site.btaDelay in Absorption of EU Funds Is Problem - European Court of Auditors' Ivanova

No quantitative errors have been found in the management of EU funds in the area of Natural Resources and Environment for Bulgaria, said Iliana Ivanova, a member of the European Court of Auditors (ECA), who presented the ECA's 2023 Annual Report to the caretaker Minister of Agriculture and Food Georgi Tahov and the leadership of the Bulgarian National Audit Office here on Tuesday. Errors have been found in the area of Cohesion Policy, but the country's main problem is the delay in the absorption of EU funds, which can be attributed to the ongoing political instability, Ivanova pointed out.

The problem with the absorption of funds under the Recovery and Resilience Plan, Ivanova stressed. She clarified that there are unresolved issues at the global level in the EU related to transparency and accountability, to how the funds from this financial model are spent, and whether these funds can be traced to the final beneficiary. The ECA noted that there are no clear definitions in the EU regulations and legislation on how the milestones and targets of the Plan are defined, which allows each Member State and the European Commission to interpret them differently. The real risks for the countries are related to loss of financing, unpaid obligations, increase in debt, inflation, etc.

The overall level of material error in EU budget spending has increased in 2023 to 5.6% against 3% in 2021 and 2.7% in 2020. Some 64% of audited expenditure is assessed as high risk. One of the reasons for this increase is the actual payments taking place after the end of the COVID crisis, when this process was almost frozen.

The highest error rate is in the area of Cohesion, Resilience and Values at 9.3%, which can be explained with the high volume of transactions. The error rate in the area of Single Market, Innovation and Digital was 3.3%, which is also above the materiality threshold. The main reason is the high complexity of the rules and the cumbersome procedure for beneficiaries, especially for those who encounter them for the first time, which is why the EU will look for ways to simplify the funding model but not at the expense of the controls in place, Ivanova said.

The lowest error rate in the EU budget is in the area of Natural Resources and Environment at 2.2%, however, the percentage is still significant when it comes to high-risk expenditure in rural payments. The auditors have appreciated the progress made by Bulgaria's State Fund Agriculture in implementing the annual quality reporting procedure.

Tahov said that the ECA assessment is a recognition of the work of the Bulgarian institutions and their commitment to efficient and quality spending of the European funds. "2023 was filled with many challenges in launching the implementation of the new programming period of the Strategic Plan for the Development of Agriculture and Rural Areas 2023-2027," the Minister said. He was the executive director of the State Fund Agriculture between August 2022 and April 2024.