(01 April 2015) – In a policy paper published by the Jacques Delors Institute, Marjorie Jouen questions the real purpose of the macro-economic conditionality, that is the link between the effectiveness of the European structural and investment funds (ESIF) and good economic governance.
Despite constant opposition of the local and regional authorities (LRA) and mixed feelings of the national governments, a link between the effectiveness of the European structural and investment funds (ESIF) and good economic governance, in other words the macro-economic conditionality, has been introduced in the 2014-2020 regulation for the ESIF.
The critic against this link was based on the firm belief and documented explanation that this new provision will impose a double unfair penalty to the local and regional authorities as they are not responsible for excessive national deficits, since most of them are constitutionally bound to balance their budgets.
First, sanctions linked to deficits are likely to make the fiscal situation in the concerned member states even worst. Since current transfers and capital transfers from the national authorities are the key sources of revenues for LRA any cut will destabilise their budgets and hinder their capacity to contribute to public investment.
Second, a suspension of payments and/or commitments of ERDF or ESF will not only disrupt financial planning at the programme level but could also lead to projects being stopped on the ground.