ECONOMY

EU Commission handling of bailouts was weak, inconsistent, say auditors

eu-commission-handling-of-bailouts-was-weak-inconsistent-say-auditors

The European Commission’s handling of bailouts for countries hit by the financial crisis was “generally weak” and inconsistent, the European Union’s Court of Auditors (ECA) said on Tuesday.

The ECA – an EU institution in charge of auditing EU’s finances – analyzed the bailouts for Ireland, Portugal, Hungary, Latvia and Romania, all of which are already completed. The auditors did not now analyze the bailouts for Greece, on which they will issue two separate reports later, or Cyprus, because the program is still ongoing.

Spain was not analyzed, because the bailout from the intergovernmental eurozone bailout fund included no EU money.

The auditors said the analyzed bailouts met their objectives, despite the Commission’s lack of experience, because they reduced deficits in the targeted countries and prompted structural reforms.

However, “the auditors found several examples of countries not being treated in the same way in a comparable situation,” the report said.

“In some programs, the conditions for assistance were less stringent, which made compliance easier,” the auditors said, while “the structural reforms required were not always in proportion to the problems faced, or they pursued widely different paths.”

The ECA noted shortcomings in the work of the Commission, which has been in charge of the financial assistance.

“The review of key documents by the Commission’s program teams was insufficient in several respects,” auditors said.

They also noted the “weak monitoring” of the programs’ implementation by the Commission and “shortcomings in documentation.”

“The Commission used an existing and rather cumbersome spreadsheet-based forecasting tool,” the report said, while “even for the most recent programs some key documents were missing.”

The financial crisis hit the European Union in 2008, starting with non-eurozone countries like Hungary, Romania and Latvia, which received EU help from the Commission’s balance of payments facility, which was eventually raised to 50 billion euros.

[Reuters]