Banks in Bulgaria to Manage EU Funds for Business

Finance | November 18, 2010, Thursday // 20:51|  views

Bulgaria's Labor Minister, Tomislav Donchev. Photo by BGNES

Next year, banks in Bulgaria will take over the management of EU funds for the business, Bulgaria's Minister on EU Funds, Tomislav Donchev, has announced.

Donchev said Thursday that at first, the model would be experimental and if it proves to be successful, then the banks will take over the management of EU funds for business officially for the next program period 2014-2020.

The minister has explained that the goal of the experiment is to accelerate the absorption of EU funds under the Operational Programs "Competitiveness" and "Development of Rural Areas."

In his words, currently the processing of the business projects under both programs is delayed. Banks also participate in the process by lending loans to many businesses and farmers for the realization of their projects. The money is then reimbursed from the EU funds.

Donchev has explained that the model has been implemented in three of the EU member states – Italy, Greece and Hungary.

Presently, a team of experts from the state administration and the Association of Banks in Bulgaria is developing the mechanism for the inclusion of credit institutions in the process. The idea is for them to receive the projects, assess them and monitor their performance with checks on the spot.

Signing of contracts with the beneficiaries and the payments will remain an obligation to the state administration.

Meglena Plugchieva, MP from the Bulgarian Socialist Party and a Vice-President on EU funds in the previous cabinet, has explained that banks will be responsible for the preparation and the monitoring of the projects.

In this way, the governing bodies under the programs will be able to focus on the policies and control of the absorption of the EU funds.

Minister Donchev said that they are waiting for statement from the Association of Banks in Bulgaria for the mechanism of their inclusion in the process. In his words, it needs to be specified who will be responsible if financial corrections are needed and whether banks will act as an intermediate unit or as a financial intermediary.

"We have to announce our statement for this project by November 19 but it is still not ready," said Violina Marinova, Chair of the Managing Board of the Association of Banks in Bulgaria and CEO of Bank DSK.

Levon Hampartsumyan, CEO of UniCredit BulBank and member of the Managing Board of the association, said that the banks have suggested the idea several times to the previous government.

"It is good that the current government took our suggestion seriously," Hampartsumyan said, adding that in his opinion, the outsourcing of the document processing would significantly accelerate the process.

He said that the banks have a capacity of 30,000 specialists because the assessment of one EU project is similar to lending a loan.

"Of course, banks will profit from this, but so will the economy. The suggestion is reasonable, we have enough effective mechanisms in order to accelerate the process of absorbing EU funds," Hampartsumyan said.

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Tags: banks, Association of Banks in Bulgaria, Tomislav Donchev, Levon Hampartsumyan, Meglena Plugchieva, EU funds, business

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