Brussels, 27/03/2012 (Agence Europe) - Despite some grey areas, for example with regard to the structural funds, the European Parliament (EP) budgetary control committee recommended, on Monday 26 March, that discharge be granted to the European Commission on implementation of the 2010 budget. MEPs criticised not only the lack of sanctions imposed on EU countries guilty of mismanaging EU funds but also the use of financial engineering instruments and pre-financing of EU projects.
MEPs highlighted the high error rate of 7.7% in cohesion (above all), energy and transport project payments in 2010.
Increasing use of sanctions. The committee observed that sanctions (halting or suspending funding) are currently too weak to enable the Commission to assume its responsibilities in full, and suggested that provisions for tougher ones be included in new rules being defined for spending in areas such as cohesion, rural and regional development, farm and fisheries for 2014-2020.
“Shared management means shared responsibility, not no responsibility”, said Christofer Fjellner (EPP, Sweden), rapporteur on the discharge for the Commission spending. “We know that for the European Social Fund (ESF), the suspension of money has been used several times, however for the Regional and Cohesion Funds, suspension was never used in 2010.” MEPs also want the Commission to be able to impose penalties on member states or stop programmes in countries or regions that repeatedly breach the rules. Member states should have to recover wrongly spent money from recipients and stop the current practice of replacing ineligible projects by other projects “retrospectively” so as not to lose EU funding, they added.
Pre-financing. MEPs expressed concern at the growing use of pre-financing in EU projects, even though they consider pre-financing necessary for beneficiaries to start their projects. Pre-financing is gradually replacing regular payments, which leads to increased financial risk as beneficiaries might go bankrupt and regular payments are postponed.
Fjellner criticised the use of so called financial engineering instruments (FEIs), as insufficiently solid and high-risk. “But I am satisfied with the responses of Commissioner Semeta, who said he will thoroughly review what is wrong and what needs to be improved in this area”, he said. The Commission proposes to step up the use of financial engineering instruments in the next budgeting period (2014-2020). MEPs are particularly critical about the lack of information on such instruments.
European Parliament budget. The committee also decided to approve the spending by the European Parliament for 2010. (LC/transl.rt)