The European Regional Development Fund (ERDF) is one of the main financial instruments of the European cohesion policy. Its objective is to bridge the gap between the development levels of the European regions, improving living standards in the less-favoured areas. Special attention is given to regions that suffer from severe and permanent natural or demographic handicaps, such as the northernmost regions with very low population density and island, cross-border, and mountain regions.

The legal basis of these financial instruments is regulated in the Treaty on the Functioning of the European Union (TFEU).

Article 176 of the TFEU states that the ERDF is intended to help to redress the main regional imbalances in the Union.

The main objectives of the ERDF funds are, essentially:

• The investment in growth and employment to strengthen the labour market and the regional economies.
• The European territorial cooperation to reinforce cross-border, transnational and interregional cooperation within the Union.
• The Integrated Sustainable Urban Development Strategy. (ISUDS)

Between 2014 and 2020, at least 5% of the ERDF allocation for each Member State needed to be earmarked for integrated actions to favour a sustainable urban development that tackles the economic, environmental, climatic, demographic and social challenges affecting urban areas.

During the 2014-2020 period, the Union allocated over 350,000 million euros to the cohesion policy, equivalent to 32.5% of its total budget for the mentioned period. Around 199,000 million euros were allocated to the ERDF. This amount included 9,400 million euros for the European territorial cooperation and 1,500 million euros in special allocations for outermost and sparsely populated regions.

The degree of co-financing of the various projects funded by the ERDF is adjusted to the development of the relevant regions. Therefore, in less developed areas (and outermost regions), the ERDF funds were able to finance up to 85% of a project’s cost. In transition regions, financing could cover 60% of a project’s costs; up to 50% in the most developed areas.

As we mentioned previously, one of the main objectives of the ERDF is to support integrated sustainable urban development strategies.