EDIOP MONITORING COMMITTEE MEETING SZOLNOK 10 05 2016 Welcome

EDIOP MONITORING COMMITTEE MEETING SZOLNOK 10/05/2016

Welcome to the Monitoring Committee Meeting of the Economic Development and Innovation Operational Programme!

EDIOP MC meeting 9. 00 – 12. 30 MC Meeting Part One 1 Piroska Miklós, Vice President of Jász-Nagykun-Szolnok County Assembly and Szalay Ferenc, Mayor of Szolnok – overview on EU development resource utilisation in the town and in the county 2 Agenda approval, voting 3 Approval of the Minutes of EDIOP Monitoring Committee meeting held on 13 October, 2015 4 New EDIOP MC participating members, voting 5 Approval of the EDIOP Annual Implementation Report, voting 6 Approval of the evaluation plan, voting 7 Overview on evaluation progress, introduction of evaluation 11. 00 - 11. 20 Optional coffee break 8 General overview on EDIOP progress (financial instruments, MFB service points, measures taken after the previous MC meeting, organisational changes) 9 Information on the Annual Development Budget • Selection criteria and methods for grant assistance calls, voting • Approval of operations outside the programme area, and overview on projects/calls of national scope, voting • Methods and criteria used for operation selection of financial instruments, voting

EDIOP MC meeting 12. 30 -13. 30 Lunch break 13. 30 – app 17. 00 MC meeting Part Two 10 Information on ELI major project progress 11 Overview on Priority 5 and 6 progress (YG, YEI) 12 Overview on Priority 8 financial instruments 13 Overview on new ex ante assessment (financial instruments) 14 Information on ex-ante requirement completion progress 15 Overview on success objective progress 15. 00 - 15. 20 Optional coffee break 16 Overview on simplified cost options (SCO) 17 Overview on audits 18 Overview on Anti-fraud strategy 19 Other: commenting on materials uploaded to the IIS MC interface (2016 communications action plan, E-cohesion report)

1 - Overview on EU development resources used in the county and the town Presenters: Piroska Miklós Vice President of Jász-Nagykun-Szolnok County Assembly and Szalay Ferenc Mayor of Szolnok

2 - Agenda approval, voting • The planned agenda had been sent to the members 15 days prior to the meeting, related materials were uploaded to the Internal Information System (IIS-BIR). • EDIOP Monitoring Committee has a quorum if more than 2/3 of members with voting right is present at the meeting (18 persons). • The Head of the MC introduces the agenda of the meeting. In urgent cases or if it is warranted, the Monitoring Committee might also discuss topics not on the agenda, and make decisions on them.

3 - Approval of the Minutes of EDIOP Monitoring Committee meeting held on 13 October, 2015 • Draft minutes of EDIOP Monitoring Committee meeting held on 13 October, 2015 were sent out via email to members for adding remarks or comments, and materials were uploaded to the IIS on 4 November, 2015. Members had 15 working days to add their comments to the minutes of the meeting. • A remark of technical nature was received, we have amended the text as necessary, and we appreciate the efforts. • The certified minutes of the meeting was uploaded to the IIS as well.

3 - Approval of the Minutes of EDIOP Monitoring Committee meeting held on 13 October, 2015 The following decrees were approved at the Economic Development and Innovation Operational Programme Monitoring Committee meeting held in Debrecen on 13 October, 2015: • EDIOP MC 4/2015. (X. 13. ) decree: The Economic Development and Innovation Operational Programme Monitoring Committee has approved the agenda. • EDIOP MC 5/2015. (X. 13. ) decree: EDIOP MC approved the minutes of the Monitoring Committee meeting held on 22 April, 2015. • EDIOP MC 6/2015. (X. 13. ) decree: New EDIOP MC organisations (with voting right: Roma Christian Network, consulting right: Approval of Regional Development Forum of the Northern Great Plains Region and National Association of Project Managers and Consultants admission.

4 - New EDIOP MC participating members, voting v With right to vote: Nomination of responsible for policy of 7 th Priority: according to 4 th paragraph of government regulation 87/2016. (IV. 25. ), Ministry of National Development responsible for policy instead of Ministry for National Economy v With consultation right: Balaton Development Council (as stipulated by Gov Dec 1821/2015. (XI. 12. ) on the approval of Balaton Regional Development Concept (2014 -2030) and Balaton Regional Development Strategy Programme, and on investments implemented in the Special Balaton Resort Area from EU and national resources) Annex 1 to the agenda was amended accordingly. v Other invited entities: - Duna Region Strategy Secretaries - National Association of Craftsmen’s Corporations (IPOSZ) - Ministry of Defence, Economic Planning Division - Prime Minister's Office, International Co-ordination Division

5 - Approval of the EDIOP Annual Implementation Report, voting Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

5 - Approval of the EDIOP Annual Implementation Report, voting v One of the Monitoring Committee's tasks is to review and to approve the Annual Implementation Report to be submitted to the European Commission on a yearly basis. v Changes since the last period: - EDIOP Annual Implementation Report is to be submitted in the SFC 2014 system, - following the MC approval, by 31 May, 2016. Both the Annual Report structure and content differ from those of reports prepared for EDOP: EDIOP Annual Implementation Report shall be compiled in a structure defined by the SFC 2014 system, with character limitations, on the interface itself, and in addition, the report had to be made in a template defined by the PO-MED as well. v The draft version of the first EDIOP Annual Implementation Report was uploaded to the IIS system on 26 April, 2016, so members can add their remarks and comments to the document. v By the deadline we received technical remarks from one organization: - We accepted the clarification concerning the National Research, Development and Innovation Office and MA. - Page 42. a„az OP adta lehetőségek szerint teljes körű – értékelése történt megtörtént” )

6 - Approval of the evaluation plan, voting Presenter: Kele János Programme evaluation officer Prime Minister's Office, Evaluation and Planning Division

LEGAL BACKGROUND 2014 -2020: The EU Regulation No 1303/2013/EU of the European Parliament and the Council: • Evaluations shall be carried out to improve the quality of the design and implementation of programmes, as well as to assess their effectiveness, efficiency and impact. (Article 54) • An evaluation plan shall be drawn up. (Article 114)

CONTENTS OF THE EVALUATION PLAN Covers all evaluations of interventions financed from the sources of ESF, ERDF and CF. Duration: 2016 -2019 Main parts of the Evaluation plan: • Part 1: Objectives, principles • Part 2: Regulations of the implementation of the evaluation plan + the planned schedule of implementation • Part 3: List and description of planned evaluations

STAKEHOLDERS • Prime Minister’s Office, Department for Monitoring and Evaluation • Managing Authority (MA) • Policy makers representing the ministries • Monitoring Committees of the Operational Programmes (OP MC) • Monitoring Committee of the Partnership Agreement (PA MC) • Monitoring & Evaluation Working Group

COMMENTS TO THE PLAN 1. The Prime Minister’s Office sent the indicative evaluation plan to the Managing Authorities, policy makers (Monitoring and Evaluation Working Group) and the European Commission for comments. 2. On the basis of comments coming in the Prime Minister’s Office finalised the evaluation plan. 3. Managing Authorities distributed the evaluation plan to the OP Monitoring Committees for their comments. Types of comments made by the European Commission, the MCs and the Monitoring and Evaluation Working Group: • • • 1. Raising new evaluation questions by evaluations Territorial aspects Suggesting additional data collection possibilities Specifications

PROCEDURE OF APPROVAL 1. The approval of the evaluation plan: - Managing Authorities have sent all comments of the OP Monitoring Committees and suggestions for consideration to the Prime Minister’s Office. - The Prime Minister’s Office incorporated comments of the OP Monitoring Committees after consulting with the MAs. - The OP Monitoring Committees will approve the evaluation plan. 2. Revision and modification of the evaluation plan is possible in the 3 rd quarter of each year, for the first time it is due in 2017.

MAJOR EVALUATION TASKS • The performance of indicators for each priority axes will have to be evaluated for the 2019 Performance Review (results will have to be presented in the Implementation Report of 2019) • For planning OP-modifications and the modification of allocations between priorities evaluations are necessary to be carried out (output indicators). • Comprehensive evaluations are required to be carried out for the Progress Report of 2017 and 2019.

FINANCING & PUBLIC PROCUREMENT Financial resource: PADOP-3 priority (Technical Assistance) Public procurements The Prime Minister’s Office has been managing contracts of evaluation frameworks employing external experts to carry out current and planned evaluations.

7 - Overview on evaluation progress, introduction of evaluation Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

Creation of a detailed map based database (mapping) about laying foundations for measures aiming development of new generation broadband networks and access • The objective of Digital Agenda Europe and the National Infocommunications Strategy: min 30 Mbps internet access by 2020 (new generation broadband network (NGA) • Analysis objective: establishing methodology and database for physical and technology NGA data, in order to ensure 100% nationwide coverage • Gov Dec 1631/2014 (XI. 6): As an infrastructure pillar of the Digital Nation Development Programme action plan, under the umbrella of the Super Fast Internet Project, a mapping encompassed a complete survey of Hungary. The mapping assessed the following: • Ø All Hungarian cities, towns and villages (3154), Ø Internal and external areas (excluding non-inhabited resorts) Ø Street and house number level, Ø For residents, businesses and public institutions, Ø Based on an official address database, Ø Broken down into bandwidth categories, Ø Data were collected in a geoinformatics compatible manner (assigning GEO co-ordinates) Database compilation was a thematic ex ante EDIOP condition. Documentation and databases created as a result of this analysis are annexes to a scheme called "Development of next-generation NGA and secondary networks", any future development shall be based these data, and exclusively on areas highlighted by the mapping.

Youth Employment Initiative analysis, I: • • The evaluation was made based on the guide set forth by the Commission The programmes were launched 8 months earlier, so their effects cannot be analysed yet. Main objective: to examine introduction and implementation conditions, efficiency and programme targeting. Secondary objective: preparation of a second impact assessment based on the same criteria, due in 2018, so the study covers in detail whether features where no data is available yet can be analysed or not. Key findings of the evaluation: • YEI is a significant help for the most underprivileged regions, Youth Guarantee introduction is expected to go as expected. • Informatics background and data collection methodology shale provide quality analysis options for most impact assessment requests. • Programme implementation body is the experienced National Employment Agency (NEA). This institution shall ensure standardised programme introduction, compilation of reliable information (however, it is also a reason why the system's ability is limited in terms of locally customised tools, and is slow to adapt to changes). • The programme has a long history in the previous planning period, so the most important new feature is the guarantee nature of the programme, the inclusion of the inactive and the provision of mentoring to those not involved in the programme. • Based on theoretical analysis, all programme tools can efficiently boost the scope of jobs available and the likelihood of employment. • In terms of planning, the programme is properly aimed. The YEI financed programme creates an opportunity to address young people who have been unemployed for a long time, and to help them find new jobs.

Youth Employment Initiative analysis, II: Recommendations: • In order to facilitate job quality and job feature assessment, impact assessments shall be extended by querying representative samples of employed individuals. • In order to involve the 25+ people in a control group, it is necessary to extend the impact assessment method to include them, thus by 2018, we would have a single and unified framework with data of participating individuals. • Integrated system development to avoid duplicate tasks for branch offices: generating reports and contracts, as well as plan completion and monitoring shall be done in a single system • Automation of 6, 12 and 18 month impact assessments in Tax Office and unemployment registries in order to streamline administrative processes and to minimise the error factor • Sending young people back to public education from which they previously dropped out encompasses high risks. Instead, it is recommended to create alternate skill and competence development opportunities • IR data confirm that characteristics of the involved individuals shall be analysed annually. If some regions see less intensively involved target groups, locally targeted programmes shall be elaborated to assist them. • Parents raising their child/children alone shall be given special emphasis, as inclusion rate of this group was under 1% in all regions. Further examination is necessary to find out why their involvement proved to be a failure and what tools shall be used to better the current situation. • A major advantage of the Youth Guarantee system is that it provides an opportunity for the mentors to address young people who have been on the lookout for jobs for a long time or have completely disappeared from the labour market. Therefore, it is suggested to include motives in the planning and evaluation system to facilitate this kind of mentoring activities. • The system could work more efficiently if branch office staff member had the capacity to contact employer in order to map their actual vacancies.

11. 00 - 11. 20 Optional coffee break

8 - Overview on general EDIOP progress Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head and Szabó Krisztina Júlia Head of Unit MNE, EDP DSS

Complete EDIOP budget available in the 2014 -2020 period: EUR 8, 815 million - HUF 2, 750 billion

EDIOP progress before April 2016 - major project progress in numbers By the end of April 2016: 9518 applications were submitted by project owners, in excess of HUF 1230 billion (EUR 3970 million) total cost. Total cost approved is nearly HUF 407 billion (EUR 1315 million). Contracted total cost amounts to HUF 379 billion (EUR 1222 million, for 2149 projects. Payments were completed to a value of HUF 3 billion (EUR 9, 7 million) (invoice based payment), simultaneously, the Managing Authority transferred, by April, 2016, more than HUF 32 billion (EUR 103 million) to the beneficiaries.

EDIOP progress before April 2016 – calls announced up to date, by priorities Number Scheme ID Name of Scheme Call announcement date Total EDIOP – Priority 1: Improving SME competitiveness 1 EDIOP-1. 2. 1 -14 Micro and SME production capacity enhancement 10/10/2014 2 EDIOP-1. 2. 1 -15 Micro and SME production capacity enhancement 09/06/2015 3 EDIOP-1. 2. 2 -15 Support for capacity-enhancing invesments made by micro, small and medium sized enterprises 09/06/2015 4. GINOP-1. 2. 4 -16 Development of industrial parks 13/04/2016 5 EDIOP-1. 2. 5 -15 Support for logistics service centres development 23/12/2015 6 EDIOP-1. 3. 1 -14 Support for micro, small and medium sized enterprise market entry 10/10/2014 7 EDIOP-1. 3. 1 -15 Support for micro, small and medium sized enterprise market entry 20/05/2015 8 EDIOP-1. 3. 2 -15 Assistance of professional cluster organisations to provide quality services 23/12/2015 9 EDIOP-1. 3. 4 -15 Development of tourist organisations (TDM) 16/11/2015 10 EDIOP-1. 3. 5 -15 National tourism marketing and demand incentive programme 29/05/2015 EDIOP – Priority 2: Research, technology development and innovation 1 EDIOP-2. 1. 1 -15 Support for corporate R&D&I activities 25/08/2015 2 3 EDIOP-2. 1. 3 -15 EDIOP-2. 1. 4 -15 Industry rights Innovation voucher 25/08/2015 04/01/2016 4 EDIOP-2. 1. 5 -15 Innovation eco-system establishment (start-up and spin-off) 28/12/2015 5 EDIOP-2. 1. 7 -15 Prototype, product, technology and service development 30/10/2015 6 EDIOP-2. 2. 1 -15 Competitiveness and excellence co-operation 29/09/2015 7 EDIOP-2. 3. 2 -15 Strategic R&D workshop excellency 29/09/2015 8 EDIOP-2. 3. 3 -15 Strengthening of research infrastructure – international presence, networking 25/08/2015 9 EDIOP-2. 3. 4 -15 Higher Education and Industrial Co-operation Centre – research infrastructure development 23/12/2015 10 EDIOP-2. 3. 6 -15 ELI laser research centre implementation (ELI-ALPS) major project, phase 2 31/03/2015

EDIOP progress before April 2016 – calls announced up to date, by priorities EDIOP – Priority 3: Info-communication development 1 EDIOP-3. 1. 1 -CCHOP-15 Support for co-operation among educational institutions and ICT enterprises 21/12/2015 2 EDIOP-3. 1. 3 -15 Development of a professional, mentoring network for supporting ICT start-ups in entering foreign markets 14/12/2015 3 EDIOP-3. 2. 1 -15 Programme providing info-communications motivation, approach-building guidance and competence training fro SMEs 02/04/2015 4. EDIOP-3. 4. 1 -15 Development of next-generation NGA and secondary networks 28/08/2015 5 EDIOP-3. 4. 2 -CCHOP-15 Development of institutional network access and connections 22/12/2015 6 EDIOP-3. 4. 3 -CCHOP-15 Consolidation of government networks, capacity and performance development 22/12/2015 Road to the employment market Encouraging social enterprises Youth Guarantee 03/09/2015 11/12/2015 10/10/2014 EDIOP – Priority 5: Employment 1 EDIOP-5. 1. 1 -15 2 EDIOP-5. 1. 2 -15 3 EDIOP-5. 2. 1 -14 4 EDIOP-5. 2. 2 -14 Encouraging young people to become entrepreneurs 10/10/2014 5 EDIOP-5. 2. 3 -16 Youth becoming entrepreneurs - Assistance for start-up costs 06/04/2016 6 EDIOP-5. 2. 4 -16 Intern programme to support beginners 03/02/2016 7 EDIOP-5. 2. 5 -16 Apprentice programme - supporting services 03/02/2016 8 EDIOP-5. 3. 1 -14 Dissemination of flexible employment in convergence regions 10/10/2014 9 EDIOP-5. 3. 2 -16 Dissemination of flexible employment in convergence regions – introduction of flexible and family friendly employment methods 26/02/2016 10 EDIOP-5. 3. 3 -15 Support for service provision aimed at legal employment 28/08/2015

EDIOP progress before April 2016 – calls announced up to date, by priorities EDIOP – Priority 6: Competitive workforce 1 EDIOP-6. 1. 1 -15 Training for individuals with low schooling and individuals employed in the public sector 28/08/2015 2 EDIOP-6. 1. 2 -15 Bridging the digital gap 02/04/2015 3 EDIOP-6. 2. 1 -CCHOP-15 Participation in OECD PIAAC programme 12/08/2015 4 EDIOP-6. 2. 2 -CCHOP-15 Decreasing the number of individuals leaving vocational training without completion 29/12/2015 EDIOP – Priority 7: Tourism 1 EDIOP-7. 1. 1 -15 Assistance for the tourism-related development of the National Castle & Fortress Programme 27/08/2015 2 EDIOP-7. 1. 2 -15 Active tourist network infrastructure development 18/12/2015 3 EDIOP-7. 1. 3 -15 Complex tourist development of health resorts 20/11/2015 4 EDIOP-7. 1. 5 -16 Complex tourist development of national parks 22/03/2016 New generation Access Network (NGA) and area network development loan 02/09/2015 EDIOP – Priority 8: Financial instruments 1 EDIOP-8. 2. 1 -15

STATE OF PLAY – FINANCIAL INSTRUMENTS 2015 • Adoption of modified financial instrument rules by member states • New institutional structure • Announcing the first product 2016 • Publication of new financial instruments

2015 CHANGING REGULATIONS AND RULES • Thematic objectives • New rules for financial instruments o Regulation 1303/2013 EU o Implementation and delegation acts o Ex-ante assessment CHANGING INSTITUTIONAL STRUCTURE • Managing Authority – Ministry for National Economy • New institutional player MFB – fund of funds • MFB service points

FIRST ANNOUNCED PRODUCT EDIOP-8. 2. 1 -3. 4. 1 -15 NEW GENERATION ACCESS NETWORK (NGA) AND AREA NETWORK DEVELOPMENT LOAN CALL ANNOUNCEMENT: 02/09/2015 OPTIONALLY SELECTABLE SUPPORTED INVESTMENT LOAN EDIOP 3. 4. 1 -2015 NEW GENERATION NGA AND SECONDARY NETWORK DEVELOPMENT FOR GRANT ASSISTANCE • • • BUDGET: HUF 10 BILLION Loan type: over year investment Loan use: in line with call EDIOP 3. 4. 1 -2015 Loan amount: minimum HUF 10 million, max HUF 1. 5 billion AMOUNT OF PRIVATE CONTRIBUTION EXPECTED: 10% Loan fees: annual interest rate 0. 5%, no other loan fees can be charged Term: maximum 18 years Submission deadline: EDIOP 3. 4. 1 -2015 30 days from supporting decision date Loan request decision: within 60 days after reception Financial intermediary: in line with Regulation 1303/2013/EU, MFB Zrt. acts as the organisation implementing the fund of funds, and as an organisation implementing the financial instruments

RESULTS – FIRST ANNOUNCED PRODUCT EDIOP-8. 2. 1 -3. 4. 1 -15 NEW GENERATION ACCESS NETWORK (NGA) AND AREA NETWORK DEVELOPMENT LOAN REQUESTS RECEIVED BY 29/02: 66 REQUESTS (FROM 256 REQUESTS). REQUESTED LOAN AMOUNT AS OF 29/02: HUF 8 256 589 261 RATIO OF GRANT ASSISTANCE AND LOAN VARIES BY PROJECT: BETWEEN 2 -800% (OTHER PROJECT RESOURCE (LOAN)/REQUESTED ASSISTANCE).

2016 INSTITUTIONAL SYSTEM ESTABLISHMENT: LOAN AND COMBINED PRODUCTS: MFB SERVICE POINTS VENTURE CAPITAL PROGRAMMES, GUARANTEE PROGRAMMES: UNDER CONSTRUCTION INTRODUCTION OF NEW FINANCIAL INSTRUMENTS • EX-ANTE ASSESSMENT • PRODUCT PLANNING WORK GROUPS • FINANCIAL INSTRUMENT PRODUCTS PLANNED TO BE LAUNCHED IN 2016

ABOUT MEASURES FOLLOWING THE PREVIOUS EDIOP MC MEETING • The evaluation plan was commented on in several rounds, and was submitted in the IIS by 12 February, 2016. • Continuous consultation with the European Commission about financial instruments. • Sharing experience gained with projects of national scope and other operations among Managing Authorities is continuous, EC is involved in negotiations.

9 - INFORMATION ON THE ANNUAL DEVELOPMENT BUDGET Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head and Szabó Krisztina Júlia Head of Unit MNE, EDP DSS

Information on the Annual Development Budget Amendments to the 2016 Annual Development Budget Ø As the Governmental Committee on National Development ceased to operate and some practical experience was gathered, approval and modification rules of procedure for the Annual Development Budget (ADB) was altered. Ø Instead of ADBs for each calendar year, a single ADB is compiled, and a transition to "rolling planning" takes place to unify its structure to include calls announced since 2014 and the announcement plan for the given year. Ø Technical conception of calls planned to be announced in the following year shall be sent by the ministry expert to the MA by 31 May, instead of 30 April. The draft ADB version shall be submitted to the Minister responsible for EU resource utilisation (PMO) for preliminary commenting by 30 June. Ø The PMO shall send its evaluation to the MA by 31 August. Following a potential revision, the MA shall submit the document to the Monitoring Committee for commenting. Ø When MC proposals have been digested, the MA shall submit the proposal to the Development Policy Coordination Committee by 31 October. Ø If the Development Policy Co-ordination Committee supports the proposals, the government shall decide on the approval of the Annual Development Budget. Ø From 2016, the ADB can be modified quarterly. Ø Adding comments to the revision - except for the deadlines - is similar to the commenting rules of procedure applicable to the approval process.

2016 EDIOP ANNUAL DEVELOPMENT BUDGET MODIFICATION BACKGROUND Ø ACTUAL EDIOP ANNUAL DEVELOPMENT BUDGET IN FORCE CAN BE FOUND INA GOVERNMENT DECREE 1006/2016. (I. 18. ). AS A RESULT OF THE TRANSITION OVER TO "ROLLING PLANNING", SCHEMES ANNOUNCED SINCE 2014 AND ANNOUNCEMENT PLANS VALID UNTIL 2016 ARE LISTED IN A UNIFIED STRUCTURE. Ø Q 1 REVISION COMMENTING OF 2016 ADB WAS CONCLUDED IN MARCH, MC MEMBERS RECEIVED THE DOCUMENT, AND THEY ADDED NO COMMENTS OR REMARKS TO IT. Ø QUARTERLY MODIFICATION PERIODS WILL NOT ALLOW FOR THE DISCUSSION OF EACH AND EVERY MODIFICATION AT AN MC MEETING, SO THE MANAGING AUTHORITY IS PLANNING TO CONDUCT COMMENTING IN WRITING. Ø BASED ON PROPOSALS RECEIVED AFTER THE DOCUMENT HAD BEEN SENT TO THE MC, SOME CHANGES OF ADMINISTRATIVE NATURE WERE IMPLEMENTED (E. G. UPDATING ANNOUNCEMENT DATES), AND TWO NEW CALLS WITH SPECIAL RULES OF PROCEDURE WERE ADDED TO PRIORITY 1.

EDIOP 2016 ADB MODIFICATION MAJOR CHANGES • SMALL MODIFICATIONS: Ø REGISTERING ALREADY ANNOUNCED SCHEMES (FINAL BUDGET AND ANNOUNCEMENT DATE) Ø BUDGET INCREASE Ø MODIFICATIONS TO CALL DATES Ø MODIFICATION AND CLARIFICATION TO CALL TITLES Ø CHANGE IN CALL ANNOUNCEMENT METHODS • CONTENT CHANGES: Ø MERGING CALLS Ø APPEARANCE OF NEW CALLS Ø CHANGE OF BENEFICIARIES FOR SPECIAL CALLS

MAIN CHANGES IN FIGURES Ø 5 calls were deleted (merged with other calls or rescheduled to 2017) Ø 7 new calls were included Ø Planned announcement date changed for 18 calls Ø Budget amount changed for 16 calls Ø number of Calls in the Annual Development Budget increased from 94 to 96 Ø total budegt aount was raised from HUF 1913. 22 billion to HUF 2209. 41 billion, by HUF 296. 19 billion

MAIN CHANGES IN FIGURES Priority Budget amount Calls as amount as per Change Calls as per the approved (HUF the modified ADB approved ADB (HUF billion) ADB (pcs) billion) Change (pcs) SME 314. 00 304. 55 9. 45 17 15 2 RDI 438. 55 258. 55 180. 00 14 12 2 ICT 119. 78 109. 13 10. 65 12 14 -2 Energy 59. 45 0 1 1 0 Employment 441. 60 0 16 18 -2 Competitive workforce 114. 05 0 10 10 0 Tourism 90. 00 0 7 7 0 Financial instruments 631. 98 535. 89 96. 09 19 17 2 Total 2209. 41 1913. 22 296. 19 96 94 2

INFORMATION ON THE ANNUAL DEVELOPMENT BUDGET • CALL SELECTION CRITERIA, METHODS (SIMPLIFIED RULES OF PROCEDURE, SPECIAL CALLS), VOTING • APPROVAL OF OPERATIONS OUTSIDE THE PROGRAMME AREA, OVERVIEW ON PROJECTS/CALLS OF NATIONAL SCOPE, VOTING • METHODS AND CRITERIA USED FOR OPERATION SELECTION OF FINANCIAL INSTRUMENTS, VOTING

OPERATIONS OUTSIDE THE PROGRAMME AREA Resource utilisation outside the programme area as stipulated by Article 70, Regulation No 1303/2013 of the European Parliament and of the Council "The managing authority may accept that an operation is implemented outside the programme area but within the Union, provided that all the following conditions are satisfied: a) the operation is for the benefit of the programme area; b) the total amount allocated under the programme to operations located outside the programme area does not exceed 15 % of the ERDF support aimed at the priority, c) the monitoring committee has given its agreement to the operation or types of operations concerned; "

EDIOP PROJECTS OF NATIONAL SCOPE Project with nationwide impact: development whose direct effects are seen in less developed regions and the Central Hungarian Region alike and which is defined as a "project with nationwide effect" by the Annual Development Budget (government decision 272/2014) The organisation is a central organisation with national scope, typically a central budgetary organ. Ratio of national scope projects not approved by the MC, based on the ADB currently in force: Call ID EDIOP-5. 3. 6 CCHOP-16 EDIOP-6. 2. 4 -CCHOP-16 Call name Call budget (HUF billion) Encouragement of legal employment, encouragement of corporate responsibilities in less developed regions, exploring jobs 6. 6 special project 21 st century adult education quality and since content development September, 2016 Method of call Planned date of call announcement CCHOP twin special September 2016 project of national scope special April 2016 project of national scope

PROJECTS EXCLUSIVELY FOR THE BENEFIT OF A LESS DEVELOPED REGION Projects where activities are obviously linked to less developed regions have their main impact there, however, the central organisation is in Central Hungary - project management costs and some technical tasks are dealt with in the Central Hungarian region. Projects not approved by the MC, based on the ADB currently in force: Method of Call budget call announcemen (HUF billion) announceme t date nt Call ID Call name EDIOP-1. 1. 3 -16 Establishment of "Industry 4. 0" sample applications to boost production SMEs digital and automatisation development 2. 35 special June 2016 EDIOP-1. 1. 4 -16 Identification, assessment, motivation and support of processing industry SMEs with outstanding growth and innovation potential to facilitate their international competitiveness and networking 1. 7 special June 2016 EDIOP-3. 1. 3 -15 Development of a professional, mentoring network for supporting ICT start-ups in entering foreign markets 2. 5 special Announced in December 2015 EDIOP-3. 3. 1 -16 Development of community internet connection points, widening their service portfolio 5 special April 2016 EDIOP-3. 3. 2 -16 Assisting the dissemination of online government, public administration and ehealth services 3 special June 2016 EDIOP-3. 4. 4 -16 Tasks related to broadband development preparation and implementation 1 special April 2016

METHODS AND CRITERIA USED FOR OPERATION SELECTION LEGAL BACKGROUND: BASED ON ARTICLE 110, SECTION (2) A) OF 1303/2013/EU: "MONITORING COMMITTEE SHALL EXAMINE AND APPROVE THE METHODOLOGY AND CRITERIA USED FOR SELECTION OF OPERATIONS. " • "Methods and criteria" approved by the Monitoring Committee at this level cover the entire selection process. Individual criterion/principle shall always be matched with the particular call. • 7 EXISTING EDIOP PRIORITIES MAINLY DIFFER FROM ONE ANOTHER, METHODS AND CRITERIA CAN PARTIALLY BE DEFINED AS A FRAMEWORK, HOWEVER, THEY MUST BE FURTHER SPECIFIED AT PRIORITY LEVEL. • THE OPERATIONAL PROGRAMME CONTAINS APPLICABLE GUIDELINES TO BE USED DURING OPERATION SELECTION FOR EACH MEASURE.

EDIOP SELECTION CRITERIA, METHODS AND THE MONITORING COMMITTEE • THE EDOP MC HELD PRELIMINARY DISCUSSIONS ABOUT EDIOP RELATED SELECTION CRITERIA AND APPLICABLE METHODS AT THE MEETING ON 3 OCTOBER, 2014. • THE FOLLOWING WERE INTRODUCED AT THE EDIOP MC MEETING ON 22 APRIL, 2015, AND SHARED VIA THE IIS SYSTEM BEFORE THE MEETING: • regulation background • types of selection processes • expectations in terms of selection processes • introduction of bi-level selection system (entry criteria and selection/ranking criteria) • Objectives, applied procedures, typical entry criteria for each priority and selection criteria for each scheme (through the IIS system) EDIOP MC 3/2015. (IV. 22. ) decree: EDIOP Monitoring Committee approved EDIOP operation selection methods and criteria. • • Upon a request received from European Commission members, the material for priorities in the IIS system was amended with the following on 05/06/2015: • Assistance categories, maximum assistance amounts • Planned scope of beneficiaries and max assistance amount for ADB calls • For calls with simplified rules of procedure as per ADB, justification why simplified selection rules of procedure was applied

METHODS AND CRITERIA USED FOR EDIOP OPERATION SELECTION, CRITERIA OVERVIEW • • ACTUAL LIST OF EDIOP CALLS CAN BE FOUND IN THE GOVERNMENT DECREE ON EDIOP ANNUAL DEVELOPMENT BUDGET THE ADB CAN BE MODIFIED 4 TIMES A YEAR, SO CALLS AND THEIR MAIN PARAMETERS CAN CHANGE PROPOSAL: • EDIOP MC 3/2015. (IV. 22. ) decree: EDIOP Monitoring Committee approved EDIOP operation selection methods and criteria. • DOCUMENTS AND LATER AMENDMENTS SHALL BE COMPILED IN A STRUCTURED GUIDE LATER. • IF THERE IS A MODIFICATION WHICH JUSTIFIES THIS, THE GUIDE SHALL BE MODIFIED. • THE MODIFIED GUIDE SHALL BE SENT TO THE MEMBERS VIA THE IIS. MEMBERS CAN COMMENT ON THE MATERIAL IN WRITING, AND IF AN ORDINARY MEETING IS NOT DUE, THE MODIFICATION CAN BE APPROVED BY VOTING IN WRITING. • VERSION CONTROL IS ACHIEVED BY ADDING PROPER DATES AND VERSION NUMBERS TO EACH VERSION. • POSSIBLE MODIFICATIONS: • New special project in the ADB • In the case of a new scheme with simplified rules of procedure, justification why simplification was necessary

EDIOP 8 SELECTION CRITERIA BASED ON EX ANTE ASSESSMENT FINDINGS, SELECTION CRITERIA FOR EDIOP 8 INSTITUTIONAL SYSTEM, TARGET GROUPS AND PRODUCTS SHALL BE COMPILED. I. INSTITUTIONAL SYSTEM PLANNED STRUCTURE FOR LOAN AND COMBINED LOAN PRODUCTS II. TARGET GROUPS BY THEMATIC OBJECTIVES III. PRODUCTS PRODUCT PLANNING PRODUCTS PLANNED TO BE LAUNCHED IN 2016

12. 30 -13. 30 Lunch break

10 - INFORMATION ON ELI MAJOR PROJECT PROGRESS Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

ELI-ALPS MAJOR PROJECT STATUS 3/1 Essentials Ø ELI-ALPS is a phased, basic research infrastructure major project Ø Total eligible costs of the two phases together: EUR 231. 4 million (HUF 69. 55 billion) Support ratio: 100% Ø Beneficiary: ELI-HU Research and Development Non. Profit Ltd. Ø Preparatory activities in 2011 -2013 Ø Implementation period: 01. 2013. – 31. 05. 2018. Ø Certain project activities and related costs have been reallocated between the two phases in 2015 Ø Due to the reallocation the modification of the Phase I EU Commission Decision is necessary. The approval of the modified decision is under way. Ø The MA requested the tacit approval of the Commission for the Phase II project under Art. 103 CPR. The project is implemented in Szeged Ø Ø Phasing of the major project Phases EUR HUF Phase I EDOP 97 904 521 29 498 000 Phase II EDIOP 133 507 394 40 052 000 Total 231 411 915 69 550 000

ELI-ALPS MAJOR PROJECT STATUS 3/2 Current status Ø Physical implementation of Phase I financed from EDOP was concluded successfully, the project has been completed financially, as well. Ø Physical implementation of Phase II financed from EDIOP progresses according to schedule. Ø Number of employees at the ELI-HU Research and Development Non-Profit Ltd. is currently 195 and further increasing according to the human resources plan. Until end 2016 at least additional 50 employees will be recruited. Ø Building complex and basic infrastructure: Ø 5 buildings have been constructed in a 10 -hectare-large plot with total surface of 24 462 sqms Ø Roads, public utilities and a rainwater pond have been constructed in an additional 6. 6 -hectare-large area Ø Drinking water and sewage pipes have been built in a total length of 3. 5 kms Ø Scheduled date for the full completion of the building complex is 6 December 2016 Ø Research technology: Ø Procurement and manufacturing of the laser systems progress. Instalment of laser systems is scheduled to start in December 2016 and finish in September 2017. Ø ELI ERIC Ø Experts have started preparatory work to establish ELI ERIC, the organisation that will be responsible for the joint operations of the three ELI projects (Czech Republic, Romania, Hungary)

ELI-ALPS MAJOR PROJECT STATUS 3/3 28/10/2015 https: //www. youtube. com/watch? v=Vy 9 q. Vau 8 hd. Y

11 - OVERVIEW ON PRIORITY 5 AND 6 PROGRESS (YG, YEI) Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

OVERVIEW OF ESF RESOURCE UTILISATION IN PRIORITIES 5 AND 6, IMPLEMENTATION OF YOUTH GUARANTEE USING YOUTH IMPLEMENTATION INITIATIVE RESOURCES EDIOP 5 EMPLOYMENT PRIORITY BUDGET: HUF 534 BILLION 2014 - 3 SCHEMES TO A VALUE OF HUF 38. 1 BILLION 2015 - 3 SCHEMES TO A TOTAL VALUE OF HUF 107. 8 BILLION THE HUF 145. 9 BILLION ANNOUNCED BY 31 DECEMBER, 2015 AMOUNTS TO 27. 3% OF THE PRIORITY BUDGET. IN THE 4 2016 SCHEMES, WITH HUF 24. 1 BILLION, 31. 8% OF THE BUDGET WAS ANNOUNCED. THE YEAR 2015 WITNESSED SUPPORTING DECISIONS TO A VALUE OF HUF 39. 09 BILLION. ANNOUNCED SCHEMES GREATLY CONTRIBUTE TO THE COMPLETION OF SUCCESS INDICATOR TARGET VALUES.

PRIORITY 5 PROGRESS BY INVESTMENT PRIORITIES Investment priority Improvement of employment for the inactive and unemployed Sustainable youth labour market integration Helping employees, businesses and entrepreneurs adapt to changes Announced scheme Scheme budget Announceme nt date Priority ratio EDIOP 5. 1. 1 -15 Road to the employment market HUF 102 billion 3 September, 2015 19. 2% EDIOP-5. 1. 2 -15 Encouraging social enterprises – supporting services EDIOP 5. 2. 1 -14 Youth Guarantee HUF 1. 2 billion 11 December, 2015 0. 2% HUF 36 billion 10 October, 2014 6. 7% EDIOP 5. 2. 2 -14 Encouraging young people to HUF 1. 1 billion become entrepreneurs 10 October, 2014 0. 2% EDIOP 5. 2. 3. Youth becoming entrepreneurs - Assistance for start-up costs HUF 2. 9 billion 5 April, 2016 0. 54% EDIOP 5. 2. 4. Apprenticeship programme to employ beginners EDIOP 5. 2. 5. Apprentice programme - supporting services EDIOP 5. 3. 1. Dissemination of flexible employment in convergence regions EDIOP 5. 3. 2. Dissemination of flexible employment in convergence regions EDIOP 5. 3. 3. Support for service provision aimed at legal employment HUF 15 billion 2 February, 2015 2. 8 % HUF 1. 2 billion 2 February, 2015 0. 2% HUF 2 billion 10 October, 2014 0. 37% HUF 6 billion 5 April, 2016 1. 1% HUF 3. 5 billion 28 August, 2015 0. 6% Target group minimum 90 000 job seekers, inactive individuals social enterprises 36 000 young people, NEET, under 25 approximately 2, 000, mostly under 25 job seekers, involved in to Youth Guarantee Programme approximately 1, 600, mostly under 25 job seekers, involved in to Youth Guarantee Programme 4, 500 young and skilled individuals under 25 SMEs, skilled workers of the target group under 25 nearly 1, 000 enterprises altogether employ 40, 000 individuals Employees and businesses using legal aid services

YOUTH GUARANTEE PROGRAMME IMPLEMENTATION WITH YOUTH EMPLOYMENT INITIATIVE FUNDS LEGAL BACKGROUND REGULATION (EU) NO 1304/2014, CHAPTER IV: SPECIAL REQUIREMENTS RELATED TO PROGRAMMING, MONITORING AND EVALUATION, FINANCIAL CONTROL AND INFORMATION OF THE YOUTH EMPLOYMENT INITIATIVE BASED ON ARTICLE 16 OF REGULATION (EU) NO 1304/2014, THE YOUTH EMPLOYMENT INITIATIVE MAY BE USED IN SUCH NUTS II REGIONS WHERE YOUTH UNEMPLOYMENT AMONG 15– 24 YEAR-OLDS WAS MORE THAN 25% IN 2012 SECTION (1), ARTICLE 19 OF REGULATION (EU) NO 1304/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL ‘. . . AT LEAST ONCE A YEAR, THE MONITORING COMMITTEE SHALL EXAMINE THE IMPLEMENTATION OF THE YEI IN THE CONTEXT OF THE OPERATIONAL PROGRAMME AND THE PROGRESS MADE TOWARDS ACHIEVING ITS OBJECTIVES. ’ - ARTICLE 19 (3): FROM APRIL 2015, STRUCTURED DATA RELATED TO THE USE OF FUNDS OF THE YOUTH EMPLOYMENT INITIATIVE SHALL BE SUPPLIED EVERY YEAR, THE SUMMARY OF THIS DATA IS DISCUSSED BY THE EUROPEAN PARLIAMENT ON A YEARLY BASIS. AN IMPLEMENTATION REPORT WAS DRAWN UP ON 30 APRIL 2015 FOR THE EUROPEAN COMMISSION, WHICH IN TURN APPROVED THE REPORT. - ARTICLE 19 (4): ‘THE REPORTS SHALL ALSO SET OUT AND ASSESS THE QUALITY OF EMPLOYMENT OFFERS RECEIVED BY YEI PARTICIPANTS, INCLUDING DISADVANTAGED PERSONS, THOSE FROM MARGINALISED COMMUNITIES AND THOSE LEAVING EDUCATION WITHOUT QUALIFICATIONS. ’ - ARTICLE 19 (6): THE SUCCESS AND EFFICIENCY OF THE ASSISTANCE PROVIDED SHALL BE ASSESSED TWICE, WITH TWO DIFFERENT EVALUATIONS REGULATION (EU) NO 1304/2013, ANNEX II: SPECIFIC DATA COLLECTION REQUIREMENTS, COMMON RESULTS INDICATORS RELATED TO THE YOUTH EMPLOYMENT INITIATIVE

YOUTH GUARANTEE PROGRAMME IMPLEMENTATION WITH YOUTH EMPLOYMENT INITIATIVE FUNDS YOUTH EMPLOYMENT INITIATIVE IMPLEMENTATION IS REALIZED UNDER THE FRAMEWORK OF THE COMPREHENSIVE MEASURE AND SPECIAL PROJECT YOUTH GUARANTEE (EDIOP 5. 2. 1 -14 YOUTH GUARANTEE), WITHIN EDIOP PRIORITY 5. FROM THE CURRENTLY CONTRACTED BUDGET OF HUF 36 BILLION, IN THE 4 REGIONS ENTITLED TO RECEIVE YEI RESOURCES (12 COUNTIES OF THE NORTH HUNGARIAN REGION, NORTH PLAIN REGION, SOUTH GREAT PLAIN REGION, SOUTH TRANSDANUBIAN REGION), THE CONTRACT PROVIDES HUF 25. 395 BILLION TO BE SPENT DIRECTLY ON THE TARGET GROUP, IN TOTAL, INCLUDING TARGET GROUP TECHNICAL IMPLEMENTATION STAFF RELATED COSTS, HUF 28 BILLION. HUNGARY SHALL UTILISE THE FULL BUDGET OF THE YOUTH EMPLOYMENT INITIATIVE UNDER THE FRAMEWORK OF SPECIAL PROJECT EDIOP 5. 2. 1. , FOR THE PURPOSE OF PROVIDING DIRECT ASSISTANCE TO THE TARGET GROUP. THE ANNUAL DEVELOPMENT BUDGET, MODIFIED BY GOV DEC 1006/2016. (I. 8. ), SHALL ORDER TO INCREASE THE PROJECT BUDGET WITH THE FULL AMOUNT ALLOCATED TO THE YOUTH GUARANTEE PROGRAMME AT OP LEVEL, I. E. BY HUF 124 BILLION. THIS WAY THE AVAILABLE BUDGET, BASED ON 2014 DATA, SHALL ENSURE THE INCLUSION OF THE ENTIRE TARGET GROUP, 13. 6% OF THE AGE GROUP, I. E. NEARLY 160, 000 YOUNG PEOPLE. HUNGARY HAS PLEDGED TO FULLY IMPLEMENT THE YOUTH GUARANTEE SYSTEM BY THE END OF 2017 UNDER THE UMBRELLA OF THE PROJECT. IN THE INITIAL PERIOD OF THE YOUTH GUARANTEE PROGRAMME, SPECIAL PROJECT EDIOP 5. 2. 1 -14 WILL PRIMARILY BE AIMED AT APPROACHING THE MOST DISADVANTAGED PEOPLE, THOSE WHO HAVE BEEN REGISTERED AS A JOB-SEEKER FOR MORE THAN SIX MONTHS, AND HAVING LOW QUALIFICATIONS, THUS ENSURING INCLUSION WITHIN 6 MONTHS. FROM 2018 ON, THE INCLUSION PERIOD SHALL BE DECREASED TO 4 MONTHS AFTER REGISTRATION DATE. SINGLE PROGRAMME ENTRY POINT: REGISTRATION WITH THE NATIONAL EMPLOYMENT SERVICE

IMPLEMENTATION OF THE YOUTH EMPLOYMENT INITIATIVE IMPLEMENTATION: IMPLEMENTATION PRE-FINANCED BY THE NATIONAL EMPLOYMENT FUND BEGAN IN JANUARY 2015, BY THE MEANS OF DECENTRALISED PARTIAL PROJECTS. THE MINISTRY FOR NATIONAL ECONOMY, AS THE CONSORTIUM LEADER AND THE TECHNICAL CO-ORDINATOR, PROVIDES GUIDANCE ON THE DECENTRALISED PLANNING, LEADERSHIP IN CONNECTION WITH ASSISTANCE AWARDED AND NATIONAL PRE-FINANCING. IN THE FUNDING SYSTEM OF THE LABOUR MARKET PROJECTS IMPLEMENTED BY THE GOVERNMENT BUREAUS IN A DECENTRALISED MANNER, TO PROVIDE SAFE LIQUIDITY FOR THE MONTHLY PAYMENTS TO THE TARGET GROUP, THE NATIONAL EMPLOYMENT FUND PROVIDES PRE-FINANCING, WHILE THE EU FUNDS ARE UTILISED WITH SUBSEQUENT SETTLEMENT. CONTRACTING: THE CONTRACT ENTERED INTO FORCE ON 29 MARCH, 2016. COSTS ARE ELIGIBLE FROM SCHEME ANNOUNCEMENT DATE. INCLUSION DATA: UP TO NOW, NES HAVE OFFERED THE RIGHT TO PARTICIPATE IN THE YG PROGRAMME TO NEARLY 72 THOUSAND INDIVIDUALS. IN THE FRAMEWORK OF SPECIAL PROJECT EDIOP 5. 2. 1 -14, NUMBER OF INDIVIDUALS INVOLVED IN THE YOUTH GUARANTEE PROGRAMME IS 33, 000, FROM THIS AMOUNT, IN THE 4 AFFECTED YEI REGIONS, THERE ARE 25, 774 INDIVIDUALS INVOLVED IN THE PROGRAMME, AND 22, 143 INDIVIDUALS WERE GIVEN OFFERS. 5, 774 INDIVIDUALS RECEIVED OFFERS FOR TRAINING, 16, 569 INDIVIDUALS RECEIVED OFFER TO GAIN WORK EXPERIENCE OR TO GET EMPLOYED. EXPECTED RESULTS BY THE END OF 2017, WHICH IS THE END OF FIRST PROJECT INCLUSION PERIOD: AT LEAST 61% OF THE INVOLVED YOUTH SHALL BE EMPLOYED, NEARLY 22 THOUSAND YOUNG PEOPLE SHALL GAIN WORK EXPERIENCE OR SHALL BE EMPLOYED, 36% OF THEM, I. E. NEARLY 13, 100 SHALL ENTER SOME KIND OF TRAININGS, SHALL OBTAIN NEW QUALIFICATIONS REQUIRED TO BE EMPLOYED IN NEW POSITIONS. INDIVIDUAL ESF DATA COLLECTION: REGISTRATION OF DATA FOR INDIVIDUAL DATA COLLECTION POOLS AS STIPULATED BY REGULATION (EU) NO 1304/2013, AS WELL AS DATA VALIDATION, IS ENSURED BY THE EMPLOYMENT INFORMATION SYSTEM, FURTHERMORE, WHEN 6, 12 AND 18 MONTHS HAVE PASSED FROM THE DATE WHEN EXITING THE OFFER PERIOD PARTICIPANTS SHALL BE IDENTIFIED OFFICIALLY BY THE NATIONAL TAX OFFICE AND UNEMPLOYED REGISTRY AS EMPLOYED OR UNEMPLOYED INDIVIDUALS.

EDIOP PRIORITY 6 – COMPETITIVE WORKFORCE BUDGET: HUF 136 BILLION 2015 - 4 SCHEMES TO A TOTAL VALUE OF HUF 41. 85 BILLION WERE ANNOUNCED, WHICH AMOUNTS TO 30, 28% OF THE PRIORITY BUDGET, WITHOUT THE CCHOP RESOURCES LINKED TO PROJECTS OF NATIONAL SCOPE. 2018 TARGET VALUE OF PRIORITY RELATED PERFORMANCE MEASUREMENT FRAMEWORK IS COVERED 63% BY THE ANNOUNCED SCHEMES. THEY ENSURE THE INVOLVEMENT OF 185, 000 INDIVIDUALS WITH NO DIGITAL COMPETENCIES OR WITH LOW SCHOOLING. TWO SPECIAL TECHNICAL SYSTEM DEVELOPMENT PROGRAMMES WERE LAUNCHED: EDIOP-6. 2. 1 -CCHOP/1 - PARTICIPATION IN OECD PIAAC PROGRAMME: TEST RESULTS DEFINE ADULT EDUCATION RULES, AID ALLOCATION AND CONTENT DEVELOPMENT. - EDIOP-6. 2. 2 -CCHOP/15 DECREASING THE NUMBER OF INDIVIDUALS LEAVING VOCATIONAL TRAINING WITHOUT COMPLETION: IT ENSURES TECHNICAL FRAMEWORK AND TEACHER EDUCATION FOR LOCAL PROGRAMMES AIMED AT DECREASING DROP-OUT INTENSITY, BASED ON THE STRATEGY FRAMEWORK AND ACTION PLAN TO FIGHT EARLY SCHOOL LEAVING.

PRIORITY 6 PROGRESS BY INVESTMENT PRIORITIES Target group 2 April, 2015 Priority budget ratio 6. 6% HUF 30 billion 28 August, 2015 22. 2% HUF 1. 1 billion 12 August, 2015 0. 8% 85 thousand individuals, ISCED 1 -2, max with elementary education, mainly in public service Adult population based on OECD standard sampling 29 December, 2015 1. 3% Investment priority Announced scheme Scheme budget Announcement date Lifelong learning EDIOP-6. 1. 2 -15 Bridging the digital gap HUF 8. 95 billion EDIOP-6. 1. 1 -15 Training for individuals with low schooling and individuals employed in the public sector EDIOP-6. 2. 1 -CCHOP/15 Participation in OECD PIAAC programme vocational and adult education development EDIOP-6. 2. 2 -CCHOP/15 HUF 1. 8 Decreasing the number of billion individuals leaving vocational training without completion 100 thousand digitally illiterate adults Teachers and experts participating in vocational training

12 - OVERVIEW ON PRIORITY 8 FINANCIAL INSTRUMENTS Presenter: Szőke Gyula Financial instruments Officer MNE, EDP DSS

I. INSTITUTIONAL SYSTEM Loan/combined loan products Venture capital programme Guarantee programme MNE - EDIOP MA The institutional system is under construction Fund of funds (MFB) Sales network operated by a financial intermediary SME 1 SME 2 SME 3 n.

I. INSTITUTIONAL SYSTEM - MFB SERVICE POINTS Public procurement of MFB service points kicked off in Q 4 2015. Between 2014 and 2020, MFB shall carry out loan service supported by credit institutions with Hungarian branch office network, via so-called MFB service points. Institutional system establishment: 1 Category MFB service point establishment: March 2016 • Number of starting MFB service points: 26, a service point in every town with county rank, three service points in Budapest • Tasks: sales, loan service, product support, client services 2 Category MFB service point establishment: July 2016 • Number of starting MFB service points: 119, at least one in all towns with population higher than 10, 000 • Tasks: sales, loan service, client services 3 Category MFB service point establishment: by 31 December, 2016 • • Number of starting MFB service points: 257, at towns with population less than 10, 000 in each county at least three Task: consultancy, client services

II. TARGET GROUPS SUMMARY OF EDIOP PRIORITY 8 TARGET GROUPS: • • • BUSINESS IN HUNGARY, POPULATION, LOCAL GOVERNMENTS, STATE AGENCIES, INSTITUTIONS, STATE-OWNED BUSINESSES NON-PROFIT SECTOR

II. TARGET GROUPS BY THEMATIC OBJECTIVES

III. PRODUCTS - PLANNING WORK GROUPS Ministry experts (MNE, MND, PMO) Prime Minister's Office, State Secretariat for EU Coordination State Aid Monitoring Office Prime MInister's Office, Financial Services and Postal Services State Secretariat Prime Minister's Office Financial instrument product EDIOP Managing Authority Organisatio n executing the fund of funds Hungarian Development Bank Private Limited Company (MFB)

III. PRODUCTS - BASED ON ADB GOVERNMENT DECREE BASED ON CURRENT PLANS: TO 1 TO 2 • 4 LOAN • 9 COMBINED PRODUCTS • 4 VENTURE CAPITAL AND • 2 TO 3 TO 4 TO 8 GUARANTEE PROGRAMMES SHALL BE ANNOUNCED.

LOANS

COMBINED PRODUCTS 1/2

COMBINED PRODUCTS 1/2

GUARANTEE

VENTURE CAPITAL

13. : Overview on new ex ante assessment (financial instruments) Presenter: Szőke Gyula Financial instruments Officer MNE, EDP DSS

EX-ANTE ASSESSMENT • Approved and final ex ante assessment in the following areas: Ex ante assessment - revision is needed for the following areas: • SME development, • ICT, • R&D&I • Employment • Energetics • • MARKET FAILURE, IDENTIFICATION OF INSUFFICIENT INVESTMENT SITUATION IDENTIFICATION OF AFFECTED TARGET GROUPS PROPOSAL FOR PRODUCT PARAMETERS TO BE USED ESTABLISHMENT OF SELECTION CRITERIA

EX-ANTE ASSESSMENT STATUS

14 - Information on ex-ante requirement completion progress Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

Legal background • Regulation 1303/2013 EU (Article 19 and Annex XI) • Aim: establishing adequate strategic and institutional framework for the utilisation of EU development funds • Thematic and general ex ante conditions • If a condition is not met by OP approval an Action Plan shall be made, and reporting obligation in terms of its implementation (in the annual implementation report) • Ex ante conditions shall be met by 31 December, 2016

General preliminary conditions related to EDIOP General ex ante conditions Implementation of ex-ante criteria (10 May 2016) G. 1 -The existence of administrative capacity for the implementation and application of Union antidiscrimination law and policy in the field of ESI Funds. Yes (partially met at the time of OP submission) G. 2 -The existence of administrative capacity for the implementation and application of Union gender equality law and policy in the field of ESI Funds. Yes (partially met at the time of OP submission) G. 3 - The existence of administrative capacity for the implementation and application of the United Nations Convention on the rights of persons with disabilities (UNCRPD) in the field of ESI Funds in accordance with Council Decision 2010/48/EC. Yes (partially met at the time of OP submission) G. 4 - The existence of arrangements for the effective application of Union public procurement law in the field of the ESI Funds. G. 5 - The existence of arrangements for the effective application of Union State aid rules in the field of the ESI Funds. G. 6 - The existence of arrangements for the effective application of Union environmental legislation related to EIA and SEA. G. 7 - The existence of a statistical basis necessary to undertake evaluations to assess the effectiveness and impact of the programmes. The existence of a system of result indicators necessary to select actions, which most effectively contribute to desired results, to monitor progress towards results and to undertake impact evaluation. Partially Yes Yes (not at the time of OP submission)

Thematic preliminary conditions related to EDIOP, I Thematic ex ante conditions Implementation of ex-ante criteria (10 May 2016) T. 01. 1 – Research, technology development and strengthening innovation (EDIOP 2) Yes T. 01. 2 - Research and innovation infrastructure. (EDIOP 2) Yes T. 02. 1 - Digital growth (EDIOP 3. ) Yes (partially met at the time of OP submission) T. 02. 2 - Next Generation Network (NGN) Infrastructure (EDIOP 3) Yes (partially met at the time of OP submission) T. 03. 1 - Actual measures (taking into account the government measurement package targeted at small businesses) taken for the purpose of supporting entrepreneurship. (EDIOP 1 and 8) Yes T. 04. 1 – Measures aimed at improving energy efficiency in connection with Yes building/renovation works and measures aimed at cost-effective investments (EDIOP (partially met at the time of OP submission) 4. and 8. ) T. 04. 3 – Measures aimed at supporting the production and distribution of renewable energy sources (EDIOP 4 and 8) Yes

Thematic preliminary conditions related to EDIOP, II. Thematic ex ante conditions Implementation of ex-ante criteria (10 May 2016) Yes T. 08. 1 – Active labour market-related measures that take into account guidelines on (partially met at the time of employment. (EDIOP 5 and 6) OP submission) T. 08. 5 - Adaptation of workers, enterprises and entrepreneurs to change. Policies that prioritize the prognostication and correct handling of amendments and structural Yes changes (EDIOP 5 and 8) T. 08. 6 - Comprehensive strategic framework for the purpose of helping young people Yes reach employment (through implementing Youth Guarantee, among other measures). (EDIOP 5 and 8) T. 10. 3 - Lifelong learning: National or regional strategic policy framework for the Yes purpose of supporting life long learning (EDIOP 6) (partially met at the time of OP submission) Yes T. 10. 4 - National or regional strategic policy framework for the purpose of improving (partially met at the time of the quality and efficiency of vocational training (EDIOP 6. ) OP submission)

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, I. • T. 02. 1. ex ante condition: Strategy policy framework for digital growth - COMPLETED • Measures related to budget planning and ranking, achieved through a SWOT or similar analysis in line with the scoreboard of the European Digital Agenda • The measures needed are set out in detail by the Digital National Development Plan and ICT Green Book, both approved by the Government in November 2014. The SWOT analysis is found in the National Info-Communications Strategy. • Indicators for measuring implementation (digital literacy, e-acceptance, electronic availability, e-healthcare) • Based on data collected by NSO OSAP and by answering EU surveys (e. SKILLS, e. GOV and elnclusion surveys), as well as creating related indicators, this was met by the first quarter of 2015.

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, II. • T. 02. 2. ex ante condition: National or regional NGA plans - COMPLETED • Infrastructure-related investment plan based on existing private and state-owned infrastructure and planned investments • This was met by 30 June 2015, by creating a mapping analysis as part of the EDIOP broadband programme (mapping NGA ‘white’ areas), and by establishing a database containing the targeted market-related commitments. • Sustainable investment models strengthening competition and providing better access to infrastructure and services • The final National Info-Communications Strategy contains the different investment models. By finalising the NIS, this criteria was fulfilled. • Measures stimulating investment by the private sphere. • Fulfilled with EDIOP. Strategic agreements (MT, Huawei), consultation with the National Media and Telecommunications Authority, a Consulting Council (with the participation of service providers) was also established as part of the Super Internet Programme.

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, III. • T. 04. 1. ex ante condition: Measures aimed at improving energy efficiency in connection with building/renovation work - COMPLETED • Measures aimed at ensuring that the minimal requirements based on Articles 3 -5 of 2010/31/EU Regulation, related to the energy efficiency of buildings are met • This criteria was met on 1 January 2015, by amending TNM Regulation 7/2006. (V. 24. ) on setting the energetics-related properties of buildings, as well as • by amending Government decision 176/2008. (VI. 30. ) on the certification of the energetics-related properties of buildings. • Creating a system that provides certifications for the energy efficiency of buildings, in line with Article 11 of Regulation 2010/31/EU • This criterion was met by amending Government decision 176/2008. (VI. 30. ) on the certification of the energetics-related properties of buildings (1 January 2015).

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, IV. • T. 08. 1. ex ante condition: Active labour market-related measures that take into account guidelines on employment - COMPLETED • Personalised services provided by the employment agency, active and preventive labour market-related measures (available for every job-seeker, but focusing on those most at risk of social discrimination) • From 1 January 2015, the Ministry for National Economy (MNE) as well as the newly formed National Office for Vocational and Adult Education (NOVAE) shall perform the employment policy tasks formerly carried out by the National Labour Office (NLO). • Thus, the tasks related to the operation and development of the relevant IT system (database of job-seekers) are carried out by the Administrative and Electronic Public Services Central Office (AEP SCO), with guidance provided by the MNE ministry expert, when it comes to labour market-related programmes. • From 1 April 2015, in the framework of the altered structure of the government offices: the National Employment Agency (NEA) retains its place in the framework of the reshuffled structure; the professional leadership of the local (country-wide and district-wide) structural units of the employment agency will be performed by the responsible Ministry; In harmony with relevant legislation, the conversion took place on 1 January, 2015. Relevant legislation and institutional OORs entered into force by 1 March, 2015. • Profiling system introduction and finalisation of complete relevant documentation: A system guide detailing system introduction and operation was approved by the Minister of State on 22 December, 2015 (effective date: 31 December, 2015). The document was made available for employment divisions of county government a document (currently with 110 items) was compiled which contains questions and answers in connection with system operation. Loading profiling categories of registered job seekers offices on the NEA intranet from 23 December, 2015. In addition, based on client characteristics to the internal IT system was completed for the entire clientèle (595, 924 job seekers) on 23 December, 2015. • Internal profiling methodology introduction trainings for staff members working with the new system were completed in November-December, 2015. • Establishment and testing of the new IT system had been completed by the end of 2015. 2016 system introduction is supported by functions which will not come with increased work load for staff working in county offices.

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, V. • T. 10. 3. Life long learning: National and/or regional strategic policy framework - COMPLETED • Development and interconnection of services aimed at life long learning, including the implementation of these services, development of skills, and the inclusion of interested parties and forming a partnership with them • The framework strategy is completed (approved with Government decree 1603/2014. (XI. 4. )), this may be accessed with the following link: http: //www. kormany. hu/download/7/fe/20000/Eg%C 3%A 9 sz%20%C 3%A 9 leten%20%C 3%A 1 t%20 tart %C 3%B 3%20 tanul%C 3%A 1 s. pdf

Thematic preliminary conditions – at the time of OP submission STATUS of UNFULFILLED CRITERIA, VI. • T. 10. 4. National or regional strategic policy framework for the purpose of improving the quality and efficiency of vocational training - COMPLETED • Improving the quality and attractiveness of vocational training, by utilising a national approach for quality assurance of vocational trainings and using transparency and qualifications-related tools (such as the European Vocational Training Credit System (ECVET)). • The process assessment system for vocational training-related activities was developed as part of priority project SOROP 2. 2. 1 -12/1 (’Improving the quality and contents of vocational training and adult education’), sub-project 4: Developing a professional process assessment system. Having closed the project the criterion was met. The project was closed on 30 November, 2015, the following processes had been completed by this date: 1. First version of process control methodology material to be submitted for technical discussions 2. Final version of process control methodology, based on pilot experience, 3. Pilot version = testing at institutional level 4. Auditor training 5. Final process audit system (project completion).

15 - Overview on success objective progress Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

Performance framework Legal background Articles 20 -22 of Regulation (EC) No 1303/2013 Council Regulation (EC) No 215/2014 • 6% of the funds constitutes a performance reserve (5 -7% by priorities) • Establishment of a performance framework at priority level, 2018 milestone, 2023 objective • Content: financial and performance indicators - cover at least 50% of the priority • Shall be included in the annual implementation report from 2017 • 2019: overview based on 2018 milestones – completion > 85% - reserve can be paid – completion < 85% - reserve can be distributed among completing priorities (OP modification) - completion < 65% - serious failure corrective measures failing to meet these can result in priority payment suspension • 2023: Final implementation report: financial correction can be used in case of a serious inadequacy

Performance framework progress 2018 milestone 2023 objective 31/12/201 5 2, 500 12, 490 1, 028* 760 3, 800 0 550, 000 1, 000 0 51, 381. 46 342, 543. 11 0 45, 000 142, 000 n. a** NEET applicants under 25 (unemployed, not attending regular day courses of educational or vocational institutions) (individuals) In connection with Youth Guarantee programme implemented by the Ministry for National Economy, NEET applicants under 25 (unemployed, not attending regular day courses of educational or vocational institutions) 30, 000 n. a** 30, 000 127, 000 n. a** 6 Competitive workforce Individuals participating in the training 135, 000 450, 000 0 7 Tourism Increase of the expected number of visits to supported sites qualifying as natural and cultural heritage or sight 352, 000 1, 660, 000 0 8 Financial instruments Number of enterprises receiving support 3, 500 23, 250 0 Priority Indicator 1 SME Number of enterprises receiving support 2 R&D Number of enterprises receiving support Ratio of households having possibility to access to at least 30 3 ICT 4 Energy 5 Employment Mbps broadband infrastructure Estimated annual decrease of greenhouse gas emission (CO 2 equivalent in tons) Individuals participating in programmes implemented by MNE Under the auspices of the sub-programme financed from YEI, Data are for information only as values presented here indicate the number of currently supported enterprises while indicator calculation was based on closed projects which were supported in the entire priority. ** physical programme implementation commenced in 2015, based on information available, the 2018 milestone shall be completed in 2016

15. 00 - 15. 20 Optional coffee break

16 - Overview on simplified cost options (SCO) Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

SCO introduction • A major initiative for the end of 2015 and the beginning of 2016 in terms of financial matters is the introduction of simplified cost options. • This move shall see the following on both the beneficiary and institutional side: • decreasing administration, • accelerated payment control and audit processes, • shorter time required for procedural steps, • smaller error ratio for audits.

SCO introduction • As stipulated by Article 68, Section (2) of the Regulation (EU) No 1303/2013 of the European Parliament and of the Council, the 1720 hours method to facilitate the settlement of staff costs relating to the implementation of an operation can be introduced. It appeared in two schemes, and we are planning to include this rule in three additional schemes which are being announced. • EDIOP-7. 1. 4, EDIOP-7. 1. 5, EDIOP-6. 2. 4 (in planning), EDIOP-7. 1. 6 (in planning), EDIOP-5. 1. 3 (in planning) • This measure will simplify the payment of approximately HUF 3 billion. • As for EDIOP-2. 1. 7 and EDIOP-2. 1. 1 the possibility of introduction is being assessed. • For EDIOP 2. 1. 7, based on cost composition of applications received up to now, 30 -305% of the total assistance amount can be settled with the simplified method. Lacking a list of winners, it is just an approximate value, about HUF 7 billion.

SCO introduction • As stipulated by Article 68, Section (1) of the Regulation (EU) No 1303/2013 of the European Parliament and of the Council, the "flat rate method" established to calculate the eligible direct costs can be introduced. It appeared in four schemes, and we are planning to include this rule in two additional schemes which are being announced. • EDIOP-5. 2. 4 -16, EDIOP-5. 2. 5 -16, EDIOP-5. 3. 2 -16, EDIOP-5. 2. 3 -16, EDIOP -6. 2. 4 (in planning), EDIOP-5. 1. 3 -16 (in planning) • This measure will simplify the payment of approximately HUF 400 million.

SCO introduction Factors delaying the introduction • The legislation provides the operational framework, however, it fails to cover the implementation level, establishment of operative measures requires negotiations (Prime Minister's Office, ) • IT system development is under way, therefore, technical limitations cannot be seen yet.

17 - Overview on audits Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

Overview on audits The Directorate General for Audit of European Funds (DGAEF), in 2015, completed a thorough audit on EDIOP. The goal of this audit was to uncover whether • there necessary institutional and legislative conditions necessary to complete all tasks in relation to EU resource utilisation are met for the 201420 period • the existing system meets the requirements set by relevant national and EU regulations EUTAF report dated 11 September, 2015 confirmed that EDIOP management and audit systems comply with relevant guidelines and requirements, therefore, an opinion without objection shall be released.

Overview on audits On 3 March, 2016, the European Commission paid a visit to the Managing Authority to examine EDIOP status. Some EDIOP specific findings: • human resource availability shall be closely monitored during EDIOP implementation as when the report was closed nearly 25% of the approved staff positions was not taken. Human resources necessary for EDIOP implementation, in view of the spike in the amount of tasks to be completed, are fine, nevertheless, the objective is to handle this area efficiently. Human resource data: • Final 2015 statistics: • Status as of 1 April, 2016:

18 - Overview on Anti-fraud strategy Presenter: Karsai Tamás Deputy Minister of State responsible for the implementation of economic development programmes, MA head MNE, EDP DSS

Overview on Anti-fraud strategy A joint EU and Hungarian objective: protection of EU and national financial interest is of utmost priority when using resources and implementing operational programme measures: application of successful and proportionate anti-fraud measures. Strategic environment: • European Commission: "Fraud Risk Assessment and Effective and Proportionate Anti-Fraud Measures", EGESIF_14 -0021 -00 16/06/2014 • Hungary: "ESF anti-fraud strategy for the 2014 -2020 programming period"

Overview on Anti-fraud strategy Main anti-fraud strategy objectives: • improvement of legal compliance and transparency in terms of resource utilisation efficiency and effectiveness • task definition for the institutional system, measure harmonisation, ensuring higher efficiency for fraud investigations • raising anti fraud awareness in the society and the institutional system • improving public trust in the institutional system by ensuring transparent and compliant resource utilisation • fostering institutional and social co-opoeration to fight fraud Self- assessment work group – a member state forum to conduct risk assessment and risk management: • the work group includes assistance management system actors, for instance, Managing Authorities • work group activities are co-ordinated by the Prime Minister's Office • the work group has meetings as often as necessary, however, at least twice a year • a forum available to establish unified measures and to share experience

Overview on Anti-fraud strategy Measures taken by EDOP MA: • Integrity management: – informing fellow workers about the overview given by MNE integrity consultant: "Information on activities to improve organisational integrity and corruption prevention" – conflict of interest policies: a set of rules applicable to MA staff, to be followed at all times during evaluations, document based audits incorporated into processes, on the spot controls and payment approval. • Measures to raise staff awareness in terms to anti-fraud behaviour: – "Fraud prevention and identification" - training material – conducting fraud risk assessment and risk management, regular revision – using the ARACHNE system - system applicability plays an important role in assessment officer training • Improving institutional and social co-operation: – "Economy development in EDOP and in EDIOP" - information booklet, sections about irregularity management and audits

19 - Other - commenting on materials uploaded to the IIS MC interface (2016 communications action plan, E-cohesion report)

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