development Project, whereby that project, valued at 225 million euros, became the first project in Croatia financed by EFSI. Of the mentioned amount, 32,5 million euros were received as an EIB loan under an EFSI guarantee. In July 2016, 160 million euros were approved for financing from the European Regional Development Fund, whereas the remainder is financed from EIB and HBOR loans (32,5 million euros) and the airportâ&#x20AC;&#x2122;s own funds in the amount of 34,5 million euros. This project is a good example of desirable synergy of funds from EFSI and ESI EU funds. The project includes reconstruction of the runway, construction of new parking positions, the first modern fuel facility of its kind in Croatia, whose pipes will reach aircraft parking positions, construction of a new administration building, a sewage system and implementation of numerous sub-projects required for regular functioning of the airport. The new airport was put in operation on 15 May 2017. HBOR RISK SHARING FOR MIDCAPS AND OTHER PRIORITIES HBOR

Approved on 22 September 2015, contract signed in November 2016 50 million euros

EFSI guarantee for an EIB loan in the amount of 50 million euros

This is the second Croatian project implemented within the framework of the Juncker Plan. Within the framework of a Risk-Sharing Model, EIB provides HBOR with a guarantee in the amount of up to 50 million euros for partial coverage of risk according to the existing portfolio of loans approved to MidCaps, which can amount to 100 million euros at the most, and which meets particular criteria. The project was designed with the aim of attracting commercial lenders and supporting MidCaps and other priority projects financed by HBOR. This was already mentioned earlier. EL TO ZAGREB

Hrvatska elektroprivreda PLC Approved on 15 June 2017 195 million euros

EFSI guarantee for an EIB loan in the amount of 150 million euros

The project of construction of a new combi-cogeneration gas facility for KKE EL-TO Zagreb is implemented for the purpose of harmonization of production units with Directive 2010/75/EU on industrial emmissions (LCP Directive) and with the aim of meeting borderline emission values prescribed by the environmental permit. The new combi-cogeneration facility will thereby replace two obsolete units at the location (Blocks A and B), and ensure safe supply of heat for consumption in the western part of Zagreb, that is, hot water connected to the central heat system and steam for industrial consumers. Financing with the support of the Investment Plan will improve the safety of electrical energy supply in Croatia and reduce the level of pollution.

__________________________________________ 9 EIB signed a loan contract with HBOR in the amount of 15 million euros, which will support investment into projects related to preserving biodiversity and adaptation to climate change, with special emphasis on green infrastructure. 22


Project title Project holder Project status Total expenses Financing

Description

Project title ČES DENTAL CENTER

Project title

CHC RIJEKA – NEW HOSPITAL BLOCK CONSTRUCTION

ISTRIAN RIVIERA DEVELOPMENT Valamar Riviera PLC

Loan contract signed on 6 March 2018 40 million euros

EFSI guarantee for an EIB loan in the amount of 16 million euros

Financing of this project represents the first transaction in the Republic of Croatia which EIB signed with a company from the private sector in which EU budgetary guarantee support through EFSI was used. With this loan EIB will co-finance the completion of construction of the Valamar Girandella Resort, that is, construction of the first Kinderhotel 5* in the portfolio of Valamar Riviera, with the opening of which in April this year repositioning of the Rabac destination into a leading resort destination for guests with high purchasing power will be completed. This loan is a supplement to an indirect loan in the amount of 44 million euros awarded to Valamar by HBOR in March 2017.

About the project

For the purpose of investing into state of the art equipment, the company was approved a PBZ loan insured by EIF in line with the Investment Plan for Europe: financing is directed at purchasing equipment, such as a 3D printer which can produce different orthodontic accessories. At the moment the Dental Center has 20 employees, and intends to expand. About the project

EIAH offered free technical assistance services for the preparation and structuring of projects for the CHC Rijeka project. Within that framework, consultants selected in the second half of 2017 helped CHC Rijeka draw up a Strategic Work Plan for the hospital, which will show which concrete measures are intended to be undertaken with regard to the organizational scheme, and thereby to CHC Rijeka’s employment policy, the correlation of this plan in relation to the National Health Development Strategy of the Republic of Croatia, but also other medical and demographic plans, as well as a work plan for the provision of non-medical hospital services, environmental protection aspects of the project etc. For the needs of its analysis of the project, on 8 and 9 February 2018 EIB held a due diligence for the project, which was attended by representatives of the Council of Europe Development Bank (CEB), who confirmed their interest in further monitoring of this projects and are, according to existing plans, prepared to obtain permits with the aim of concluding new loan contracts with HBOR in the following months.

23


State of play with regard to use of EFSI funds in six candidate and potential candidate countries for EU membership EFSI is primarily intended for EU Member States, whereas candidate countries1 and potential candidate countries2 are recommended to use funds available to them and mostly insufficiently used, such as the Western Balkans Enterprise Development & Innovation Facility (WB EDIF)3, InnovFinn Equity fund and Instrument for Pre-Accession Assistance (IPA II)4. In addition to the fact that those are specific instruments for promoting regional development, it is undoubtedly easier to obtain financial support from those funds than to compete for it with 28 full Member States. Nevertheless, the opportunity for using EFSI funds for candidate countries and potential candidate countries for EU membership is specifically stated in Article 8 of Regulation (EU) 2015/1017, in the context of participation in cross-border projects which, in addition to those countries, mandatorily include at least one EU Member State. In order to maximize EFSI’s impact, it is very important that it is open for participation of countries outside the EU. The Investment Plan for Europe and its main pillars are already opening numerous opportunities for countries of Southeast Europe with regard to development of their economies and preparation for using EFSI funds as full EU Member States, and their position has additionally improved with the entry into force of the new Regulation (EU) 2017/2396. By now third countries could already participate in EFSI projects, directly or through joint investment platforms, however, with an amendment to Regulation (EU) 2015/1017 two new types of those platforms have been introduced into the structure of EFSI; cross-border and regional. This clearly confirms that in its past application EFSI was not equally focused on all regions of the Union, but that it is intended to balance and expand its application in that sense. There are three ways in which third countries can participate in EFSI through the mentioned platforms5: (1) on EFSI level, by direct

contribution to EFSI through ensuring funds or providing guarantees (the latter relates only to Member States), subject to agreement of the Steering Committee, without participation in the management of EFSI; (2) in investment platforms as sponsors/investors or implementing bodies; (3) in individual projects financed by EFSI as co-financiers. In 2016 the EIB Management Committee issued a document under the title of „Geographical eligibility of cross-border operations involving non-EU entities under EFSI”.6 The document is focused on Article 8 of Regulation (EU) 2015/1017, relating to EIB guarantees for financing or investment operations covered by the Regulation and the EFSI Agreement if those operations are implemented within the Union or with participation of subjects which are seated or established in one or more Member States, and extend to include one or more third countries. The purpose of the document is to clarify Article 8 in the context of investment into cross-border projects including non-EU countries.

According to the mentioned document, the typology of cross-border projects eligible for EFSI funding covers:

• Operations including mutual physical connectedness between at least one Member State and a third country or territory fulfilling the requirements in line with Article 8 (b) – such projects can, inter alia, take the form of construction of transport tunnels or bridges, electrical energy supply (for example, electrical cables or gas pipelines) or setting up telecommunication interconnectors (for example, broadband internet connectors). These eligible physical interconnections will not include the parts of a wider cross-border project if the part being financed does not physically cross the border between the EU Member State and the eligible third country or territory. For example, a

__________________________________________ 1 Candidate countries are Albania, Montenegro, Former Yugoslav Republic of Macedonia, Serbia and Turkey. This part of the publication relates to six Western Balkans countries, and is thereby not completely applicable to Turkey. 2 Potential Member States are Bosnia and Herzegovina and Kosovo. 3 For the purpose of providing support to economic recovery of the Western Balkans, new infrastructure projects and projects from the area of market competition, as well as from the area of development / training of human resources, have been approved WB EDIF. 4 The purpose of this instrument is to facilitate the transition into the status of Member States for candidate countries and potential candidate countries. In the programming period 2014-2020, total programme budget amounts to 11,7 billion euros. About 4 % of those funds will be distributed for cross-border cooperation programmes among EU Member States and IPA II beneficiary countries, in accordance with their needs and priorities. 5 http://www.eib.org/attachments/general/efsi_rules_applicable_to_operations.pdf. 6 http://www.eib.org/attachments/strategies/efsi_steering_board_cross_border_operations_en.pdf 24


project of construction of a highway connecting EU Member States with a third country, but in which the part for which EIB financing through EFSI is requested includes only works carried out in that third country would not represent an EFSI cross-border operation. In order for the project to be eligible, at least 50 % of investment expenses must be accounted for in the EU. • Operations including mutual connectedness between at least one EU Member State and a third country or territory which meets the requirements in line with Article 8 (b) – such projects can, inter alia, take the form of construction of telecommunication systems (including satellite telecommunications) with relay transmitters or similar equipment in eligible third countries or territories when the telecommunication system has been developed by bodies seated or established in several Member States and put in operation in those Member States, and when that system expands to include an eligible third country or territory. This, for example, can include projects through which European transport management systems are put in operation in EU Member States and neighbouring countries outside the EU. In order for a project to be eligible, at least 50% of eligible investment expenses must be accounted for in the EU. • Operations including a product or service developed in an EU Member State, but whose implementation includes expenses in a third country or territory meeting the requirements in line with Article 8 (b) – such projects can take the form of RDI projects with a single objective, including eligible expenses in eligible third countries or territories, for example, in the case when testing vaccines for a particular disease must be carried out in an eligible third country or territory. They can also take the form of investment into new production capacities for the production of new, energetically cleaner machines by a production company from an EU Member State, which includes investment into new production capacities in an eligible third country or territory, with regard to that part of the components or materials required for production of those machines in the EU, with a direct and verifiable link showing that investment in the EU is subject to investment in the eligible third country or territory. In order for those projects to be eligible, at least 80 % of eligible investment expenses must be accounted for in the EU, whereas the remaining components should be accounted for in the eligible third country or territory, in line with Article 8 (b). Those eligible operations will include bodies seated or established in the EU and will not include projects in which the borrower is a body seated in a third country which is expanding to include EU Member States. • Operations including framework cooperation with the aim of financing portfolios of projects with a thematic focus, including projects in at least one EU Member State and an eligible third country or territory, in line with Article (b) – such operations can take

the form of framework programmes, loans or EFSI investment platforms established or managed by a body established/founded in an EU Member State, and which support construction of energy-efficient buildings in an EU Member State and an eligible third country or territory. In order to be eligible, such operations should prove that the projects supported in the eligible third country or territory will bring direct and verifiable benefit to (investment into) the EU, that they support EFSI general objectives, and that at least 80 % of eligible expenses of investment into the projects is accounted for in the EU, whereas the remaining components should be accounted for in the eligible country or territory, in line with Article 8 (b). • Operations including cooperation with EU financial intermediaries aimed at providing support to final beneficiaries, especially SMEs, which are seated in at least one EU Member State and a third country or territory meeting the requirements in line with Article 8 (b) – such operations can take the form of multi-beneficiary intermediated loans or risk-sharing operations, for example with national development banks, including final beneficiaries in the EU and the eligible third country or territory. Such an operation could, for example, be carried out in cooperation with a development agency in order to provide support to SMEs (and MidCaps) in particular regions of the EU Member State and foreign territories according to Article 8 (b) of Regulation 2015/1017 relating to that Member State. In order for an operation to be eligible, the financial intermediary must be contractually obliged that at least 80% of the final beneficiaries portfolio will be accounted for in the EU, and that the remainder of the portfolio will be accounted for in the eligible third country or territory in line with Article 8 (b). For the purpose of clarity, those eligible operations will only include operations including financial intermediaries seated or established in the EU. • Operations including EIB equity interests in funds – in order to fulfil the EFSI regulation, an EU guarantee can also be awarded for EFSI financial and investment operations in which EIB invests in funds whose activity is not exclusively limited to EU Member States, under certain conditions. Criteria listed below will be applied to investments into funds, where such funds are of benefit for an EU guarantee under the Infrastructure and Innovation Window: o EIB is permitted to invest into funds with at least one joint investor. Participation in those funds will not exceed 50 % of the total amount of undertaken committments (including EIB). Other investors can be established in the EU or in third countries. o By the end of the investment period, the funds will invest at least: a) 60% of total funds invested in countries covered by Article 8 of Regulation 2015/1017, b) 80 % percent of total funds invested in countries covered by the Article 8 of Regulation 2015/1017.

25


From the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of June 20167 it is perceivable that opportunities for using EFSI funds by countries outside the EU need to be further investigated. In the Communication it is stated that the Commission will assess the opportunities of using EFSI-type models for investment into developing countries through a scheme which would allow for solving concrete bottlenecks for investment by international financial institutions (IFIs) and thereby attract private actors to invest in those areas. In line with that, different international financial institutions should be allowed to expand their operations in challenging investment environments of post-conflict countries, as well as Candidate country

Albania

encourage investment into projects relating to migration, which have had an enormous impact precisely on the area of Southeast Europe. Hereafter follows a table overview of funds drawn from the EU by candidate countries and potential candidate countries for EU membership.

There are still no projects co-financed by an EFSI guarantee in countries outside the EU, and hereafter is provided an overview of other EU financing sources intended for candidate countries and potential candidate countries which shows that, considering the presence of other instruments, there is potential for using EFSI, but that those countries require additional promotional activities and provision of technical assistance in the preparation of projects.

Source of EU funds

Amount of assigned / allocated funds (€)

Pre-accession funds (2007 – 2020)

1,24 billion

EIB loans

WB EDIF (as of 2009)

92,5 million

Pre-accession funds (2007 – 2020)

506,2 million

Pre-accession funds (2007 – 2020)

1,28 billion

Sector budget support

Montenegro

Macedonia

Serbia

Bosnia and Herzegovina

Kosovo

130 billion

Support for floods in 2015 EIB loans

WB EDIF (as of 2009) EIB loans

135 million

14,9 million 451 million 81 million

660 million

WB EDIF (as of 2009)

93,4 million

WB EDIF (as of 2009)

116,4 million

WB EDIF (as of 2009)

122 million

Pre-accession funds (2007 – 2020) EIB loans

Pre-accession funds (2007 – 2020) EIB loans

Support for 2014 floods

Support to refugees under the Regional Housing Programme Pre-accession funds (2007 – 2020) EIB loans

WB EDIF (as of 2009)

2,2 billion 4 billion

690 million 1,7 billion

41 million

10 million

1,48 billion

160 million

95,7 million

Source: Drawn up by the author based on European Commission data from February 2018. Available at: (https://ec.europa. eu/neighbourhood-enlargement/news_corner/news/strategy-western-balkans-eu-sets-out-new-flagship-initiatives-andsupport-reform_en, accessed on 9 April 2018.

__________________________________________ 7 https://ec.europa.eu/commission/sites/beta-political/files/1_en_act_part1_v11.pdf 26


Technical assistance for preparation and increasing the visibility of projects The European Investvent Advisory Hub (EIAH) and the European Investment Project Portal (EIPP) represent the second part of the Investment Plan for Europe, and have been set up in order to facilitate the attainment of the European Fund for Strategic Investments objectives, especially with regard to activities of identification and preparation of projects. The European Investment Advisory Hub is a joint initiative of the European Commission and EIB, designed with the aim of speeding up investments by offering a single access point for different types of supports and investments in all phases of the project cycle, whereas the European Investment Project Portal is an Internet portal established and managed by the European Commission which allows projects holders and promoters from the public or private sector of EU Member States to make contact with potential investors from around the world.

EIAH provides support to development and preparation of projects based on expert knowledge of the Commission, EIB, national development banks or institutions, as well as management bodies of the European Structural and Investment Funds. Based on Regulation (EU) 2017/2396 of the European Parliament and Council which was brought in December 2017 and entered into force on 1 January 2018, provision of more directed technical assistance services on the local level by the European Investment Advisory Hub has been facilitated. This support includes provision of targeted support regarding the use of technical assistance for structuring projects, innovative financial instruments, public-private partnerships and, as required, counselling with regard to relevant issues concerning European Union legislation, taking into account the specificities and needs of Member States with less developed financial markets. EIAH’s advantage is the provision of free expert knowledge to public project promoters in order to ensure equitable access to EFSI financing. EIAH especially relies on good practices of existing programmes such as European Local Energy Assistance (ELENA), European Energy Efficiency Fund (EEEF), Joint European Resources for Micro to Medium Enterprises (JEREMIE), Joint Assistance to Support Projects in European Regions (JASPERS), Joint European Support for Sustainable Investment in City Areas (JESSICA) and European Code of Good Conduct for

Microcredit Provision (JASMINE).

There is a significant number of projects potentially sustainable from the economic and technical standpoint, but which are not financed due to lack of security and transparency within the European Union. This is often due to private investors being unaware of those projects or not having enough information in order to assess investment risks, including regulatory risks. With EIB’s support, the Commission has participated in the promotion of sustainable projects by having established a transparent portal for current and future projects within the Union which are suitable for investment – the European Investment Project Portal. The European Investment Project Portal ensures that information regarding investments are regularly and structuredly published in order to allow investors to access transparent and reliable data. Inclusion of a project in the project portal is free of charge for all types of project promoters. Member States can also present investment projects on their territories on the portal in cooperation with regional and local bodies.

European Investment Advisory Hub – a single contact point for investors and project holders

The European Investment Advisory Hub and the European Investment Project Portal are important for identification and preparation of projects, and have been set up in order to facilitate the attainment of European Fund for Strategic Investments objectives. The main purpose of EIAH is providing investors, projects holders and public management bodies with advice regarding the establishment, development and preparation of projects. The European Investment Advisory Hub and the European Investment Project Portal have been established with the aim of: • Achieving maximum use of existing technical assistance available to investors and project holders, • Provision of additional advisory services, and • Increasing the visibility of investment projects in the EU.

27


The Advisory Hub1 is a single contact point for investors and project holders seeking advice on investment projects and their financing. The Hub is managed in accordance with an agreement between the European Commission and EIB. The Hub’s operation is based on expert knowledge and existing advisory services provided by EIB and the European Commission, such as fi-compass or JASPERS. The Hub’s operation also relies on the expert knowledge of national development banks and institutions, as well as European Structural and Investment Funds management bodies. The Hub can conclude contractual partnerships for the purpose of cooperation with national development banks, institutions or management bodies. Services provided by the Advisory Hub include: • Provision of technical assistance to competent bodies and project holders, • Provision of assistance to project holders in order for them to be able to develop their projects so as to meet eligibility criteria in line with the EFSI regulation, • Increasing the availability of EFSI support in the EU through more efficient use of local knowledge, and • Operation as a platform for exchange of experiences and expert knowledge on project development. In its proposal for extenuation of EFSI, the Commission stresses that in the forthcoming period the European Investment Advisory Hub will provide technical assistance on the field, based on agreements with relevant local actors. Furthermore, more directed and adapted technical assistance services for projects including several Member States and projects for combining EFSI with other financing sources such as European Structural and Investment Funds, Horizon 2020 and Connecting Europe Facility will be ensured. In this context, in the EFSI 2.0 proposal it is planned that the European Investment Advisory Hub will actively contribute to the objective of sectoral and geographical diversification of EFSI by supporting EIB in its efforts to initiate new projects on the field in less developed Member States. In line with that, the Commission will consider the possibility

of nominating special representatives for European investments in its representative bodies in Member States, who would cooperate with competent Commission services within the framework of a single investment policy group. At the start of 2018 the Ministry of Regional Development and EU Funds and EIB signed a contract on the provision of advisory services to Croatian public and private companies for the purpose of identification, preparation and development of investment projects. The signed contract on the provision of advisory services over a period of 12 months, financed in entirety by EIB, will contribute to establishment of more efficient investment planning by identifying deficiencies in the existing system, proposing measures and providing recommendations for improvement, and contribute to the realization of investment projects. The Advisory Hub provides services in the sectors of research and development, energy, transport, circular economy, environmental protection, information and communication technologies and social infrastructure. Interested public and private companies can address the Hub by submitting a request for advisory support through the Hub’s Internet portal - http://eiah.eib. org/find-support/index. Once the request has been submitted, the Hub’s employees will assess the need for providing advisory support and set about defining the model of cooperation and contract signing. The Hub can provide support in the activities of designing project proposals, identification of requirements, elaboration of project activities, drawing up analyses, carrying out research and project implementation. Depending on the project proposal requirements, the Hub’s employees can also recruit external associates. The Hub’s services are free of charge for the public sector, whereas for the private sector there is a possibility of financial compensation, depending on the type of the advisory service concerned. Fees paid by SMEs are limited to one third of the value of technical assistance provided. Hereafter follow several examples of EIAH technical assistance:

Area

Technical assistance examples

Plans for support to public companies and the nonprofit sector

The Hub provides support to a consortium of non-governmental associations covering different areas such as the healthcare and social sector, employment and training, social incubators, and provides assistance to disabled or elderly persons, by drawing up market analyses and business plans for structuring the organizational and financial model of the consortium.

Renewable energy sources projects

Environmental protection projects Public healthcare infrastrucure construction projects

In the area of renewable energy sources the Hub provides advisory support for the development of basic project strategies, drawing up of demand analyses and investment studies.

In the area of development of environmental protection projects, the Hub provides support in the development of business plans and initiating activities for seeking possible financing sources.

The Hub provides support to countries in the area of public healthcare infrastructure construction projects by drawing up financial plans and plans for the realization of project activities.

__________________________________________ 1 More on the Advisory Hub at: http://www.eib.org/eiah/index.htm 28


The project portal – increasing the visibility of projects and finding foreign partners In order to increase transparency with regard to the opportunities for investment in the EU, the European Commission established the European Investment Project Portal (EIPP). EIPP is part of the Investment Plan for Europe initiative, and is intended for supporting investment into the real economy. With EIPP’s assistance, project promoters from the public and private sector seated in the EU can increase the visibility of their projects in a simple way. The presentation of projects on EIPP is structured and user-friendly, so as to attract investors from all over the world, who will be able to enrich their portfolio with additional European projects. The European Commission established EIPP as a link between project promoters in the EU and investors from around the world in order to promote and speed up the use of a larger number of opportunities for investment in the EU. The portal is intended to increase the visibility of existing opportunities for investment in the EU through the establishment of a central platform for promoting projects in the EU, using a harmonized and structured format. EIPP is one of numerous Commission initiatives for restoring investment activities in the EU. Herafter are presented the most common questions and answers on delivering projects for publishing on the European Investment Project Portal. Can anyone deliver a project for publishing on EIPP?

The promoter of a project intended to be published on EIPP must be a public body of a Member State or a private/public entity established in a Member State. Individuals and legal entities undergoing bankruptcy, liquidation or similar proceedings are not allowed to deliver projects to the portal. The project promoter must be an organization authorized for presenting projects. Will the European Commission or a competent body verify project quality?

The Commission verifies projects based on criteria for publishing projects on the portal defined by Commission Implementing Regulation (EU) 2016/1942, as amended by Commission Implementing Regulation 2017/919. The purpose of EIPP is not to replace the usual in-depth analysis procedure which investors must carry out prior to making investment decisions.

In which languages can a project be applied?

Project applications in all EU official languages are acceptable. If the project is delivered in another language, the European Commission ensures free translation to English. What is the smallest size required for a project to be eligible for publication on EIPP?

Currently it is 1 million euros. If a project is smaller than the smallest project size, project promoters should consider the possibility of linking with similar projects in other regions and submission of a joint, larger project. Does implementation of projects published on EIPP have to last three years?

No. In line with criteria for participation, it is only required that project implementation commences within three years from its submission to EIPP. For how long will a project be published on EIPP?

In the course of three years. During that time project promoters are encouraged to deliver information on the progress of their projects. Following the expiry of three years, the project can be applied for publication again if the promoters consider that its publication on the portal could still be useful. How can an interested party make contact with the promoter of a project published on EIPP?

Through an Internet form. The form can be found on the portal, as well as the name of the organization of the promoter concerned, but it does not contain specific contact data. Thereby promoters can choose not to reply to unwanted contacts. Can cross-border projects be applied for publication on EIPP?

Yes, under the condition that investment is carried out in all stated EU Member States. Cross-border projects implemented in cooperation with third countries are also allowed to be applied for publication, under the condition that the investment is at least partially carried out in an EU Member State.

Source: Drawn up by the author based on data from the official website of the European Investment Project Portal (EIPP) https://ec.europa.eu/eipp/desktop/hr/index.html, accessed on 9 April 2018.

Is there a fee to be paid for submitting projects?

No. Submission and publication of projects are free of charge for all project promoters from the public or private sector. When will a project be published on EIPP?

Project publication can be expected within 45 working days from the date of submission. Publication depends on whether the project is clearly described and whether requested information have been immediately delivered. __________________________________________ 2 Više o portalu za projekte: https://ec.europa.eu/eipp/desktop/en/index.html 29


At the moment, more than 250 projects from the sectors of energy, digital economy, transport, social infrastructure, environmental protection, agriculture and rural development, as well as SME projects, including 15 projects from the Republic of Croatia are published on the portal. Hereafter follows a brief overview of several projects in the Republic of Croatia published on the portal: Project title CCPP Slavonski Brod Project title

Nautical Tourist Port Ploče

Project title

Wester Žabica Complex

Project title

Zelina Aquapark

Project title

Delnice Sport Hotel

30

About the project

The project includes investment into a new production facility with total power of 600 MW through stage construction of a Combined Cycle Power Plant (CCPP) near Slavonski Brod (CCPP Slavonski Brod). The net power of the first stage of CCPP Slavonski Brod amounts to cca. 240 MW. Estimated total investment amounts to 450 million euros, and estimated investment in the first stage amounts to 190 million euros. About the project

The project includes construction of a nautical tourist port with a maximum capacity of 400 berths at the location „Pod cestom“ in the Baćina area of the town of Ploče. Total project area size is 9,33 hectares, of which the the inland part accounts for 1,34 hectares, whereas the sea surface accounts for 7,99 hectares. Planned capacities include a total of 7 piers for a total of 224 vessels of different sizes (up to 35 meters). According to the existing conceptual design there are two variants of development of this project. According ot the conceptual design, the first variant includes construction of 282 berths, a parking lot for 101 automobiles, dry berths, a travel lift or dock, as well as conversion of existing buildings into a restaurant, reception, stores and storage spaces. The second variant is an extended version of the first one, wherein, in addition to the objects constructed in the first part, full commercialisation of the area is planned, as well as construction of a hotel with 140 beds, additional berths (up to a total of 400) and a building with stores and storage spaces, and with 240 parking spaces. Total estimated value of the first variant amounts to 6 million euros, and the value of the second variant is estimated at an additional 15,5 million euros. About the project

Construction of the Western Žabica Complex will allow for operational activity of the Rijeka bus terminal with associated contents such as a parking lot and commercial contents, as well as expansion of the pedestrian zone in the town centre. The project includes construction of a bus terminal complex with a bus garage (cca. 11.500 m²), a fourlevel public garage with 940 parking spaces (cca. 26.000 m²) and business premises (cca. 3.600 m²). In addition to construction of the terminal, the project includes construction of a new access road along the ground level of the complex, extending to Riva Street, reconstruction and a new design of Žabica Square, as well as reconstruction of the entrance to the Rijeka port area. The estimated value of the project is 52 million euros. About the project

Zelina Aquapark is a project of construction of a sport and recreational complex at the location of the former Zelina bathing resort, covering a total surface area of 44.547 m2, owned by the Town of Sveti Ivan Zelina, and the concept design provides for stage construction of a main building (including a restaurant with a separate ceremonial hall, three bars, a night club, management offices, rescue services, staff sanitary and wardrobe premises, storage spaces, technical and other auxiliary premises), an access square in front of the main building, five open space swimming pools with sun decks, grandstands and water attractions (a water castle, a tobbogan complex with an access tower) and separate catering and sanitary buildings. The estimated value of the project is 5 million euros. About the project

The project includes activities of reconstruction and upgrading of the former Medical Center and its conversion into a hotel with 39 rooms and 84 beds. Construction of associated contents, that is, a parking lot, a children’s playground, a small park and a promenade is planned nearby. The estimated value of the project is 1,67 million euros.


Activities of the Office MEP Ivana Maletić’s activities and reports

Maletić: I want Croatia to become one of the economically strongest countries in Southeast Europe

This year we will celebrate five years of EU membership. We are still facing a lot of work in order to become an active, recognizable and strong Member State which successfully uses the advantages offered by the European Union, from the Single Market, transfer of technologies and new knowledge, through Cohesion Policy and Common Agricultural Policy to other different financing sources. My work in the European Parliament as a member of the Committee on Economic and Monetary Policy, Committee on Regional Development and Committee on Budgets is directed precisely at better positioning of Croatia in the European Union and at strengthening Cohesion Policy in the EU budget in order for EU funds to remain a source of encouragement of strong and long-term sustainable development in the forthcoming period.

Solutions for emerging problems such as the migrant and refugee crisis, youth unemployment, lack of investment, internal security, agricultural crisis, delays in payments from the EU budget, non-implementation of structural reforms etc. are being sought on European Union level.

All those issues are important for us as well. The European Fund for Strategic Investments (EFSI), the socalled Juncker Fund, is an additional financing source and an opportunity for financing investments into renewable energy sources, circular economy, innovation and new technologies through investment platforms. This fund is intended to encourage entrepreneurs for realization of high risk profile projects. We are continually working on improvement of the visibility of opportunities for financing with EFSI guarantees, and our objective is to significantly increase the use of these financing sources in the Republic of Croatia. That is precisely why we have prepared this special publication: European Fund for Strategic Investments – status of implementation, challenges and opportunities in the EU with a special review with regard

31


MEP Ivana Maletić is one of the authors and Editor-in-Chief of the book „EU Projects – From idea to realization”

MEP Ivana Maletić leading an EPP hearing on the subject of „Acceleration of implementation of Cohesion Policy“ with her colleague Mr. Van Nistelrooij

to Croatia and neighbouring non-member countries, and held a conference on the subject of the opportunities for financing entrepreneurial and local unit projects with EFSI guarantees with European Commission Vice President Jyrki Katainen. In addition to investments, achieving economic growth also requires changes in the mode of operation. Through the European Semester the European Commission calls on all Member States to put more energy into implementation of Country Specific Recommendations and ensure stronger support to their economies through implementing structural reforms. A book on the European Semester and economic policies on EU level, as well as recommendations for Croatia is in preparation and will be published in the course of 2018.

Reforms are not only a concern of the Government and Brussels, reforms represent the willingness and decisiveness of the Government and the entire society to change. Only together, by using all opportunities available to us, by changing and adapting to a new age based on smart investments can we succeed and initiate stronger economic growth.

32

Work on encouraging better use of EU funds in the Republic of Croatia

We went around all our counties, we organized hundreds of conferences and meetings with entrepreneurs, farmers, the youth, non-profit organizations, local units and all other interested parties. We are continuously receiving inquiries on the opportunities for finacing projects from EU funds. That is precisely why I was one of the authors and Editor-in-Chief of the book „EU projects: From idea to realization“. That is a publication which is intended to contribute to successful use of EU funds in Croatia. First of all, you need an idea, then knowledge on the opportunities for financing, identification of the programme from which realization of the idea can be financed, and then commences the road to preparation and implementation of the project. We can achieve more by working together, and each implemented project represents a success for the entire country. The Resolution on Acceleration of Implementation of Cohesion Policy which I had drawn up with the aim of undertaking measures for avoiding loss of EU funds in particular Member States, especially in Croatia, was


adopted at a plenary session in May 2016. Due to the importance of the subject, the European People’s Party (EPP) also organized a hearing with experts from Member States, over which I presided. With numerous amendments and this resolution I encouraged acellerated simplification of rules and procedures, adaptation of Cohesion Policy to the needs of final beneficiaries, better communication in order to increase the visibility of Cohesion Policy among citizens, and especially stability in approaching the overall policy in cooperation with other colleagues from the Committee on Regional Development. Member States also have to carry out their tasks, which implies improving their financial management systems, solving problems which represent an obstacle to the preparation and implementation of projects, carrying out structural reforms and building a faster and more flexible administration, as well as strengthening administrative capacities.

We prepared workshops with the aim of introducing all interested entrepreneurs, young people, farmers, innovators, scientists, officials etc. to the basics of preparation of EU projects and the opportunities for financing from ESI funds by 2020, as well as expectations regarding the future, the period after 2020. We held our first workshop at the Business Incubator Šibenik upon request from the director of the Podi entrepreneurial zone Jakov Terzanović, in order to help reinitiate educational activities and encourage entrepreneurs, but also the public sector, to continue working on EU projects. The workshop was held on 6 April 2018 from 5 pm to 8 pm, and on 7 April from 9.30 am to 12 am. We introduced the attendants to the opportunities for finacing projects from EU funds and preparation of project proposals for applying for EU tender procedures. Two days is not enough time to learn how to prepare projects, but it is enough for obtaining basic knowledge on what is eligible for financing and which are the steps in the preparation of projects. At the workshop we went through the objectives to be fulfilled though the use of ESI funds, the basic principles of Cohesion Policy and the future. After 2020 we will receive almost the same envelope, amounting to 10 billion euros, and thereby it is important to learn how to prepare projects, but also to become actively involved in defining new strategic documents showing what we will spend funds on. They have to be a reflection of your needs with criteria adapted to yourselves. Without working together we will again have operational programmes financing areas which are not of interest.

A workshop on EU funds held at Business Incubator Šibenik

A lecture on the subject of smart specialization as the future of the European Union’s socio-economic development held by MEP Ivana Maletić in Zadar

A visit to a seminar for ambasadore seniores of the European Parliament’s Euroscola

33


„Youth Guarantee: two years later“ conference held on 5 May, organized by the European Parliament, Public Information Office of the Republic of Croatia and Croatian Youth Network

A conference on Erasmus+ programme

The book “Ready-Set-Go-Erasmus+”

MEP Ivana Maletić assuming presidency over Knowledge4Innovation initiative

We also went through the most important project parts and most common mistakes which result with losing points, demonstrated successful project examples, showed how to fill out basic forms and pointed out which tender procedures are currently open and which have been announced.

I have initiated the #MOJEUPROJEKT education programme which included 106 young people who learned about EU funds in a practical way – through drawing up projects. During 2016 we prepared 16 projects, and the education programme was carried out again during 2017 in cooperation with Oath to the Virgin Mary for the Homeland, Magis and SKAC Palma associations, and the Heart of Jesus praying community.

We are preparing a new book on EU projects in which you will be able to find all the tips and tricks for proper preparation and implementation of projects. We will go around all the counties, so if you want us to visit your city feel free to invite us.

Continuing work with young people: We carry out educational activities in #MOJEUPROJEKT programme, and the MEP has become an Erasmus+ programme ambassador for young entrepreneurs.

34

Yount unemployment is a burning issue in Croatia, therefore I called upon identifying activities and measures aligned with the needs of young people. We need to stop adapting young people to our ideas and start working together and in accordance with their needs. I regularly provide advice to young people regarding all opportunities provided by Erasmus+ programme, I have held numerous education programmes and conferences at universities and faculties all over Croatia, and a special large conference


on Erasmus+ programme in Zagreb in December 2016. The book „Ready-Set-Go-Erasmus+“, which is an excellent handbook for preparation and implementation of projects financed from Erasmus+programme was presented at that conference. Due to my continued work with young people and on policies for young people I have become the ambassador of Erasmus+ programme for young entrepreneurs in Croatia, and ambassador of the Startup Europe Awards competition.

Knowledge for Innovation (K4I)

At the meeting of the Knowledge4Innovation (K4I) initiative Steering Committee held in January this year I was elected K4I President, whereas MEPs Andrej Novakov, Henna Virkkunen, Angelika Mlinar and Paul Rubig were selected as Vice Presidents.

European Innovation Summit: A round table on the subject of the future of the Framework Programme

After K4I had been run by former President of the European Parliament and Prime Minister of Poland Jerzy Buzek and Coordinator of the Committee on Regional Development Lambert van Nistelrooij, who jointly promoted innovation as an EU priority for almost ten years, I have the honor to assume presidency over this important organization which brings together innovation and science as important European policy priorities.

K4I is an open and independent platform whose aim is to create sustainable support mechanisms for innovation and includes a wide range of participants, including representatives of regions, cities, the academic and research community, trading organizations, as well as representatives of technological platforms. In 2009 Members of the European Parliament established the K4I forum which, with the support of more than 40 MEPs, by now organized over 500 discussions, conferences and round tables, as well as nine successful European Innovation Summit events, attended by more than 40.000 participants and 30 European Commissioners. The subjects elaborated by K4I mostly concern issues relating to innovation and knowledge as an important European policy priority, promoting innovation as a key tool for encouraging sustainable economic growth, development of an innovation model with people at the centre of innovation and incorporating ideas from the Forum into the market through patent protection, standardization, public procurement and smart regulation.

“Good governance and smart specialization of LRSUs and solutions for continuing decentralization”

Innovations are of key importance for acceleration of developement in all areas, from agriculture, transport, the environment, energy and digitalization to education, healthcare, social welfare and general changes in the mode of operation of the public sector.

35


MEP Ivana Maletić holding a lecture on the subject of the Digital Agenda for Europe and opportunities for financing projects from EU funds within the framework of the „Croatia 2030 – Identification of projects important for regional development – development digitalization in the function of growth of local employment and income” conference

A visit of a group of entrepreneurs and representatives of the academic community to the European Parliament organized by the Office of MEP Ivana Maletić

MEP Ivana Maletić brought young Croatian entrepreneurs, innovators and students to the „Science-Innovation-Startups – New Opportunities for the Youth” conference which she organized in cooperation with Portuguese MEP Claudia Monteiro de Aguiar

A visit to the European Parliament was also organized on the 950th anniversary of the town of Šibenik

The European Innovation Summit is an opportunity for exchange of ideas and good practices between Member States. At the end of last year, the subject of the European Innovation Summit was „Turning knowledge and ideas into value for society“, and I led two discussions on the subjects of „Focus on the mission in research and development policy“, aimed at providing recommendations for FP9, that is, continuation of Horizon 2020 programme, and „Open science, open innovation – acceleration of the innovation process“.

„Let the Stars Shine“ initiative

36

„Let the Stars Shine“ is a joint initiative of nine Members of the European Parliament (from Croatia, Bulgaria, Belgium, France, Germany, the Netherlands, Poland, Romania and Slovenia) launched on 30 August 2017 with the aim of encouraging European togetherness and solidarity, as well as promoting and increasing the visibility of quality and creative projects which have had a positive influence on the lives of citizens in Member States. The main idea behind this initiative is based on strengthening communication and visibility of good and positive projects encouraged in the European Union and financed from the EU budget.


Within the framework of this initiative, MEP Ivana Maletić organized a call for application of projects to be presented at the European Parliament, calling on municipalities, cities, counties and all citizens to fill out a form and apply projects financed from EU funds which have had a positive influence on life in their surroundings, positively surprised with their contents or inspired new entrepreneurial undertakings and projects in a special way. The applications received, 69 of them, were evaluated by a special commission comprised of experts in the area of Cohesion Policy, and the best five projects were selected to represent the Republic of Croatia at a conference and exposition which will be held at the European Parliament in June 2018, as well as be included in a special European Parliament publication on EU projects which are bringing positive changes.

MEP Ivana Maletić organized a conference under the title of „Good governance and smart specialization of LRSUs and solutions for continuing decentralization“ in Zagreb. Within the framework of the conference a round table was held, in which, in addition to MEP Ivana Maletić, Minister of Regional Development and EU Funds Gabrijela Žalac, Minister of Finance Zdravko Marić and Minister of Public Administration Lovro Kuščević also took part. The participants of the round table discussed key subjects relating to attaining and encouraging local unit development through public administration reform, which is necessary and without which there can be no rationalization and good governance. Following the initial presentation and the round table, awards were given to the winners of the „Let the Stars Shine“ competition. The approved projects within the framework of the initiative are: „Revitalization of St. Michael’s Fortress“ project by the Town of Šibenik, „Through Knowledge to Warm Home“ project by the Town of Petrinja“, „Coworking Zadar – Innovation Through Collaboration“ project by the Town of Zadar, „Sisak–Moslavina County – Center of Gaming Industry“ project by Sisak-Moslavina County development agency SI-MO-RA Ltd., and „Osteogrow“ project by the Faculty of Medicine in Zagreb.

Information on important EU subjects and activities of MEP Ivana Maletić

We are regularly reporting on all important discussions, resolutions and regulations on our website (www.ivanamaletic.com) and on Facebook (www.facebook.com/ivana. maletic.cro/), in addition to publishing an informative monthly magazine in which we elaborate all important subjects relating to economic policy, EU funds, the budget, public finance etc., as well as provide reviews and carry out special analyses comparing the Republic of Croatia with newer Member States.

A visit of representatives of local and regional self-government units to the European Parliament

37


As of the commencement of MEP Ivana Maletić’s work at the European Parliament we have published 34 issues of the monthly magazine and four special issues: „Entrepreneurs facing the challenge of use of EU funds“ (April 2014), „Young people facing the challenge of use of EU funds“ (May 2014), „Comparison of Croatia with other countries based on international competitiveness analyses“ (January 2017) and „An EU guide to successful and sustainable development of cities and municipalities“ (May 2017). All publications, as well as presentations held at conferences in cities and at faculties are available on the official website - www.ivana-maletic.com.

Visitor programmes and internships

Within the visitor programme, Members of the European Parliament have the possibility of bringing 110 visitors annually and introducing them to the operation of European institutions, as well as presenting their work at the European Parliament, and are allowed to receive young people as interns at their offices.

MEP Ivana Maletić participated in an official visit of the Committee on Regional Policy to Slovenia.

Thereby, over 60 young people worked as interns at our office, who learned much about the operation of European institutions, the functioning of the EU, and especially on the modes of decision-bringing at the European Parliament. That is valuable knowledge which allows them to cope more easily with affairs they take over in the Republic of Croatia. We organized more than 20 visits and by now brought 500 visitors to Brussels and Strasbourg.

MEP Ivana Maletić taking part in a session of the expanded presidency of the Club of Representatives of the European People’s Party in Valencia with MEPs Šuica and Zovko

In addition to a visit, a conference is also almost always organized, allowing for acquiring new knowledge and connecting with experts in charge of areas interesting to visitors of European institutions.

38

By bringing visitors from our homeland, Croatia, we wish to fulfil three objectives: „Our first objective is for our citizens, as part of the European Union, to familiarize themselves with European institutions and the operation of the Parliament because it is important that they feel what membership in the EU actually means. The second objective is for our visitors to present our values, matters of importance in the Republic of Croatia at the European Parliament. The third objective is exchange of knowledge and experiences with similar organizations in other Member States“, pointed out MEP Ivana Maletić, who organized visits by sportsmen, entrepreneurs, scientists, young people, assemblies and representatives of local units.


MEP Ivana Maletić making a guest appearance on the “From the heart of Europe” show with assistants and co-workers Alen Halilović and Domagoj Badžim

MEP Ivana Maletić’s reports Abolition of financial limitations for cultural legacy reconstruction projects

MEP Ivana Maletić was shadow rapporteur for REGI Committee opinion on the report on integrated approach to cultural legacy in Europe. She pointed out the importance of monitoring investments into culture from different sources, as well as providing information on all cultural projects in a single integrated report. She stood for abolition of financial limitations amounting to 5 and 10 million euros for an individual investment into cultural legacy reconstruction projects, which is especially important for the Republic of Croatia which is rich with historical and cultural treasure, and the needs for investment in the revitalization of particular localities significantly exceed the set limitations.

Acceleration and simplification of rules for using ESI funds

MEP Ivana Maletić drew up a resolution under the title of „Acceleration of Implementation of Cohesion Policy“ with the aim of taking measures for avoiding loss of EU funds in particular Member States, especially in Croatia. That was the first resolution requesting from the European Commission to take concrete measures for providing assistance to Member States which are lagging behind

with regard to the use of EU funds, and was adopted at a plenary session in Strasbourg on 11 May 2016. Cohesion policy for the financial perspective 2014-2020 has changed significantly, and some of the changes include thematic concentration, focus on results, need for greater coordination with economic policy, ex-ante preconditions, attaining synergy with other programmes, increased use of financial instruments etc. MEP Ivana Maletić pointed out that all these novelties contributed to improvement of Cohesion Policy, however, Member States are required to produce new knowledge and try a different approach. They should carry out their programming in a completely new manner, establish new management structures, new procedures and new information systems. All that takes time and we are now facing the fact that in 2016, that is, the third year of the financial perspective 20142020, in most Member States implementation is only just beginning, and some of them have not yet established rules of operation and procedures neither for new management structures nor for information systems and are facing the risk of decomittment (withdrawal of funds in line with the N+3 rule- funds allocated in year N must be spent in the following three years) already in 2017, and especially in 2018. „We are not blaming anyone with this resolution and we do not want to seek the culprit guilty for the late commencement of implementation. We are also not asking for more funds nor for extenuation of the N+3

39


MEP IvanaMaletić taking part in the 28th anniversary of the establishment of CDU of the Šibenik-Knin County

rule. What we are asking for is the following: accelerated simplification of rules and procedures, rapprochement of Cohesion Policy to the needs of final beneficiaries, better communication in order to increase the visibility of Cohesion Policy among citizens and, especially, early start of programming for the new perspective so as for new operational programmes to be ready at the end of 2020 and for implementation to commence in the first year“, pointed out MEP Ivana Maletić.

More funds for entrepreneurs and R&D&I

On behalf of EPP, Mep Ivana Maletić was shadow rapporteur for the draft opinion on the budget of the European Union for 2015, and all amendments she proposed were adopted. In explaining the amendments supported by most political parties in the Parliament, the MEP pointed out that in partnership agreements with Member States and operational programmes the European Commission should insist on implementation of development projects and drivers of growth, such as opening financing sources for SMEs and thereby direct budgetary funds towards creation of an innovative, creative and competitive Europe. Due to the importance of implementation of structural reforms and good management of public finance for achieving economic growth and development,

40

the MEP requested from the European Commission to encourage investment into analyses, scientific research and innovation in the mentioned areas, and exchange of knowledge and experiences acquired through implementation of projects financed from European Structural and Investment Funds in cooperation with Member States. Only through implementation of reforms, encouraging entrepreneurship and investments, making smart investments into educational, healthcare, environmental, energy and transport infrastructure can competitiveness be raised and economic growth and development realized.

Harmonized rules and joint work of Member States are required for achieving faster growth

As shadow rapporteur for the opinion on the European Semester with regard to harmonization of economic policy: Annual Growth Survey 2017, I especially pointed out that the Annual Growth Survey, as an important document on policies which represents the basis for national reform programmes, Country Specific Recommendations and implementation plans, should serve as a guideline for Member States and for preparation of national budgets for the purpose of introducing common solutions which exist in national budgets and are linked to the EU budget.


I stressed that, in comparison with other large markets such as the USA, the European Union has strong fiscal rules, uneven legislation in Member States and a large number of different limitations which represent an obstacle to progress, innovative solutions and entrepreneurship in general. Prior to presenting the Annual Growth Survey, it is necessary to discuss common activities and rules which need to be established on EU level in order to encourage exchange of knowledge, experiences, technologies, innovations, development and fast growth of startups with Member States in more detail.

An important new division of Croatia on the level of statistical regions

MEP Ivana Maletić was shadow rapporteur for the report on amendments to the European Statistical System for Territorial Typologies, that is, amendments to Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics , the so-called NUTS Regulation. With amendments to the former NUTS Regulation proposed by the European Commission, a legal basis for recognition of territorial typologies, including the definition of cities for the needs of European statistics, has been established. That includes establishment of definitions and statistical criteria for different territorial typologies, with ensuring harmonized and transparent applications on EU level and in Member States.

On NUTS II level Croatia is divided into two statistical regions. The division into two regions, Northern and Southern Croatia, as well as merging of North-Western and Pannonian Croatia into one region, as decided by the Government in the summer of 2012, without carrying out public consultations, is not in the spirit of even regional development, that is, Cohesion Policy, because less developed areas are put in the position to help more developed ones by allowing them to participate in the funds. Thereby the City of Zagreb, whose GDP is above 100 % of the average GDP of Member States, has the opportunity of using EU funds for basic infrastructure because it is included in Northern Croatia, whose GDP is lower than 75 % of the EU GDP because of Slavonian counties, whose GDP is below 50 % of EU GDP. Division of Croatia on the NUTS II level must be modified, and with these amendments regulations are becoming more flexible and we have the opportunity to establish another division, which would support a more even development of Croatia in the course of the following year.

EIB must change its work patterns and direct funds towards less developed Member States

MEP Ivana Maletić was the REGI Committee rapporteur for an opinion on the Annual Report on the Financial Activities of the European Investment Bank (EIB). This was the first time that the REGI Committee gave its opinion on EIB’s report, and MEP Ivana Maletić was entrusted with drawing up the opinion first and thereby laying the foundations for future reports. EIB plays a series of important roles in the implementation of Cohesion Policy: providing favourable loans for financing national projects, providing advisory and analytical services as assistance to Member States through JEREMIE and JESSICA insturments; providing assistance in the management of financial instruments; assistance to Member States in the preparation of projects and building capacities with support from JASPERS and JASMINE initiatives. EIB should support sustained development of All Member States with its activities, as well as direct sources of financing towards regions which are lagging behind, however, in her analysis of EIB’s report MEP Ivana Maletić established that EIB was not fulfilling the objective set before it by the Treaty on European Union and the Common Provisions Regulation for the European Structural and Investment Funds.

MEP Ivana Maletić immediatelly requested detailed information on EIB’s operation in the context of Cohesion Policy, explanation and measures for changing the distribution of funds: „ According to the geographical distribution of loans as per Member States in which projects are implemented, 54,11 % of all loans approved in 2016 were allocated to five Member States – Spain, Italy, France, Germany and Great Britain. This distribution of funds is not in line with the regulations and objectives EIB should be fulfilling, and I request detailed information on investments, the reasons for lack of investment into less developed Member States and taking urgent measures for changes in the mode of operation and distribution of funds from EIB.“

Reform of the own resources system should not put an additional tax burden on EU citizens

MEP Ivana Maletić was ECON Committee’s shadow rapporteur for an opinion on the reform of the EU’s own resources system, in which she especially emphasized that the system reform should not put an additional tax burden on EU citizens.

For the current seven-year budgetary cycle, the EU has at its disposal the following own resources: traditional own resources (mostly customs and sugar duties),

41


own resources based on Value Added Tax (VAT) and own resources based on Gross National Income (GNI). According to the rules, the EU can increase its own resources for payments up to the limit of 1,23 % of the total Gross National Income of all Member States during the period 2014-2020. The total amount of approved funds for assumed commitments cannot exceed 1,29 % of the EU’s GNI.

Within the framework of proposed measures for changing the own resources system, the MEP pointed out that increase of payments based on GNI, and especially the effects of Brexit and the need for financing new priorities, with keeping Cohesion Policy and Common Agricultural Policy on the existing level, should be taken into account. The MEP agreed with the High Level Group on Own Resources’ proposal to simplify rules relating to VAT, reduce administrative expenses and eliminate all correction mechanisms on the revenue side, whereby a more just system for European citizens would be established with regard to the EU budget. In her amendments, MEP Ivana Maletić pointed out the need for establishment of a budgetary capacity for strengthening the euro, which would not overlap with existing policies and fragment the budget, and would be directed at macroeconomic stabilization ans strengthening the financial system in the entire EU. „Therefore, that budgetary capacity should be intended for all Member States, not only eurozone countries“, pointed out MEP Ivana Maletić.

In order to realize common EU objectives with regard to economic governance, MEP Ivana Maletić mentioned that a clear connection between budgetary spending and strategic objectives is required in the process of budget planning.

contributing to better management and monitoring of Cohesion Policy in Member States, which would allow for more accurate estimations of payments from the EU budget. EU funds should be directed towards areas in which the largest EU added value can be realized, and therefore the system of allocation of funds from European Structural and Investment Funds should be improved by adding criteria related to the challenges the EU is facing, especially demographic movements, unemployment, social inequality and migration.

Will and decisiveness are more important for implementation of structural reforms than funds

The Regulation establishing the Structural Reform Support programme was brought in May 2017. The program will last from 2017 to 2020, and 142,8 million euros have been ensured for its implementation. Considering that demands of Member States for using assistance from this programme exceed the available funds several times, it has been decided that the Programme budget be increased by 80 million euros, and the procedure of amendment of the Regulation is in progress, while MEP Ivana Maletić is shadow rapporteur. In addition to investments and responsible fiscal policy, implementation of structural reforms is of key importance for achieving high growth sustainable in the long-term. „Cohesion Policy ensures funds for investments, however, if countries are not implementing structural reforms at the same time, those funds are thrown away in the long-term because they are not helping countries to develop but only postponing, that is, mitigating their fall. That is precisely why it is important to link the Structural Reform Support Programme with Cohesion Policy“ pointed out MEP Ivana Maletić.

In addition to the size of GDP, demographic indicators should also be taken into account in the distribution of ESI funds What will be the source of funds for the Structural Reform MEP Ivana Maletić was BUDG Committee’s shadow rapporteur for the opinion on the European Commission’s 7th Report on Economic, Social and Territorial Cohesion in the EU. Within the framework of her amendments, the MEP pointed out that each year the difference between estimated and real payments for Cohesion Policy from the EU budget is considerable and called on the European Commission to develop a methodology for better planning of EU budget implementation in cooperation with Member States. The MEP proposed the establishment of an e-Cohesion system into which Member States would enter data on prepared projects, public procurement plans with planned and realized dates for carrying out tender procedures and contracting, data on implementation, as well as all financial and accounting data on accounts, co-financing, expenditure eligibility etc., with the aim of

42

Support Programme is also very important. We do not wish that Cohesion Policy always be used as the source for new instruments, and Member States are already financing reforms from technical assistance at this moment. One of the proposals is that they be allowed to use the Excellence Reserve for implementation of structural reforms, although it was primarily intended for additional project financing. The Commission intends to finance these additional 80 million euros from the Flexibility Instrument, whose funds amount to 471 million euros annually and which serves precisely for financing expenditures for which there are no funds within set limits in the budget, which MEP Ivana Maletić supports.


Member of the European Parliament Ivana MaletiÄ&#x2021; is an economic expert with multiannual experience in the areas of public finance, budgeting and European funds. She completed an MA in Economics at the Faculty of Economics in Zagreb.

She started working at the Ministry of Finance, first as expert assistant and advisor, and later as Assistant Minister and State Secretary. She is an internationally renowned lecturer and advisor in the area of financial management and has held numerous seminars on the subjects of financial management, budgetary processes, public finance reform, EU funds, regional development etc. She has published a large number of scientific and professional papers, co-authored several important books from the area of public finance and currently participates in numerous research projects. She actively participated in the negotiations on accession of the Republic of Croatia

to the European Union as Deputy Chief Negotiator and as Chief Negotiator for Chapter 22: Regional Policy and Coordination of Structural Instruments (EU funds).

She was selected as a Croatian Democratic Union representative at the Elections to the European Parliament in 2013 and 2014. At the European Parliament she is a member of the Committee on Economic and Monetary Affairs (ECON) and its Financial Assistance Working Group (FAWG), deputy member of the Committee on Regional Development (REGI), Special Committee on Tax Rulings (TAXE) and Committee on Budgets (BUDG), and she especially monitors the Committee on Budgetary Control (CONT), Committee on Employment and Social Affairs (EMPL), Committee on Agriculture and Rural Development (AGRI), Committee on Fisheries (PECH) and Committee on Transport and Tourism (TRAN).

www.ivana-maletic.com


KNOWING THE PAST. LIVING THE PRESENT. CONSIDERING THE FUTURE.

44

Profile for Ivana Maletić

Europski fond za strateška ulaganja  

Posebno izdanje Ureda zastupnice Europskoparlamentu Ivane Maletić

Europski fond za strateška ulaganja  

Posebno izdanje Ureda zastupnice Europskoparlamentu Ivane Maletić