In mid year, refunds from the European Union for projects implemented with EU funds totaled EUR695 million, making it impossible to hit the target, given that for three major operational programs – Regional, Transport, Environment and Raising Competitiveness, payments have been recently suspended. Labor minister Mariana Campeanu said yesterday that human resources development program POSDRU “could be suspended” (after it also had problems earlier in the year).
The solution to this deadlock that has existed for several years would be to centralize absorption of EU funds and put decision in the hands of one institution – for instance the Ministry of European Affairs (MAEur). But the move is risky because to do this it would be necessary for all operational programs to be re-accredited, which would mean freezing all payments for at least one year.
Analyses of government officials show that the “loss” would be greater if programs were re-accredited than if the status quo was kept. So, this will happen between 2007 and 2014, when the Ministry of European Affairs will be broken into two, with one entity to handle EU funds exclusively.
But the suspension of refunds raises an even more serious problem. Up to now, in order to make up for the lack of refunds, the Government covered part of the payments to beneficiaries of EU funds itself and then got the money back from Brussels.
That is why MAEur statistics provide two relative values – one for refunds (money paid by the EU based on bills) and another one that reflects payments to beneficiaries.
The differences between these two values are significant: the rate of absorption (refunds from Brussels) is 9.1% of the entire amount of EUR19.6 billion allocated from 2007 to 2014 for structural funds and 19.1% for payments to beneficiaries. In absolute terms, this means that while EUR1.76 billion have been refunded from Brussels, beneficiaries received EUR4 billion, with some of the money being covered from the state budget, which was supposed to get it back from the EU later.
Basically, the Finance Ministry lent to the authorities that manage structural funds through a sort of bridge loan. In the first quarter, 1.4 billion lei were paid through short-term loans from a reserve fund of the state’s Treasury in order to ensure continuity of payments to beneficiaries and around RON2.4 billion were paid in the second quarter. But if this money is not recouped from refunds, it goes into the budget deficit.
The budget deficit agreed by the IMF and the EU is extremely tight in 2012, 2.2%. The new finance minister, Florin Georgescu, negotiated with the IMF to increase the deficit from 1.9% of GDP to 2.2% in order to be able to restore public sector wages and repay amounts retained illegally from pensioners. Nothing will be negotiated anymore as far as EU funds are concerned, said government sources, so if the situation is not resolved, payments to beneficiaries from internal sources will be suspended.
(English version by Daniela Stoican)