Reading note – Bulgaria
Title of the document: Cohesion policy: Strategic Report 2010 on the implementation of the programmes 2007-2013
Author: DG Regional Policy, European Commission
Publication date: 31 March 2010
Target public: Member States, citizens and other stakeholders
Recently Jean Marie Seiler, director of DG ‘Regional policy” at the European Commission, stated that Bulgaria has the lowest rate of absorption of EU funds across the EU-27. According to the Strategic Report on the implementation of the programmes 2007-2013, delivered by the Commission earlier this year, the Bulgarian authorities are working on projects for 20,2% of the funds allocated to the country under the 2007-2013 financial perspective but only 3,8% have been paid so far. Indeed, the country has faced difficulties in absorbing both pre-accession assistance and post-accession funds.
It is important to note that no EU Member State has absorbed 100% of the funds allocated to it. How is it possible that countries are unable to spend money in the wake of the worst economic crisis since 1929? This is the result of what is called “absorption capacity“, which refers to different Member States ability to fully spend the allocated resources in an effective and efficient way. According to the Commission report, in 2007-2013, Belgium had the greatest rate of project selection with nearly 62%. Restrictions on absorption capacity exist both on the demand and the supply side. On the demand side, problems pertain to the actual ability by project applicants to generate acceptable projects. On the side of supply, difficulties emerge due to the limited macro-economic absorption capacity of a Member State (funds allocated cannot exceed 4% of GDP), its inability to co-finance EU supported programmes and projects, and weak administrative capacity.
In March 2008, the European Commission temporarily froze payments to Bulgaria under different pre-accession instruments (PHARE, SAPARD and ISPA) as the Bulgarian authorities had failed to meet requirements of good management. In a report issued by OLAF, the European Anti-Fraud Office, the major deficiencies identified were the ‘critical weaknesses in administrative and judicial capacity”, ‘hesitation to use enforcement powers to remedy irregularities and fraud”, the ‘de facto non-independence of the national audit authority and implementing agencies”. According to the report by the body entrusted with the mission to protect the financial interests of the EU and fight fraud and corruption, ‘high level corruption and organised crime” aggravate these problems.
As far as post-accession assistance is concerned, for the period 2007-2013, Bulgaria was allocated a total of 6,853 billion euro worth of Structural and Cohesion Funds, that is 6,674 billion under the Convergence objective and 179 million under the European Territorial Cooperation objective. Figures provided by the Ministry of Finance show that around 1,800 billion euro was paid by the European Commission under the different programmes by the end of April this year. The National Strategic Reference Framework is organised around four axes: improving basic infrastructure, increasing the quality of human capital with a focus on employment, fostering entrepreneurship, and supporting balanced territorial development. Most problematic are the projects in the programmes ‘Transport” and ‘Environment”.
FIND OUT MORE:
On the Commission”s decision to freeze pre-accession funds due to mismanagement:
The Commission”s report on Bulgaria”s EU funds management:
Official reports of the Ministry of Finance on the financial implementation of EU funds.
General information on Cohesion Policy in Bulgaria: