EU cohesion budget down, subsidies for Bulgaria - up

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The European Commission presented its version of the EU budget for 2021-2027. Once the UK leaves the EU, there will be less European funding and there will be cutbacks everywhere, the biggest cuts being in the structural funds and in agriculture. However, this will not affect Bulgaria which is among the few countries of the EU for which Brussels hass earmarking more money than in the current budget, specifically for cohesion policy and common agricultural policy. Funding for these two programmes will be cut down, with the cohesion policy budget for 2021-2027 totalling 373 billion euro, which is 7 percent less than now. Subsidies for farmers are also being reduced, though only by approximately 1 percent.

European funding as a whole may be cut down, but for Bulgaria it is being increased – by 8 percent, to reach 8.9 billion euro, instead of the current 8.3 billion. EU financing is going up for Romania, Greece, Cyprus, Spain and Italy as well. There are several countries the new rules concerning structural funds will affect most adversely - Poland, Hungary, the Czech Republic, Lithuania, Estonia and Malta. Estimates show that over the next programming period the money they will receive will be down by a quarter compared to what they are now getting in cohesion funds. 

Bulgaria will be receiving more money, still, there seem to be conflicting opinions on the matter. On the one hand, without this money, many of the infrastructure projects would not have been possible – for example motorways or urbanization projects where European funding covers more than 60 percent of the costs, the remainder coming from local co-financing. Speaking of co-financing, it should be said that the EU’s new policy envisages that national governments cover a bigger share of the cost of joint projects. This means that the national budget will now have to come up with more money to add to the European subsidies. A task that is not all that easy for the poorest country of the EU. Skeptics also question the positive effects of European funding on one more point – that it distorts the principle of free competition. Though the European funding for Bulgaria is substantial, in fact it does not exceed 3 percent of the country’s GDP, though it should immediately be added that Bulgaria’s economy actually accounts for a mere 0.3 percent of Europe’s overall economy.

In light of all this one more thing should be made mention of – despite its nominal increase, the per capita European subsidies in Bulgaria are still among the lowest in united Europe with €1,248 of the new EU budget per person, or almost half the per capita sum for Croatia, for example. In point of fact this disparity is the result of the implementation of the new European policy, which puts an end to the practice of allocating cohesion funding depending on per capita GDP. The new criteria on which financing depends include youth unemployment, levels of education, immigration in the 2014-2017 period and carbon emissions.

There is one thing in the EU’s new budget that is very important to Bulgaria. Sofia has stated its firm intent to apply, by the end of this month, for the ERM-2 (Exchange Rate Mechanism), or the Eurozone waiting-room as it is also known. Brussels says that all countries applying for the Eurozone should be assisted so that by their efforts they may live up to the membership criteria. The funding earmarked for the purpose amounts to €25 billion over 7 years; access to this money will be given to the countries which have stated their intent to enter the Eurozone.

Though they are no panacea, European subsidies are important because they also act as a disciplining and anti-corruption mechanism. Not to mention the fact that European money has made possible so many of the things that benefit the public – the Sofia metro, for one.

The EU’s new budget for Bulgaria is encouraging, though the European Commission’s draft still has to be endorsed by the European Parliament and the European Council which are yet to have their say. These discussions will start in the coming days in Sofia, as Bulgaria now holds the Presidency of the Council of the European Union.

English version: Milena Daynova

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