EU reimbursements amounted to EUR110 million in June. The halt of this stream of funding will affect the public budget right away, which has already spent the money and expects to be reimbursed by Brussels. Ongoing projects will be hurt, too, considering the “fresh” money paid to such projects was released by the government as reimbursements of prior bills arrived.
Analysts deem such a measure as “insane” considering it will introduce further delays in the chaos stifling the drawing of funds. Such delays may drive people and companies bankrupt, because they took out loans from banks or have already made payments while waiting for the EU money to come, which they have no idea when they will get.
The president argued his request by saying that if the financial audit of the European Commission found irregularities in the running of these projects, it would not only stop paying the bills but also withdraw the money allocated to the project in question, which leads to lower amounts of money allocated to Romania.
On the other hand, he said, if the Romanian authorities were the ones to find the potential irregularities with projects, they would withdraw the money from those specific projects and reallocate them to other projects, therefore keeping the amounts allocated to Romania intact.
The president said this measure did not affect the amounts allocated to agriculture in any way.
Analysts say otherwise.
“It would be chaos; EU-funded projects are contract-based. They can be cancelled if irregularities are found. A measure that halts reimbursement requests sent to Brussels is exceptional,” says Cosmin Dragoi, managing partner of EU funds consultancy M27 CED Invest.
What does this decision mean for Romania’s former chief negotiator with the EU, Vasile Puscas? “Bankruptcies, facilities being closed, because people borrowed from banks, made payments while waiting for the EU money to arrive.”
If all the institutions made mistakes since all the projects are being rechecked, this means everything is rotten and must be replaced, Puscas said.
Dan Barna, partner with advisory firm Structural Consulting Group, says the measure is a radical step and its impact will be felt by all EU-funded projects.
The amount that reached Romania every day in June stood at EUR5 million on the average, as a result of reimbursement by the European Commission of the expenses made for EU-funded projects. This is extremely low as it is, because the rate of the EU reimbursement to Romania is of only 4% of the total amount made available for structural and cohesion funds for the 2007-2013 period, EUR19.2 billion.
The measures taken by the president mean he admitted to the government’s failure in drawing EU funds.
Part of the funds for various programs are now frozen after a number of audit missions of the European Commission found irregularities in the running of the respective contracts.
(English version by Loredana Fratila-Cristescu)