(SOFIA) - Bulgaria's government will cover the 75 million euro (94 million dollar) cost of a number of contracts following the European Union's decision to cut off its access to hundreds of millions of euros in EU funding.

The European Commission punished Bulgaria last month for failing to adequately tackle corruption by suspending a sum of 220 million euros (282 million dollars).

Meglena Plugchieva, deputy premier on the management of EU funds, however, said the actual loss to Bulgaria caused by the EU decision was only 75 million euros for which the country had signed contracts.

"One-hundred-and-fifty million leva (75 million euros) from the lost 220 million euros of funds for projects... will be paid from the budget," national radio quoted Plugchieva as telling a meeting of parliamentary committee on European Affairs.

The contracts would be paid for by the budget, she said.

The European Commission froze 825 million euros in farm, road and regional development subsidies in July amid concerns of possible fraud and conflicts of interest.

It threatened more sanctions if effective measures were not taken.

But Sofia lost access to the money, as it was deemed to have failed to correctly manage the funds, with the deadline to use the money expiring on November 30.

The Commission has also warned that Sofia could lose another 340 million euros frozen this year, as well as some of the 11 billion euros in funds earmarked to be handed to Bulgaria by 2013.

Some of the suspended money came from the EU's PHARE programme -- designed to help Bulgaria prepare for its January 2007 accession to the bloc -- by funding infrastructure projects, and helping to strengthen institutions and the rule of law.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.