European financing blocked by grievous irregularities, media

An evaluation shows hundreds of thousand of RON of debt that needs to be paid from the state budget.

European Commission (EC) representatives say the financing of Romania from the budget of the European Union (EU) via structural funds is blocked. Payments within the various sector operational programmes with important financing have been stopped following internal verifications or EC checks identifying serious irregularities. ‘I can tell you in simple terms that the financing from the EU budget is frozen’, an EC official told ‘Adevarul’ daily in exclusivity. EC verifications lead to penalties ranging from 15 to 25 per cent of the total value of contracts within four operational programmes. Actually, the topic was set to be addressed during the talks PM Victor Ponta was going to have with the Commission President, José Manuel Barroso, yesterday.The EC official quoted by ‘Adevarul’ stressed that the blocked operational programmes were those managed by the directorate general subordinated to the EU Commissioner for Regional Policies, Johannes Hahn. Those are the Operational Programmes for Environment, Transport, Improvement of Economic Competitiveness and Regional. As far as a fifth operational programme – Development of Human Resources – is concerned, disbursements were stopped over two months and a half ago, with dozens of beneficiaries claiming huge debts and warning that implemented projects may be compromised. As a consequence, the current situation will change when the management authorities address the various flaws having been identified and which are in particular concerned with the absence of safeguards that the expenditure is lawful and compliant with the principles of sound financial management. The Commission officially informed Romanian authorities on those irregularities on August 3.   At the same time, as shown by both the Romanian Audit Authority in the latest report to Brussels and the EC in its July observations, there are still notable deficiencies in the management and controlling system in Romania, which must be remedied. The Commission will publish its final evaluation and its implications this month, European sources also say. ‘We are not in the suspension phase. But, yes, you can expect new communications from the European Commission regarding payments in the next weeks as audit reports are evaluated’, the quoted sources further note. With several operational programmes either suspended or in a pre-suspension stage, under the agreement with the European Commission, Romania will have to reimburse payments from its own resources, meaning from the state budget, say POSDRU beneficiaries. A debt evaluation shows some dramatic situations and debts amounting to hundreds of thousand of RON. No solution has been so far offered by the Government, except for the announcement that the 25 per cent POSDRU penalties – the so-called corrections – have been recognised by the Executive and will be enforced.

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