The capacity of financial instruments to extend the useful life of European cohesion policy funds remains under-exploited. These are the findings of a new report by the European Court of Auditors, published on Wednesday 3 December, which deplores a “missed opportunity” to increase the impact of European investments.
Unlike traditional grants - which make up the bulk of cohesion policy funding - financial instruments are based on loan, guarantee or equity mechanisms.
Their distinctive feature: these funds can be reused in new projects.
The EU has allocated significant sums to financial instruments: €16.9 billion for 2007-2013, €31 billion for 2014-2020 and €19.4 billion for 2021-2027. In total, around 5% of the cohesion policy budget has been channelled through these instruments. All Member States, with the exception of Ireland and Luxembourg, have used them.
“European cohesion money has been reused to a certain extent, but without reaching its full potential”, regrets Alejandro Blanco Fernández, the member of the Court responsible for the audit. In his view, the European Commission has not sufficiently checked the data provided by Member States and therefore does not have a precise picture of the amount actually reinvested.
Out of 61 financial instruments examined for 2014-2020, only 12 reused the funds to finance new projects during the eligibility period. A further 19 reused a portion of the funds not to support investment, but to cover management costs and expenses.
One of the main reasons for this is the pressure on managing authorities to first absorb all programme allocations to financial instruments in order to avoid losing funds financed by the EU budget, says the report.
The low rate of reuse during the eligibility period is also a natural consequence of the fact that investments are made over the medium to long term, which limits reflows available for reuse, the Court continues. Another factor is that managing authorities, instead of asking fund managers to automatically reuse reflows, sometimes wait until they have accumulated before deciding how to reuse them.
See the report: https://aeur.eu/f/jtj (Original version in French by Lionel Changeur)