(SOFIA) - Bulgaria and the European Commission have agreed on an action plan to pay back farmers hit by an EU agricultural subsidy freeze, the government in Sofia said Thursday.

"From now on, we can pay back projects under the (EU agricultural) Sapard programme using national funds," said Bulgaria's deputy prime minister in charge of EU funds, Meglena Plugchieva.

The European Commission confirmed in a July 23 report it was freezing more than 800 million euros (1.25 billion dollars) in farming, road and regional development aid for Bulgaria over concerns of mismanagement and corruption.

The freeze hit some 600 farmers who had been due to receive EU money for their approved projects. Many said they risked bankruptcy if they were not compensated, as they relied on the subsidies to pay back loans taken out to fund their projects.

"This was a very severe sanction and we were not allowed to resort to national funds to pay back farmers," said Plugchieva.

"Based on the action plan we have presented, payments can now be made," she added.

The EU's Director-General for Agriculture and Rural Development Jean-Luc Demarty gave the green light in a letter received Wednesday evening, after a request by Sofia, said Agriculture Minister Valeria Tsvetanov.

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