EU Freezes 1.2 Billion Leva Payment to Bulgaria Due to Reform Delays

Bulgaria's request for the second tranche of funding under the Recovery and Resilience Plan (RRP) has been met with resistance from Brussels. The European Commission has withheld the release of the payment, which amounts to 1.2 billion leva (653 million euros), citing the country's failure to meet several key reforms outlined in the plan. Although Bulgaria submitted its request for the second payment on October 7, 2023, the Commission’s preliminary assessment revealed that while 53 out of 62 milestones had been completed, eight milestones and one objective remain unsatisfied.

The unsatisfactory implementation of these crucial reforms is primarily focused on areas such as energy, corruption prevention, and public procurement, which are among the key challenges identified by the European Commission in its country-specific recommendations for Bulgaria. The Commission's methodology allows for the suspension of payments if key milestones are not met, which could result in Bulgaria losing the entire tranche if the issues are not addressed.

Bulgaria has been granted a one-month period to respond to the Commission’s assessment. By December 29, 2024, the Bulgarian government must present its comments and take corrective action. The European Commission will then issue its final decision within a month of Bulgaria's response. If the reforms are successfully implemented by mid-2025, the funds may be released. However, the lack of progress on key reforms has already created significant budgetary issues, as the 1.2 billion leva was earmarked in the 2024 budget. As of October, Bulgaria's budget deficit had reached 4 billion leva, equivalent to 2% of GDP.

The Bulgarian government and the European Commission hold differing views on the extent of the implementation. The Bulgarian authorities claim that only three measures remain unimplemented, as reported in the public module of the EU funds system, UMIS. However, the Commission’s assessment remains firm, underscoring the challenges that Bulgaria faces in fulfilling its commitments under the RRP. The ongoing political instability in Bulgaria, compounded by the absence of a regular government, is considered a significant factor in the delayed progress.

Bulgaria had initially been allocated 5.69 billion euros in grants under the Recovery and Resilience Plan. The first payment of 1.37 billion euros was received in late 2022. However, due to the delays in implementing the necessary reforms, Bulgaria risks losing up to 4.3 billion euros in future payments under the plan. Despite this setback, the European Commission has expressed its willingness to offer assistance to help Bulgaria fulfill its remaining commitments and make full use of the available resources.

Sources:

• Bulgarian National Television (BNT)
• econ.bg