site.btaUPDATED EC Reports Slight Reduction in Allocation of Recovery and Resilience Facility Grants for Bulgaria
There has been a slight reduction, by EUR 578 million, in the allocation of Recovery and Resilience Facility (RRF) grants for Bulgaria following the update to the allocation key. This is on the grounds that the EU institutions agreed in 2020 that the RRF allocation key should take into account the impact of the economic crisis induced by COVID-19, the European Commission press service told BTA. To this end, the RRF grant allocation was indicatively based on the Autumn 2020 Economic Forecast, with an update on 30 June 2022 based on actual Eurostat outturn data.
After the revision, the grants under the Recovery Plan for Bulgaria will go from EUR 6.27 billion to EUR 5.69 billion until 2026.
The reduction of the Recovery Plan grants triggered a diatribe by former prime minister and GERB leader Boyko Borissov Tuesday, who said that the country is losing billions of leva due to the incompetence of the outgoing government. "This government and the caretaker government [before that] literally failed with the Recovery and Resilience Plan, and the European Commission yesterday [June 4] reduced the total grants by EUR 578 million. Billions are being lost due to incompetence and irresponsibility," said Borissov during a news briefing at his GERB party's office.
The Finance Ministry responded with a statement the same day saying that the Recovery Plan funding has been reduced due to a mechanism signed by the GERB-dominated government of Boyko Borissov.
"The Finance Ministry fully agrees with the 'incompetence and irresponsibility' part but they apply to the government of Mr Boyko Borissov which in February 2021 backed and voted in the EU an obligation for reducing the funding for the Recovery and Resilience Plan as part of the framework of the Recovery and Resilience Facility," said the Ministry. It goes on to explain that the framework which the Borissov government backed, includes a decision for 30% of the total grants to be re-calculated to reflect the real economic growth in 2021. The growth figures were finalized in June 2022 and based on them, the grants for Bulgaria were lowered because Bulgaria showed better economic performance than the EU average. The Bulgarian economy showed an economic growth that was better than the forecast as of February 2021 while other EU countries did worse than expected and, based on the framework adopted in early 2021, resources were redistributed among the Member States.
The adjustment in funding affects all Member States and not just Bulgaria: 22 had their funding cut and seven of them had a more significant reduction that Bulgaria's. The funding for Romania and France was reduced by some EUR 2 billion. Only five countries got an increase, the Finance Ministry said.
The Bulgarian recovery plan is being implemented as planned. The funding adjustment does not call for any recalculations at this stage, the Ministry added.
In the past three months, the government has been consistently raising on European level the question of having to compensate the reduced grants and is seeking opportunities for alternative funding, including new funding for the countries suffering the consequences of the Ukraine war in the energy sector, the Ministry said in conclusion.
What the EC also told BTA
Contrary to the claims of GERB, the reduction of the funds under the Recovery and Resilience Plan is not related either to the delayed payment, or to the fact that Boyko Borissov is no longer in power, but only to the update of the data of the statistical office on the economic damage caused by COVID-19 in Bulgaria, outgoing Minister of Innovation and Growth Daniel Lorer wrote on his Facebook profile.
For Bulgaria and other countries, the data of the European Union about the pandemic in 2020 show that the economic fall is smaller than expected and the size of the general funding under the Plan was actualized by the end of the pandemic. The adjustment of all countries' plans is laid down in the NextGenerationEU recovery programme regulation. This is the real reason to reduce the funds for Bulgaria and for other member countries, such as Belgium, France, and Hungary, the Minister pointed out.
On May 4, the Council approved the assessment of Bulgaria’s recovery and resilience plan. Now, before Bulgaria can submit any payment request, as is the case for all EU Members, it will have to agree with the Commission on a number of additional legal documents, the Commission said.
First, the Commission will sign the financing and loan agreements with Bulgaria. As a second step, the Operational Arrangements will have to be agreed and signed. These will identify the evidence needed to show that the different milestones and targets are met, and on how the Commission will engage and work together with Bulgaria to monitor the plan’s implementation.
The time necessary to conclude these arrangements varies from one Member State to another, from a few weeks to several months. The Commission will then have up to two months to assess this payment request and provide its preliminary assessment to the Council’s Economic and Financial Committee, which in turn should provide its opinion within one month.
(BTA correspondent Nikolay Jeliazkov contributed to this story from Brussels.)