The government will work to make the most of the funds being made available for reforms in the next EU Multiannual Financial Framework covering the period 2021-2027, Parliamentary Secretary for EU Funds Aaron Farrugia told The Malta Independent on Sunday.
On 31 May 2018, the European Commission adopted a proposal on the establishment of the Reform Support Programme (RSP) which was presented as part of the package relating to the upcoming Multiannual Financial Framework for 2021-2027.
The Reform Support Programme (RSP) will provide support for priority reforms in all member states, with an overall budget of €25 billion. It is comprised of three elements: a Reform Delivery Tool (financial support for reforms) - €22bn; a Technical Support Instrument (technical expertise) - €0.84bn) and a Convergence Facility (support for Member States preparing to join the eurozone) - €2.16bn.
The proposed RSP will provide financial and technical support to all EU member states in order for them to pursue and implement reforms aimed at modernising their economies. It will support reform efforts in areas such as product and labour markets, education, tax systems, capital markets and the business environment, as well as investment in human capital and public administration reforms. The RSP will be open to all Member States wishing to benefit from it.
The Programme builds on the experience of the currently ongoing Structural Reform Support Programme (SRSP) for 2017-2020. This has a budget of €142.8 million and is intended to contribute towards strengthening the overall capacity of Member States to design, prepare and implement institutional, administrative and growth-enhancing structural reforms, including assistance for the efficient and effective use of EU funds. Its aim is to assist national authorities throughout the reform process - or according to defined stages or different phases of this process - to achieve the desired results.
Malta has successfully participated in the first competitive call under the current SRSP, as a result of which it will benefit from 13 initiatives with an estimated budget of €975,000 targeting various priority areas such as public finances and institutional reforms. The reforms the Maltese Government has implemented with this EU-funded programme include €250,000 to enhance judicial procedures and law court operations, €120,000 to support the early identification of students at risk of early school leaving, €100,000 for the development of the 2030 National Energy and Climate Plan and €120,000 for a national strategy for electronic payments.
Contacted by this newspaper, Dr Farrugia said that the RSP will be unlike other fund programmes available to member states. He explained that, while funds such as the European Regional Development Fund allocate specific amounts of funding to countries for example, this fund does not specifically assign a set amount of funding to countries. Instead, member states must compete to make use of the funds for applicable projects. While there will be some form of geographical balancing, it will not be as strict as other EU funding programmes. Access to this funding is more likely the better linked it is to country-specific recommendations, said Dr Farrugia. It is important to note that countries do not take up all country specific recommendations, as sometimes these may clash with the local context in the individual countries.
One of the main challenges highlighted in the European Commission's Malta 2019 Country Report is that the island must ensure that continuous growth is sustainable in the long-term. Other issues raised were that Malta had made only limited progress in addressing the 2018 country-specific recommendations, and that the increase in age-related spending represents a substantial risk to the long-term sustainability of public finances.
This month, Member States are expected to present their National Reform Programmes, detailing national reform priorities, and their Stability Programmes (for eurozone countries) or Convergence Programmes (for non- eurozone countries), setting out their multiannual fiscal strategies. Based on all these programmes, in the spring the Commission will present its proposals for a new set of Country-Specific Recommendations, targeting the key challenges to be addressed for 2019-2020.
During a meeting of the Malta Council for Economic and Social Development, Dr Farrugia said that while the Country Report said that Malta had made only limited progress in addressing the country-specific recommendations, research by the Bruegel Institute showed that Malta was amongst the top performers in the EU. "Over the period 2013-17, Malta ranked 4th in the EU in terms of implementation of Country Specific Recommendations", he said. "This shows that the government takes this process seriously and that the efforts are appreciated by its peers.
"Structural reforms are important determinants of economic growth. At the same time, such reforms spanning fields such as pensions, health, education, the judiciary and competition tend to be particularly tough to implement, especially in view of the political costs involved," he pointed out.
"In recognition of this, the European Commission proposed a Regulation on the establishment of the Reform Support Programme with a view to strengthen instruments based on EU funding that are intended to support governments in implementing country-specific recommendations or other challenges identified in the European Semester," Dr Farrugia added. "This shows that the European Semester and EU funding are becoming increasingly intertwined, with a view to creating the necessary conditions for the implementation of reforms."