COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of the Reform Support Programme
Date: 2018-05-31
Institutions: European Commission, Secretariat-General
Subjects: EU Member State, EU aid, EU financial instrument, EU programme, administrative reform, economic convergence, institutional reform, non-participating country (euro area), structural adjustment

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   EUROPEAN COMMISSION  Brussels, 31.5.2018  SWD(2018) 311 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of the Reform Support Programme {COM(2018) 391 final} - {SEC(2018) 280 final} - {SWD(2018) 310 final}  
 
 
Executive Summary Sheet 

A. Need for action 

Why? What is the problem being addressed?  

The problem to be addressed by this proposal is the slow and uneven implementation of structural reforms. 
Structural  reforms  are  needed  to  enhance  cohesion  and  competitiveness,  raise  productivity,  foster  the 
resilience of economic and social structures of the Member States and encourage growth and employment. 
The implementation of reforms has been advancing slowly and unevenly across Member States both inside 
and outside the euro area, which can have negative impacts on growth and competitiveness in EU Member 
States and the Union as a whole. The European Commission's assessment within the European Semester 
process  has  confirmed  that  the  implementation  of  reforms  needed  to  address  the  Country  Specific 
Recommendations  has  so  far  been  uneven  across  Member  States  and  that,  even  though  reform 
implementation  has  increased  slightly  overall  compared  to  May  2017,  reforms  often  take  longer  to  be 
implemented than anticipated. In addition, the experience of the euro-area crisis has demonstrated that it is 
of  paramount  importance  that  Member  States  make  the  necessary  reforms  before  adopting  the  euro  in 
order  to  ensure  a  well-functioning  Economic  and  Monetary  Union.  The  current  favourable  EU-wide 
economic  situation  with  rapid  growth,  recovering  levels  of  employment  and  investment,  and  improving 
public finances provides a window of opportunity to implement structural reforms. 

What is this initiative expected to achieve?  

The  proposal  for  the  establishment  of  the  Reform  Support  Programme  is  expected  to  contribute  to 
addressing national reform challenges of a structural nature  and strengthen the administrative capacity in 
all EU Member States by providing financial incentives for implementation of reforms and technical support 
to help Member States design and implement reforms and improve their administrative capacity. In addition, 
targeted  support will  also be  provided  to  Member  States whose currency  is  not  the  euro  and  which have 
taken  demonstrable  steps  towards  adopting  the  single  currency  within  a  given  time-frame  to  help  them 
prepare  for  euro-area  membership.  The  Programme  aims  to  achieve  these  objectives  by  tackling  the 
drivers of the low and uneven implementation of reforms, such as the lack of administrative capacity, short-
term economic, social and political costs of reforms, and the lack of political ownership. 

What is the value added of action at the EU level?  

While the implementation of structural reforms in Member States remains a national competence, the crisis 
years have shown that due to the strong links between economies of Member States, reform efforts cannot 
be  a  purely  national  issue.  This  Programme  will  provide  additional  support  for  the  implementation  of 
structural  reforms  in  both  euro-area  and  non-euro-area  Member  States,  thereby  contributing  to  cohesion, 
competitiveness, productivity, growth and employment. Its impact will therefore be felt not only  at national 
level, but will also have positive spillover effects for the Union as a whole.  

To  achieve  this,  the  Programme  will  offer  three  separate  but  complementary  instruments  (the  Reform 
Delivery Tool, Technical Support Instrument and the Convergence Facility), thus maximising impact at EU 
level.  

The Reform Delivery Tool will be a direct response to the weak implementation of the structural reforms at 
national level. It is designed to enhance the implementation of reforms identified in the European Semester 
process by providing financial incentives. While the implementation of structural reforms in Member States 
remains  a  national  competence,  action  at  EU  level  will  provide  an  impetus  to  help  overcome  the  lack  of 
political  ownership  or  the  commitment  to  undertake  reforms  (which  could  be  partly  related  to  financial  or 
short-term political costs).  
The  Technical  Support  Instrument  (and  the  technical  support  component  of  the  convergence  support 
instrument) will strengthen the administrative capacity of Member States through a Union-wide network of 
expertise to the benefit of all Member States that request support and will promote mutual trust and further 
cooperation between Member States and the Commission. 
The  financial  support  component  of  the  Convergence  Facility,  targeted  to  Member  States  that  are 
determined to adopt the single currency within a given time-frame, will aim at strengthening the resilience of 
those Member States and the resilience of the euro area as a whole, enabling positive cross-border effects 
and/or positive spillover effects across the Union. 

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B. Solutions 

What legislative and non-legislative policy options have been considered? Is there a preferred 
choice or not? Why?  

The impact assessment examined the existing Commission instruments for supporting the implementation 
of  structural  reforms.  It  concluded  that  while  there  are  some  instruments  at  EU  level  to  support  the 
implementation of structural reforms, they are insufficient to address the drivers behind the low and uneven 
implementation and to promote the needed structural and administrative reforms. The European Semester 
is  an  effective  soft-law  tool  for  outlining  challenges  and  reform  needs  and  for  keeping  track  of  responses 
from Member States to meet those needs, but the European Semester process itself has no enforcement 
arm and no tool to provide actual incentives for reform. Technical support provided through the Structural 
Reform Support Programme (SRSP) has a limited budget and this Programme ends on 31 December 2020. 
The European Structural and Investment Funds (ESIF), which will be denominated the “Union Funds” under 
the new Common Provision Regulation, finance the implementation of some structural reforms and provide 
encouragement for some reforms, notably through the application of ex-ante conditionalities. However the 
goals  and  intervention  logic  of  the  ESIF  and  the  future “Union  Funds” remain geared  towards  investment 
rather than reform. Finally, there is currently no targeted support for non-euro-area Member States wishing 
to  join  the  euro  area,  which  could  accelerate  the  process  of  convergence  in  those  Member  States. 
Therefore, under a no-policy-change scenario, these instruments at Commission's disposal to facilitate and 
promote  the  needed  structural  and  administrative  reforms  in  the  EU  Member  States  would  prove 
insufficient. 

The  establishment  of  a  new  Reform  Support  Programme  is  the  preferred  option  as  it  would  allow  for  a 
contribution to addressing the problem in a comprehensive manner, by strengthening the current technical 
support  offered  through  the  SRSP,  adding  a  targeted  instrument  providing  financial  support  for  the 
implementation  of  reforms  and  adding  a  targeted  instrument  to  support  the  implementation  of  reforms  in 
non-euro-area Member States.  

While  the  technical  support  would  contribute  towards  enhancing  the  administrative  capacity  of  all  EU 
Member States, additional financial incentives would help provide further stimulus for undertaking reforms. 
In addition, a dedicated Convergence Facility providing targeted financial and technical support to Member 
States seeking to adopt the euro will allow for help to be provided for preparing for successful participation 
in  the  euro  area,  enhance  resilience  and  foster  greater  convergence  within  the  Economic  and  Monetary 
Union.  

THE STRUCTURE OF THE NEW PROGRAMME 

The  Reform  Support  Programme  will  have  an  overall  budget  of  EUR  25  billion  and  the  take-up  of  the 
Programme  will  be  fully  voluntary.  The  Programme  will  offer  financial  and  technical  support  for  priority 
reforms at national level. It will include the following instruments: 

  The Reform Delivery Tool, which will provide financial support across all Member States for key 

reforms identified in the context of the European Semester;  

  Tailor-made Technical Support Instrument provided to Member States (extension of the current 
Structural Reform  Support  Programme),  upon  their  request,  which  will aim  to strengthen  Member 
States’ administrative capacity in the preparation, design and implementation of growth-enhancing 
reforms; and  

  The Convergence Facility to provide dedicated financial and technical support to Member States 

seeking to adopt the euro.  

Appropriate safeguards in the design of the Reform Delivery Tool, such as the payment at the end of the 
implementation  of  Member  States'  reform  commitments,  identification  of  reforms  within  the  European 
Semester,  discussion  of  the  reform  commitment  proposals  in  the  Economic  Policy  Committee  (in 
consultation where appropriate with relevant Treaty-based Committees) or suspension and cancellation of 
payment  in  the  case  of  incomplete  or  unfinished  reform  commitments,  will  ensure  that  the  risk  of  moral 
hazard is limited.  

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Who supports which option?  

Evidence  supporting  enhanced  technical  support  exists  in  the  provision  of  technical  support  through  the 
Structural Reform Support Programme (SRSP), adopted in 2017 and preceded by the support through the 
Task  Force  for  Greece  (TFGR)  and  the  Support  Group  for  Cyprus  (SGCY),  both  of  which  (ad-hoc) 
structures  were  integrated  in  the  Structural  Reform  Support  Service.  Since  the  SRSP  entered  into  force, 
there  has  been  a  very  high  take-up  of  the  Programme  by  Member  States,  with  requests  for  support 
significantly exceeding the amount of funding available for its annual cycles. Besides the oversubscription 
for the amounts available under the SRSP, based on the feedback received from the Member States and 
preliminary observations from the implementation of initial SRSP projects on the ground, the SRSP seems 
to fill a gap in the implementation of structural reforms by supporting the Member States at various stages 
of the reform process. Member States appreciate the voluntary character of the Programme, the fact that 
support  is  provided  rapidly,  without  any  co-financing  from  national  budgets  and  with  rather  low 
administrative  burden,  and  the  sharing  of  expertise  with  other  Member  States  or  experts.  The  SRSP 
contributes  strongly  to  consistent  implementation  of  strategic  Union  priorities,  to  the  development  and 
implementation of solutions that address cross-border issues  and Union-wide challenges. In some cases, 
the  support  has  also  enabled  funding  to  be  leveraged  from  other  Union  programmes,  e.g.  by  helping  to 
better prepare projects under the ESIF, or to integrate –through these projects - aspects not covered by the 
ESIF. 
As regards the Reform Delivery Tool, as this is a new instrument, the Commission gathered ideas on the 
design of the future tool from a number of technical workshops organised in each EU Member State. The 
majority of Member States acknowledged the need to deal with structural reforms and welcomed a new tool 
for  incentivising  reforms.  At  the  same  time,  they  stressed  the  need  to  give  more  ownership  over  the 
implementation  of reforms to Member States. Inputs  from Member States gathered during the workshops 
has  been  taken  into  account  in  the  design  of  the  Reform  Delivery  Tool,  namely,  the  availability  of  the 
Programme to all EU Member States, coordination with the ESIF, allocation of funds to all Member States, 
safeguards against moral hazard and the link to the European Semester.  

What are the benefits of the preferred option (if any, otherwise main ones)?  

C. Impacts of the preferred option 

The impacts of the Programme will depend on the reforms that Member States will propose and implement 
in the context of the Reform Delivery Tool or on the type of technical support that they will ask for and make 
use of in the framework of the Technical Support Instrument. Overall, the Programme is expected to help 
improve  the  low,  uneven  implementation  of  reforms  and  bridge  the  gap  between  the  need  for  and  the 
willingness  to  complete  structural  reforms,  focusing  on  those  reforms  that  enhance  cohesion  and 
competitiveness,  raise  productivity,  encourage  growth  and  employment  and  improve  the  resilience  of  the 
Union's  economies.  It  is,  therefore,  expected  to  generate  positive  impacts  on  economic  growth, 
employment, sustainable development and the resilience on the Member States' economies within the euro 
area and the Union.  

What are the costs of the preferred option (if any, otherwise main ones)?  

The design of the Programme is such that it would minimise administrative and transaction costs, both for 
the Commission and for the Member States. Dialogue between the Member States and the Commission on 
the  reform  proposals  would  aim  at  anticipating  and  mitigating  possible  negative  impacts  that  could  occur 
(for  instance  possible  negative  social  or  environmental  impacts  or  redistributive  effects),  through 
accompanying  measures  or  risk-mitigating  actions.  The  financial  support  can  also  be  used  to  offset  the 
potential negative impacts. 

How will businesses, SMEs and micro-enterprises be affected?  

Enhanced implementation of structural reforms in the growth and business environment sector would create 
better  conditions  for  conducting  business  and  could,  therefore,  have  a  positive  effect  on  the  business 
environment. 

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Will there be significant impacts on national budgets and administrations?  

Structural reforms can impose short-term costs on national budgets and administrations. Financial support 
would help to offset negative impacts before the long–term benefits materialised. Technical support could 
focus notably on reforms aimed at improving the revenue management or the public financial management, 
thereby  having  a  positive  impact  on  national  budgets.  The  Programme  will  also  aim  at  improving  the 
administrative capacity of the Member States. 

How will complementarity with other Union funds be ensured?  

The  Reform  Support  Programme  provides  for  complementarity  and  synergies  with  other  Union 
programmes,  notably  by  complementing  the  policy guidance  provided  under  the  European  Semester  and 
by helping to leverage the use of the ESIFs.  
While the ESIF aim at providing financing for investments needed to reach the objectives of the European 
Structural and Investment Funds, the future Reform Delivery Tool will aim at incentivising structural reforms 
and thereby improving the framework conditions for investment. The impact of investments can be greatly 
enhanced by creating the right framework conditions. At the same time, investments under the ESIF can be 
supportive of a particular reform. The ESIF and the Reform Support Programme will therefore be mutually 
reinforcing.  
In order to ensure that the actions proposed for implementation under the Programme are complementary 
to and do not overlap with other Union programmes and funds (the future Union Funds), coordination for all 
three instruments will be ensured within the internal working arrangements of the Commission. 

When will the policy be reviewed?  

D. Follow up 

The Commission will monitor the implementation of the entire Programme and measure the achievement of 
the general and specific objectives through monitoring framework and appropriate indicators. A mid-term 
evaluation and an ex-post evaluation for each instrument will be carried out no later than four years after 
the start of the programme implementation. Evaluations will be carried out in a timely manner to feed into 
the  decision-making  process  and  the  preparation  of  the  next  programme.  The  Commission  will 
communicate  the  conclusions  of  the  evaluations,  together  with  its  observations,  to  the  European 
Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.  

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