Cohesion Commissioner tells Bulgaria to make good use of EU’s unprecedented funding

A screenshot from the EURACTIV Bulgaria webinar with Commissioner Elisa Ferreira held on 18 February 2020. [Euractiv.bg]

The EU’s new long-term budget and Recovery and Resilience Fund, worth €1.8 trillion, offer a once-in-a-generation opportunity for the EU and Bulgaria, Elisa Ferreira, Commissioner for Cohesion and Reforms told a mostly Bulgarian audience on Thursday (18 February).

Ferreira was the keynote speaker at a virtual conference organised by EURACTIV Bulgaria, titled “European support for economic recovery, cohesion and reforms in Bulgaria”.

‘Perfect timing’

Speakers said the timing of the conference was “perfect’.

In early February, Bulgaria sent a second draft of its Recovery and Resilience Plan to the European Commission. Nevertheless, critical voices in the country warn that the current Bulgarian government could not make the best use of European funding. Bulgarians will vote in general elections on 4 April.

Ferreira said the Recovery and Resilience Facility (RFF), worth €750 billion, has reserved up to €10.4 billion for Bulgaria. This, she added, is equivalent to 17% of Bulgaria’s GDP.

Of this amount, up to €6.3 billion (no less than 10% of Bulgaria GDP) under the RRF is available in grants and an additional €4.1 billion in loans, Ferreira said.

The Commissioner expressed hope that the Commission will start borrowing as soon as all member states ratify the EU budget for the 2021-2027 period. Bulgaria is among the first member states to have done so already.

Ferreira pleaded for Bulgaria – and the rest of the EU – to use the facility for investments and reforms.

Golden chance

She said this was “a golden chance” for countries to modernise, reform and overcome structural bottlenecks that may be hampering growth, and contribute to a more cohesive, resilient European Union.

Alluding to the Bulgarian context, Ferreira said national recovery plans should ensure that regional divergences don’t go deeper, but that there would be a balanced regional rebound and recovery.

Bulgaria is a typical example where economic activity is concentrated in big cities such as Sofia, Plovdiv, Varna and Burgas. There is also a clear division between the better developed south and a poorer north, including north-west Bulgaria, the poorest region in the EU.

Ferreira also urged Bulgaria, and other member states, to make good use of the bloc’s cohesion policy.

In Bulgaria, the EU will invest €11.1 billion via its Cohesion policy over the 2021-27 period.

To bridge the gap between emergency and recovery REACT-EU will offer an additional €436 million to Bulgaria to continue short-term measures – to hospitals, small firms and workers and prepare the green and digital transition.

Phasing-out coal

Ferreira also touched upon the funding under the new Just Transition Fund, as the transition to a carbon neutral economy poses a particular challenge for Bulgaria.

Bulgaria accounts for 7% of coal production in the EU, and there are an estimated 56,000 jobs in the mining sector.

Ferreira said the EU will provide Bulgaria with €1.3 billion to help these regions assist miners and all those whose livelihood depends on this sector to make the transition.

In total, she said the EU had reserved for Bulgaria some €22.5 billion of European investments, in RRF & cohesion funding combined.

Asked how Bulgaria can make the most of them, Ferreira said her advice was for Bulgarians to ask themselves: “What do we want for Bulgaria? Where do we want the country to be in 20-30 years from now?”

Ferreira pleaded for a more efficient Bulgarian research and innovation system, digitalisation and e-governance, as well as tackling environmental challenges.

She also said that Bulgaria had one of Europe’s lowest recycling rates – just 2.4%, though Bulgarian statistics give a higher figure.

The Commissioner also called for accelerating water management reform, including transport as part of the vision, to reduce regional disparities and to meet green ambitions.

Deputy Minister of Regional Development Denitsa Nikolova said that one of the priorities in the national plan was to reduce social and economic imbalances between urban and rural areas, and between the centre and the periphery of the country.

“In the course of two programming periods, we focused on big cities, which contributed to the deepening of the country’s imbalances. Through the mechanism for integrated territorial investments in the new programming period, we will try to solve these issues,” Nikolova explained.

MEP Andrey Novakov (GERB, EPP), who sits on the Regional Development Committee, spoke in optimistic terms about future development, mentioning projects such as high-speed railways, roads, new schools, hospitals. Railways in Bulgaria are currently underdeveloped.

Another EU lawmaker, Tsvetelina Penkova (BSP, S&D), pointed to a lack of transparency in the use of EU funds and proposed the implementation of a united system making all information available to the public.

Petar Ganev from the Institute for Market Economy said that social transfers and services in the country have failed to achieve the desired results, as social payments continue to have a limited effect on reducing poverty and inequality. At the same time, social services have insufficient scope for the needs of the population.

The webinar was moderated by former Deputy Prime Minister Ivaylo Kalfin, who commented that much of the money earmarked for innovation and business goes to administration – an issue that he said deserves more attention.

[Edited by Benjamin Fox]

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