EUROPEAN COMMISSION Strasbourg, 5.7.2016 COM(2016) 446 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT,

THE COUNCIL AND THE COURT OF AUDITORS 2015 Annual Management and Performance Report for the EU Budget



Table of contents Introduction Section 1 Performance and results 1.1. Performance at the heart of the Juncker Commission 1.2. Summary account of progress 1.3 Competitiveness for Growth and Jobs (Budget Heading 1A) 1.3.1 Implementation of 2014-2020 programmes 1.3.2 Results of 2007-2013 MFF programmes 1.4 Economic, Social and Territorial Cohesion (Budget Heading 1B) 1.4.1 Implementation of 2014-2020 programmes 1.4.2 Results of 2007-2013 programmes 1.5 Sustainable Growth: Natural Resources (Budget Heading 2) 1.5.1 Implementation information on 2014-2020 programmes 1.5.2 Results of 2007-2013 programmes 1.6 Security and Citizenship (Budget Heading 3) 1.6.1 Implementation of 2014-2020 MFF programmes 1.6.2 Results of 2007-2013 MFF programmes

1.7 Global Europe (Budget Heading 4) 1.7.1 Implementation of 2014-2020 programmes 1.7.2 Results of 2007-2013 programmes Conclusions on performance and results Section 2 Management achievements 2.1 Achievement of internal control objectives 2.1.1. Managing legality and regularity risks: Amount at risk at closure 2.1.2. Control cost-effectiveness and simplification 2.1.3. Anti-fraud strategies 2.2 Management assurance 2.3 Assurance obtained through the work of the Internal Audit Service (IAS) 2.4 Follow-up of discharge and external audit recommendations Conclusion on management achievements



Introduction The EU budget enables Europeans, acting together, to tackle common challenges both at European and international level. Representing around 1 % of EU Gross National Income, and 2 % of public spending in the EU, the EU budget is used in conjunction with national budgets and other policy and regulatory tools at European level to help the Union achieve its strategic objectives. In particular, it contributes to delivering the political priorities set out by President Juncker. These priorities reflect the key challenges faced by Europe’s economy and society and are the reference point for all the Commission’s activities. They are highly complementary to the goals of the Europe 2020 jobs and growth strategy, launched in 2010, which established a series of headline targets to be achieved by 2020 for employment, research and development, climate change and energy, education, poverty and social exclusion. These common targets provide a roadmap for action at European level and also at national level, and are translated into orientations for Member States via the European Semester process.

The Multiannual Financial Framework (MFF) for 2014-2020 and the related financial programmes were designed to support delivery of the Europe 2020 targets. In order to reinforce the link between expenditure and political objectives, the 2014-2020 MFF includes a comprehensive set of performance indicators. These indicators make it possible to measure progress within each programme in terms of their outputs and their contribution to the final outcomes and impact on economic growth and the welfare of European citizens. The 2015 Annual Management and Performance Report for the EU Budget combines two former reports: the Evaluation Report produced in accordance with Article 318 of the Treaty on the Functioning of the European Union; and the Synthesis Report required by Article 66 (9) of the Financial Regulation. Bringing together information on the performance and management of the EU budget, the report provides a comprehensive overview of how the EU budget supports the Union’s political priorities, and of the role the Commission plays in fostering a culture of performance and in ensuring and promoting the highest standards of budgetary management. Covering both compliance and results assessment, the report is an important part of the Commission’s contribution to the annual budgetary discharge process. The EU budget in 2015 — contributing to policy delivery and crisis response During 2015, the Commission made significant progress on the ten political priorities identified in President Juncker’s political guidelines. The EUR 315 billion Investment Plan for Europe is giving a much-needed boost to investment in jobs and growth. In addition, key strategic proposals in areas such as the Energy Union, Capital Markets Union and Digital Single Market have set out a path to a deeper, more open internal market and greater economic dynamism. 2015 was also a year in which the Commission responded swiftly and comprehensively to a series of major challenges for Europe's economy and society: the ongoing refugee crisis; terrorist attacks and instability in Europe’s neighbourhood; high unemployment and a sluggish economic recovery; financial instability in Greece, and the economic impact of the Russian ban on agricultural and processed food exports. This challenging context shaped how the EU budget was implemented throughout 2015. Addressing these immense challenges required a combination of political leadership and strategic use of the EU budget. In line with the political priorities, the EU budget was oriented towards maximising its contribution to jobs, growth and investment. The successful implementation of Horizon 2020 programmes, the frontloading of resources to fund financial instruments providing finance to SMEs, the acceleration of payments to support the Youth Employment Initiative, the mobilisation of the Erasmus+ programme, the establishment of the European Fund for Strategic Investments and the ‘Solidarity Package’ seeking to alleviate the situation of farmers illustrate how the budget was mobilised quickly and effectively to support political priorities. The refugee crisis is creating unprecedented challenges for the EU. Although it is clear that the refugee crisis will not be addressed only by the allocation of additional financial resources and moreover that the EU will only be able to contribute marginally to the global financial needs in this area, a strategic approach to funding is absolutely necessary in combination with the policy instruments the EU has at its disposal. The EU response to the refugee crisis is a clear example of how the EU budget was used as part of a multi-faceted response to a very serious challenge. During 2015, the Commission presented the European Agenda on Migration, setting out a comprehensive plan to reduce the incentives for irregular migration, save lives and secure the EU’s external borders. It provides for the development of a strong common asylum policy and a new policy on legal migration. The Commission also presented the European Agenda on Security as the basis for cooperation and joint action by the Union on security in the next five years, with the aim to develop a genuine area of EU internal security. Funding for the refugee crisis was increased by 50 %, up to EUR 3.7 billion in 2015 and over EUR 10 billion for the 2015-2016 period. This additional funding strengthened the Triton and Poseidon operations in the Mediterranean as well as the capacity of Frontex, EASO and Europol. It also includes emergency measures inside the Union and supports the setting up of a mechanism for the relocation of refugees away from the frontline Member States. By tripling the funding for its maritime patrols on the central and eastern Mediterranean migratory routes, the EU contributed to saving over 252 000 lives in 2015 and additional 100 000 by mid-2016. It also redoubled its efforts to counter smugglers and dismantle human trafficking groups. Besides actions to deal with the incoming flow, the EU budget was also used to target the root causes of migration, through immediate humanitarian aid for Syria, Iraq and other neighbouring countries (Turkey, Lebanon, Jordan); the establishment of two new Trust Funds and a financing Facility to provide a framework for the implementation of actions on the ground. The European Union Regional Trust Fund in response to the Syrian crisis supported by EUR 570 million from the EU budget, will provide a coherent and increased aid response to the Syrian crisis on a regional scale. They will respond to the resilience and early recovery needs of Syrian refugees in neighbouring countries, as well as of the host communities and administrations. Likewise, the Commission has launched an Emergency Trust Fund for stability that addresses the root causes of irregular migration and displaced persons in Africa. This Trust Fund is made up of EUR 1.8 billion from the EU budget and the European Development Fund, combined with contributions from EU Member States and other donors. The EU Facility for Refugees in Turkey was set up coordinating a total of EUR 3 billion to support refugees in Turkey and their host communities. EUR 1 billion of this assistance will be financed from the EU budget. The facility has been providing grants and other financial support as of 1 January 2016. Thanks to rigorous monitoring of implementation, substantial redeployment efforts and positive developments on the revenue side, the additional expenditure in 2015 did not require an additional call for own resources from Member States. The 2015 budget was fully implemented and brought back on a sustainable path thanks to the progressive elimination of the backlog of unpaid bills from the past programming period, in line with the ‘Payments Plan’ agreed with the European Parliament and Council. However, with the demands placed on the EU budget ever increasing, it will be essential to ensure both that adequate funding is available to support the political priorities in future years, and that the budget is sufficiently flexible to react to unforeseen events.

Structure of the Annual Management and Performance Report Section 1 of this report summarises the EU budget performance based on the latest available evidence on the results achieved with the EU budget up to end 2015. This reporting draws on information from the Annual Activity Reports produced by Commission departments; the Programme Statements that are part of the budget proposal for 2017; and other sources such as evaluation and implementation reports on EU programmes. The report provides a summary account whereas further detailed reporting on programmes' objectives and progress on indicators measured against baseline and targets are available in the Annual Activity Reports and Programme Statements. While the report relates to the 2015 reporting year, it draws on the latest available data, which sometimes relate to previous reporting years. For each of the budget headings, the report provides implementation information on the progress of the 2014-2020 MFF programmes and the latest available evidence on the results of the 2007-2013 MFF programmes. As requested by the European Parliament and the European Court of Auditors, the report also presents the links with the Europe 2020 Strategy and provides concrete examples of the added value of EU financing. The report also provides key examples of other types of non-spending policy instruments used together with spending programmes to support the Union’s overall priorities. This section also describes the work under way in the Commission on an EU ‘Budget Focused on Results’, a wide-ranging initiative designed to ensure that the EU budget is used to maximum effect to deliver results for EU citizens.



Section 2 describes the Commission’s management of the EU budget in 2015. Reporting on management performance is based on the Annual Activity Reports of Commission departments, in which the internal control environment and related issues are described in detail. Where problems were encountered in the course of the year the report describes how Commission departments tackled these challenges. This section summarises information on the achievement of the internal control objectives; managing legality and regularity risks; the cost-effectiveness of controls; and anti-fraud strategies. The conclusion at the end of the section, reached on the basis of the management assurance received from all departments and of the assurance obtained through internal audit work, enables the Commission through adopting this report to take overall political responsibility for the management of the 2015 EU budget.



Section 1

Performance and results 1.1. Performance at the heart of the Juncker Commission In the context of budget discipline and competing demands on the EU budget, a strong focus on performance and on delivering results on the ground is an imperative. In the course of 2015, this has required maximum use of the flexibility available within the MFF, including substantial redeployments, in order to direct available resources to the most pressing priorities, while continuing to provide a stable framework for long-term investment. President Juncker set the tone at the beginning of his mandate: ‘It is not enough to allocate money wisely. We will have to do more, with less. We need to get the best out of the budget and spend money smartly. […] People want us to achieve results. They also want to know how we spend the tax payer’s money.’

The EU ‘Budget Focused on Results’ (BFOR) initiative launched in 2015 by Vice-President Georgieva is designed to deliver on this commitment. It builds on the existing performance-based budgeting framework to promote a new balance between compliance and performance, fund absorption and programme results. ‘Focus, speed and results’ are the guiding principles of a number of initiatives, which fall into four areas: identifying in which areas the EU budget should be invested to promote key priorities and serve multiple objectives with the requisite agility and flexibility; improving how the EU budget is to be invested, in order to maximise the leverage of funds via an increased use of financial instruments, simplification and proportionate, cost-effective controls; reflecting on how the implementation and performance of the EU budget are assessed in order to implement a streamlined and realistic performance framework, including reporting on legality and regularity and results; ensuring effective communication that provides easily accessible and understandable information on the results achieved with the EU budget for the wider public as well as productive stakeholder dialogue, including expert and political discourse on performance-based budgeting and an annual conference dedicated to BFOR. One of the examples of better communicating EU budget results to citizens is a specific EU Results web tool launched by Vice-President Georgieva in September 2015 at the BFOR annual conference. It provides examples on how the EU budget is spent showing the impact on the ground of EU financed projects in Europe and beyond, covering different funding areas. While the BFOR agenda is based on continuous progress, specific improvements were already introduced during 2015 in the Commission’s Strategic Planning and Programming cycle as well as in the budgetary procedure. These changes enhance performance planning, monitoring and reporting for both Commission activities and all spending programmes. Work is ongoing to review the performance indicators established for programmes financed by the EU budget. This review will allow the most suitable indicators to be selected, backed by reliable evidence, to measure progress in the achievement of objectives and to provide clearer and more comprehensive performance information for the preparation of the annual EU budget. Other improvements will be visible in the reporting for 2016. One example is the introduction of a multiannual Strategic Plan for every Commission department based on common general objectives that cover the ten political priorities of the Juncker Commission and which support the Europe 2020 goals and the Treaty obligations. In the area of sound financial management, progress was achieved in measuring indicators to assess the cost-effectiveness of controls as well as the amounts at risk per policy area. In this exercise, the Commission also draws on the work and the recommendations provided by the Internal Audit Service (IAS). In line with its methodology and best practice, the IAS has approached performance in an indirect way, i.e. an assessment of whether and how management have set up control systems intended to measure the performance (efficiency and effectiveness) of its activities. In order to help the Commission to follow its methodology and best practice, IAS carried out a number of performance audits in 2015, addressing how Commission departments manage, monitor and report on the specific objectives that are under their control and can be achieved through their outputs and actions, and on how they manage, monitor and report on the performance of EU policies. (see Annex 3 for additional elements on IAS performance audits). ---

This new Annual Management and Performance Report reflects the Commission's new approach to performance reporting. It is also an example of the Commission’s commitment to streamline reporting on the performance of the budget. This report is part of an integrated reporting package supporting the discharge process. The following sections present the latest evidence available on the results achieved with the EU budget. The section begins with a summary account of progress towards the Europe 2020 targets and then covers both the implementation of the 2014-2020 programmes and the results from the 2007-2013 programmes. 1.2. Summary account of progress To achieve its objective of smart, sustainable and inclusive growth, the Europe 2020 strategy includes five headline targets on employment, research and development, climate and energy, education, and the fight against poverty and social exclusion. These headline targets are translated by each Member State into national targets. While Member States are primarily responsible for progress towards these targets at national level, the EU budget contributes to the achievement of the headline targets at EU level. The Europe 2020 headline targets are monitored by the Commission using nine indicators. Information on progress on these indicators is regularly updated and published on Eurostat’s website. The following diagram presents the latest available data for the nine indicators. It shows the progress made since 2008 and the distance still to cover towards the related Europe 2020 targets. Indicators related to environmental targets and education are showing progress towards the headline targets. On the contrary, further efforts are required in the area of employment, research and development and fight against poverty or social exclusion. Chart 1: Europe 2020 headline targets The EU budget is also an important tool to support the achievement of cross-cutting policy objectives such as climate action and biodiversity. To respond to challenges and investment needs related to climate change, the EU has decided that at least 20 % of its budget for 2014-2020 – as much as EUR 180 billion over the whole period − should be spent on climate change-related action. To achieve this result, mitigation and adaptation actions are being integrated into all major EU spending programmes, in particular Cohesion Policy, regional development, energy, transport, research and innovation, the common agricultural policy as well as the EU’s development policy. Starting from the 2014 draft budget, the estimates for the climate related expenditures are monitored on an annual basis in accordance with the methodology based on Rio markers. In 2015 the total contribution to the climate mainstreaming was estimated at around 17 % and should reach 22 % in 2016. Similar to the mainstreaming of the climate action, the tracking procedure for biodiversity-related expenditure forecasted that 7 % of the 2015 budget and 9 % of the 2016 budget will be allocated to limiting and reversing the decline of biodiversity in the EU, making an important contribution to the Europe 2020 sustainable growth objectives. The following sections describe the links between the objectives of the 2014-2020 MFF programmes and the Europe 2020 Strategy. For the budget headings most directly linked to Europe 2020 (1A, 1B, and 2), the reporting on the achievements of 2007-2013 programmes is also structured around the Europe 2020 priorities, showing to the extent possible the contribution of the EU budget to the Strategy’s objectives. Chart 2: 2015 EU budget per budget heading

The EU budget amounted to EUR 162.273 billion in 2015. About half of this (48 % or EUR 78 billion) was allocated to Heading 1 ‘Smart and Inclusive Growth’ split between Heading 1A ‘Competitiveness for growth and jobs’ (10.8 %) and Heading 1B ‘Economic, social and territorial cohesion’ (37.2 %). Heading 2 ‘Sustainable Growth: Natural Resources’ was the second largest area of the budget, accounting for 39.4 %. 1.3 Competitiveness for Growth and Jobs (Budget Heading 1A) EUR 17.55 billion was allocated to the programmes for Competitiveness for Growth and Jobs (commitments in Heading 1A) in 2015. This represents 10.8 % of total annual budget expenditure. The main programmes under the budget heading ‘Competitiveness for growth and jobs’ are: the Horizon 2020 Framework Programme for research and innovation; large infrastructure projects (Galileo, International Thermonuclear Experimental Reactor (ITER), Copernicus); the Erasmus+ programme funding education, training, youth and sport actions; the Connecting Europe Facility (CEF) funding interconnections in trans-European transport, energy and ICT networks; and the new European Fund for Strategic Investments (EFSI), part of the Investment Plan for Europe.



Commission priorities The programmes under this budget heading contribute mainly to the Juncker Commission priorities of ‘Jobs, Growth and Investment,’ ‘Digital Single Market,’ ‘Energy Union and Climate,’ and ‘Deeper and Fairer Economic and Monetary Union.’ They contribute to the Europe 2020 priorities of ‘smart and sustainable growth’ and to ‘inclusive growth’ mainly through the job creation and employability effects of Horizon 2020 (successor of the Seventh Research Framework Programme (FP7)) and Erasmus+. Chart 3: Left: Share for Heading 1A in the entire 2015 budget. / Right: Main programmes financed in 2015 under Heading 1A. Category 'Other programmes' includes among others European Union programme for Employment and Social Innovation (EASI), Customs and Fiscalis. Category 'Large infrastructure projects' includes among others Galileo, European Geostationary Navigation Overlay Service (EGNOS), Copernicus, ITER. All figures in EUR million.

1.3.1 Implementation of 2014-2020 programmes Since the new MFF, many of the implementation functions of the programmes under Heading 1A are now being carried out either through agencies (executive or national and in some cases decentralised), Joint Undertakings, Article 185 initiatives, or the European Investment Bank (for financial instruments). Horizon 2020, Framework Programme for Research and Innovation The Horizon 2020 work programme for 2014-2015 was fully implemented. By the end of 2015, 198 calls for proposals had been published and 78 268 proposals received. Out of these proposals, 10 658 were put on the main or reserve list. The average success rate for proposals was 14 % which means that oversubscription rates continue to be high and shows the high demand for EU funding in this area. Galileo, European Geostationary Navigation Overlay Service (EGNOS), Copernicus In 2015 the deployment of the Galileo satellites was accelerated with three successful launches and the deployment of six additional satellites. By December 2015, the total number of satellites launched had doubled to 12 of which nine operational, which sets a significant deployment pace within the satellite navigation world. The number of airports with EGNOS capability went up from 150 (2014) to 174 (2015). The implementation of the Cooperation Agreement with Ukraine continued, with EUR 5 million made available through the neighbourhood instrument for developing EGNOS in Ukraine. In 2015 Copernicus further progressed towards becoming a fully operational earth observation programme with the successful launch of Sentinel-2A on 22 June 2015 adding optical imaging capability to the system. Satellite data from Copernicus triggered for example early flood warning in the UK and Ireland in 2015, and helped assess the consequences of the earthquake in Afghanistan. International Thermonuclear Experimental Reactor (ITER) A total of 104 out of 139 procurement arrangements have been signed by the ITER Organisation for the different work packages of the construction of the ITER reactor. This represents 90.5 % of the project’s total in-kind value. This means that a significant part of ITER activity is now in the hands of the ITER members who will deliver the ITER components. The European Joint Undertaking for ITER (F4E), in charge of delivering the EU contribution to the ITER Organisation, has now placed most of the large value contracts (more than EUR 100 million). As of 31 December 2015, F4E has signed 766 operational procurement contracts and 145 grants for a total of about EUR 2.8 billion (2008 value). The project is however facing challenges, in particular in terms of delays, risk of cost-overruns and overall governance. Many of these risks are linked to the inherent nature of the project which goes beyond the current state-of-the-art of fusion technology, and to the complex governance set-up. An action plan for improvement, also addressing the observations raised by the European Parliament and the Court of Auditors in their reports on the 2013 discharge was approved by the Governing Board of F4E in March 2015, and is currently being implemented. Erasmus+

Since 2014, the Erasmus+ programme has brought together seven previous programmes and included new actions for education exchange. In 2014-2015, more than one million individuals took part in 18 000 EU-funded actions with more flexible terms of mobility, which better reflect the evolution of student needs and the structure of degrees (Bologna process) across Europe. Connecting Europe Facility (CEF) In 2015, EUR 12.8 billion was allocated to 263 transport projects through grant agreements signed in 2015, under the 2014 CEF calls for proposals. The CEF funding has generated EUR 28.3 billion of total investments, combining an EU contribution with regional and Member State budgets, as well as loans from the European Investment Bank (EIB). Under the two calls for proposals for CEF energy launched in 2015, an amount of EUR 366 million of support was allocated to 35 projects for studies and for works. The bulk of the support went to projects in the Baltic region as well as in Central Eastern and South Eastern Europe, addressing the security of supply challenges of these parts of Europe. All projects selected aim at increasing energy security and reducing the isolation of Member States from EU-wide energy networks. Their objective is to contribute to the completion of a European energy market and the integration of renewables into the electricity grid. Some EUR 2 billion are planned for use by the CEF financial instruments for the period 2014-2020. For this purpose, the CEF Debt Instrument Delegation Agreement for the implementation of the CEF Debt Instrument was signed on 22 July 2015 with the European Investment Bank. This important step allowed the Debt Instrument to start operating, building on the experience gained with the instruments from the period 2007-2013 such as the Loan Guarantee Instrument for Trans-European Transport Network (TEN-T) Projects and the Project Bond Initiative (PBI) Pilot phase. The work plans proposed by the European Coordinators for the nine Core Network Corridors provided for by the TEN-T Regulation were endorsed by the Member States concerned in May 2015 and officially presented in the TEN-T Days in Riga in June 2015. On that basis, priorities have been set for each of the corridors, and actions such as studies, works, and governance arrangements were decided as a consequence. Compact for growth and jobs: How the Pilot Phase of the Project Bond Initiative (PBI) helped leverage additional financing for important infrastructure projects To give an additional boost to the attainment of Europe 2020 objectives, the EU Heads of State or Government adopted the ‘Compact for Growth and Jobs’ in June 2012. One of the actions under this Pact was the launch of the ‘Project Bond Initiative.’ The external evaluation of the Pilot Phase of the PBI finalised in December 2015 assessed a number of infrastructure projects supported by the Project Bond Credit Enhancement solution between 2012 and July 2015 and concluded that the PBI responded to a clear market failure by providing a product that mitigated the key risks associated with infrastructure projects by institutional investors. To this effect the PBI pilot facilitated greater private sector involvement in the long-term capital market financing of major projects in the areas of Trans-European Transport Networks, Trans- European Energy Networks, ICT and broadband. Moreover, the risk-sharing arrangement between the European Commission and the EIB as well as the EU contribution provided were crucial to developing the initiative, allowing the EIB to target riskier and larger transactions, and to widening the investor base. Furthermore, the evaluation pointed out that the leverage gained on the five Project Bond Credit Enhancement transactions closed as of 31 July 2015 (i.e. the cut-off date for the evaluation) with the available EU contribution was 12.9, while the expected leverage of all Project Bond Credit Enhancement transactions to be closed with the existing EU budget support was 18.6 (EUR 4 270 million in capital cost divided by EUR 230 million of EU budget contribution) which is fully in line with expectations. Two more Project Bond Credit Enhanced transactions were signed in the first three months of 2016 with the EU budget support, driving the total number of deals signed under the PBI (including transactions at EIB own risk) to 10. Programme for the Competitiveness of Enterprises and small and medium-sized enterprises (COSME) In 2015, the frontloading mechanism put in place for the Loan Guarantee Fund (LGF) under COSME triggered an even more significant contribution to financing for riskier SME transactions than would have been the case without the EFSI guarantee — (18 guarantee agreements signed, for a total amount of EUR 163 million of legal commitments). It is expected that especially start-ups and smaller SMEs, which find it hardest to access finance, will benefit from the enhanced LGF. As of 30 September 2015, more than 30 000 SMEs had already received financing to a total of more than EUR 700 million. As of 31 December 2015, more than 51 000 SMEs had already received financing for almost EUR 1 300 million under the enhanced COSME LGF.

About 450 000 SMEs have received services via the Enterprise Europe Network ranging from information on EU matters, to specialised advisory services or services facilitating partnership between SMEs via company missions and matchmaking events. The objective is to increase SME's competitiveness and increase their innovation capacity via the 3 000 network staff present in all EU regions and 35 countries outside the EU. The 625 participating organisations provided specialised advice to 60 000 SMEs on access to finance, intellectual property rights, business and technology reviews and resource efficiency. About 22 000 SMEs participated in matchmaking events. These activities resulted in 3 190 special achievements reported by companies and numerous success stories. Erasmus for Young Entrepreneurs gives new or aspiring entrepreneurs the chance to learn from experienced entrepreneurs running small businesses in other countries. So far nearly 12 000 entrepreneurs’ profiles have been registered and 3 900 matches involving 7 700 entrepreneurs have been established. The Investment Plan for Europe A major Commission priority in 2015 consisted in preparing the implementation of the Investment Plan for Europe, launched in 2014. Mobilising finance The cornerstone of the Investment Plan is the European Fund for Strategic Investments (EFSI), which is managed by the EIB Group. As of end of May 2016, EFSI projects were approved by the EIB Group for a total investment value of about EUR 100 billion underpinned by EFSI supported financing of EUR 9.3 billion for Infrastructure and Innovation investments, and EUR 3.5 billion in favour of SMEs, evidence of a successful roll out of the instrument. The full impact on the economy can only be comprehensively assessed after full deployment of the Initiative. In May 2016, the Commission submitted its first Report on the management of the guarantee fund of the EFSI in 2015 as required by the legal basis. Supporting investment in the real economy 2015 also featured substantial efforts to prepare the launch of two key tools that make the Investment Plan easily accessible to the project promoters: the European Investment Advisory Hub (EIAH) started operating on 1 September 2015, and the European Investment Project Portal (EIPP) which went live on 1 June 2016. The European Investment Advisory Hub (EIAH) offers project promoters a single point of entry for technical assistance, guidance and advice. As of the end of May 2016, it had dealt with more than 160 requests The EIB and the European Commission worked closely with a Core Group of National Promotional Banks (NPBs) and prepared a Memorandum of Understanding (MoU) for possible cooperation between EIAH and the NPBs. 18 NPBs from 16 Member States had signed the MoU by the end of May 2016. The European Investment Project Portal (EIPP), developed by the Commission, is designed as a publicly available web portal enabling EU-based project promoters to boost the visibility of their projects to potential international investors. Creating an investment friendly environment To improve the business environment and financing conditions, the investment plan foresees progress towards a Digital Single Market, Energy Union and Capital Markets Union. Since the crisis, investment has evolved differently across countries, both in terms of private and public investments. Both regulatory and non-regulatory obstacles to investment remain. Identifying and removing those challenges to investment is part of the efforts to improve framework conditions and remove red tape and regulatory bottlenecks. The Commission is engaging in a structured dialogue with Member States to help removing these national obstacles to investment in the context of the European Semester. Support for Small and Medium-sized Enterprises (SMEs) The SME Guarantee Facility (SMEG) with an EU budget commitment of EUR 649.90 million catalysed EUR 20.7 billion SME financing for 381 592 SMEs through 463 295 loans. The achieved leverage effect for the SMEG Facility is 38.6.





Under the High Growth and Innovative SME Facility (GIF), EUR 555 million of EU resources has been invested in venture capital funds, catalysing a total achieved financing of nearly EUR 3.12 billion to 437 eligible investees (SMEs). The achieved leverage effect for GIF is around 5.6. Such SMEs experience a larger growth in sales, assets and employment than those not backed by an equity or venture capital fund and are also less likely to default than other companies. 1.3.2 Results of 2007-2013 MFF programmes Implementation aspects The recently completed ex-post evaluation of the Seventh Research Framework Programme (FP7) shows that during the seven years of the programme (2007-2013) there were 487 concluded calls with nearly 136 000 eligible proposals received. Around 25 000 projects were funded, involving more than 134 000 participations from 170 different countries. In total around 29 000 organisations participated, of which over 70 % were newcomers. SMEs accounted for more than 50 % of all industry organisations participating in grant agreements. Furthermore, FP7 had a significant contribution to the Juncker Commission priority 'EU as a Global Actor' with more than 7 800 participations from non-associated third countries, receiving more than 700 million euros from the European Commission. FP7 simplification measures saved participants over EUR 550 million compared to FP6. The evaluation of the Research Executive Agency (REA) which manages a large share of Horizon 2020 revealed that the actual costs of running REA in 2012-2015 were EUR 34.8 million (15 %) lower than the initial estimation due to cost savings in the staff and infrastructure expenditure. The actual savings from the programme delegation to the REA were 24 % higher than the initial estimations (EUR 53.4 million compared to EUR 43.1 million). The analysis of the actual costs of the European Research Council Executive Agency (ERCEA) which manages the European Research Council (ERC) part of Horizon 2020 in 2012-2015 were EUR 20.6 million (12 %) lower than the initial estimation due to cost savings in overheads, whereas actual staff-related expenditure exceeded its estimations for 2014-2015. The actual savings from the programme delegation to the ERCEA were slightly higher than the initial estimations (EUR 46.5 million compared to EUR 44.6 million). As of January 2014 the TEN-T Executive Agency became the Innovation and Networks Executive Agency (INEA), responsible inter alia for the implementation of parts of the CEF programme (transport, energy and telecoms) and of the transport and energy specific programmes of Horizon 2020. The ex-post evaluation study carried out for the period 2011-2013 demonstrated that the agency was the most cost-effective option available for the implementation of the TEN-T programme. This option generated savings of EUR 8.8 million of EU budget compared with what would have cost an in-house implementation of the programme. Contribution to policy achievements Smart Growth In 2015, the ex-post evaluation of FP7 reported on the achievements of 12 149 completed FP7 projects (representing about 50 % of total FP7 projects). While it is still too early to make a final assessment of the market impact of FP7, the evaluation estimated an indirect economic effect of EUR 500 billion over 25 years, or approximately EUR 20 billion annually in additional Gross Domestic Product (GDP).

Through short-term leverage effects and long-term multiplier effects, each euro spent by FP7 generated approximately EUR 11 of estimated direct and indirect economic effects through innovations, new technologies and products. The ex-post evaluation of FP7 reported 1 700 patent applications and more than 7 400 commercial exploitations resulted from FP7 projects. With more than half of the projects from FP7 still ongoing, reported impact is expected to increase in the coming years. Projects supported under FP7 have finished with higher Technology Readiness Levels, which are proxies for the assessment of their innovation thrust, compared to FP6 participating organisations. An analysis of the Community Innovation Survey shows that innovative companies supported by FP7 were more likely to introduce product, process or service innovations new to the market and to obtain on average a higher proportion of turnover from innovation than those not supported by FP7. Similarly, a counterfactual analysis assessing the ‘average number of patent applications per researcher’ showed that, on average, researchers in organisations participating in FP7 tend to apply for patents more than researchers in organisations which do not take part in the EU’s Framework Programmes. FP7 was particularly effective in strengthening scientific excellence. FP7 projects have so far generated 170 000 publications. Of these, 54 % are in open access. The share of FP7 publications among the top 1 % of highly cited publications is on average 3.6 %. This proportion is 2.8, 2 and 3.6 times higher than the EU, US and World average respectively. The numbers of publications in top-rated scientific journals that acknowledge ERC funding, and the fact that ERC funding included 11 Nobel Laureates and 5 Fields Medallists are testimony to ERC’s scientific excellence. More than 13 000 SMEs participated in FP7 and received EUR 6.4 billion. This is well above the 15 % target of funding to go to SMEs within the FP7 cooperation programme as set by Council and European Parliament at the outset of FP7. Econometric analyses show that SMEs participating in FP7 scored 38 % higher than the control group with regard to employment growth and operating revenue. Example of EU added value According to respondents to an online stakeholder consultation on the ex-post evaluation of FP7, tackling pan-European challenges through European research is among the three most important areas of European added value compared to Member State actions (alongside increasing competition in research, and enhancing researchers’ mobility). Under Horizon 2020, the successor programme of FP7, the European Commission is introducing a set of ‘societal challenge’ prizes. These Horizon Prizes offer a cash reward to those who most effectively meet a defined challenge. They act as an incentive for innovation. They prescribe the goal but not who the innovator should be or how the goal should be achieved. In 2014, the German biopharmaceutical company CureVac GmbH won the Innovation Prize and was awarded EUR 2 million for progress towards a novel technology to keep life-saving vaccines stable at any ambient temperature, thereby overcoming one of the biggest barriers to using vaccines in developing countries. In 2015, the prize leveraged additional private investment in research when the Bill and Melinda Gates Foundation announced a commitment to invest EUR 46 million in CureVac in order to accelerate the development of its innovative vaccine technology and the production of numerous vaccines against infectious diseases. Under the FP7 Marie Skłodowska Curie actions (MSCA), over 50 000 fellowships have been awarded to researchers (including 10 000 PhD candidates). These fellows represented 148 different nationalities located in 86 countries around the globe, making the MSCA the most international part of FP7. MSCA contributed to retaining the best researchers in Europe as nearly 34 % of the fellows were nationals of non-EU countries and 46 % of researchers coming to the EU from industrialised countries stayed in Europe after the end of their MSCA fellowship (although it is not possible to measure the direct influence of the programme). Survey results show that some 80 % of the MSCA fellows felt that their fellowship experience had improved their career prospects, showing the appreciation of those who received financial support of the programme’s contribution to the development of their scientific careers. Sustainable Growth The Intelligent Energy Europe programme (IEE) has delivered tangible benefits: since 2007 IEE projects have delivered renewable energy equivalent to the annual electricity consumption of 7 million citizens, saved primary energy equivalent to the annual electricity use of more than 2 million households, and are expected to trigger more than EUR 4 billion of sustainable energy investments. A preliminary estimate of the annual primary energy savings expected from the ongoing IEE projects shows that they should exceed 312 000 tonnes of oil equivalent (toe) per year. IEE reached out to more than 40 million people across the EU. The evaluation pointed out that the expected average leverage factor of eco-innovation projects is around 20 (EUR 1 of public investment leads to a gross revenue leverage factor of 20 times, 2 years after the project ends) with an average net employment generation of around 8 individuals (full-time) per project. Converted into cash terms, the value of the total global environmental and economic benefit from the CIP (Competitiveness and Innovation Framework Programme) Eco-Innovation initiative is estimated at more than EUR 1.6 billion over a span of 5 years.

Making energy more secure, affordable and sustainable The EU headed into 2015 with a commitment to deliver secure and affordable energy to its citizens and businesses, while also fighting the causes of climate change. It launched the Energy Union in February to help consumers save money and energy, help the environment, promote a competitive energy market and ensure security of supply. A number of related proposals were launched in July covering the revision of the EU emissions trading system, making energy efficiency labels clearer and delivering a better deal for consumers. The Commission also launched a public consultation on the new design of the electricity market. In February the Commission presented a Communication on how to achieve a 10 % electricity interconnection target in all Member States by 2020. By the end of 2015 several interconnection projects had already been unveiled, linking the Baltic States in the north, the Iberian peninsula in the south and Malta with the rest of the EU. In September the Commission adopted the new Strategic Energy Technology plan (SET plan). Its aim is to accelerate the development and deployment of low-carbon technologies and to increase the cooperation among the Member States. In November the Commission issued the first annual State of the Energy Union, which showed the progress made since the adoption of the energy union framework strategy. Its implementation will require further efforts, however, and 2016 will be a crucial year of delivery. In addition the EU played a central role in brokering the world’s first universal, legally binding climate deal, which was adopted by 195 countries in December in Paris. The agreement set out a global action plan to enable the world to avoid dangerous climate change by limiting global warming to well below 2 °C. It also sent a clear signal to investors, businesses and policymakers that the global transition to clean energy is here to stay and that resources have to shift away from polluting fossil fuels. Inclusive Growth The FP7 ex-post evaluation shows that, while FP7 was not specifically set up to create jobs, the programme will directly create 130 000 research jobs over a period of 10 years and indirectly 160 000 additional jobs over 25 years. The Marie Skłodowska Curie actions (MSCA) have enhanced the employability, career development opportunities and mobility of researchers in Europe and beyond. 95 % of MSCA fellows were in employment two years after the end of their fellowship. FP7 contributed to longer term researcher recruitment as a large share (43 %) of temporary researchers hired by projects stayed in the beneficiary research teams after the end of the project. With one out of two European graduates who studies or trains abroad benefits from Erasmus, evidence from the Erasmus programme demonstrated that Erasmus increases the employability advantage over non-mobile students by 45 %. Students from Eastern Europe were 83 % less likely to experience long-term unemployment if they had taken part in Erasmus. A survey conducted among the Erasmus for Young Entrepreneurs programme showed that more than a third of the would-be entrepreneurs who took part actually started a business; and two thirds of the experienced entrepreneurs participating gained new ideas or technical know-how, tapped into new markets and increased their turnover.

1.4 Economic, Social and Territorial Cohesion (Budget Heading 1B) EUR 60.4 billion was allocated to the programmes under Heading 1B for 2015, which represents 37.2 % of total 2015 EU budget.

Chart 4: Left: Main programmes financed in 2015 under Heading 1B. Category 'Other' includes among others 'Outermost and sparsely populated regions' and 'Fund for European Aid to the most deprived' / Right: Share for Heading 1B in the entire 2015 budget. All figures in EUR million. Heading 1B of the MFF covers the ‘European Regional Development Fund’ (ERDF), the ‘Cohesion Fund’ (CF), the ‘European Social Fund’ (ESF) — including the ‘Youth Employment Initiative’ (YEI) (a specific top-up allocation), and the ‘Fund for European Aid to the Most Deprived’ (FEAD). All these programmes are delivered under shared management. Commission priorities: The ERDF, CF and ESF constitute the Cohesion Policy of the EU with a budget of EUR 351.8 billion for 2014-2020, which is the most important EU investment instrument for the delivery of the Europe 2020 objectives supporting growth and job creation at EU level and structural reforms at national level. Cohesion Policy interventions contribute to the attainment of several of the priorities of the Juncker Commission notably ‘Jobs, Growth and Investment,’ ‘Digital Single Market’ and ‘Energy Union and Climate.’ Cohesion Policy also contributes to the development of the internal market as well as a number of actions relating to the response to the refugee crisis and migration policy. The reformed Cohesion Policy in 2014-2020 has been fully aligned with the Europe 2020 strategy for ‘smart, sustainable and inclusive growth’. Cohesion funding represents more than 60 % of the public investment budget in a number of Member States and it has continued to play a pivotal role in supporting long-term investment strategies. How Cohesion Policy contributes to the implementation of country-specific recommendations In accordance with the legal framework covering the European Structural and Investment Funds (ESIF), the programmes co-financed by the ESIF for the period 2014-2020 address all relevant country-specific recommendations in the context of the European Semester. The operational programmes have been closely aligned with past country-specific recommendations and their approval has been subject to the implementation of a number of reforms (ex-ante conditionalities) in order to facilitate the use and effectiveness of the ESIF. This firm integration of the reformed Cohesion Policy into the new economic governance of the EU in the MFF for 2014-2020 helps to increase the responsiveness of the policy to changing economic circumstances and emerging imbalances. While the main efforts of the Commission were linked to the successful finalisation of negotiations on the 2014-2020 programmes, throughout 2015 the Commission also implemented targeted actions aimed at addressing country specific difficulties and increasing the Member State capacity to effectively complete their 2007-2013 programmes. 1.4.1 Implementation of 2014-2020 programmes By end of 2015, all 2014-2020 Cohesion Policy operational programmes (OPs) were adopted by the Commission, enabling all programmes to start implementation on the ground. The improvements introduced for the 2014-2020 period ensure that programmes have more robust result orientation, with investment needs linked to specific objectives and priorities with corresponding indicators and targets for outputs and results. Every programme has a performance framework against which performance will be assessed. This makes transparent reporting and evaluation of progress towards programme objectives possible. At the end of 2015, more than 100 000 projects had already been selected by Member States. The Communication ‘Investing in jobs and growth – maximising the contribution of the ESIF’ issued by the Commission in December 2015 provides a good overview of ESIF investments programmed for the 2014-2020 programming period and their expected outputs.

Overall, it is estimated that a positive impact, compared to the status quo, will directly result from the implementation of 2014-2020 ESIF programmes notably on GDP growth and will continue well beyond the end of the implementation. The expected impact is particularly significant for EU-13 Member States, for which the ESIF represent a significant proportion of public investment. For those Member States, it is expected that the difference compared to the status quo will peak at +2.7 % at the end of the implementation, remaining consistently above 2 % for at least 10 years after 2020. Information on implementation and results will notably be provided as part of the yearly Annual Implementation Reports for the ERDF-CF and the ESF programmes, and closely monitored by the Commission. The first Annual Implementation Reports are due for submission by the Member States in June 2016. Pre-conditions for implementation The ex-ante conditionalities (ExACs) are one of the key new elements of the reformed Cohesion Policy, aiming at increasing the effectiveness of the funds. They establish framework conditions for investments to be effective and should be met upfront – during the first years of implementation at the latest. Although around 75 % of all ex-ante conditionalities were fulfilled by the time the programmes were approved some 750 were not (for example transport master plans underpinning transport investment). Action plans for their fulfilment by the end of 2016 at the latest were agreed with the Commission. Some delays were noted in the fulfilment of these action plans: out of 470 action plans originally planned to be completed by end 2015 142 action plans were completed in 2015 together with 3 action plans planned for 2016. The Commission has been carefully monitoring the situation of action plans related to the fulfilment of ex-ante conditionalities and will continue to do so throughout 2016. Designation is another new element of the reformed Cohesion Policy, aiming at reinforcing assurance by making Member States more responsible, in line with the principle of subsidiarity. It is a process whereby Member States designate the authorities which will be in charge of the management and control of the programmes, ensuring that adequate systems have been appropriately set up from the start of the period. Once the process is completed, programmes can start to submit payment requests to the Commission. The first authorities were designated by Member States in 2015. At the end of 2015, Member States had notified to the Commission the designation of programme authorities for 20 % of the ESF, ERDF and CF programmes, at a slower pace compared to the initial schedule. The Commission is however providing support to Member States to help them overcome the difficulties encountered. Specific support for Greece As part of the measures taken to help Greece, an increase of the pre-financing for structural funds under the 2014-2020 programming period, together with a 100 % EU financing rate for the eligible expenditure and an early release for the remaining 5 % for the 2007-2013 programmes has been agreed. The cumulative impact was EUR 2 billion (half in 2015 and half in 2016). Youth Employment Initiative (YEI) As regards the Youth Employment Initiative (YEI), the first set of monitoring data submitted by Member States in April 2015 (cut-off date end 2014) reports on some 138 000 participants on aggregate. A major problem identified was the lack of public funding to advance YEI activities. For this reason, the Commission proposed to increase the pre-financing of the YEI to 30 % in 2015 to facilitate the financing of the initial measures. This pre-financing was paid on the EU budget 2015. A subsequent survey and interviews with the Managing Authorities in 2015 show that YEI implementation has started in most eligible Member States. As of November 2015, 10 Member States reported that they had already committed for funding 75 % or more of their YEI budget for concrete actions. Overall, for the 20 Member States implementing the YEI, at the end of December 2015, the total cost of operations selected for support was EUR 3.3 billion and EUR 380 million had been declared by beneficiaries. According to the same study, by November 2015, larger Member States and/or main recipients of the YEI had managed to engage thousands of young people each – Italy (around 375 000 contacted or already in measures), Portugal (100 000), Greece (32 000), France (32 000) and Hungary (16 000). SME Initiative

Implementation has also started on the ground for the SME Initiative, which is a joint financial instrument of the Commission and the EIB Group (the European Investment Bank and European Investment Fund) which aims to stimulate SME financing by providing partial risk cover for SME loan portfolios of originating financial institutions. The corresponding products, which are attractive to banks and SMEs alike, can be extremely effective in providing a rapid and effective way to increase lending to the real economy, create jobs and stimulate economic growth. Implementation has already started in several Member States (Bulgaria, Spain, Malta), with several others (among which Romania, Italy and Finland) having also announced their intention to join. Creating jobs and improving labour market conditions In addition to the support provided by the EU budget and the dedicated programmes, the Commission also contributed to the improvement of the jobs and employment situation in the EU through a series of initiatives: -A new European Pact for Youth was launched seeking to create 10 000 business education partnerships and at least 100 000 new apprenticeships, traineeships and entry-level jobs by end 2017. -A new start for social dialogue was launched with a broad cross-section of social partners aiming to better address the economic and social challenges faced in Europe. -The Commission proposed the European Accessibility Act to improve the functioning of the internal market for accessible products and services designed for disabled persons, by removing and preventing barriers to their free movement. -Supporting labour mobility and better coordination of social security systems has been one of the Commission’s main actions to improve the European labour market. EURES, the European Job Mobility Portal allows workers to easily access a database of job vacancies from the public employment services of all Member States and match them with their job applications on line. In 2015 EURES was strengthened and modernised, becoming an up-to-date mobility tool using the latest IT technologies, accessible for all. -Progress was made in evaluating the EU legislation in the area of fair and safe working conditions. A comprehensive evaluation of the acquis consisting of 24 directives in the area of occupational safety and health is soon to be completed. This evaluation is part of the Commission’s programme on Regulatory Fitness and Performance (REFIT) aiming at a simplified, clearer and more robust regulatory framework supporting growth and jobs. 1.4.2 Results of 2007-2013 programmes Implementation aspects A total of 440 operational programmes (322 for ERDF-CF and 118 for ESF) benefit from Cohesion Policy funding in the 2007-2013 programming period for a total budget allocation of EUR 346.5 billion. Implementation reached satisfactory levels in most Member States at end 2015 for the three Cohesion Policy funds (80.2 % while excluding pending claims not yet paid), with only Romania, Italy and Croatia still experiencing some delays. The overall ESF implementation rate for all Member States reached 80.5 % towards the end of 2015. The absorption rates for the ESF in the least performing countries exceeded 65 %, with the exception of Croatia (52.3 %) and Romania (51.1 %). For ERDF and CF, the rhythm of delivery has further accelerated towards the end of 2015, with an overall implementation rate excluding pending claims for all Member States of 80 %, with delays being noted only for Romania, Italy and Croatia. The impact of these delays can still be mitigated, as expenditure linked to financial instruments can still be presented and the eligibility period for Croatia runs until the end of 2016. The analysis of available monitoring information in relation to project selection, as well as information contained in the annual implementation reports submitted by programme authorities in June 2015, shows that most of the 2007-2013 Cohesion Policy operational programmes are on track. By autumn 2015, more than 760 000 projects have been supported by ERDF-CF across all Member States.

A stronger focus on performance In line with the Commission's stronger focus on performance, and as part of a pilot exercise launched in 2014 by the Commission, a review of the performance of all the 322 ERDF-CF programmes was carried out again in 2015. Performance was considered to be good or acceptable for 91 % of the programmes and poor or critical for 9 % of them. This represents a positive evolution compared to the picture resulting from the assessments recorded for 2014 previous exercise (according to which, 12 % of the programmes were considered at risk). In particular, the performance of programmes improved with regard to management and control issues, project selection and financial instruments leading to accelerated implementation with the overall ERDF-CF implementation rate for all Member States increasing to 87 % at the end of 2015. The implementation of financial engineering instruments remains however slower than initially planned, with EUR 1.04 billion out of a total of EUR 17.06 billion not yet paid into financial instruments by end 2014. Contribution to policy achievements While GDP growth is just one of the many objectives of EU cohesion policy, the macro-modelling section of the ex post evaluation estimated that 1 euro of cohesion policy investment in the period 2007-13 will generate about EUR 2.7 of additional GDP by 2023. In other words, cohesion policy will be responsible for nearly EUR 1 trillion of additional GDP. In addition the thematic sections of the ERDF-CF and ESF ex post evaluations are being finalised and more extensive performance conclusions will be provided in next year's report. The cohesion policy achievements up to 2014 described below are based primarily on the latest available monitoring information obtained from the annual implementation reports submitted by the Member States in 2015 and on the evidence resulting from ex-post evaluations already completed (i.e. environment, transport and enterprise support). Smart Growth (ERDF and ESF) Results in the smart growth area are delivered both by mobilising financial resources and by contributing to the improvement of investment conditions. Programmes boost jobs, growth and investment across Europe, while focusing on the least developed areas and sectors with growth potential. More than 36 000 projects were co-financed across the EU to support cooperation between businesses and research centres up to 2014. Some Member States performed well while exceeding largely initial targets (United Kingdom); in other Member States (such as Poland, Belgium or Austria) collaboration between the public sector and the private sector remains below the targets but sustained efforts are being made in order to foster this important cooperation. Example of EU added value The added value of ERDF support lies in providing Member States with additional financial support for growth-creating investments in the context of strong fiscal consolidation constraints. The economic activity induced by these investments produces a short-term impact on GDP (in EU-12 countries GDP expected to increase by 2.7 % per year between 2007 and 2016), as well as a long-term impact (materialising only in the long run) thanks to the structural improvements in the economies of the EU. An example of a successful ERDF investment is the set up in 2013 of a holding fund of almost EUR 16 million in the Spanish region of Extremadura, which was absorbed in less than two months and, as a result, was almost doubled up to EUR 30 million. By providing loans to SMEs for growth and innovation, it has contributed to enlarging the private investment market in the only Spanish region that qualifies as less developed (‘convergence region’). So far more than 600 SMEs have benefitted from its support. Critical success factors are the partnership between the European Investment Fund and the regional government and a thorough ex-ante assessment of the regional market that led to a tailor-made financial instrument. Building on this experience, Extremadura has contributed EUR 75 million of its regional ERDF allocation to the 2014-2020 Spanish SME Initiative.

With the help of ERDF financing, close to 95 000 research and development projects were carried out. These led to more than 40 000 full-time research jobs being created up to 2014, exceeding the overall target of 33 500 jobs created. Steady progress is notably reported in Poland, where close to 5 000 research jobs were created up to 2014. Thanks to ERDF investment, particularly in less developed regions, the extent of broadband coverage has increased significantly in the EU in recent years. More than 8 million additional households have obtained access to broadband as a result of ERDF support up to 2014. Significant achievements are notably reported in Greece — with an extended coverage of broadband internet to 800 000 additional citizens completed by 2014 — and in Slovenia, with more than 70 000 additional citizens covered by broadband access thanks to investments made up to 2014. Some Member States still face particular challenges in closing the gap between regions that have access to modern information and communications technology, and those that do not or only have restricted access. This challenge will be addressed through additional investments in the 2014-2020 period. More than 825 000 jobs had been created by 2014 thanks to ERDF investment support for SMEs. These interventions have been key in mitigating the effect of the crisis in recent years. In addition, the creation of more than 120 000 new firms across the EU was supported by ERDF. Preliminary results of the enterprise support (SME, large enterprises, financial instruments) work packages of the ongoing ERDF-CF 2007-2013 ex-post evaluation show that the ERDF supported at least 246 000 SMEs (without counting the indirect support) with grants received especially by micro-enterprises. The support represents about EUR 47.5 billion or 16 % of the total ERDF allocations. Three main benefits were identified: improvement in the economic performance of supported entities (in spite of the general economic downturn); enhancement in innovation thanks to investment in research and development, and behavioural changes. A substantially smaller part of the support (approximately EUR 6 billion) went to around 3 700 larger enterprises, many of them just above the SME threshold. Most of the supported projects achieved their goals such as increased private investment, enhanced firms’ productivity or additional jobs. However, the evaluations argue that regions and Member States should concentrate their support on reaping indirect benefits such as linking larger enterprises with a local supply chain. Such support is promising as it can facilitate the sustainability of investments and jobs in a region. For ESF, preliminary results of its ex-post evaluation showed that in the area of human capital, ESF contributed to the development and consolidation of the science and technology system (through financial support and guidance in the area of research and innovation). ESF also helped increase capacity building in research, as well as attract additional human resources to research and foster employability. As regards quality of higher education, ESF contributed to system level changes, such as improvement of study programmes, staff training and use of e-learning. Sustainable Growth (ERDF and CF) The additional capacity of renewable energy production directly resulting from ERDF-CF supported interventions reported by Member States at end 2014 is close to 4 000 MW, an increase of more than 1 200 MW compared to 2013. In addition, a significant number of projects continued to be implemented to increase the energy efficiency of apartment blocks and public buildings, notably in the EU-12 countries where both types of buildings are heavy energy consumers. The reported reduction of greenhouse emissions resulting from these interventions was 475 592 kt of CO2 and equivalents at end 2014. The completed work package on energy efficiency in public and residential buildings of the ongoing ERDF-CF ex-post evaluation pointed to the fact that, while achievements have been made during the 2007-2013 programming period, these are only partially captured by the programmes’ monitoring systems. Lack of standardised design of indicators resulted in variable and inconsistent capture of evidence. Comparison of achievements across programmes can, however, be made for the two most frequently used result indicators ‘reduction of energy consumption’ and ‘reduction of greenhouse gas emissions’: by 2013 (i.e. two years before the completion of the programmes in end 2015) the reviewed programmes achieved 2 904 GWh per annum energy reduction and 1 454 kilo tonnes of CO2 equivalent per annum of emissions reduction as a result of, among others, energy efficiency interventions.

In the area of risk prevention, with the help of ERDF-CF support better protection from natural risks was achieved end 2014 for around 20 million at risk of floods and 30 million people at risk of forest fires. While the overall level of achievements of targets in the area of drinking water and waste water treatment progress is still standing at 38 % of targets, substantial improvements were reported by Member States: expressed in absolute numbers at end 2014 there was a significant increase in additional population served by water (more than 1.7 million) and waste water projects (more than 1.2 million) compared to 2013. Preliminary results of the environment work package of the ongoing ERDF-CF ex-post evaluation show that in many EU-13 and southern EU-15 Member States, Cohesion Policy is one of the main sources of public financing and therefore provided a major contribution to achieving EU water and waste targets. Many of these countries have made broad progress: in the area of waste, the recycling rate increased in almost all EU-13 Member States; in the area of water, projects financed by the ERDF and Cohesion Fund improved drinking water supply for at least 4 million EU citizens and contributed to better wastewater treatment for over 7 million EU citizens. Furthermore, the evaluation found that the financial analysis undertaken as part of the preparation of the examined major projects (i.e. investments over EUR 50 million) on water and waste management provided a sound basis for financial sustainability of those environmental projects. Progress by the end of 2014 compared to 2013 was also reported by Member States in the area of transport where special efforts were directed to interventions that experienced more difficulties during previous years, such as construction of new roads (including TEN) and reconstruction of railways. The most significant progress was registered on reconstructed roads (more than 30 000 km were reported at end 2014 compared to around 20 000 km at end 2013). Progress was also made in the traditionally slower moving field of reconstructed railways, with achievements of almost 4 000 km by the end of 2014 compared to just over 3 000 km at the end of 2013. Preliminary results of the transport work package of the ongoing ERDF-CF ex-post evaluation show that by addressing the needs of regions where the transport infrastructure was underdeveloped, Cohesion Policy support fostered better connectivity both within and across Member States. It also stimulated improvement in the way transport interventions are planned (e.g. through the development of transport strategies) and prepared (e.g. through improvements in the quality of applications for EU support for major transport investments over EUR 50 million), while encouraging Member States to pay more attention to sustainable transport in line with the EU strategic documents. Inclusive Growth (ERDF and ESF) In this area ERDF and ESF work together by investing both in infrastructure and in human capital in the field of education and training, active labour market policies and the inclusion of disadvantaged groups into the labour market and society. Preliminary results of the ESF ex-post evaluation showed that the ESF support in Access to Employment contributed with 12 % of national Active Labour Market Policies (ALMP) funding across the EU. In some Convergence regions (EU-12 and southern Member States such as Greece), a significant share of the ALMP participants was funded through the ESF. The evaluation also found a good fit between ESF interventions, country-specific recommendations (CSRs) made under the European Semester and the Europe 2020 Strategy. For example, the ESF contributed to reforming the Public Employment Services in a number of Member States by strengthening their capacity for designing and delivering programmes and/or by increasing their skills. The ESF human capital investment covered interventions aimed at developing the skills of various target groups, improving the quality of education and training systems and the adaptability of enterprises. Less developed regions (‘convergence regions’) could implement a wider set of activities (compared to the more developed ‘regional competitiveness’ regions) in the areas of lifelong learning, reforms of education and training systems and the development of human resources in research and innovation. As at end 2013 the ESF investment provided substantial additional resource (EUR 51 billion including national co-financing) contributing to the Europe 2020 and the Education and Training strategies and related CSRs, and generating at least 21 million results (46 % of all participations) in terms of achievement of qualifications (13 %), employment (8 %), and enhanced skills or competencies, or ‘other positive results’ (25 %). In the area of Social Inclusion, ESF interventions allowed Member States to add to existing social inclusion actions and support a greater number of participants than would have been possible otherwise, especially in the context of the economic downturn. EUR 11.5 billion (including national co-financing) were allocated to social inclusion. By the end of 2013, at least 1.3 million participants in social inclusion priority axes had secured employment, achieved a qualification or achieved other positive results. This excludes soft results (e.g. increases in self-confidence, improvements in health conditions, more active involvement in civil society, and more active job seeking behaviour), which were rarely recorded by Member States. The ESF support also allowed Member States to offer more tailored services to specific target groups which would otherwise have access only to mainstream services not tailored to their specific — and often more intensive — needs.

Overall, up to the end of 2014, 98.2 million participations in ESF interventions were recorded for all ESF policy themes. In terms of outputs, the programme has achieved its objective to reach at least as many participants as in the previous programming period. In terms of results, due to the limitation in the monitoring and reporting systems in the 2007-2013 period, aggregated result indicators only provide a partial picture. At least 8.9 million participants are reported to be in employment directly or sometime after the intervention, while at least 8.5 million participants received a qualification/ certificate or successfully completed a training course. An additional 12.8 million participants reported other positive results such as increased skills and competences. The overall assessment drawn by the ex-post evaluation and those carried out by Member States can be considered positive, albeit mostly based on qualitative evidence, due to shortcomings in the monitoring systems and the very limited number of counterfactual impact evaluations. As regards the ERDF, the investments in educational and childcare infrastructure continue to show significant progress with over 30 000 completed projects involving investment in education facilities to build new schools or colleges or to modernise and re-equip existing ones. These were almost entirely located in less developed (‘Convergence’) regions and were mainly reported by one Member State (Italy). Other Member States also carried out such actions but did not use the indicator measuring the capacity of the supported infrastructure, which precluded reliable aggregated reporting on the number of people benefiting from this infrastructure at EU level.



1.5 Sustainable Growth: Natural Resources (Budget Heading 2) EUR 63.9 billion has been allocated to Heading 2 for 2015, which represents 39.4 % of the total 2015 EU budget. Heading 2 covers the two pillars of the Common Agricultural Policy (CAP): Pillar I consists of the market support measures and the direct payments financed by the European Agricultural Guarantee Fund (EAGF); and Pillar II comprises the rural development support financed by the European Agricultural Fund for Rural Development (EAFRD). The heading also covers the European Maritime and Fisheries Fund (EMFF), the international dimension of the Common Fisheries Policy (CFP) [i.e. the Regional Fisheries Management Organisations (RFMOs) and the Sustainable Fisheries Agreements (SFAs)], as well as activities in the fields of climate and environment through the Programme for the Environment and Climate Action (LIFE). Commission priorities: Actions under this heading contribute to the achievement of the Commission priorities ‘Jobs, Growth and Investment,’ ‘Energy Union and Climate’ and to some extent to the priority ‘Digital Single Market.’ They also contribute to the Europe 2020 objectives in the area of sustainable growth with links also to smart and inclusive growth with regard to investments contributing to job creation and innovation. Chart 5: Left: Main programmes financed in 2015 under Heading 2 / Right: Share for Heading 2 in the entire 2015 budget. All figures in EUR million.



Commission action to tackle the agricultural crisis The Commission acted in two ways to provide necessary market stabilisation as the dairy and pig meat sectors were hit by the Russian ban on imports from the EU. It first opened private storage aid to reduce market supply. In a second round of action, it brought forward the disbursement of direct payments and put in place a ‘Solidarity Package’ of various other specific measures easing farmers’ cash flow. Specific temporary support measures were adopted to support farmers affected by the Russian ban on fruits and vegetables amounting to EUR 219.3 million, while for the milk sector, the additional support measures amounted to EUR 54.3 million. Furthermore, promotion measures in non-EU countries were increased with a first budgetary impact of EUR 3 million in 2015 (with further amounts impacting on 2016 and 2017). In 2015, initiatives have been launched supporting the agricultural markets and improving the supply chain. These include: -dissemination of market information through ‘market dashboards.’ This will make the markets more transparent and help market operators to take better-informed decisions; -launching or re-launching fora for analysis such as the Agricultural Markets Task Force (addressing topics such as market transparency, unfair trading practices, and access to financial instruments and futures markets) and the High-Level Forum for a Better-Functioning Food Supply Chain.

1.5.1 Implementation information on 2014-2020 programmes European Agricultural Guarantee Fund (EAGF) For the EAGF, financing direct payments to farmers and market related expenditure, the implementation during the initial years of the MFF 2014-2020 is on track. Within the Common Market Organisation (CMO) sector-specific support programmes are operating at various points in their respective life cycles. Additional market support measures, such as private storage aid for certain dairy products and withdrawal schemes for fruit and vegetables, were taken in response to the Russian import embargo on certain EU agricultural products and market downturns in the dairy and meat sectors. These measures provided much-needed support to affected producers in the Member States and helped rebalance the sectors concerned. European agriculture managed to find alternative markets at home and abroad (in particular in Asia), as shown by the trade statistics: despite the loss of the Russian market the overall value of export of EU agricultural products rose by 6 % during the 12 months following the imposition of the ban in August 2014. EU exporters achieved major gains in the USA (+19 %) and China (+39 %), among other markets. EU wine exports increased by EUR 660 million (10.3 %) year-on-year in the first nine months of 2015. This success was underpinned by the sector-specific programme’s support for promotion in non-EU countries, as well as for investments in vineyards and in processing and marketing facilities. For direct payments, during the 2015 financial year the EAGF continued to finance pre-reform schemes but particular elements of the 2013 Common Agricultural Policy (CAP) reform including the convergence of aid levels between Member States were also introduced. On the administrative level, the Commission has since 2014 assisted Member States in preparing and implementing direct payments through e.g. guidance documents or discussions in expert group meetings. European Agricultural Fund for Rural Development (EAFRD) For the EAFRD, all 118 Rural Development Programmes have been adopted. The Commission does not expect that the delay in programme approval (last programmes approved in December 2015) will have an impact on the ability to reach the programmes’ objectives and their associated targets. As of 31 December 2015, around EUR 23.5 billion has been committed. This represents 24 % of the global EAFRD envelope for 2014-2020. As regards payments, Member States’ requests received by end of 2015 amounted to a total of EUR 3.77 billion, which is still 4 % of the total commitments, reflecting the need to accelerate implementation in the years to come. A strong focus on simplification In early 2015 the Commission embarked on a large-scale simplification exercise covering the entire agricultural acquis. By the end of 2015 a number of legislative amendments were made, such as: -extension of the deadline for support applications; -more flexibility in relation to voluntary coupled support; -young farmers’ payment; and -reducing the administrative burden for beneficiaries and Member States administrations by simplifying the Integrated Administration and Control System (IACS) such as the introduction of preventive preliminary cross-checks and various improvements to the guidance documents, in particular on direct payments in relation to the implementation of ecological focus areas. Also the rules for administrative penalties under IACS are being simplified. European Maritime and Fisheries Fund (EMFF)

For the EMFF, the late adoption of the EMFF regulation (May 2014) extended the negotiation process with Member States, which was completed in December 2015. All 27 EMFF operational programmes have now been adopted by the Commission. In order to ensure a smooth start of implementation, the Commission adopted a series of implementing and delegated acts. It also provided guidance to the Member States in EMFF Committee meetings and EMFF expert group meetings, focusing in particular on the new features in the EMFF. At the end of 2015, a total number of 14 protocols to Sustainable Fisheries Partnership Agreements (SFPAs) with non-EU countries were in force, compared to 10 in 2013 and 13 in 2014. In 2015 negotiations for the renewal of protocols with Greenland and Mauritania, as well as for new SFPAs with Liberia and Cook Islands, were successfully completed. At the same time SFPAs with Mozambique and Kiribati were discontinued at the expiry of their last protocols.



Life programme for Environment and climate action (LIFE) The implementation of the LIFE programme is on track. The new types of grants (integrated, technical assistance, capacity building and preparatory projects) introduced by the LIFE Regulation were successfully put in place and the related calls for proposals launched. The high level of demand for projects focused on climate action and for integrated projects confirmed that the new features introduced by the LIFE Programme were received very favourably. More than 300 project applications focused on climate action objectives have been received following the first two calls for proposals in 2014 and 2015. As for the integrated projects, in 2015 LIFE provided EUR 63.8 million in support of six Integrated Projects funded under the LIFE programme for the Environment: they will facilitate the coordinated use of more than EUR 1.4 billion in complementary funding from the EAFRD, ERDF, national and private funds. Several policy achievements under the 7th Environmental Action Programme (7th EAP) were also supported by scientific, technical and logistic support financed under LIFE, such as activities linked to the development and adoption of the Circular Economy Package, as well as preparatory work and logistic support for the United Nations conference on climate change (COP21) which led to the first-ever universal, legally binding global climate deal. 1.5.2 Results of 2007-2013 programmes Implementation aspects The EAGF direct payments under the former regime prior to the 2013 CAP reform were smoothly implemented with the calculation and allocations of support carried out by Member State administrations in a timely fashion. For rural development (EAFRD), a number of corrective modifications on individual Member State programmes were made throughout the 2007-2013 period. The changes concerned issues such as shifts of financial allocations between measures, adaptation of targeted beneficiaries and eligibility criteria. This helped to address the low financial absorption rate in the first years of implementation, as well as some unforeseen problems arising due to the changed economic or wider policy context. The final absorption rate for the 2007-2013 period is currently estimated at the level of 98 %.

The European Fisheries Fund (EFF, predecessor of the EMFF) provided funding to the fisheries industry and coastal communities to help them to be economically resilient and ecologically sustainable. By 31 May 2015, 90.8 % of the EFF had been committed. Commitments made by the Member States from 2007 to 31 May 2015 amounted to EUR 3.91 billion for 134 689 operations. For the same period investments in the fishery and aquaculture sector amounted to EUR 9.27 billion: 42 % from the EFF, 26 % from national public contributions and 32 % from private funding. Measures for the sustainable development of fisheries areas have made progress reaching over 11 % of total EFF commitments. In terms of the leverage effect, every euro of EFF support committed generates EUR 1.37 of committed national support (+2.2 % compared to 31 May 2014), of which EUR 0.75 of private funding and EUR 0.62 of national public contribution. In 2015 the performance of Sustainable Fisheries Partnership Agreements (SFPAs) was evaluated as part of a broader evaluation covering different financial measures under the Common Fisheries Policy. The evaluation found that SFPAs were managed in accordance with the principles of sound financial management. Given the analysis of the costs of access paid by other non-EU vessels under private agreements and the fees paid by vessel owners compared to landed values of catch, the access fees negotiated by the EU were judged as advantageous to, and efficient for, vessel owners. The evaluation showed higher value for money for tuna agreements than for multi-species agreements. For LIFE+, grants projects accounted for 81 % of the programme’s multiannual budget of EUR 2.1 billion. This amounted to EUR 1.7 billion for the overall period and mobilised financial resources (EUR 1.8 billion) for more than double the EU financing. Contribution to policy achievements Given that the ex-post evaluations on the performance of the 2007-2013 Rural Development programmes and the EFF have not yet been completed, the achievements reported below are mainly based on the latest available monitoring information on these programmes. Smart Growth In the 2007-2013 period the CAP exerted a strong positive influence on the farm sector’s viability by offering the sector targeted funding to improve its performance. The EU’s farm sector raised its total factor productivity by 0.7 % per year between 2005 and 2014 (and by 1.7 % per year in the EU-13), showing clear evidence of using the factors of production more efficiently. Rural development funding provided support for knowledge-building, investments, various forms of cooperation, and innovation. In the period 2007-2013, the EAFRD supported: 430 000 farm modernisation projects; start-up support for 165 000 young farmers; 385 000 farmers’ involvement in quality schemes; more than 5 million training days for farmers. Rural development measures also helped the creation or development of 70 000 (non-agricultural) micro-enterprises. EAFRD financing also supported the achievement of better access to broadband and/or ICTs for 8 million rural inhabitants. Next-generation access in rural areas reached 25 % by the end of 2014 — up from less than 20 % in 2013. Although the use of financial instruments in 2007-2013 rural development programmes was still modest (EUR 364 million of funding from 16 Rural Development Programmes in 7 Member States), some of the results were encouraging. For example, between 2010 and 2014 a guarantee fund which operated in Romania and was funded through rural development policy helped to make EUR 265 million of loans available by providing just EUR 116 million as security in the form of 1 040 guarantees.

Sustainable Growth In the period 2007-2013 more than 80 % of total CAP payments were linked to compliance by farmers with basic standards concerning the environment (as well as food safety, animal and plant health and animal welfare). Furthermore, by supporting farmers, the EAGF enabled a retreat from harmfully intensive practices. The greenhouse gas emissions from agriculture (excluding soils) continued to decline in a steady fashion with an average annual rate of decrease of 0.7 % between 2001 and 2012, thus contributing to the targeted trend of reducing CO2 emissions. Under rural development programmes various types of area-related payments were made to encourage management practices that have a proven positive impact on biodiversity, soil, water, and air in both the farm and forest sectors. During the 2007-2013 programming period, the surface under agri-environmental schemes expanded to 47 million ha, representing more than 25 % of the EU-27 Utilised Agricultural Area in 2013. In particular, the support received from farmers to convert to organic farming covered 7.7 million hectares. All this played an important role in the improvement of the environmental performance of EU farming. For the EFF, in 2007-2013 Member States actively used the decommissioning instrument under the EFF to adjust fishing capacities to available resources. Many Member States declared in their fleet capacity reports for 2013, that their fishing fleets were in balance with the stocks exploited, even though pockets of overcapacity remained, particularly in the Mediterranean. The 2015 Commission Annual Report on EFF implementation confirms the gradual decrease of EFF support to fleet measures (permanent and temporary cessation of fishing) and the continuous support to more environmentally friendly fishing practices which have contributed to the increase the number of stocks fished at Maximum Sustainable Yield level (MSY) from 27 in 2014 to 39 in 2015. LIFE+ contributed to increasing awareness and public participation in the implementation of EU environment policy and legislation, as well as to the good governance in this area.. The programme served as an effective tool to promote the implementation of the priorities established in the 6th Environmental Action Programme (6EAP). The evaluations of the programme confirmed that LIFE+ has been ‘a successful instrument with significant EU added value.’ Over its twenty years of implementation and in addition to ‘quantified benefits estimated at some EUR 600 million a year,’ LIFE has contributed to: improved conservation and restoration of some 4.7 million hectares of land; improved water quality over an area of approximately 3 million hectares; more healthy air quality for some 12 million people; waste prevention of some 300 000 tonnes and recycling of a further 1 million tonnes; 1.13 million tonnes reductions of CO2 emissions per year. Example of EU added value The LIFE programme acts as a platform for the exchange of best practice and knowledge-sharing, allowing actors across the EU to learn from each other’s experiences. More than 25 % of the LIFE Nature conservation measures results were shared and replicated across the EU. An example of such successful knowledge-sharing is the Elia project aimed at creating green corridors for biodiversity under overhead high-tension lines in forests while at the same time reducing the annual maintenance costs for the electricity transmission system operators. Thanks to this project 155 km (775 ha) in Belgium and 31 km (155 ha) in France were restored. In both countries, the conservation measures involved 732 stakeholders from 28 stakeholders groups in their long-term management. The cost benefit analysis showed that the annual maintenance costs were reduced by a factor of 2.5-5, with a return on the initial investments after only 3-9 years. The operator in Belgium is expected to roll out this approach under a further 600 km of overhead lines on its own budget, after the term of this LIFE project, hoping to achieve annual cost savings of some EUR 1 million. The measures implemented under this project are applicable to more than 75 000 km across the EU. Inclusive Growth

The combination of direct payments and market measures helped limit job and output losses. In 2014 the employment rate in rural areas recovered to 63.3 %. This was important for the EU’s 11 million farms, their 22 million regular workers and for those linked to farming — e.g. 22 million in food processing, food retail and food services, plus others in upstream or other downstream sectors (making up a sector of nearly 44 million jobs altogether). The CAP also promoted a balanced territorial development in the EU through its rural development measures, which supported almost 53 000 operations improving basic services in rural areas (e.g. transport; electricity; household maintenance) in the period 2007-2013. For the EFF, a recent study estimates that at least 7 300 jobs have been created by the Fisheries Local Action Groups (FLAGs), while a further 12 500 jobs maintained at an estimated cost of EUR 32 000/job created or maintained and over 200 new enterprises created with EFF support. According to the evaluation completed in 2015, SFPAs measures proved effective in terms of economic benefits for the EU and the non-EU countries fleets. The SFPAs supported employment for around 2 500 EU nationals on EU vessels in many EU coastal regions, with the highest numbers in the Spanish regions of Andalusia, Galicia, Basque Country and Canary Islands, Latvia and Lithuania, the French regions of Brittany and Réunion, and the Pomorskie region of Poland. However, it was found that the generation of FPA-related jobs in regions such as Andalusia and Canary Islands was negatively affected by the reduction in fishing opportunities under multi-species agreements in West Africa over the evaluation period (2007-2013). 1.6 Security and Citizenship (Budget Heading 3) Under Heading 3, the EU budget brings together a range of programmes (EUR 2.5 billion representing 1.6 % of the total 2015 EU budget) supporting pressing political challenges such as security, asylum, migration and integration, health, consumer protection, culture and dialogue with citizens. Funding is geared to projects where EU collaboration brings about significant efficiency gains. Chart 6: Left: Main programmes financed in 2015 under Heading 3 / Right: Share for Heading 3 in the entire 2015 budget. All figures in EUR million. This part of the budget came under particular pressure this year due to the refugee crisis. Agencies such as Frontex, EASO and Europol were strengthened with a tripling of the initial amount allocated to the ‘Triton’ and the ‘Poseidon’ operations in the Mediterranean Sea and additional support to establish hotspots. Emergency measures in the Asylum Migration and Integration Fund (AMIF) and Internal Security Fund (ISF) funds were considerably strengthened (EUR +130 million) in order to help the frontline Member States such as Greece and Italy. EUR 25 million was also provided to fund the resettlement scheme.



Commission priorities: The programmes under Heading 3 contribute mainly to the Juncker Commission priorities of ‘Justice and Fundamental Rights’ and ‘Migration.’ Despite the small budget involved, these programmes contribute to Europe 2020 achievements. For example, the Health Programme funds actions related to healthy ageing (a prerequisite for smart growth) and health inequalities (a key component of inclusive growth), and the Asylum Migration and Integration Fund contributes to inclusive growth through financing of projects for integrating non-EU nationals. 1.6.1 Implementation of 2014-2020 MFF programmes

In the area of security, asylum, migration and integration, Member States have started implementing actions supported by AMIF and ISF, as outlined in their national programmes. Both funds are key funding sources to address the refugee crisis and are mainly implemented under shared management. In 2015 considerable progress has been made in the start-up phase. All 54 multiannual national programmes of Member States were adopted; they describe how the Member State intends to meet the funds’ goals. The remaining four programmes under ISF for the Schengen Associated countries will be approved following the conclusion of the bilateral agreements with these countries. The designation process of an authority responsible for the management of the funds, a prerequisite for disbursing funding, is also on track. As of the end of 2015, only four Member States still needed to designate a responsible authority. Following these steps, activities started in 2015 to monitor the funds' implementation on the ground. Member States submitted their first annual implementation reports in March 2016. Despite the late adoption of the legal bases of the AMIF and ISF and taking into account the refugee crisis and recent security-related events, Member States have reported progress in the implementation of their national programmes. Although the pace of the implementation has been slow in the first two years (approximately 19 % of the total funding committed for 2014-2015), the implementation is expected to accelerate in 2016. The activities in 2015 funded under direct management were impacted by the creation of additional emergency assistance aid. The budget available for grants tripled from EUR 77.41 million in 2014 to EUR 261.94 million in 2015 and 38 emergency assistance grants were awarded in 2015 (representing a value of EUR 163 million) to Member States mostly affected by the influx of asylum seekers. The grants financed basic needs of asylum seekers such as accommodation an