Editor's note

International Internet Magazine. Baltic States news & analytics Wednesday, 25.04.2018, 00:04

EU Budget-2018: a guide for the Baltic States' development

Eugene Eteris, BC, Riga/Copnehagen, 14.07.2017.Print version

Preparations for the EU-2018 budget are already in fool swing: recently, the European Parliament, a co-legislative institution (with the Council) agreed on the budget's draft. For the Baltic States (BS) the draft shows most perspective sectors in development and visualises the spheres in growth that are most likely to be supported by the EU finances. Thus, share of EU Structural and Investment Funds in public investment has been at the level of 70% in Latvia and Lithuania and about 50% in Estonia.

One of the EU co-legislators, the European Parliament (EP), has adopted a draft EU Budget for 2018. Now the EU member states can see common European directions in development financed from a "common purse". The 2018 EU budget's aim is to enable the EU member state to continue generating sustainable growth and jobs, while ensuring the security of its citizens and addressing the migration challenges. The Parliament expressed its firm conviction that in order to achieve sustainable growth while creating stable and quality jobs in the EU states, boosting investment in research, innovation, infrastructure, education and SMEs is the key.

Therefore the EP supported (on 5 July 2017) a proposed reinforcements to Horizon 2020, the Connecting Europe Facility (CEF) and Erasmus+ as these programmes would contribute directly to reaching these goals. The EP considers, however, that further reinforcements will be needed, especially given the cuts operated in these policies’ financing to the benefit of EFSI financing.

Share of European Structural and Investment Funds in public investment (2015-2017) was about 70% in LV and LT, and about 50% in EE. Not all budget headings are important for BS, we'll mention only most vital.    

Supporting business and SMEs

The Parliament recalls the crucial role of SMEs in job creation, reduction of the investment gap, and underscores that their adequate funding must remain at the top priorities of the EU budget. However, it regrets, in this respect, that the proposed allocation for COSME is about 3% lower in comparison with the 2017 budget, and expresses its intention to further reinforce this programme in the 2018 budget.

The EP points to the need of further supporting SMEs and calls for full delivery on the programme’s financial commitments in the remaining years of the current MFF. Finally, it welcomes the Commission’s attempt at streamlining SME financing within Horizon 2020.

In this regard, the EP commends the role of the European Fund for Strategic Investments (EFSI) in bridging the investment gap across the EU member states (and between the EU’s territories) and helping to implement strategic investments that provide a high level of added value to the economy, the environment and society.

The Paliament supports, therefore, the EFSI's extension until 2020 and highlights the quick uptake of funds in the EFSI-SME Window with its intended scale-up. However, it regrets the lack of a holistic approach to SME funding that would allow for a clear overview of total funds available.

The EP underlines its firm position in the ongoing legislative negotiations that no further cuts should be incurred in existing EU programmes in order to finance this extension. 

Thus, the EP considers that EFSI, whose guarantee fund is mostly financed by the EU budget, should not support entities established or incorporated in jurisdictions listed under the relevant EU policy on non-cooperative jurisdictions, or that do not effectively comply with EU or international tax standards on transparency and exchange of information.  

Youth employment

The EP welcomes the fact that the draft budget 2018 includes additional allocation for the Youth Employment Initiative (YEI), thus responding to Parliament’s previous calls for the continuation of this programme. The Parliament approves the draft proposal for amending present EU budget that integrates the provision of EUR 500 million in commitments for the YEI, as agreed by Parliament and the Council in the 2017 budgetary conciliation.

The proposed amounts are clearly insufficient for the YEI to reach its goals; the EP believes that in order to effectively tackle youth unemployment the YEI must continue to contribute to the Union’s priority objective of growth and jobs.

The EP insists on the need to provide an effective response to youth unemployment across the Union, and underlines that the YEI can be further improved and be made more efficient, notably by ensuring that it brings real European added value to youth employment policies in the EU states and does not replace the financing of former national policies.

Cohesion policy

The EP recalls that cohesion policy plays a primary role for the EU development and growth; it stresses that 2018 cohesion policy programmes are expected "to catch up and reach cruising speed". The Parliament emphasises its commitment to ensuring adequate appropriations for these programmes, which represent one of the core EU policies.

However, preoccupied by the unacceptable delays in the implementation of operational programmes at national level, it calls on the EU states to ensure that the designation of managing, auditing and certifying authorities is concluded and implementation is accelerated.

It recognises that the long negotiations over the legal bases have meant that the EU institutions involved in them have their portion of responsibility for the low implementation rate.

Finally, it notes the fact that some EU states consider that cohesion funds could be a tool for guaranteeing solidarity in Union policies.


Sustainable growth and natural resources

The EP agreed on the proposed 59,5 billion euros in commitments (+1,7 % compared to 2017) and 56,4 billion in payments (+2,6 %) for this budget heading out of about 150 billion total budget.

The EP noted that the increased appropriations to finance the European Agricultural Guarantee Fund (EAGF) needs for 2018 (+2,1 %) were largely due to a significantly lower amount of assigned revenue being expected to be available in 2018.

The EP welcomed the increase in commitments of the European Maritime and Fisheries Fund (EMFF) (+2,4 %) and of the LIFE+ programme (+5,9 %), in line with financial programming, but regrets that considerably reduced payment appropriations seem to reveal a still slow take-off of those two programmes in the 2014-2020 period.

It highlights the prolongation of exceptional support measures for certain fruits for which the market situation is still difficult; it regrets, however, that the Commission is not currently proposing support measures in the livestock sectors, and particularly in the dairy sector, related to the Russian ban on EU imports, and expects, therefore, by the Council a change of course in this regard.

The EP expects, consequently, that some funding will be allocated to dairy farmers in countries (like the Baltic States) most affected by the Russian embargo.

However, the Commisssion's later amendments, expected late in 2017, should be based on updated information on the EAGF funding, verifying real needs in the agricultural sector and duly taking into account the impact of the Russian embargo and other market volatilities.


Finally, the EP reiterates its support for the implementation of the Commission’s strategy "Budget Focused on Results", and calls for continuous improvement of the quality and presentation of performance data, so as to provide accurate, clear and understandable information on EU programmes’ performance.

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