site.btaThink Tank Suggests Measures to Speed Up Recovery Plan Implementation
The Institute for Market Economics (IME) has sent a written opinion to Bulgarian caretaker Deputy Prime Minister Atanas Pekanov and caretaker Finance Minister Rositza Velkova. The opinion states that even though the preparation of the National Recovery and Resilience Plan (NRRP) and its submission to the European Commission for approval were initially delayed, even now that the plan has been approved, no significant efforts are being made for the implementation of the reforms set out in it and for the launch of the projects.
The political crisis over the last two years did not help speed up the implementation of the plan and seriously jeopardize the overall implementation of the reforms in the NRRP. Even more serious are the fiscal effects that the delay can have on key budget indicators, the IME stressed.
This also outlines another, already serious problem with the next stage: Bulgaria has promised to honour 66 commitments between July and December, most of which require an effectively functioning government and parliament, the opinion reads. To date, according to the 2020 information system for management and monitoring of EU funds in Bulgaria, 63 stages and goals remain unfulfilled, and the time for this is too short (less than three months until the end of the reporting period). Thus, a little over BGN 1.4 billion, which is programmed for somewhere in March 2023, may be delayed for a long period of time. Meanwhile, the administration has promised to complete 47 more measures and reforms in the first half of 2023, on which no progress at all has been made, and this is a condition for another BGN 1.48 billion for the autumn of 2023, the economic experts say.
The time has probably come for serious consideration of the possibility of debt financing under the Recovery and Resilience Facility. For the time being, the Bulgarian NRRP does not provide for the use of borrowed funds at the expense of the instrument. This may change if the terms of a possible loan are more favorable than market financing of the budget. In the presence of a prepared capital programme for the next three years, an option should be considered to cover part of the needs with funds by adapting the NRRP, instead of covering the same investments through a budget deficit and new state loans at market interest rates, the IME said.
The non-governmental organization proposes that the administrations of the ministries and departments involved in the implementation of the plan start drawing up the requisite documents and start all procedures which do not require special political will and the presence of a functioning parliament and government.
The IME recommends a discussion of the options and parameters of using debt instruments under the EU Recovery and Resilience Facility and analyzing the most profitable opportunities for Bulgaria to finance the deficit through their inclusion in the budget debate.
The IME argued that that the caretaker cabinet (and after it the regular government) should be more active in sharing detailed information about the discussion on the implementation of the plan with the European Commission and the obstacles that arise to the implementation of the projects and reforms. In their opinion, the ministries are left to act as they see fit, and the emergence of a problem with the implementation of any of the objectives is noticed too late, when the time for response is limited.