Report from the Commission - Annual Report on the Cohesion Fund (2005) {SEC(2006)1366}
Date: 2006-11-21
Institutions: European Commission
Subjects: Cohesion Fund, activity report, financial control, financial management, implementation of the budget

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.11.2006 
COM(2006) 635 final 

REPORT FROM THE COMMISSION 

ANNUAL REPORT ON THE COHESION FUND (2005) 

{SEC(2006)1366} 

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TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

4. 

5. 

6. 

7. 

Budget execution.......................................................................................................... 3 

Economic environment and conditionnality ................................................................ 7 

Coordination with transport and environmental policies ............................................. 8 

Transport ...................................................................................................................... 8 

Environment................................................................................................................. 9 

Inspections ................................................................................................................... 9 

Irregularities and suspension of aid............................................................................ 10 

Evaluation .................................................................................................................. 11 

Information and publicity........................................................................................... 12 

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ANNUAL REPORT ON THE COHESION FUND (2005) 

This  report  is  presented  in  conformity  with  Article  14.1  of  Regulation  (EC) 
n°1164/1994  establishing  a  Cohesion  Fund.  It  covers  the  activities  of  the  Cohesion 
Fund during 2005. 

1. 

BUDGET EXECUTION 

Cohesion  Fund  resources  available  for  commitments  in  2005  amounted  to  
€ 5 131 932 989 (current prices) for the 13 beneficiary Member States. This amount 
includes  technical  assistance  credits  (€  8  100  000).  It  should  be  noted  that  the 
Cohesion  Fund  covers  12  Member  States  and  that  Ireland,  as  a  result  of  economic 
growth, is no longer eligible since 1 January 2004. 

The  commitment  appropriations  were  virtually  entirely  used  (99.99  %)  and  no 
appropriations were carried over to 2006. 

Table 1. Implementation of commitments in 2005 (in Euro) 

Commitment 
appropriations 

Initial 

Movements 

Final 
resources 

Outturn 

Cancelled 

Carryovers 
2006 

2005 budget 

5 131 932 989 

0 

5 131 932 989 

5 131 394 095 

2 084 326 

0 

2 084 326 

2 084 326 

0 

0 

0 

0 

0 

0 

0 

0 

0 

5 134 017 315 

5 133 478 421 

Totals 

5 134 017 315 

Table 2. Implementation of payments in 2005 (in Euro) 

Payment 
appropriations 

Initial 

Movements 

Final 
resources 

Outturn 

Cancelled 

Carryovers 
2006 

2005 budget 

3 005 500 000 

- 905 667 578 

2 099 832 422 

2 095 501 859 

4 330 562 

Appropriations 
carried 
from 2004 

over 

Appropriations 
made  available 
again 

Repayments 

Appropriations 
carried over 
from 2004 

Appropriations 
made available 
again 

133 138 854 

0 

133 138 854 

133 138 854 

7 413 307 

0 

0 

7 413 307 

7 352 531 

0 

0 

Repayments 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

60 775 

0 

0 

0 

0 

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Totals 

3 146 052 161 

- 905 667 578 

2 240 384 583 

2 235 993 244 

4 330 562 

60 775 

Due to a relative slow rate of implementation of payments in the first nine months of 
the year, a total of € 905.6 million of payment appropriations was transferred from 
the Cohesion Fund to the ERDF as part of the global transfer procedure with other 
Structural  Funds.  This  transfer  meant  that  some  99.8  %  of  the  payment 
appropriations were implemented in 2005. 

Budget implementation of appropriations in 2005 by Member State 

Table 3. Commitment appropriations 2005 (in Euro) 

Member State 

Environment 

Transport 

Amount 

% 
Envir 

Amount 

% 
Trans
p. 

852 915 773 

47.2 

955 633 794 

52.8 

108 808 087 

25.3 

321 689 418 

74.7 

289 926 872 

59.2 

199 774 911 

40.8 

13 122 653 

86.9 

1 976 824 

13.1 

125 984 675 

49.1 

130 826 766 

50.9 

España 

Ellada 

Portugal 

Kypros 

Ceska 
Republika 

Eesti 

33 779 915 

38.5 

53 970 504 

61.5 

Magyarország 

157 491 180 

50.7 

153 050 527 

49.3 

Latvija 

Lietuva 

Malta 

Polska 

78 180 693 

50.6 

76 219 129 

49.4 

117 185 363 

68.3 

54 376 851 

31.7 

0 

0 

5 347 620 

100 

673 535 292 

57.8 

491 996 252 

42.2 

Slovensko 

79 538 582 

51.0 

76 448 510 

49.0 

Slovenija 

47 140 815 

90.9 

4 694 914 

9.1 

Technical 
Assistance 

Total 

Amount 

Amount 

% MS 
on 
total 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1 808 549 567 

35.2 

430 497 505 

8.5 

489 701 783 

9.5 

15 099 477 

0.3 

256 811 441 

5.0 

87 750 419 

1.8 

310 541 707 

6.0 

154 399 822 

3.0 

171 562 214 

3.3 

5 347 620 

0.1 

1 165 531 544 

22.7 

155 987 092 

3.0 

51 835 729 

1.0 

Technical 
Assistance 

Total 

0 

0 

0 

0 

29 862 501 

29 862 501 

0.6 

2 577 609 900 

50.2 

2 526 006 020 

49.8 

29 862 501 

5 133 478 421  100 % 

Table 4. Payment appropriations 2005 (in Euro) 

Figures for the new Member States refer only to payments for projects adopted under 
the  Cohesion  Fund  as  from  1  May  2004  (i.e.  not  taking  into  account  pre-accession 

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aid  for  ISPA  projects).  Table  no  5  below  shows  the  payments  effected  in  2005  in 
relation to ISPA projects adopted before accession in 2004. 

Member State 

Environment 

Transport 

Technical 
Assistance 

Total 

Amount 

% 
Envir. 

Amount 

% 
Transp. 

Amount 

Amount 

% 

España 

Ellada 

Ireland 

Portugal 

Kypros 

Ceska 
Republika 

654 401 989 

47.2 

732 303 612 

52.8 

156 508 198 

49.9 

157 306 438 

50.1 

12 004 179 

73.2 

4 391 663 

26.8 

124 050 708 

45.1 

150 776 339 

54.9 

0 

0 

0 

0 

5 058 456 

100 

15 326 716 

100 

Eesti 

2 543 159 

66.8 

1 264 006 

33.2 

Magyarország 

3 190 375 

4.0 

74 988 467 

96.0 

Latvija 

Lietuva 

Malta 

Polska 

0 

0 

0 

0 

0 

0 

0 

0 

20 441 701 

100 

48 866 247 

100 

0 

0 

17 411 326 

100 

Slovensko 

2 664 822 

61.3 

40 784 213 

38.7 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1 386 705 601 

62.0 

313 814 636 

14.0 

16 395 842 

0.7 

274 827 047 

12.3 

5 058 456 

0.3 

15 326 716 

0.7 

3 807 166 

0.2 

78 178 843 

3.5 

20 441 701 

0.9 

48 866 247 

2.2 

0 

0 

17 411 326 

0.8 

43 449 035 

1.9 

8 542 556 

0.4 

Slovenija 

Technical 
Assistance 

Total 

8 542 556 

100 

0 

0 

0 

0 

0 

0 

3 168 067 

3 168 067 

0.1 

955 363 431 

42.8 

1 277 461 745 

57.2 

3 168 067 

2 235 993 244 

100 % 

For the fourth year running, there was tendency for payments in favour of projects in 
the  transport  sector,  although  the  distribution  between  transport  and  environment 
varies considerably among Member States. 

Table 5. New Member States – Payments made in 2005 related to former ISPA projects 
(excluding technical assistance) 

Member State 

Environment 

Transport 

Total 

Ceska 
Republika 
Eesti 

Amount 

37.842.669,97 

% 
Envir. 
64,2% 

Amount 

21.083.316,98 

% 
Transport 
35,8% 

Amount 

% 

58.925.986,95 

11,4% 

16.146.155,41 

56,6% 

12.363.826,57 

43,4% 

28.509.981,98 

5,5% 

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Magyarország 
Latvija 
Lietuva 
Polska 
Slovensko 
Slovenija 
Total 

28.224.506,00 
24.905.962,19 
12.859.292,90 
85.207.452,51 
20.033.296,36 
1.009.431,70 
226.228.767,04 

39,8% 
41,6% 
38,6% 
40,3% 
43,4% 
11,0% 
41,9% 

42.706.981,30 
34.943.875,20 
20.464.144,41 
26.464.614,43 
26.147.266,92 
8.137.626,12 
292.311.651,93 

60,2% 
70.931.487,30 
13,7% 
58,4% 
59.849.837,39 
11,5% 
61,4% 
33.323.437,31 
6,4% 
59,7%  211.672.066,94 
40,8% 
56,6% 
46.180.563,28 
8,9% 
89,0% 
1,8% 
9.147.057,82 
58,1%  518.540.418,97  100,0% 

Table 6. Settlement in 2005 of commitments for the period 1993-99 (in euro) 

Member State 

Initial amount to be 
settled 

Decommitments 

Payments 

Final amount to 
be settled 

España 

Ellada 

Ireland 

Portugal 

Total 

305 739 244 

30 456 151 

70 983 944 

204 299 149 

171 283 818 

59 732 167 

29 386 156 

82 165 494 

33 705 504 

31 638 853 

4 067 959 

29 637 545 

2 124 257 

29 514 596 

542 367 419 

90 188 318 

106 562 316 

345 616 784 

NB: The initial amounts to be settled in 2005 do not correspond to the final amounts presented in the 
annual report for 2004, due to inaccuracies in the table for the year 2004. 

Cohesion  Fund  commitments  are  made  from  differentiated  appropriations.  In  other 
words, the payments follow the initial commitments of resources. If all the projects 
are  implemented  in  line  with  the  decisions,  an  amount  to  be  settled  exists 
"automatically" because of the gap between the date of the decision and the date of 
payment of the balance (normally 4 to 5 years). 

In  order  to  avoid  an  excessive  delay  between  commitments  and  payments,  a 
particular  effort  to  clear  outstanding  appropriations  on  actions  begun  in  2000  was 
continued. Some 36.2 % of the outstanding appropriations existing at the beginning 
of the year were either paid or subject to decommitment in 2005. By the end of 2005, 
outstanding  appropriations  had  fallen  to  just  6.7  %  of  the  annual  budget  of  the 
Cohesion Fund (compared to some 50 % at the end of 2002 and 39 % at the end of 
2003). This effort to reduce outstanding appropriations will be maintained in 2006 in 
the  national  authorities  who  are  responsible  for  project 
partnership  with 
implementation and the related payment claims. 

Details on the projects adopted in 2005 for each Member States are presented in the 
Annex to this report. 

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2. 

ECONOMIC ENVIRONMENT AND CONDITIONNALITY 

The Council Regulation on the Cohesion Fund1 attaches macro-economic conditions 
to  the  use  of  the  Fund.  It  states  that  “no new projects  or, in the event  of  important 
projects, no new project stages shall be financed by the Fund in a Member State in 
the event of the Council, acting by a qualified majority on a recommendation from 
the Commission, finding that the Member State has not implemented [its stability or 
convergence  programme]  in  such  a  way  as  to  avoid  an  excessive  deficit.”  This 
reflects  the  role  of  the  Cohesion  Fund  as  an  instrument  of  budgetary  support  at 
national level helping Member States to maintain macro-economic rigour. 

No decisions were taken by the Council in 2005 to suspend the financing by the Fund 
to  any  of  the  recipient  countries.  Six  recently  acceded  Member  States  were 
confirmed  as  having  an  excessive  deficit  in  2004  –  the  Czech  Republic,  Cyprus, 
Malta,  Hungary,  Poland  and  Slovakia.  With  the  exception  of  Hungary,  no  further 
action  was  deemed  necessary  by  budgetary  developments  in  2005,  after  the 
Commission concluded in December 2004 that all of the Member States concerned 
had taken effective action in response to the Council recommendations. Cyprus was 
able to correct its excessive deficit by 2005, while the convergence programmes of 
the other countries (except for Poland) are in line with the Council recommendations, 
with target dates for the correction of the excessive deficit, respectively in 2006 for 
Malta, in 2007 for Slovakia, and in 2008 for the Czech Republic. The 2005 update of 
the  Polish  convergence  programme  proposes  to  reduce  general  government  deficit 
below  3%  by  2009,  as  opposed  to  the  2007  deadline  in  the  July  2004  Council 
recommendation. In the opinion of the Council, this does not constitute an effective 
correction  of  the  excessive  deficit  by  2007,  and  the  Commission  intends  to 
recommend  further  steps  under  the  excessive  deficit  procedure  as  required  by  the 
Stability and Growth Pact. 

In 2005, three Member States covered by the Cohesion Fund (Greece, Hungary and 
Portugal) were involved in additional steps in the excessive deficit procedure. 

For Portugal, the excessive deficit procedure was restarted after the 2004 abrogation 
of the previous procedure initiated in 2002. After the deficit outturn of 2.9% in 2004, 
the Council reopened the excessive deficit procedure in reaction to the foreseen 6.2% 
deficit for 2005, and recommended a correction of the situation by the end of 2008 at 
latest.  The  Council,  in  its  Opinion  on  the  2005  update  of  the  Portuguese  stability 
programme,  noted  that  the  programme  was  consistent  with  the  correction  of  the 
excessive deficit by 2008. 

The  Council  decided  in  January  2005  that  Greece  and  Hungary  had  not  taken 
effective action in response to the Council recommendations in July 2004. In the case 
of  Greece,  however,  the  Commission  concluded  in  April  2005  that  effective  action 
was  being  taken  to  bring  its  budget  deficit  below  3%  in  2006  in  response  to  the 
Council notice of February 2005. The Council notice extended the deadline for the 
correction of the excessive deficit to 2006, and this is mirrored in the deadline set by 
the 2005 update of the Greek stability programme for remedying the situation. 

1 

Based on Article 6 of Council Regulation (EC) No 1164/94, as in the codified version presented by the 
Commission.  

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As  regards  Hungary,  the  Council  issued  in  March  2005  a  new  recommendation 
requesting the country to introduce additional budgetary measures by July 2005 and 
to  correct  its  excessive  deficit  by  2008.  In  July  2005,  the  Commission  issued  a 
communication  to  the  Council  stating  that  the  Hungarian  authorities  have  taken 
effective action for the 2005 budget deficit, but further action may be required and 
important  and  decisive  adjustments  are  needed  to  reach  the  2006  deficit  target.  In 
October  2005,  the  Commission  re-assessed  the  budgetary  situation  of  Hungary  and 
recommended to the Council to decide for the second time in 2005 that Hungary has 
failed to take effective action to correct its deficit. The re-assessment concluded that 
budgetary targets for 2005 and 2006 would be missed by a large margin, calling into 
question the previously established 2008 deadline for the correction of the excessive 
deficit. On the basis of this situation, in November 2005 the Council issued a second 
Article 104(8) decision for Hungary. The 2005 update of the Hungarian convergence 
programme  was  submitted  in  December  2005,  with  a  plan  to  bring  down  the 
excessive deficit by 2008. This was considered to be subject to substantial risk by the 
Council in its opinion, as the tightening of the expenditure was not based on clearly 
defined and quantified measures. Hence, the Council invited Hungary to present, by 
1 September 2006, a revised update of its convergence programme. 

Conditionality  provisions  will  continue  to  apply  after  2007:  the  proposed  new 
regulation on the Cohesion Fund for the next programming period2 further clarifies 
the application of the conditionality clause. In particular, the Council can decide on 
the suspension of either the totality or part of the financial assistance from the Fund 
for  the  Member  State  concerned  with  effect  from  1st  January  of  the  year  following 
the decision. The suspension will concern new commitments. 

3. 

COORDINATION WITH TRANSPORT AND ENVIRONMENTAL POLICIES  

3.1. 

Transport 

In 2005, the transport sector accounted for a fraction less than half (49.8%) of total 
Cohesion Fund commitments. As in the past, in order to improve the modal balance, 
the  Commission  asked  the  Member  States  to  give  particular  preference  to  railway 
projects. The projects adopted in 2005 by Member States are set out in the Annex to 
this report. 

In  the  transport  sector,  Community  support  is  delivered  in  a  coordinated  way  by  a 
variety  of  instruments:  Cohesion  Fund,  ISPA,  ERDF,  Trans-European  Networks 
programmes,  EIB  loans.  Financial  support  from  these  instruments  is  essentially 
directed towards the Trans-European transport networks (TEN-T). 

The  Community  guidelines  for  the  development  of  TEN-T  were  established  by 
Decision  n°1692/96/EC  as  amended  by  Decision  n°884/2004/EC.  The  Decision 
specified  30  priority  projects  of  European  interest,  out  of  which  14  are  the  revised 
Essen  projects.  The  Decision  calls  on  Member  States  to  give  priority  to  these 
projects. 

2 

Article  4,  Proposal  for  a  Council  Regulation  establishing  the  Cohesion  Fund,  COM(2004)  494  final, 
2004/0166(CNS). 

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In agreement with Article 3 of Regulation (EC) 1164/94 as amended by Regulation 
1264/1999, the Cohesion Fund may provide assistance for the transport infrastructure 
projects  of  common  interest,  financed  by  Member  States  and  which  are  identified 
within the framework of the Guidelines on TEN-T. 

3.2. 

Environment 

In  2005,  the  environment  sector  accounted  for  just  over  half  (50.2%)  of  total 
Cohesion  Fund  commitments.  In  general,  the  projects  supported  by  the  cohesion 
Fund  contributed  to  the  global  objectives  of  environmental  policy  in  relation  to 
sustainable development, in particular to the achievement of the priority areas of the 
sixth  Action  Programme,  notably  on  the  management  of  natural  resources,  waste 
management  and  in  relation  to  investments  that  seek  to  limit  impacts  on  climatic 
changes. The projects adopted in 2005 by Member States are set out in the Annex to 
this report. 

During  2005,  the  Cohesion  Fund  continued  to  contribute  to  the  implementation  of 
environmental  legislation,  not  only  through  the  direct  financing  of  infrastructures, 
but  also  by  providing  incentives  encouraging  the  application  of  directives.  This 
territorial  dimension  such  as  nature 
concerns 
preservation, solid waste and waste-water management and the environmental impact 
assessment (EIA). 

interventions  with 

thematic 

The  new  Member  States  have  set  water  and  solid  waste  management  as  important 
priorities  for  expenditures.  Investments  and  infrastructure  needs  remain  high  in  the 
majority of cases in order to meet the conditions of the key directives in fields such 
as solid waste and water (in particular urban waste-water treatment), but also in the 
fields  of  air  quality  and  the  effort  to  reduce  industrial  pollution.  Support  for 
environmental infrastructure under the Cohesion Fund is therefore important for the 
new Member States. 

4. 

INSPECTIONS 

The audit work of the EU 4 (Greece, Ireland, Portugal, Spain) in 2005 continued to 
focus  on  following  up  outstanding  issues  in  the  effective  operation  of  management 
and  control  systems  in  three  Member  States.  The  action  plans  agreed  with  the 
Member  States  (Greece,  Portugal  and  Spain  at  central  level)  continued  to  be 
monitored so that the necessary adaptations could be made. 

The  audit  scope  included  both  compliance  tests  for  the  systems  as  a  whole  and 
substantive  testing  of  project  expenditure  focusing  on  the  effective  implementation 
of  verification  checks  at  management  level,  compliance  with  the  requirements  for 
public  procurement,  eligible  expenditure  and  publicity  to  seek  assurance  on  the 
legality  and  regularity  of  payment  requests.  In  addition,  a  separate  audit  enquiry 
started  in  2005  for  projects  that  had  been  formally  closed  in  order  to  examine  the 
audit work carried out by the winding up bodies before providing an audit opinion. 
One mission was carried out in Spain and in Portugal in the transport sector. 

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Twenty Cohesion Fund projects were audited in depth in 2005, the large majority in 
Spain  and  Portugal  while  the  audit  effort  for  Greece  concentrated  on  compliance 
tests. 

At  systems  level,  the  shortcomings  noted  regarded  insufficient  ex-ante  controls 
(management  or  operational  verifications)  and  the  unsatisfactory  fulfillment  of  the 
Article  9  of  Commission  Regulation  (EC)  n°1386/2002  on  sample  checks.  At 
projects  level,  the  main  deficiencies  observed  concerned  the  procedures  for  the 
award  of  public  contracts.  The  irregularities  which  were  observed  are  subject  to 
contradictory  procedures  with  the  Member  States  concerned,  and  to  determine 
whether,  and  to  what  extent,  there  will  be  recourse  to  the  application  of  possible 
financial corrections. 

With  regard  to  the  systems  set  up  by  the  ten  new  Member  States  to  fulfill  the 
requirements  of  Commission  Regulation  (EC)  n°1386/2002,  desk  reviews  were 
completed  in  the  period  January-March  2005  enabling  the  Commission  to  gain 
assurance on the set-up of the systems. Systems audits began in 2005 to check that 
the  systems  in  place  correspond  to  the  description  and  function  effectively.  In 
addition, a separate enquiry was launched during 2005 with the objective of verifying 
the  correct  application  of  public  procurement  procedures  based  on  a  sample  of 
contracts concluded after accession. 

5. 

IRREGULARITIES AND SUSPENSION OF AID 

During 2005, the European Anti-Fraud Office (OLAF) opened five cases in relation 
to the information received concerning Cohesion Fund. Among these, two cases led 
to external enquiries and one case has already been closed as a “non case”. The two 
remaining cases have been transferred to the year 2006 waiting for an evaluation. No 
control missions linked to Reg. (CE) n°2185/963 have been realised. 

According  to  Article  3  of  Reg.  (CE)  n°  1831/944  concerning  irregularities  and  the 
recovery  of  amounts  unduly  paid,  as  well  as  the  organisation  of  an  information 
system in this area, and some eight of the beneficiary Member States communicated 
204  irregularity  cases  involving  €  129  250  528  of  Community  contribution.  These 
cases have been the subject of initial administrative or judicial findings of fact. 

It is worth noting that the majority of these cases (192) have been communicated by 
the  four  original  beneficiary  Member  States,  with  a  predominance  of  Greek  cases 
(152), involving a total of € 91 653 202 in Community contribution, of which € 24 
872  456  remain  to  be  recovered.  The  cases  communicated  by  the  Irish  authorities 
(18)  involved  a  total  of  €  21  714  607  deducted  before  the  presentation  of  the  final 
payment  requests  to  the  Commission.  On  the  contrary,  for  the  16  cases 
communicated  by  the  Portuguese  authorities  involving  €  6  205  143  in  Community 
contribution, and for the 6 cases communicated by the Spanish authorities involving 
€  8  668  985,  amounts  of  respectively  €  4  131  494  and  €  8  378  744  remain  to  be 
recovered. 

3 
4 

OJ n°L 292, 15.11.1996, p.2 
OJ n°L 191, 29.07.1994, p.1 

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Among  the  new  Member  States,  only  the  Czech  Republic,  Estonia,  Hungary  and 
Lithuania  have  notified  cases  (respectively  6,  2,  1  and  3  cases),  involving  less 
important amounts than those cited above. For almost all cases, the amounts involved 
have been deducted before presentation of the payment requests to the Commission. 

The other new Member States have informed the Commission that no irregularities 
have been observed during 2005. However, the attention of Member States must be 
drawn  to  the  fact  that  a  certain  number  of  cases  detected  during  national  and/or 
Community  audit  missions  have  not  led  to  a  notification  according  to  the  relevant 
regulation. 

In most notified cases, irregularities relate to the application of public procurement 
rules, and for the remaining cases, the presentation of ineligible expenditure. 

During the year 2005 Regulation (CE) n° 1831/94 was modified by Regulation (CE) 
n°  2168/20055.  The  amendments  concern:  the  definition  of  irregularity  as  stated  in 
Article 1.2 of Regulation (CE) n° 2988/95 of the Council; the definition of suspicion 
of fraud; the clarification of the moment when a case must be notified; the definition 
of  “bankruptcy”  and  the  exclusion  of  the  obligation  to  notify  cases  of  bankruptcy, 
except  some  cases,  namely  when  there  is  a  suspicion  of  fraud;  the  electronic 
transmission  of  irregularity  cases;  the  increase  of  the  notification  threshold  from  
€ 4 000 to € 10 000; the redefinition of the objectives, stressing on risk analysis. 

6. 

EVALUATION 

In  accordance  with  the  provisions  of  Article  13  of  the  revised  Regulation  (CE) 
n°1164/94  of  16  May  1994,  the  Commission  and  Member  States  have  to  ensure 
effectiveness of Community aid when implementing projects co-financed under the 
Cohesion Fund. This implies recourse to monitoring and evaluation measures likely 
to allow adaptation of the projects according to the results of the monitoring and of 
the evaluation. 

Commission  and  Member  States  carry  out,  if  necessary  in  cooperation  with  the 
European Investment Bank, appraisal and evaluation of all co-financed projects (11 
in 2005). 

During  the  implementation  of  projects  and  after  their  completion,  the  Commission 
and  Member  States  monitor  the  realisation  of  the  projects,  the  respect  of  their 
objectives  and  the  impact  of  their  implementation.  At  methodological  level,  each 
request  for  assistance  is  accompanied  by  a  cost-benefit  analysis  (CBA).  The  CBA 
has  to  demonstrate  that  the  socio-economic  benefits  in  the  medium  term  are 
proportional with the financial resources mobilised. The Commission examines this 
evaluation  on  the  basis  of  principles  set  out  in  the  guide  for  cost-benefit  analysis 
published in 20036, used both by project sponsors and by the Commission. 

On  this  basis,  the  Commission  provided  during  2005  important  methodological 
support  and  assisted  Member  States  through  actions  of  capacity  building  aiming  to 

5 
6 

OJ n°L 345, 21.12.2005, p.15 
http://europa.eu.int/comm/regional_policy/sources/docgener/guides/cost/guide02_en.pdf  

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improve  the  consistency  of  the  ex-ante  financial  and  economic  analysis  of  the 
projects.  Thus,  dedicated  software  (called  CBA  Software)  was  developed  which, 
after a test phase, is now fully operational. Its aim is to give the Commission and the 
benefiting  Member  States  thereafter,  a  tool  likely  to  help  them  carry  out  the  cost-
benefit analysis for projects financed by the Cohesion Fund. 

In  addition,  the  ex  post  evaluation  of  a  sample  of  200  projects  co-financed  by  the 
Cohesion  Fund  during  the  period  1993-2002,  carried  out  in  2004  gave  in  2005 
important  follow-up  work:  an  ad  hoc  working  group  was  set  up  to  proceed  to  the 
prioritisation and to the reformulation of the recommendations of this report. 

7. 

INFORMATION AND PUBLICITY 

On  9  March,  the  Commission  sent  a  set  of  guidance  documents  to  the  Member 
States.  These  documents  had  the  objective  of  recalling  certain  provisions  of 
Regulation  1164/94  and  set  rules  to  ensure  the  respect  of  the  principle  of  sound 
financial  management:  The  arrangements  for  the  payment  of  the  20%  payment  on 
account; the procedure for  implementing the repayment,  in whole or in part, of the 
payment  on  account  (“M+12  rule”);  the  procedure  to  be  applied  under  Art.C5  of 
Annex  II  of  Reg.  1164/94  (“M+24  rule”);  the  guidelines  for  the  amendments  of 
decisions  on  Cohesion  Fund  projects;  the  transition  arrangements  from  ISPA  to 
Cohesion Fund for the Member States concerned. 

Two information meetings with the 25 Member States were held in Brussels, on 20 
April and 15 December. At the first meeting, the Commission presented a follow up 
of  the  ex-post  evaluation  of  200  Cohesion  Fund  projects,  whose  conclusions  were 
discussed  during  the  previous  meeting,  in  November  2004.  At  the  December 
meeting,  an  exchange  of  good  practice  on  the  Environmental  Impact  Assessment 
(EIA) compliance took place. 

Following  adoption  on  1  April  of  Commission  regulation  (CE)  n°621/2004  on 
information and publicity measures, the Directorate general published a fact sheet on 
the Inforegio website and an update to the Cohesion Fund reference website. 

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