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Bulgaria and EU funds: challenges of absorption

Bulgaria and EU funds: challenges of absorption. prepared by Irena Panayotova Polina Rousseva Anna Stoeva. Bulgaria: Brief Economic Overview. Bulgaria: lowest GDP per capita in EU. Amounts to app.30% of EU avg. All six regions of Bulgaria allegeable for EU funding

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Bulgaria and EU funds: challenges of absorption

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  1. Bulgaria and EU funds: challenges of absorption prepared by Irena Panayotova Polina Rousseva Anna Stoeva

  2. Bulgaria:Brief Economic Overview • Bulgaria: lowest GDP per capita in EU. Amounts to app.30% of EU avg. • All six regions of Bulgaria allegeable for EU funding • The EU budget 2007-2013 will allocate to Bulgaria more than 11 billion euro • Low absorption capacity (WHY?)

  3. Pre-accession funds Bulgaria is entitled for: • PHARE • ISPA • SAPARD

  4. PHARE - Objectives • Building efficient administration and institutions in Bulgaria • Integrating the acquis communautaire in the national legislation • Fostering economic and social cohesion

  5. ISPA (Instrument for Structural Policies for Pre-accession) It assists countries in environmental and transport policies.SAPARD (Special Accession Program for Agriculture and Rural Development)It assists countries in creating employment & sustainable economic development in rural areas.Overall objectives:* help future member states develop economically* help acquire the necessary skills for post-accession funds ( i.e.managing decentralized aid, meeting deadlines and requirements, developing cooperation habits) ISPA & SAPARD

  6. General information on EU funds For the period between 2000 and 2006, the funds redistributed through Structural funds amounted to $213 billion, or 1/3 of the expenses of the Union for this period. $18 billion from them have gone for the Cohesion fund. For the period 2007-2008 Bulgaria will receive 8 billion euro in structural and cohesion funds and around 6 billion in agricultural funds.

  7. 2006 Objectives • Objective 1 - promotion of development and structural adjustment of lagging-behind regions. • “Objective 1 regions” with GDP less than 75% of the Community average • 70% of the common financing goes to the so called • Objective 2 - economic and social cohesion. • support countries with weak growth due to structural problems • 11,5% of the funds designated for regional development • Objective 3 - support and modernization of policies and systems of education, training and employment. • financial support outside the frame of Objective 1 • a framework for a competent policy in human resources development for a country as a whole, with high consideration ov regional divergence and interests

  8. 2007-2013 Bulgaria will receive 4,6 billion Euro.

  9. Objectives 2007-2013 • Convergence • speeding up the development of the least advanced member states and regions • improving the conditions for growth and employment • stimulating investments in human capital, development of innovations and the knowledge-based society, as well as environment and administrative efficiency • financed from the ERDF, the ESF and the Cohesion fund • Regional competitiveness and employment • not limited only to the poorest regions • target competitiveness through innovation, trade openness, entrepreneurship • financed from the ERDF and the ESF • European territorial cooperation • transborder cooperation through joint initiatives, networks for experience exchange, etc. • financed exclusively from the ERDF.

  10. Absorption of EU funds: Issues • Size of municipalities • Human resources • Financial resources • Information availability • Corruption and transparency

  11. Size matters • Only 22% municipalities are large (over 100,000 ppl), the rest 78% are small and medium sized • Large municipalities operated 70 Phare projects; the medium & small ones together - only 35 • Approximately 72% of municipalities have NO approved projects; only 7% have 3 or more

  12. Medium and small municipalities struggle with: • Administration capacity • Scarcity of resources available (Internet, trainings, co-financing) • Lack of interaction and cooperation with local businesses and NGOs

  13. Human Resources:insufficiency and incompetence • Insufficiency of HR: SU+AUBG for 7 years = 700 EU Majors BG estimated capacity needed = 20 000! • Can compensate with trainings? • Reluctance of the state and the municipalities to finance trainings • App. half of the trainings lasted only ½ day; max 3 days

  14. Human Resources: continued • Low wages = low motivation = low efficiency = less successful projects • Corruption = harms the most efficient applicants • Language barrier: only 4% of the municipality staff know English

  15. Financial constraints:* limited own resources* insufficient or no provision of funds for projects in municipalities’ budgets * difficulty to finance both project implementation and project design* the most common amount allocated to co-financing projects is between 10,000 & 50,000 BGN Municipalities as co-financing partners:

  16. 2) Limited personnel: - often, only 1 person per municipality manages projects  limited ability to design the co-finance of projects3) Perceptions for high requirements: - they serve as a disincentive for municipalities to engage in projects4) Insufficient clarity on municipalities’ role in projects - the scale of the need to co-finance is not completely understood

  17. 4) Municipalities see each other as competitors: - often, they do not understand the benefits of cooperation in project co-financing (mistrust each other) - the political affiliation of mayors can be an obstacle to this type of cooperation - sense of unequal distribution of benefits due to: • insufficient consideration for the common good • lack of long-term vision • difficulty to overcome the feeling of rivalry Positive attitude towards partnership has started to grow.

  18. Information Starvation • only 23% of municipalities have enough knowledge on project funding opportunities • About 1/3 of those that believe they are ready are poorly informed about the structural funds • almost 1/3 have no experience with pre-accession instruments • and 8% have no project experience at all • 1/5 do not have employees specifically trained in the field of structural funds • in 1/5 of the cases only one or two employees have been trained in the last years. • 82% of municipalities state they need specialized surveys and evaluations linked to project development • 2/3 of the municipalities have used consultant support for the preparation of planning documents. • less than 60% of small municipalities have used consultants (as compared to 80-90% for the large municipalities)

  19. Corruption Some 10-12% of the EU budget which amounts to 110 billion euro are misappropriated (OLAF) In Bulgaria: • 54 Cases of Funds Misappropriation Revealed • 20 of tehm connected to ISPA • 32 with SAPARD • 2 with PHARE • over 7.5 million euro drained on SAPARD programme

  20. Sources: • http://epp.eurostat.cec.eu.int • www.undp.bg • http://www.isoc.bg • www.evropa.bg • http://ec.europa.eu • www.lex.bg

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