Bulgaria’s EU Funds Absorption: Maximizing the Potential!

Abstract

This paper focuses on EU structural and cohesion funds assistance to Bulgaria during the 2007-13 program period. Initial weaknesses resulted in a low absorption rate, which was mitigated by increasing advance payments; applying electronic application and reporting procedures; simplifying and unifying tender processes; and strengthening the role of international financial institutions and banks in project preparation, evaluation and monitoring. The possible impact on growth and potential output is briefly discussed, while the risks of improper absorption are acknowledged. Valuable lessons have been learned, but it is recommended that additional steps be taken for the next program period 2014-20.

Spotlight on Factors Influencing the Absorption Rate of EU Funds in Romania

“…Traditionally, when analyzing the absorption rate, it is useful to distinguish between: (a) contracting ratio (projects are approved and contracts signed); (b) absorption ratio (advance payments plus verified payments disbursed); (c) certification ratio (invoices have gone through the national verification and certification process and the certified expenditures sent to Brussels for approval and disbursement of funds); and (d) final absorption rate, when projects have been certified by the European Commission (Paliova, 2014).…”

“…The use of EU funding is governed by the additionality principle which means that the EU financial resources allocated to the member states are additional to the national available funding and do not substitute the member state investment efforts. Consequently, it seems that the "EU structural funds are intended to finance projects in addition to what would anyway be included in the budget" (Paliova, 2014); if the obligation to co-finance EU programs/projects under cohesion policy is also taken into account, it seems that the EU funding may cause an additional fiscal (Paliova, 2014) to member states, in particular the less developed ones.…”

Empirical analysis and estimates of the impact of the EU structural funds absorption in countries of Central and Eastern Europe

“…Their conclusion is that investments in the public sector have the most permanent impact about 3 percent higher than the baseline scenario, mainly because the private capital depreciation is assumed to be higher than in the public sector. GIMF calibrated to Bulgaria also predicted that the implementation of structural funds could increase GDP by 1.5-3% annually in the medium term (Muir and Weber, 2012; Paliova and Lybek, 2014) (18)(19).…”

Climate Change Influence on Agriculture and the Water-Energy-Food Nexus in Central and Eastern European Countries

“…Except for Poland and Slovenia, the two countries that had a consolidated and advantageous farm structure to start from, factors such as different agricultural policy frameworks, restrictive land policies, uneven CAP support and supplement payments, increasing competition with limited domestic market capacity to withstand such strains, negativist attitudes regarding the attractiveness of the economic sector, and the degree of investments (see detailed data in Jambor, 2009, 2013;Ciutacu et al, 2015) seemed to impact country performances and created different outcomes. In the case of Bulgaria and Romania, for example, even if pre-accession (PHARE, ISPA, SAPHARD) and post-accession funds were significant, they struggled to keep up with disbursements as seen in other CEE countries (Paliova and Lybek, 2014).…”