Report on the Management of EU Funds in Bulgaria - guide

23 July 2008
by eub2 -- last modified 23 July 2008

The European Commission approved on 23 July a series of reports assessing the progress in Bulgaria of judicial reform and the fight against corruption under the Co-operation and Verification mechanisms set up when both countries joined the EU last year. The Commission has also adopted a separate report on the management of EU funds in Bulgaria. These reports assess the progress and shortcomings that exist in Bulgaria on the commitments made at the time of accession. The Commission concludes that genuine efforts and some progress have been made, mainly in terms of judicial reform but much more needs to be done by both countries to fight high level corruption and in Bulgaria on organised crime. The reports highlight the need for sustained political commitment and implementation on the ground if the benchmarks set at the time of accession are to be met in full. The reports put forward a series of concrete follow up measures. The Commission has taken a formal decision to suspend certain EU funds until the Bulgarian authorities are able to demonstrate that sound financial management structures are in place and operating effectively.

Why does the Commission report on the management of EU funds in Bulgaria?

Bulgaria, like other Member States, has received important financial and technical support from the European Union in the pre-accession period and is eligible for high levels of financial support in the period up to 2013 - €6.852 billion from the Structural Funds alone. Whereas Structural Funds are at an early stage of implementation in Bulgaria, funds received in the pre-accession period (under programmes such as PHARE, ISPA and SAPARD) are already being implemented. In addition to administrative delays common to many Member States, the Commission has become aware of weaknesses in the control systems used in Bulgaria and a number of cases of fraud and irregularity. The Bulgarian authorities are aware of these problems and have been taking steps to address them, including by nominating a deputy Prime Minister to oversee the administration of EU funds in the country. Given its responsibility under the Treaty for the implementation of the EU budget and for protecting the EU's financial interests, the Commission has decided to report about these implementation difficulties in Bulgaria to the EU's budgetary authority, Parliament and Council. In its report, the Commission outlines the implementation problems encountered and provides an overview of remedial measures taken to date and of next steps.

What does the report on the management of EU funds say?

Common management and financial control standards must be met by all Member States in the management of EU funds. These include strict procurement procedures (e.g. on tendering, evaluation and award of contract) and rigorous financial control. European Union funding is made available only once sound financial management can be demonstrated and certified. Bulgaria is experiencing serious implementation difficulties in several EU funded programmes still has to demonstrate that sound financial management structures are in place and operate effectively. Administrative capacity is still weak and there have been serious allegations of irregularities as well as suspicions of fraud and conflicts of interest in the award of contracts. These have led to the temporary suspension of funds.

In recognising the dimensions of the problem, the Bulgarian government has recently taken a number of corrective steps. It has started work on procedural and legislative changes needed to effectively deal with conflict of interest. It has made some key high level appointments – such as the appointment of a Vice-Prime Minister responsible for the co-ordination of EU funds who is at the same time the head of the Bulgarian Anti Fraud Coordination Service. A new Director of the Audit Authority has been appointed. These are steps in the right direction. But, all of this must be followed up by credible, structural corrective actions and a fundamental reform.

What must Bulgaria do urgently to get back on track?

EU funds earmarked for Bulgaria are the practical expression of the Union’s solidarity with the citizens of Bulgaria. In its report, the Commission encourages Bulgaria to take urgent action to implement EU funds which are aimed at fostering social cohesion, improving regional development and at enhancing Bulgaria’s overall economic performance and stability. It advises that:

• Administrative capacity in the management of EU funds should be strengthened by guaranteeing stability, training and technical expertise of staff. Appointments to management positions must avoid any potential conflicts of interest of interest;
• Conflicts of interest in the management of funds must be excluded;
• The supervision and transparency of public procurement procedures should be improved;
• Regular on the spot checks and audits across all funding programmes should be carried out;
• Irregularities and fraud should be reported to the Commission without delay and according to clear criteria;
• Measures to prevent breaches of confidentiality should be implemented, protective, corrective or disciplinary measures should be taken swiftly whenever necessary;
• Co-ordination between ministries, stakeholders and between central, regional and local authorities should be further improved.

European Commission - Assessing ongoing progress by Bulgaria and Romania report

Source: European Commission