The CoM agrees to solve the issue of strengthened financial discipline in the EU funds acquisition
On Tuesday, August 21, the Cabinet of Ministers (CoM) considered the regular quarter informative report of the Ministry of Finance (MoF) on the acquisition of European Union (EU) funds (European Social Fund, European Regional Development Fund, Cohesion Fund) and other foreign financial resources by June 30.
The MoF informed the government about the current status – by July 31 EU fund projects have been approved in amount of 92% (2.92 billion lats) of the EU fund 3.18 billion lats financing, but payments to projects promoters make a half of the total amount for the period (1.58 billion lats). Repayments in amount of 41% (1.26 billion lats) have been received from the European Commission (EC) to the state budget. This currently ranks Latvia the fourth among the new EU Member States.
Since in June and July the EC renewed EU fund payments to Latvia this year by August 3 Latvia has received from the EC 286.5 million lats.
Despite the EU funds implementation progress, according to the report of the MoF to the CoM, some deviations from the planned implementation speed have been identified in a number of sector activities, explanations of responsible ministries about the reasons of delays and planned actions to reduced related risks have been accepted.
According to a number of decisions made by the government in May and June regarding undertaking state budget over-commitments in the implementation of EU fund projects, currently approved total amount of state budget over-commitments in 2012-2015 is almost 300 million lats (8.5% of the total public financing for EU fund projects). The MoF drew attention of the government to the fact that state budget over-commitments are planned a compensating mechanism in cases when projects are not implemented, contracts are terminated and at the same time neutral effect on the state budget deficit should be ensured.
In order to eliminate and timely prevent identified risks, including potential adverse effect on the state budget deficit due to deviations from the acquisition plan and state budget over-commitments, the CoM agree to solve the issue of strengthened financial discipline in the EU funds acquisition. The coalition working group on EU funds issues will discuss in detail the financial discipline mechanism proposed by the MoF.
The CoM paid attention to the issue of the effective coordination of common projects of municipal territory development in order to avoid risks due to overlapping of activities in these territories, for example, simultaneous implementation of road reconstruction and water management projects in the same object, and thus also potential application of financial corrections causing losses to the state budget. Having listened to the objections of the Ministry of Environmental Protection and Regional Development regarding management of this issue, it was agreed that the Finance Minister would establish and chair a working group aimed at the development of an effective coordination mechanism, involving responsible ministries and other cooperation partners.
Regarding the 2004-2006 programming period it is positive that from the EC the last two final payments have been received: in June the European Regional Development Fund final payment was received in full amount of 13.4 million, but in early August – the final payment from the Fisheries Fund in amount of 0.8 million lats. Thus the implementation of EU structural funds in the programming period 2004-2006 has been successfully completed acquiring 99.9% of the available financing. Such a high result has been achieved largely thanks to the undertaken state budget over-commitments.
Regarding the EEA/Norwegian Financial Mechanism in Member States all seven EEA/Norwegian Financial Mechanism 2009-2014 programmes have been submitted and will be implemented by Latvia in the time period from 2012 till 2017 in total amounting to 46.2 million lats, but in June the five-year Swiss programme financing period was closed. Swiss competent authorities have confirmed 12 planned projects in total amounting to all the financing available to Latvia or 32.8 million lats. It should be emphasised that Latvia is the first among 12 beneficiaries in terms of the acquisition of the Swiss programme financing.
Information prepared by:
Aleksis Jarockis
Head of the Communication Division
Phone: 67083850
Aleksis.Jarockis@fm.gov.lv
