Political row over the absorption of CSF funds

After a year of near inaction, absorptions of EU funds offered to Greece through the Third Community Support Framework program (CSFIII) moved ahead in 2005, according to Deputy Economy and Finance Minister Christos Folias. The extent of the progress, however, has been disputed by the opposition Panhellenic Socialist Movement (PASOK), which charged Folias of cooking the numbers, pointing at discrepancies between the amount allegedly absorbed through the program and the actual spending through the Public Investment Program. Even if the government’s numbers are to be trusted, Greece has absorbed less than half of the money allocated to it through CSFIII, which began in 2000. It has one year left to come up with projects that will need funding and three years to absorb the rest of the funds. According to the data presented by Folias, the absorption rate of CSFIII funds climbed to 42 percent at the end of 2005, up from 29.8 percent at the end of 2004. In June 2004, three months after the New Democracy party had gained power, in March 2004, Prime Minister Costas Karamanlis had committed the government to reaching an absorption rate of 37 percent by the end of 2004. The absorption rate for CSFIII funds had reached 3 percent in 2001, 9 percent in 2002 and 20 percent in 2003. It is normal for the absorption rate to accelerate over the years although Folias tried to make political capital of the fact that New Democracy, during its 22 months in power, had absorbed an average of 287 million euros per month as against PASOK’s 160 million per month. Folias’s presentation drew a rebuke from PASOK’s head of the economic policy section, Vasso Papandreou, a former minister. She pointed out that, on November 15, the absorption rate for CSFIII funds stood at 35.3 percent and wondered over the feasibility of the great leap in the remaining month and a half. «Since such miracles do not happen – especially by the present government – New Democracy ought to be sincere enough to explain how this apparent rise in absorption is essentially due to the fact that projects implemented in past years with national funds were massively transferred to the CSF program. This explains the paradox that, while spending on CSF programs has increased compared to 2004, the relative expenditure items in the Public Investment Program for 2005 appear to have declined relative to 2004… The government appears incapable of implementing a development program but has mastered cooking the numbers.» Papandreou also pointed out that, comparing the last two bimonthly reports on the «Information Society» program, on December 15 and December 30, 2005, it appears that, in the space of two weeks, projects worth 175 million euros were contracted out, implemented and fully paid for. The government had not replied to Papandreou’s claims by last night except for a brief statement by the Interior Ministry correcting a mistaken reference she made concerning absorption of funds destined for the region of Epirus. Asked by reporters how the government will succeed in absorbing the remaining 58 percent of CSFIII funds by 2008, Folias said that Public-Private Partnerships for public infrastructure projects will be crucial. «I have no reason to doubt our ability (to absorb the funds),» he said.

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