19.11.2009

On 18 November 2009 the European Commission (EC) decided to lift the suspension of payments for the accession-related programme PHARE.
As a result of the efforts of the new Government Bulgaria managed to save from potential loss EUR 91 million.

By lifting the suspension of payments EC acknowledges the progress achieved by the new Government of the Republic of Bulgaria and the efforts made by it to identify the weaknesses in the management and control systems and to take the necessary corrective actions. By its decision the Commission confirms that all requirements for lifting the suspension of payments for the accession-related programme PHARE have been met.

The measure was imposed in February 2008 due to problems ascertained and not good functioning of the systems in two of the four Implementing Agencies - within the Ministry of Finance and within the Ministry of Regional Development and Public Works. The amount of these contracts is EUR 323 million PHARE financing. By a further letter the EC unblocked payments for the so-called twinning contracts amounting to EUR 63 million under PHARE. Affected by the suspension are contracts to the amount of EUR 260 million. They pertain to the implementation of the 2002, 2003, 2004, 2005 and 2006 Financing Memoranda - 25 Financing Memoranda in total involving more than 570 contracts.

In order to terminate the suspension measure the EC required of the Bulgarian authorities to review and assess the contracts concluded by the two Implementing Agencies in the period July 2007 - July 2008. These contracts amount to EUR 130 million PHARE financing.

The new Government had a number of meetings with representatives of DG Enlargement of the EC where actions and mechanisms to reduce the financial sanction amount were discussed. An agreement was reached the financial correction to be EUR 39 million. By Implementing Agency this is as follows:

- EUR 19 million financial correction, being 25% of the value of the contracts concluded by the Central Financing and Contracting Units within the MoF amounting to EUR 76 million under PHARE

- EUR 20 million financial correction, being 38% of the value of the contracts concluded by the PHARE Implementing Agency within the MRDPW amounting to EUR 54 million under PHARE

Thus from EUR 130 million in total which the EC deems to be affected by system weaknesses and therefore ineligible for financing under PHARE, Bulgaria has saved EUR 91 or BGN 180 million which it expects to receive from the EC. The PHARE funds are disbursed in tranches under a scheme and mechanism specific for each Financing Memorandum.