Malta has only managed to recoup 30 per cent of the EU funds it has allocated to projects and risks losing a significant amount of what is left to be transferred to its coffers if it does not speed up the process.
The European Commission has found that the island is doing well in allocating its €840 million of Cohesion Funds for 2007-2013 but it is one of the laggards when it comes to actually getting paid.
From the €606 million of funds allocated until 2011, Malta has so far recouped only €250 million. The amount is much lower than the 41.3 per cent EU average and puts the country ahead of only Romania (15 per cent) and Bulgaria (28 per cent), the latest entrants in the EU.
This, according to the Commission’s analysis, is creating a cash flow problem that is being reflected in the country’s annual budget.
The hold-up is related to the time it takes to verify payments that need to be made to those carrying out the projects, according to the report. Reasons for this bottleneck include the slowness in granting planning permits for the bigger projects, lack of human capacity at the evaluation stage and a complicated tendering and adjudication process.
The Commission warns that if Malta doesn’t step up its expenditure “a significant amount of funds will be lost and the intended objectives not achieved”.
Sources close to the Commission told Times of Malta that the island needed to pull up its socks if it wanted to use all the funds allocated to it.
On the positive side, the report shows that, by end of 2011, Malta had managed to allocate 72.2 per cent of the cohesion funds made available since 2007. This compares well to an EU average of 71.2 per cent.
“Although Malta is doing very well in allocating projects according to the priorities set by the government and agreed with the Commission, the process of validation of payments needs to be stepped up as there are only three years left,” one source said.
Under the EU’s rules, Malta has until 2015 to close off all payments related to the 2007-2013 EU budgetary period. At the same time, it is preparing the background for the eventual rolling-out of the 2014-2020 funding programme which gave the island €1,128 million in additional EU funds.
“Although there was a substantial increase in the disbursement of funds during 2010 and 2011, the amount disbursed remained relatively low when compared to the amount contracted,” the report states.
“Delays in procurement but also delays during implementation act as general hindrance to the rapid disbursements. This has an impact on the verification process of payments by the Managing Authority which in itself presents a different set of challenges that delay the submission of payment claims by the Commission.”
Some of the problems encountered are specific to Malta, particularly due to the “fragmentation” of projects related to its small size and “the lack of experience in managing EU funds” especially by certain government departments and NGOs.