Romania halfway to 20 percent EU fund 2012 absorption target

At the eleventh hour Romania is struggling to absorb as many EU funds as possible, in the face of unresolved issues such as dense and constantly changing procedures and overworked and unmotivated public workers. As the 2014-2020 multiannual financial framework is approaching, the authorities are also pondering new concepts such as the better spending of EU funds, in addition to their actual volume.

Simona Bazavan

While over 70 percent of the EU funding available for Romania for 2007-2013 has been contracted, which makes for a “satisfactory, if not good, percentage”, the actual absorption rate is well below that level, revealed the minister of European affairs, Leonard Orban, last week at the Mediafax Talks about European Funds conference.

This year the authorities have set the target to increase the absorption rate to a minimum of 20 percent from the existing 10 percent. By comparison, the absorption rate was only 3.7 percent before the establishment of the Ministry of European Affairs in September last year said Orban.

The best absorption rates are in the area of regional development and agriculture. However, despite isolated successes, overall Romania risks a disengagement of EUR 952 million this year, the highest being for the Operational Program Increase of Economic Competitiveness. At present four out of the seven operational programs are being audited by the EU, with Romania risking the suspension of payments.

The discrepancy between the two indicators – the accession and the absorption rate – stems from many factors, one of the most important being the beneficiaries’ difficulty in coming up with the money to co-finance the projects. Banks are essential in the process but only a few have come up with products for clients with EU-funded projects, said the European affairs minister.

On the other hand, the consensus of the beneficiaries of EU funds is that the reimbursement of payments is constantly delayed by ever changing conditions and requests from the authorities, said Dan Barna, managing partner at Structural Consulting Group. “Our site, www.fonduri-structurale.ro, has some 5,000-6,000 visitors and their general feeling can be summed up in three words: confusion, bewilderment and disappointment,” he said. Management authorities constantly request more documentation from the beneficiaries but in many cases it is physically impossible for the public workers to actually check all the papers they receive, stressed Barna.

Orban admits the charge and says that despite the deadline to process reimbursement requests in 45 working days, there are delays. The main cause of this and other issues in the system is lack of sufficient personnel and sometimes even lack of expertise. Wage cuts in the public sector have driven many specialists to search for work in the private sector or even leave the country.

“We have reached the point where we are suffocating beneficiaries with all sorts of requests, each more absurd than the one before, and we see that this increasingly dissuades them from considering accessing EU funds,” said Orban.

One of the main difficulties Romanian beneficiaries face in attracting EU funds is the matter of acquisitions, be they public or private, said the minister.

“I recently met with beneficiaries, several mayors, who reproached me exactly for this – the lack of a unitary agreement on things and different interpretations of the same matter between the various institutions, be they management authorities, audit authorities or even the European Commission,” said Orban.

The process of standardizing procedures will continue and, in addition to this, the country’s Procurement Authority (ANRMAP) will ask the government to raise the minimum project value at which holding public procurement procedures become mandatory, said authority president Lucian Dan Vladescu. This level is currently EUR 15,000 and has remained unchanged over the past six years.

As for private acquisitions, it has gotten to the point where procedures have become as complex as for public acquisitions, said Orban. “This is why it must be simplified. We have already begun this but it is not enough. Detailed evaluations are necessary for all structures involved and unnecessary procedures should be eliminated,” he urged. Orban added that such procedures are preferred as they represent coverage for the authorities involved but in reality they make it hard to see what the real problems are in the process of accessing funds.

Given this context, numerous projects for which financing was obtained as early as 2008 haven’t actually been implemented, thus leading to a blockage of funds. Whether these projects stand a chance of being implemented by 2015 will be assessed by the end of September, said Orban. The money that will be taken back from the failed projects will be used to finance others for which demand for funding exceeded the money available.

Looking forward to 2014-2020

Negotiations for the multiannual financial framework for 2014-2020 are in full swing said Orban. “The European Commission’s proposition satisfies us, both in terms of the funding available and the procedures,” he stated. Romania must learn from its experience so far and come up with solutions in order to not repeat the same mistakes.

A stronger coordination system and changes to the HR policy in order to better motivate public workers must be applied, thinks Orban.

And this time around, there is also hope that better coordination between the numerous individual structures involved in the accession of EU funds, but also within the government, could result in coherent development strategies. This could lead to the better spending of EU money instead of concentrating solely on the amount of funds absorbed.

“We wanted very much absorption without paying too much attention to the quality of the projects. We have often acted on a first come, first served basis,” admitted Orban.

simona.bazavan@business-review.ro

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