Over 2 bln lost from EU-funded projects

Greece lost over 2 billion euros in financing from the Second and Third Community Support Framework programs (CSFII/III) due to shoddy work and budget overruns which required reimbursing some of these funds to the European Union, Deputy Economy Minister Christos Folias said yesterday. From CSFII alone, which ran between 1994 and 1999, more than 1 billion euros in funds were lost, Folias claimed. As for CSFIII, which started in 2000 and will run until 2006, losses are estimated at 950 million euros, he said. Folias added that these 2 billion euros were actually paid to project contractors from the state budget, with some of them being paid in advance in the hope that, somehow, the EU would finally provide the funds. This added a considerable burden on the state budget and further worsened the already considerable deficit over the years. Folias said that, at present, absorption of CSFIII funds has been improving, with the exception of funds for projects overseen by the Environment and Public Works Ministry, adding that the EU is looking very closely at project applications. However, in 2004, Greece lost 35 million euros due to delays in coming up with projects requiring funding. Although Folias put the blame on the previous government for the fund losses, the EU recently threatened Greece with cutting off funding altogether because of the government’s failure to modernize the tender process for public works as well as their monitoring during their execution. As a result, there is the danger of at least 530 million euros being withheld from the funds earmarked for Greece. The issue is expected to be resolved one way or another by the end of February. Total absorption of CSFIII funds stood at 30.34 percent at the end of 2004 from 22.15 percent on February 29 (a week before the national election and a change in government) according to the data presented by Folias. In order to avoid a major loss of funds, Greece must be able to absorb 5 billion euros per year until 2008. (Although CSFIII ends in 2006, Greece will be able to absorb funds until 2008 if it secures them by end-2006.) Among sectoral programs, Information Society has the worst absorption rate (18.93 percent), while the highway building program has a rate of 43.01 percent. However, the program has stalled since last February, when its absorption rate was 42.47 percent. Among ministries, the Economy and Finance Ministry has the worst record, with programs under its supervision having an absorption rate of 21.14 percent. The Ministry of Public Works has a rate of 39.59 percent, but faces the problems described above.