Commission Report (2002): Czech Republic

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 21: Regional policy and co-ordination of structural instruments

Progress since the last Regular Report

Since the previous Regular Report, further important progress has been made in preparing for the implementation of structural policies.

With regard to territorial organisation, the preparation for defining the Objective 2 eligible area in the region of Prague has been finalised.

Concerning the legislative framework, the Act on Environmental Impact Assessment entered into force on 1 January 2002 and should ensure compliance with the relevant acquis. The Act on Financial Control entered into force in January 2002, in line with the acquis in this field. The relevant secondary legislation was approved in March 2002.

As regards the institutional structures, all Regional Councils have been established, while the new regional governments at NUTS III level have become operational. The Czech Government`s Resolution of January 2002 defined the institutional framework for the implementation of the Structural Funds and the Cohesion Fund. In March 2002, the Ministries completed this resolution by designating the units responsible as managing and paying authorities and (for the Cohesion Fund) implementing bodies. The Ministry for Regional Development has been appointed Managing Authority for the Community Support Framework and the Cohesion Fund. Managing Authorities for the relevant Sectoral Operational Programmes were also appointed. A Paying Authority for the Structural Funds and the Cohesion Fund has been appointed within the Ministry of Finance. These Managing Authorities will be responsible for the programme-management and overall co-ordination, whereas some tasks will be sub-delegated to intermediate bodies, which will be entrusted with the tasks related to the management and monitoring of projects. Progress can be noted as regards the improvement of the inter-ministerial co-ordination by the establishment of the Management and co-ordination Committee and a Working Group for Programming.

Regarding programming, after the Commission`s comments on the NDP were sent in February 2002, the revised National Development Plan (NDP) will be presented to the Government in November 2002. It consists of one Joint Regional Operational Programme and 6 Sector Operational Programmes. Following the Czech Government`s Resolution of January 2002, respect for the partnership principle will be ensured via the Managing and co-ordination Committee which oversees the implementation of the National Development Plan. This Managing and co-ordination Committee includes representatives of the pre-accession instruments co-ordination bodies, representatives of the Ministries concerned in the sphere of economic and social cohesion, NUTS II Regional Councils and other economic and social partners including non-governmental and non-profit organisations. Upon accession, the Managing and co-ordination Committee will become the Community Support Framework (CSF) Monitoring Committee and will ensure compliance with the partnership principle.

As regards monitoring and evaluation, a pilot version of the Monitoring System for the Structural Funds was established at the Ministry for Regional Development in February 2002. In a second phase to be completed by mid-2003, the system will be extended to all other Government agencies and regional authorities. Ex-ante evaluation of the NDP and the OPs (Operational Programmes) and SPDs (Single Programming Documents) began in 2002 and should run parallel to the drafting of the different programmes.

In the field of financial management and control, significant progress was achieved with the Act on Financial Control, which stipulates the setting up of a system of financial control in the public administration by July 2002. Consequently, internal audit units are being established in all ministries involved in the implementation of the Structural Funds and the Cohesion Fund.

As regards statistics for the implementation of the structural funds, decisions on NUTS classification in accordance with Community rules have been taken. Monitoring of most economic and social indicators is ensured by the Czech Statistical Office at the different NUTS levels.

Overall assessment

As regards the territorial classification, the Czech Republic has completed the establishment of territorial units corresponding to NUTS classification. There are 14 regions at NUTS III level (kraj), and 8 regions (cohesion region) similar to NUTS II. In order to complete the legislative framework, alignment with public procurement acquis is needed.

As regards the institutional structure, most of the units appointed Managing or Paying Authorities have had experience with the implementation of Phare, ISPA and SAPARD programmes. However, certain units have had only limited experience with the implementation of EC programmes, and their administrative capacity is an issue of concern. Consequently, a coherent human resources strategy, including training and budgetary implications, needs to be established.

The National Development Plan needs to be approved. A timetable has been set with regard to the preparation of the programming documents. Considerable work remains to be done to fulfil the requirements of the acquis regarding the Single Programming Documents, the Operational Programmes and the Programme Complements and the Community Support Framework by the end of December 2002. It is especially important that an agreed implementation system is finalised rapidly to enable the relevant structures to develop suitable inter-ministerial co-ordination, partnership arrangements and information channels, which can be realistically tested during the remaining pre-accession period. Further progress is needed to raise the technical capacity to prepare a suitable pipeline of projects, which will be eligible and ready to be financed when the Structural and Cohesion Funds are released. Efforts need to be made to develop the necessary project development capacity both at national, regional, and local level.

The same applies to the nomination of all intermediate bodies. An agreed designation of tasks, roles and responsibilities still has to be achieved. This is an urgent issue for finalising drafts of the National Development Plan and Operational Programmes by the end of 2002. Moreover, a thorough review of capacities will be needed once all tasks and responsibilities are known.

Increased efforts are needed to develop the appropriate channels of communication to enable local authorities, social and economic partners -- including bodies representing employment, environment and equal opportunities at national, regional and local levels oe to be directly and more visibly involved in formal consultation processes. While the basic structures do exist through the various committees already functioning, it is expected that the partnership principle will be applied when developing the forthcoming information and publicity strategies for the Operational Programmes.

The Czech Republic should further accelerate its preparatory work on the monitoring system for the Structural Funds and extend its interconnection to other central authorities, managing authorities and regional implementing agencies.

Preparations for financial management and control need to be finalised as soon as possible.

In relation to financial management and control, the Czech Republic is generally well advanced in legislative alignment. However, the appropriate systems and procedures for financial management and control still need to be strengthened, in particular as regards the structure of the Managing and Paying Authorities. Internal audit units are being established in the ministries responsible for the implementation of the Funds. The central audit service within the Budgetary Supervisory Service co-ordinates these services. However, these departments still need to be strengthened and the training of internal auditors should be a priority in this respect. Common guidelines for the internal audit services are being drawn up. The Czech Republic has introduced multi-annual planning of budgetary expenditure. Its budgetary legislation also contains sufficient flexibility to transfer allocations between funds and priorities. As regards regional statistics, the Czech authorities will have to ensure that the available data are brought up to the level required for regional policy planning and programming, monitoring and evaluation, in particular the ex-ante evaluation.

Conclusion

In its 1997 Opinion, the Commission concluded that the Czech Republic still needed to establish a legal, administrative and budgetary framework for an integrated regional policy and ensure its compliance with EC rules. The Commission added that, given the Czech Republic`s administrative capacity and the necessary political awareness, the Czech Republic should, in the medium term, be ready to apply the Community rules and channel funds from the EC structural policies.

Since the Opinion, the Czech Republic has made important progress in legislative terms, and, more recently, has moved forward with developing the necessary administrative capacity. Overall, legislative alignment is well advanced, although further efforts are required on public procurement. As regards administrative capacity the implementing structures are in place but further efforts are needed to make them fully operational.

Negotiations on this chapter have been provisionally closed. The Czech Republic has not requested any transitional arrangements in this area. The Czech Republic is generally meeting the commitments it has made in the accession negotiations in this domain.

In order to complete preparations for membership, the Czech Republic`s efforts should now focus on clearly defining the final implementation structures and further reinforcing their administrative capacity, strengthening inter-ministerial co-operation and partnership, and further reinforcing systems and procedures for effective monitoring, financial management and control.

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