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The Cohesion Fund at a glance

I. What is the Cohesion Fund?

The Cohesion Fund is a structural instrument that helps Member States to reduce economic and social disparities and to stabilise their economies since 1994. The Cohesion Fund finances up to 85 % of eligible expenditure of major projects involving the environment and transport infrastructure. This strengthens cohesion and solidarity within the EU. Eligible are the least prosperous member states of the Union whose gross national product (GNP) per capita is below 90% of the EU-average (since 1/5/2004 Greece, Portugal, Spain, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia).

For the Cohesion Funds EUR 15.9 billion (in 2004 prices) are available for the years 2004-2006. More than half of the funding (EUR 8.49 billion) is reserved for the new Member States.

Spain : Cerceda waste disposal train

II. Who is eligible?

Fonds de Cohésion, pays éligiblesBased on the regulation No 1164/94 of 16 May 1994, a Member States is eligible for Cohesion Funds, which:

  • has a per capita gross national product (GNP), measured in purchasing power parities, of less than 90 % of the Community average,
  • has a programme leading to the fulfilment of the conditions of economic convergence as set out in Article 104c of the Treaty establishing the European Community (avoidance of excessive government deficits).

Four Member States: Spain, Greece, Portugal and Ireland were eligible under the Cohesion Fund from 1 January 2000. The Commission’s mid-term review of 2003 deemed Ireland (GNP average of 101 %) as ineligible under the Cohesion Fund as of 1 January 2004. On 1 May 2004 with the EU enlargement, all new Member States (Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia) were qualified for the Cohesion Fund.

Cohesion Fund support is conditional. The funding granted to a Member State is liable to be suspended if the country fails to comply with its convergence programme for economic and monetary union (stability and growth pact) running i.e. an excessive public deficit (more than 3% of GDP for Spain, Portugal and Greece, this threshold is being negotiated separately for each of the ten new Member States according to their own public deficit at the moment of the accession). Until the deficit has been brought back under control, no new projects might be approved.

Here you will find a map of Member States eligible for the Cohesion Fund in EU25 2004-2006.

III. What kind of projects are eligible?

Projects to be eligible must belong to one of the two categories:

a) Environment projects helping to achieve the objectives of the EC treaty and in particular projects in line with the priorities conferred on Community Environmental policy by the relevant Environment and Sustainable Development action plans.
The Fund gives priority to drinking-water supply, treatment of wastewater and disposal of solid waste. Reforestation, erosion control and nature conservation measures are also eligible.

b) Transport infrastructure projects establishing or developing transport infrastructure as identified in the Trans-European Transport Network (TEN) guidelines.

There has to be an appropriate funding balance between transport infrastructure projects and environment projects.

Here you will find the Guide to the Cohesion Fund 2000-2006 for the Member States.

EN - English ES - Español FR - Français GR - ελληνικά PT - Português

Here you will find the expenditure principles for financing by the Cohesion Fund.
REGULATION 16/2003


IV. How are the Cohesion Fund projects managed?

Member States submit applications for financing to the European Commission, which generally decides on funding within three months. The proposals must include key elements explaining what and why it is being proposed, the feasibility and financing of the project and the impact it will have in socio-economic and environmental terms. All projects must comply with Community legislation in force, in particular the rules on competition, the environment and public procurement.
The Commission analyses, if all conditions for the financing are met, including:
• the economic and social benefits generated by the project in the medium term, as demonstrated by a cost-benefit analysis,
• the project's contribution to achieving Community objectives for the environment and/or the Trans-European Transport Network,
• compliance with the priorities set by the Member State,
• the project's compatibility with other Community policies and consistency with operations undertaken by the Structural Funds.

The total rate of the EU assistance cannot exceed 85 % of public or equivalent expenditure and depends on the type of operation to be carried out. For projects, which generate revenue, the support is calculated taking into account the forecasted revenue. The polluter-pays principle (the body that causes pollution should pay for it) has an impact on the amount of support granted. For projects to be carried out over a period of less than two years or where Community assistance is less than EUR 50 million, an initial commitment of 80% of assistance may be made when the Commission adopts the decision to grant Community assistance. The combined assistance of the Fund and other Community aid for a project shall not exceed 90 % of the total expenditure relating to that project. Exceptionally, the Commission may finance 100 % of the total cost of preliminary studies and technical support measures – in view of the limited budget available for such levels of support this is restricted to EU wide technical assistance.

The Member States are responsible for implementing the projects in line with the Commission Decision, managing the funds, meeting the timetable, complying with the financing plan and, in the first instance, ensuring financial control. The Commission makes regular checks and all projects are subject to regular monitoring. Additionally the Commission regulation No 621/2004 (link to lays down rules regarding information and publicity measures concerning the activities of the Cohesion Fund which have to be fulfilled by the Member States.

Here you will find direct access to full annual reports
Here you will project examples

Madrid Metro

V. Funds available by country

For the years 2000-2006 the European Union provides over EUR 28.212 million (in 2004 prices) for the Cohesion Fund. The funds available for the countries are as follows:

Cohesion Fund for the four eligible Member States in average, 2000–06 (1)

Elláda
España
Ireland
Portugal
3 388
12 357
584
3 388


(1) Ireland only until the end of the year 2003 (million EUR commitments in 2004 price)

Cohesion Fund for the ten new eligible Member States in average, 2004–06

Česká Rep.
Eesti
Kypros
Latvija
Lietuva
Magyarország
Malta
Polska
Slovenija
Slovensko
936,05
309,03
53,94
515,43
608,17
1 112,67
21,94
4 178,60
188,71
570,50


(million EUR commitments in 2004 price)

VI. What will change after 2006?

Based on the European Commission proposal, the Cohesion Fund will be more integrated into the operation of the mainstream Structural Funds (link to The third cohesion report on economic and social cohesion and the proposal of new legislative package).

On one hand, the regulation proposal (link to) establishing the Cohesion Fund retains the eligibility criteria (threshold of 90 % GDP), the grant limit (85 %). Besides this the conditionality of Cohesion Fund assistance will also continue to apply.

On the other hand, the Commission proposes a switch from project-based support to programme-based support. The Commission approval will be required only in the case of major projects (EUR 25 million for environmental and EUR 50 million for transport projects). Therefore, the Cohesion Fund managing authorities will have increased responsibility in terms of selection, appraisal, grant award, monitoring, management and ensuring speedy implementation to avoid loss of assistance as programming spending discipline will apply, i.e. the “n+2” rule.

The assistance will not only cover major transport and environmental protection infrastructures, but also projects in the fields of energy efficiency, renewable energy and intermodal, urban or collective transport.

The Commission proposal earmarked 26 % of the total allocation for the Structural Policy instruments to the Cohesion Fund (EUR 63 billion).

For more details see also the article “The Cohesion Fund in evolution”

Portugal Alqueva dam , hydro powerplant

VII. The Cohesion Fund Regulations

Regulation (EC) No 1164/94 (link to) established the Cohesion Fund provided the
enamework for its implementation. This regulation was subsequently complemented by
Regulations (EC) No 1264/99 (link to) and (EC) No 1265/99
Financial control and corrections - REG 1386/2002
Eligibility – REG 16/2003
Publicity - REG 621/2004

Following the Union’s enlargement on May 1st 2004, the Cohesion Fund regulations apply to the 10 new Member States until the end of 2006 (see II Annex to the Act of Accession).