Europe Plans 166.7 Billion Euros for the Forthcoming “Rainy Days”
It seems that the cost of the epidemic consequences will go beyond our wildest imagination. The European institutions are aware of economists' forecasts for a deep recession in 2021 and therefore rely on record budgets and new mechanisms for controlling funds. What is new is that the allocation of money will be bound to the rule of law and reforms.
After the long-term Community budget for 2021-2027 has been stalling for six months, the European Commission has concentrated its efforts on the financial framework for 2021 which will be entirely focused on recovery. The Commission proposed record expenditure for this period of EUR 166.7 billion in commitments (-9.7% compared to 2020) and EUR 163.5 billion in payments (+ 0.8% compared to 2020). Another 211 billion Euros in grants are expected, as well as nearly 133 billion Euros in loans under Ursula von der Leyen Recovery Plan. Compared with the EU budget for this year
which amounts to the "modest" 172.5 billion Euros.
If these intentions are realized, significant investments will be mobilized which will serve to overcome the immediate economic and social consequences of the pandemic, for sustainable recovery and protection and for job creation. It is also important to note that this is the first budget that does not provide for contributions and payments from the United Kingdom since London left the Union on 29 February.
Programs funded the most
Of course, more attention is paid to those areas that are important for faster recovery. For example, the Digital Europe program and cyber defense receive 1.34 billion Euros. Three billion Euros go to highly efficient transport infrastructure, 575 million Euros – to the single market, 163.2 million Euros - to support cooperation in the field of taxation and customs.
The Erasmus + program will be funded with EUR 2.89 billion, and 1.1 billion Euros are earmarked for tackling migrants.
Among the most expensive items is agricultural policy - 55.2 billion Euros, and 1.9 billion Euros will be allocated for pre-accession assistance, including for the Western Balkans.
Horizon Europe is offered 17.3 billion Euros for 2021. The amount should help increase scientific and innovative activities related to health and climate.
At the same time the European Parliament is pushing for more funds for social activities and in particular for radical measures to mitigate the shock in the field of employment. These measures include billions in wage subsidies, income support and the extension of unemployment benefit schemes.
The problem is that if the three factors in the community - the commission, parliament and national governments - fail to agree on the parameters of the 2021 budget, it will face the fate of the long-term one which is unlikely to be adopted by the end of this year.
Money versus the rule of law
Because of the crisis the European institutions have generously opened their wallet, hence the big question for Bulgaria now is whether EU funds abuse in our country will stop and whether the authorities will finally start strictly observing the conditions for the allocation of European money. It will be a terribly difficult task for BG authorities but somehow they will have to understand that they will not get away with the dumb Balkan tricks any more. The European Commission in particular has been threatening for a long time but on June 29 it officially announced that it would present the first general monitoring reports on the rule of law in the community in September.
"Preparations are under way. The reports are expected to be linked to access to funds from the European Union budget. The Commission will propose to suspend or limit the funds allocated to countries in the general budget when shortcomings in the rule of law are identified," EU Justice Commissioner Didier Reynders announced. He insisted that decisions in this direction be taken by the EU Council
by reverse qualified majority,
i.e. the rejection would require the votes of 55% of the countries representing 65% of the European population.
"The new mechanism will safeguard against corruption, protect media freedom and oversee the work of national institutions," Reinders added. According to him, the data for the reports will be collected from various sources, but the assessments will be made by the commission.
In this regard, MEP Radan Kanev commented that the current state of media freedom in our country, political corruption and politicization of the prosecution
directly threatens Bulgaria's chances
to be given support and investment from the EU Reconstruction Fund.
"The report will address issues related to the fight against corruption, media freedom and pluralism, and inter-institutional brakes and balances.
If their functioning is threatened due to a deficit of the rule of law, Brussels will have the power to freeze, reduce or limit European funds proportionally, "Kanev said.
EUR 200 million for medium-sized businesses
The European Commission has approved state aid amounting to BGN 200 million in support of medium-sized enterprises in Bulgaria affected by the coronavirus crisis.
The European Regional Development Fund will provide co-financing of EUR 87 million in the form of a direct grant, and one company will be able to receive up to EUR 75,000 under this line.
All companies will be able to benefit from the aid, with the exception of those engaged in primary production and processing of agricultural products, fisheries, aquaculture, as well as the forestry, financial and gambling sectors.
About 1,500 companies are expected to benefit from the measure, and the aid will be provided to them before December 31.
This is another financial instrument for business recovery. Under the 60/40 scheme, BGN 114.7 million have been paid so far, which has preserved the employment of about 150,000 people. Money is already being allocated under the program to support micro and small enterprises. Under it, they can rely on between BGN 3,000 and 10,000 in grants.