Gov’t in race to save billions in EU subsidies

The government has set itself the hard task of persuading the European Commission to accept laxer rules in the implementation of the Third Community Support Framework (CSF III) investment program, hoping to avert a loss of subsidies. A series of hard negotiations is already under way, covering the entire spectrum of CSF III applications but ostensibly described as being over «technical details.» CSF III was originally budgeted at around 34 billion euros of national and EU investment funds for the 2000-2006 period, with two additional years allowed for implementation after appropriation, that is, until 2008. It’s implementation in Greece has faced considerable delays and about 11.3 billion euros still remain unappropriated. Officials fear that at least part of this sum will be lost if it is not appropriated this year. According to sources, the ongoing discussions even include increases in the amount of EU participation in certain categories of projects that have shown high degrees of absorption. The Greek side is said to have explored the possibility of extending the deadline for implementation by one year to 2009. This appears to have met with a negative response and Greece has opted to focus on negotiating changes to the regulations. The government has now set an ambitious target of 19.3 billion euros to be absorbed in the next 30 months, with a minimum of losses. However, the supervision under which the European Commission has placed Greek public finances poses a serious problem, constraining the amounts the government can spend on public investment. This is the basic reason why Environment and Public Works Minister Giorgos Souflias often objects when he is blamed for project delays. Projects are paid with national funds and the government receives the corresponding EU subsidy after submitting the relevant documentation. By last month, Greece had absorbed 14.9 billion euros of the total 34.2 billion euros. The remaining 19.3 billion, which must be absorbed by the end of 2008, comes to 643.3 million a month. Since the beginning of the year, a mere 585 million has been absorbed, against an annual target of 5.7 billion. A key parameter is that of project contracts. Those remaining to be finalized by the end of 2006 are worth 11.3 billion. Those that are not, will be lost irrevocably. Speaking at yesterday’s session of the CSF III monitoring committee, Economy and Finance Minister Giorgos Alogoskoufis accused the previous PASOK government of serious legal inadequacies in the preparation of CSF III which have been largely responsible for delays.

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