19.05.2015

"After an in-depth internal discussion and together with the Managing Authorities of the Operational Programmes we chose the concept on the establishment of a Fund of Funds for joint management of the financial instruments in the new programming period". Minister of Finance Vladislav Goranov said the above during the discussion between government and businesses "Nine paths to EU Funds" organized by the "24 Chassa" and "Trud" newspapers, with the partnership of the Confederation of Employers and Industrialists in Bulgaria.

According to Minister Goranov one of the advantages of the idea is the achievement of "economy of scale due to the fact that the financial instruments under the various OPs, targeted at one and the same category of beneficiaries, can be consolidated and reach the latter as a package". Besides, in regard to the horizontal procedures related to financial instruments implementation, such as the development of an investment strategy, the legal procedures, audits, reporting and everything connected to the mechanism of EU funds financial management and control will be common for the Fund of Funds.

Vladislav Goranov explained the sequence of the steps related to the establishment of the FoF structure, which are being discussed. The first step is the establishment of a manager of the FoF. The Finance Minister said that "we will probably decide its structure to be EAD with state participation in the capital, and as regards the FoF itself - it will consolidate the management of elements of the individual Operational Programmes which are separate and yet structured together under joint management". The second step will be the elaboration of the rules of organization and management of the Fund's manager - this will be done in accordance with the requirements of Regulation 1303/2013 and especially Article 7 of Delegated Regulation No 480/2014. After that financial agreements will be prepared and signed among the individual Managing Authorities, the Managing Authorities and the manager of the FoF, respectively, which - together with the other mandatory elements - will also define rules on investment and treasury management of the Fund and of the individual funds within its structure. The rules should reflect the requirements of Regulation 1303/2013 and Implementing Regulation No 821/2014 on accounting and audit, pointed out Goranov to business representatives. The next step will be the determination of financial intermediaries which will perform the functions related to the (treasury or investment) management of the individual funds within the structure. We need to respect the requirements of the national and EU legislation and to implement impartial, transparent, non-discriminatory and conflict-of-interest and money-laundering avoiding procedures. The selection criteria should reflect the requirements of Article 7, paragraphs 1 and 2 of Delegated Regulation No 480/2014. The last stage is the preparation and signing of financial agreements between the manager of the FoF and the financial intermediaries performing functions related to the management of each fund within the structure of the Fund.

"As regards the treasury management function, we have not taken a final decision, but in view of the provisions of Article 4, item 3 of the Public Procurement Act, in connection with Article 39, paragraph 1 of the BNB Act, we can choose BNB as a treasury authority without having to conduct a procedure under the Public Procurement Act" - said Minister Vladislav Goranov. He commented that it was also the practice in terms of funds' management; they have accounts with BNB. 

The Finance Minister reminded that "a total of approximately EUR 777 million under the individual Operational Programmes are allocated to financial instruments and a major task in the new programming period will be to create a capacity in our country for financial instruments' management". According to Goranov, the Commission concept is in future the EU Funds to be increasingly provided through financial instruments and the establishment of the Fund of Funds in this sense is a step in the right direction.

After presenting the concept on the Fund of Funds Minister Goranov said that letters had been sent to EIB, the World Bank and EBRD inviting them to provide technical assistance in the establishment of the FoF as well as to participate in steering committee. Our country has received confirmation by these financial institutions that they are ready to work together with the government for the establishment of the Fund.