The European Union Phare Programme
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C URRENT T OPIC The European Union Phare Programme Monika âunderlíková, National Bank of Slovakia The Phare Programme was established in 1989 on the basis of a decision by the Council of Ministers of the European Union (EU), the aim being to support the economic and political transformation of Poland, Hungary and, from 1990, the Czechoslovak Federal Republic. At the Copenhagen Summit of 1993, the Phare Programme was included among the means for expediting the accession preparations of EU candidate countries; it was further expanded in 1996 to encompass 13 countries of Central and Eastern Europe, and became the main form of financial and technical cooperation between the EU and candidate countries in the pre-accession period. The financial support provided to the accessi- the EU, and with the accreditation of selected on process from the Phare Programme was aimed implementation agencies, Slovakia took full res- at institution building, for which the EU set a limit ponsibility for the prepared projects. In accordan- of 30% of the allocated funds, and at econo- ce with Council Regulation (EC) No 1266/1999, mic and social cohesion – covering mainly inve- the EC Delegation now simply coordinates and stments – for which it was possible to draw up monitors the financed programmes. to 70% of the funds provided that projects were The basic allocations were made on the basis co-financed at a minimum level of 25%. of financial memoranda signed by the Slovak The financial allocations were conditioned on Government and the EC. Since the Phare Fund the fulfilment of the Copenhagen criteria for the represented public funds of the European Union, accession of associate countries to the EU. The they had to be used transparently. The financing criteria were set down in the accession documents of projects was conducted in accordance with the – the Accession Partnership and the National Plan principles of public procurement, and until last for the Adoption of the Acquis Communautai- year it was governed by “The Practical Guide to re. The fulfilment of the objectives was evalua- Contracting under the Budget of the European ted by the European Commission on a regular Union“. All projects are at present contracted basis until Slovakia became a member of the EU. solely under the Public Procurement Act. A country receiving EU funds through the Phare Responsibility for the programming and mana- Programme was also required to ensure a func- gement of projects at the sectoral level lies with tioning infrastructure. In 1996 the Government the respective sector coordinators. Insofar as it Office of the Slovak Republic took over from the concerns the Slovak banking sector, the Phare Ministry of Foreign Affairs of the Slovak Repu- Programme has been carried out since 1993 by blic as the body responsible for the coordinati- the project management unit established at the on of pre-accession assistance – under the lea- National Bank of Slovakia (NBS). The Phare Pro- dership of the deputy prime minister for Euro- gramme for the banking sector, including pro- pean integration, serving also as the national coor- jects for the NBS, came under the category of dinator for foreign assistance. In 1998, as part institution building and it was aimed at prepa- of the gradual decentralization of the manage- ring the entry of Slovakia into the single market ment of the Phare Programme, two bodies were of the European Union and the European Sys- established under the Ministry of Finance of the tem of Central Banks. Projects carried out in the Slovak Republic (MF SR): the National Fund, which banking sector followed priorities of the Acces- administered the funds provided for the whole sion Partnership and the National Plan for the country, and the Central Financial and Contrac- Adoption of the Acquis Communautaire in the ting Unit, which took over from the project units chapters of Freedom to Provide Services (3), Free the organization of tenders and the execution of Movement of Capital (4) and Economic and contracts for the appointed implementation units. Monetary Union (11). Phare technical assistan- In 2002, the MF SR became the payment aut- ce most frequently took the form of know-how, hority for all EU funds provided to Slovakia. EU specialist courses, seminars and fellowships, con- funds represent income of the state budget and sultations, expert opinions and institutional coo- are subject to budgetary discipline. All such pay- peration. ments are made through the State Treasury. Over thirteen years, the project management The changes included a shift in competences unit at the NBS prepared almost 60 projects under from the European Commission to its Delegati- the Phare Programme, representing an allocati- on in Bratislava, which approved all the program- on of more than EUR 17 million. Most of the mes. The activities of the EC Delegation were funds were contracted to projects for commer- decentralized following Slovakia's accession to cial banks. As the implementation of the indivi- BIATEC volume 15, 1/2007 13 C URRENT T OPIC dual programmes progressed, the EC gradually In regard to the integration of financial sector moved away from financing a large number of supervision, the aim of the project was to furt- smaller projects addressing current needs – e.g. her improve the quality and effectiveness of the an analysis of the capital market, the introduc- integrated supervision, to build up a system of tion of new models for monetary analyses, the risk-oriented supervision of the capital market and organization of specialist and language courses, insurance industry, supervision of pension funds, quality improvement of existing payment and set- financial conglomerates, electronic commerce, tlement systems, support for the development market functioning and cross-border services, and, of mortgage banking and the use of bank cards, with regard to the Basel 2 Capital Accord, super- and the introduction of new accounting standards vision of credit institutions. – towards financing a smaller number of larger • Under the banking module, BBA held a series projects addressing conceptual questions; these of special seminars on risks within the scope included the establishment of an association of of Basel 2, consolidated supervision, and trai- banks, the introduction of a specialist training sys- ning in the SW CADcalc and CADmarkt used tem in the form of distance learning in the finan- by the NBS, and it produced two compendium ce and banking sector (for which the NBS Insti- manuals for on-site supervision in accordance tute of Banking Education received accreditati- with the requirements of Basel 2. on), audits and follow-up restructuring program- Under the insurance industry module, BBA mes of the largest commercial banks for the pur- organized several seminars on off-site super- pose of their subsequent privatization, analysis vision in line with the Solvency II accord, pro- of the banking sector's debts and a draft mecha- duced a supervision framework plan as well as nism for settling non-performing loans, the deve- a SW format, and arranged specialized missi- lopment and improvement of supervision over ons for the Bureau of Insurers, Insurance Gua- banks and the capital market, and legal and tech- rantee Fund and for insurance mediation. nical support for the integration of both super- • Under the capital market module, BBA held visory institutions. several seminars and provided running consul- tations in regard to the current issues of super- Number and name of project: 2003/995-004-03-01-0001 vision – e.g. brokerage firms, the UCITS Direc- Support for risk-oriented supervision tive on collective investment in transferable Budget: € 1 150 000 securities, and the implementation of the Mar- Project launch: June 2005 kets in Financial Instruments Directive (MiFID). • Under the pension fund module, BBA arran- Planned end of project: October 2006 ged numerous consultations on current issu- End user: National Bank of Slovakia es of supervision, held a series of educational (originally also the Financial Market Authority) seminars, and produced a draft amendment Partner institution / contractor: Belgian Bankers Academy (BBA) to the Pension Funds Act. Form of implementation: technical assistance A total of 18 foreign experts were contrac- ted for the project; they worked together for a In October 2006, the last two projects under total of 1,188 days and organized 36 seminars the pre-accession memoranda for the 2003 Phare attended by 600 workers of the FMA and NBS. Programme were completed. They followed on According to the final steering committee, the from successfully accomplished projects that project's planned objectives were 100% fulfilled. addressed current supervisory needs related to This project for the NBS was carried out by the the implementation of EU directives on the capi- company AXON PRO S.A., Bratislava, the winner tal market, insurance industry and pension funds, of the respective tender. The project's objective the transition to supervision on a consolidated was the supply of a SW application, developed basis, and on the new assessment of risks in ban- in accordance with the functional specification king activities in accordance with the Basel 2 Capi- and technical/operational requirements of the tal Adequacy Accord: NBS, in order to meet the needs of the current The project was the logical continuation of the supervision system for the capital market and to preceding project "Strengthening Supervision of be used on a daily basis for the electronic col- the Financial Sector", implemented between June lection, evaluation and archiving of data submit- 2004 and October 2005 by the consortium Wie- ted by capital market entities subject to NBS ner Burse A. G.er 2005 supervision. The supply included SW installation and testing, delivery of the respective documents, Number and name of project: 2003-004-995.03.0101-0002 and training the supervisor's staff in the use and SW development for capital market supervision maintenance of the application.