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The Warsaw Voice » Business » August 29, 2012
Business & Economy
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Problems in Spending EU Funds
August 29, 2012   
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Poland has been allocated more funds from the EU than any other member state in Central and Eastern Europe. But it has proved inefficient in spending such money—on this score, it is behind every other country in the region apart from Romania and Bulgaria.

A report entitled EU Funds in Central and Eastern Europe by the KPMG consulting company shows that funds which the EU will spend on economic and social cohesion in the region could total 209.1 billion euros in 2007-2013. The figure includes national public contributions paid by individual member states in Central and Eastern Europe. As the country with the biggest population in the region, Poland has been awarded the highest amount at 65.3 billion euros. When the region’s entire population is taken into account, “contracted grants,” which are grants for which contracts were signed by the authorities and the final beneficiary by the end of last year, come to 1,374 euros per capita. The highest per capita value of contracted grants was reported in Estonia and the Czech Republic, at 2,000 euros. According to the KPMG report, by the end of 2011 a total of 60.8 billion euros was paid out to beneficiaries in Central and Eastern Europe, which was 598 euros per citizen and accounted for 43 percent of all contracted grants.

The report also says that in the five years since programs financed from EU structural funds for the 2007-2013 period were launched, the ten member states in Central and Eastern Europe have signed contracts for funds totaling 67 percent of the available budget. The three Baltic states of Lithuania, Latvia and Estonia boast the highest “contracted ratio,” which are funds for which contracts have been signed divided by the available budget. Between 2010 and 2011, the contracted ratio rose the fastest in Bulgaria, reaching 79 percent at the end of last year.

Five member states in Central and Eastern Europe—Hungary, Poland, Romania, Slovakia and Slovenia—had contracted ratios below the region’s average. Miros³aw Proppé, head of a KPMG advisory group on the public sector in Poland and Central Europe, says it is hard to determine what countries with such low contracted ratios have in common. “They include both small and large countries, some in a good or moderate economic shape and others doing poorly. Some of them became member states during the first period of enlargement, others during the second,” Proppé said.

The report indicates that in 2012, the contracted ratio will reach around 50 percent, a level that no individual country in Central and Eastern Europe has attained so far. The statistics are topped by the Baltic states (44 and 43 percent), followed by the Czech Republic (39 percent) and Slovenia (38 percent). The contracted ratio for Hungary, Poland and Slovakia remains steady at 28 percent, and below 20 percent for Bulgaria and Romania. As far as EU operational programs are concerned, Hungary had the lowest contracted ratio and spent the least funds on programs concerning the environment and energy, social renewal and electronic public administration. The contracted ratio for all operational programs in Poland was below the anticipated 50 percent, especially when it comes to infrastructure and environment. Slovakia had the lowest contracted ratio for the information society operational program and also performed poorly in terms of transportation, education, research and development. “Based on KPMG’s experience and public data available, we can say that problems with spending EU funds allocated to infrastructure, environment, e-administration and research projects may be the result of inadequate feasibility studies, scant ideas as to what to spend available funds on and a lack of skills in project management, including insufficient experience in public procurement,” said Proppé.
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