50 Bulgarian Municipalities Face Bankruptcy over Financial Corrections
The managing authority of operational program Environment has imposed financial corrections worth BGN 129M on 50 municipalities due to newly discovered public procurement flaws.
Emil Savov, Deputy Executive Director of the National Association of Municipalities in the Republic of Bulgaria (NAMRB), warned in a Tuesday interview for the Bulgarian National Radio (BNR) that the measure would have a devastating impact.
He said that there was a risk of a number of projects collapsing due to the financial impossibility to cover the shortfall emerging as a result of the financial corrections.
Savov claimed that the uncertainties endangered the operational program as a whole, as well as the willingness of municipalities to apply for funding under OP "Environment" during the next programming period.
"We are witnessing an extremely unfounded decision of the managing authority, which, seeking to clear its image, is transferring the problem to a place where it does not exist in a most short-sighted manner," he said.
Savov explained that the NAMRB had been given assurances by the Environment Minister back in November 2013 that it would be given a list of municipalities where problems had been identified, adding that no dialogue had taken place since then.
He said that the municipalities had been taken by surprise last week by the letters informing of the financial corrections.
Savov cited the Straldzha municipality as one of the municipalities which would be affected by the measure.
Straldzha Mayor Mitko Andonov said that the municipal administration had received a letter before Easter stating that a project implemented 2 years ago for technical assistance for the designing of the water supply and sewerage network of the village of Zimnitsa had been imposed financial corrections amounting to 25%, or BGN 77 000. Andonov specified that the scheme had been implemented, inspected and financially settled.
"EU rules allow the managing authority to impose financial corrections five years after the implementation of the project. However, the way this is happening, with no opportunity to react, makes it a quite unprecedented occurrence," Savov declared.
He also announced that NAMRB representatives were to meet with Environment Minister Iskra Mihaylova on Wednesday, adding that the NGO would adamantly oppose what it saw as a mindlessly selected approach to the matter.
Savov reminded that in order to not lose the financial resources, municipalities would be forced to use proceeds from local taxes and fees to cover the financial corrections, stressing that the move would be impossible for many local administrations. He went on to warn about the prospect of bankruptcy for municipalities unless the outcome of the step was reconsidered.
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