Банкеръ Weekly



MONEY COMES FROM WORLD BANK AND SOCIAL MINISTRYCombating corruption, reducing unemployment and increasing the quality of life - that's how the Government laid down the main priorities in social policy at the beginning of their mandate. For fulfilment of these tasks then the rulers relied on several economic instruments, among them the Social Investment Fund (SIF) with the Ministry of Labour and Social Policy, established in 2002 as a successor to the international Fund for Regional Initiatives (FRI) project. Within the period of its existence, 1998-2002, the FRI implemented more than 250 projects, worth a total of BGN40MN-plus. The World Bank described it as one of the most successful funds, it had set up in Central and Eastern Europe. As of 2003 the credit institution began to fulfil together with the SIF the Social Investments and Encouragement of Employment programme, consisting of two components: Initiatives for Active Measures for the Labour Market, and Initiatives for Development of Municipal Infrastructure. EUR67.7MN has been earmarked for the implementation of the five-year programme. Financing will be effected through a EUR50.8MN state-guaranteed loan from the World Bank and another EUR17MN from the social ministry's budget. All Bulgarian municipalities, as well as various groups of people who have worked out plans for improvement of local infrastructural sites and environmental preservation, can move forward their proposals. SIF's Management Board has approved 132 projects since the beginning of 2004, of which 38 are for construction of water and sewage facilities, 14 are for development of public services, and one is for the electricity supply network. The other approved proposals include 56 for school repairs, 4 for building municipal markets, and 19 for reconstruction of or building social homes. Agreements for financing 103 of the approved proposals have been signed so far. The aggregate amount of the grants released by the fund has already totalled BGN24.5MN. 2007 people, 401 of them registered at the employment offices as permanently out of work, will be hired for the construction and repair works. The newly-built or reconstructed facilities will be used by some 202,000 people. By rule, only 80% of the value of micro-projects is covered by money from the SIF and the balance of 20% is undertaken by the organization, bidding to implement them. The aggregate worth of proposals moved by the municipalities should be between EUR20,000-200,000. They are allowed to propose several projects each year, but only one of them, appraised as the most perspective, is financed. The individual groups may offer for realization plans worth EUR10,000-80,000. Forms are accepted any time at SIF's head office. They are filed personally by an authorized representative of the candidate, not by post or e-mail. The schedule for approval of projects is worked out in the beginning of each calendar year. Then, plans for the tranches of releasing the grants are made on the basis of the prepared investment programme. The rating of proposals is effected according to social and economic criteria. Funds are allocated mainly for the fulfilment of micro-projects in more underdeveloped municipalities. Special attention is paid to the proposals from the socially vulnerable groups of people. Planned investments should be spent on construction and repairs of facilities that are state-owned or municipal property. Proposals for repair of schools, kindergartens and social home are approved as well. Building of new sewage networks or reconstruction of the existing one in individual population centres is financed, too. Funds from SIF can be also used for setting up municipal markets and aids for adaptation of public facilities to the needs of disabled people. A mandatory condition is that offered micro-projects are included in the plan for regional or municipal development and approved by the municipal councils. When ranking them the level of unemployment and living standards of the population in the region where the project is to be realized are taken into consideration. The number of working positions to be opened for its implementation are considered as well. The terms for fulfilment should not exceed 6 months for a micro-project of a group or 9 months for a municipality. Mayors are required to guarantee maintenance and repair of the new facilities.So far about 43% of the World Bank loan has been utilized, SIF Director Blagovest Georgiev told the BANKER weekly. According to the investment plan, all finds should be invested in the realization of projects by the end of 2007. That means that Bulgaria should utilize BGN23.5MN each year. In order to compensate the lagging behind, we'll spend BGN25MN in 2004. Seventy eight projects in 25 Bulgarian municipalities were implemented in 2003, worth a total of EUR8,490,430. This year they are 54 more and a higher interest to the money from SIF can be witnessed, Mr. Georgiev specified. According to him, if we speed up the procedure for approval of proposals we'll manage to observe the World Bank's plan. The main reasons for the delay are poorly drafted projects and a too complicated procedure for their ranking, he is adamant. Social ministry data show that SIF's commission has considered more than 800 proposals since the beginning of the year, and only 134 of them have been approved. All the others which do not fully comply with the requirements have been returned for improvement. The projects that satisfy the requirements but have not been financed this year will be included in the investment programme for 2005, Mr. Georgiev specified. Several large-scale proposals have been approved. The largest amounts released by SIF are: BGN358,739 for rehabilitation of a school in Kyustendil, BGN366,966 for completion of a children's healthcare establishment in Primorsko, and BGN360,000 for urban development of a housing quarter in Dobrich.Control over the implementation of approved projects is very strict and is fulfilled at several levels, SIF's Director underscored. First, municipal councillors see to the fulfilment of each individual stage of the preliminary plan. A special commission with the fund looks after the quality of construction and repair works and funds to the building contractor are remitted only after its approval. The company to implement the project is picked up by a tender, carried out according to a methodology of the World Bank. Requirements of the Public Procurement Act are also observed. That eliminates the possibility for firms akin to the municipal council members to win the orders, Mr. Georgiev is certain.

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