CR corrects system of drawing money from EU funds

It will be up to the EC to decide when the payment of subsidies will be renewed. If the EC does not renew the payments by the end of this year, the Czech Republic could lose tens of billions of crowns from EU funds.

"We believe that by fulfilling the action plan [changes in the system of drawing the subsidies], the criticised shortcomings will be removed and all demands will thus be met so the payments will be renewed," the ministry´s spokeswoman Jana Jaburkova told CTK today.

All changes have been consulted with the EC´s officials, she added.

The EC´s main objections concerned problems with control and audit, placement of public orders and turnover of staff responsible for the subsidies.

The EC will now check to what extent the Czech authorities have improved and if they really made the required changes.

"It cannot be ruled out that the EC will ask for additional information or that its officials will make a mission to check the situation. Decision on the renewal of financial flows between Brussels and the Czech Republic will follow," Jaburkova said.

The ministry has prepared a method for the placement of public orders linked with the drawing of money from EU funds and in cooperation with the Finance Ministry updated instructions for hiring people who take part in drawing of the money. A document for the use of services of external subjects has also been prepared and consulted with the EC.

The ministry at the same time trained 4,280 people, three quarters of them recipients of the subsidies. At seminars, they perfected their skills in particular in the areas of control of projects and justifiable expenditures.

"The seminars are also dedicated to the amendment to the law on public procurement. Passing of the amendment is a big step forward in the removal of the shortcomings that the EC has criticised most," Jaburkova remarked.

The problems concern, for example, programmes North West, Central Bohemia, Education for Competitiveness, Transport and Environment. Owing to suspicion of all kinds of discrepancies, the ministry is not accepting new applications for the payment of subsidies.

If the EC does not renew the financial flows this year, it would mean widening of the Czech state budget deficit by some Kc100bn. This would equal to raising the public finance gap to 6 percent of GDP, Prime Minister Petr Necas said one month ago.

Finance Minister Miroslav Kalousek noted, however, this was "purely hypothetical".

"I consider it as a really key issue," Necas said in Brussels today about the action plan´s fulfilment.

Necas wrote a letter in this sense to European Commissioner for Regional Policy Johannes Hahn last week. In the letter, he described the Czech Republic´s individual steps to remedy the situation.

"For us, it is of course of key importance that drawing of money from European funds be renewed for the Czech Republic in the course of the summer or in the first half of the autumn at the latest," Necas said.

"There should not be a danger that money will be taken from one member country and given to another member country," he added.

The subsidies are being paid from the state budget and the EC then pays the money retroactively. If EC officials find a problem, they can suspend these payments.

The Czech Republic can obtain subsidies worth Kc778.5bn, if calculated by the current exchange rate, in the period of 2007 - 2013. In total, authorities paid Kc333.8bn from the state budget between 2007 and the beginning of May this year.