CONSTANtIN BOŞTINĂ: The managing authorities do not have the ability to manage structural funds

Andreea Arăboaei

Romanian investment project fail to raise support, because they lack a vision shared by the business environment and the banks who would support them, Constantin Boştină, the President of the Association for Studies and Social-Economic Forecasts, said, during the first debate of the South-Eastern and Central European Financial Forum. The main theme of the forum was "Quick access to structural funds".

He added that Romanian managing authorities do not have the ability to manage structural funds, and said that politicians bear most of the blame, because they are more concerned with their popularity then doing their best to help secure those funds, while Romania gets penalized for failing to do the latter.

"Banks should not be behaving like pirates in this time of crisis, and government officials should understand that the European Union and the International Monetary Fund are going to sanction Romania if it fails to use the European funds efficiently", he added.

Vasile Puşcaş, the Minister for European Affairs, considers that a good collaboration between business people, banks and authorities, would be the first step for solving the issues that arise in the system: "Good ideas should come from business people who are active in the market and whose visions meet the European requirements. Moreover, the crisis has increased the need to restructure the economy", he said.

Mr. Puşcaş (the Minister for European Affairs) added: "Discrepancies in Romania have increased, because until now, the structural funds have only been used for local instead of regional projects. Now is the time to come up with new projects and with efficient ways to manage their implementation".

Mr. Puşcaş considers that the current economic crisis provides our country with the opportunity to build a new economic model and decide on what its main coordinates should be, emphasizing the importance of opting for high environmental standards, developing "green technologies" and renewable energy sources, because we have a high potential in this sector. The Minister said: "Sure, everyone wants Romania to access a high amount of structural funds. We have to be aware however that these funds are subject to conditions, such as abiding the regulations of the European Internal Market and good governance requirements".

The Executive Vice-President of BCR, Wolfgang Schoiswohl, considers that there is a need for a broader vision when it comes to absorbing European funds. "Amid this deep economic crisis, this is the best time to accelerate these initiatives", he said.

• The paradox of European projects: eligible projects do not necessarily receive bank funding

Simply being declared eligible and receiving European funding, does not guarantee that an applicant"s project will receive the needed cofinancing from a commercial bank.

Usually, the European funds are given to the beneficiaries as they make the payments, which means that a loan is needed to cover part of the costs.

There is however, a discrepancy between the demands of the evaluators of European funding programs, and the requirements of the banks, spokespersons of the business environment say. While for European evaluators, a 9% maximum profitability rate is enough to designate a project as eligible, most of the time, banks feel this number is not enough to justify the risk of a loan default.

This is how the paradox of eligible projects that fail to qualify for bank loans arises.

This was one of the main issues of the Financial Forum for Central and South-Eastern Europe.

Wolfgang Schoiswohl, the vice-president of the Corporate division of the Romanian Commercial Bank (BCR), said that the banks are willing to discuss these issues, but they are extremely cautious in granting loans, because they have to consider the safety of shareholders as well as that of depositors.

Consultants claim that the difficulties in accessing European funds concern both the business environment and the managing authorities.

They said that the business environment is suffering from an acute lack of knowledge of the funding sources which are available to it, as well from the total inability to estimate the costs of the attracted funds. On the other hand, the managing authorities do not communicate with potential beneficiaries and do not advertise the funding programs as much as they should. What"s more, the managing authorities fail to provide adequate solutions to the issues of the beneficiaries, illustrating their inadequate qualifications.

Mr. Vasile Puşcaş said that a national meeting is scheduled to take place in the near future, which will bring together the officials of the managing authorities and other players in this sector, such as consulting companies, in order to discuss ways to improve communication with the potential end-users of European funds.