EUROPEAN FUNDING The crisis, the lack of co-financing and the insufficient administrative processing capacity - the hurdles for the Economic Competitiveness Sectoral Operational Program

At the end of April, the Economic Competitiveness Sectoral Operational Program (POS CCE) had an absorption rate of 6.44% and a contracting ratio of 50%. The leaders of the Management Authority (AM) of the POS CCE said that the main causes of the absorption rate recorded at that moment by the program are the overlap of the effects of the economic crisis with the difficulties in the implementation of the first scheduling period as a EU member state and the wariness in granting loans for co-financing projects. This is compounded by the appearance, over time, of uncertainties or regulatory deficiencies which directly impact the program, such as financial corrections (the quantum and the situations when they apply), the source and the financing method for the expenses which were not included in the expenses statements, due to various reasons, the personal liability of the public servant for any potential errors. The regulations of the financial sanctions was made in July 2011, through the Government Ordinance no. 66 (the treatment of irregularities). Another factor which has prevented a more effective absorption is also the low administrative capacity of the institutions involved in the management of the POS CCE (due to understaffing), as well as of the beneficiaries, in particular of SMEs.

The officials of the POS CCE have also said that another reason why the beneficiaries of structural funds have encountered difficulties is the complexity of the legislative provisions, resulting from the overlapping of the European Regulations and the national legislation of public finances and the specific regulations for the funds, due to the complexity of the architecture of the implementation system and of a still immature consulting market which offers services of varying quality. The implementation of the projects has also been made worse by the faulty management.

• A targeted absorption rate of 20-25%

The POS CCE is aiming for an absorption rate of approximately 20-25% by year end 0f EU contributions, in line with the allocation of the EU for the 2007 - 2013 period. The measures implemented at the level of the POS CCE in order to speed up the absorption of the funds allocated to the program are in line with the Priority Measures Plan for boosting the absorption ability of the Structural and Cohesion Funds (PMP), a document which was approved through a Memorandum in the Government Meeting of April 27th, 2011. The main lines of business stipulated as part of the PMP are supported by the implementation of a set of priority measures which include the monthly monitoring of the status of the launch of project requests and their acceleration; the granting of a reasonable delay to the participants for consulting the guides; the setting of a maximum delay for the evaluation of the submitted projects; the acceleration and the constant monitoring of the signing of the contracts/financing decisions.

Other measures which were implemented are the constant monitoring of the reimbursement durations and of the making of payments by the beneficiaries; the oversight of the quarterly payment targets; the active promotion of the possibilities for guaranteeing the loans taken to ensure their own contribution to the funding of the projects; the standardization of the awarding documentation and of the afferent contracts; the simplification of the procurement procedures for the beneficiaries which are not governed by the Emergency Government Ordinance 34/2006.

The absorption rate can also be improved by finding ways to hire additional staff which would not burden the employee expenses of the public institutions, the cancellation by the Management Authorities of the financing contracts with the beneficiaries who are experiencing major unjustified delays in beginning the implementation of the projects, the intensification of the activities for the training of the beneficiaries on essential topics which concern the implementation of the projects;

Over time the POS CCE management authority has taken a series of steps aimed mostly at promoting the active use of the financial resources offered by the Technical Assistance Axis, the drafting of guides for the beneficiaries, the reallocation of funds in 2010, (within the same priority axis) from the least popular operations to the ones in higher demand. A second series of reallocations was made in autumn 2011, especially for ensuring the financing of the ELI-NP major project. Another measure which was taken by the Sectoral Operational Program CCE is the beginning, under the coordination of the Ministry of European Affairs, of an exercise to simplify the procedures in order to streamline the payments and to shorten the deadlines.

• Constant monitoring to lower the risk of disengagement

The management of POS CCE says that it is constantly monitoring the amounts of statements expenses which need to be sent to the European Commission, to avoid the risk of the disengagement of funds in 2012.

The best performing area in the POS CCE came mostly from the Major Intervention Domain (DMI) 2.2 "Investments in the infrastructure for Research Development Innovation (CDI) and the development of the administrative capacity", followed by DMI 1.1 "Productive investments and preparing companies for market competition, especially SMEs" and DMI 4.2. "The tapping of the renewable energy resources for the generation of green energy".