EU auditors: Risk of inefficiency and fraud if emergency aid is paid out too swiftly
Share article:
Share article:

EU auditors: Risk of inefficiency and fraud if emergency aid is paid out too swiftly

Credit: ECA

The European Court of Auditors (ECA) warned today EU’s legislative and budgetary institutions that the crisis response mechanisms for the next seven-year budget lack provisions to ensure sound financial management of EU funds.

EU has put forward a €750 billion package, Next Generation EU, to support member states in their efforts to minimise the socioeconomic impact of the pandemic and get back on a path of sustainable growth.

As part of the package, the European Commission proposed amendments of current legislation to make an additional €58 billion (in current prices) available in 2020 – 2022. The proposal, known as REACT-EU (Recovery Assistance for Cohesion and the Territories of Europe), will top up cohesion funding for EU countries in the crucial first few years of the Covid-19 recovery.

Before deciding on the Commission’s proposal, the Council and the European Parliament requested ECA’s opinion on the proposal. ECA acted rapidly and delivered its opinion within one week after the requests.

In the opinion published today (14 July), ECA points out a tension between the proposal’s aim of providing the extra funding as swiftly as possible and the goal of making it available where it is needed most and will have most effect.

According to ECA, the proposal gives member states a free hand in terms of how to use the additional funding and lacks detail on how it will be coordinated with other EU instruments and national schemes. This creates the risk of fragmenting or duplicating EU support. Rushed spending might also prioritise absorption over value for money.

Due to the lower absorption rates of some member states there is a risk that they may not be able to spend the additional money effectively. ECA notes in particular that some of the member states likely to be hit hardest by the COVID-19 pandemic are also among those with the lowest absorption rates for the current programming period.

The proposal also includes a new method for allocating the additional funds to member states which may be distorted by the use of unrepresentative figures for unemployment in the calculations. In the proposal, most of the additional funding is calculated on the basis of the unemployment levels in June-August 2020.

In those member states where temporary job retention schemes are still in place in that period, this may lead to an underestimation of the true level of unemployment, as unemployment rates are likely to rise once these schemes end, according to ECA.

By providing significant additional funding in a short period of time, the new instrument also carries a higher risk of irregularity and fraud. ECA quotes Europol that has warned that “Economic stimuli such as those proposed in the wake of the COVID-19 pandemic will be targeted by criminals seeking to defraud public funding.”

Last but not the least, the absence of mandatory common indicators will make it difficult to assess effectiveness at the EU level. There is no requirement for an ex post evaluation specifically on the additional REACT-EU funding.

ECA’s opinions have usually a preventive effect and might save future mismanagement of EU funds. The EU institutions have now a short time to address the shortcomings in the proposal and mitigate the risks identified by ECA.

M. Apelblat
The Brussels Times


Latest news

England now accepting cheaper Covid tests from fully vaccinated travellers
Fully vaccinated travellers who enter England from non-red countries will only be required to book a lateral flow test to take following their ...
Re-introducing face masks indoors considered as Covid-19 situation worsens
Belgium's council of ministers will hold an emergency meeting on Monday to discuss the worsening epidemiological situation, and reintroducing face ...
Federal museums to receive €2.9 million booster shot
Federal museums will receive an additional €2.9 million in support from the government for the fiscal year 2021, of which the first payouts will be ...
European Parliament emphasises healthy food and animal welfare in EU Farm to Fork Strategy
The European Parliament adopted this week a resolution on the EU Farm to Fork Strategy calling for a fair, healthy and environmentally-friendly food ...
Threats of strike action could affect Brussels’ STIB network from Monday
Brussels public transport operator STIB's trams, buses and metros could be affected from Monday 25 October onwards as the union representing the ...
Number of international adoptions in Belgium continues to drop
The number of regulated international adoptions authorised by Belgium further dropped in 2020, continuing an ongoing decreasing trend. Last ...
Disaster drill with emergency services held at Brussels Airport
Around 300 people took part in a disaster drill held was organised on Saturday by Brussels Airport in collaboration with external emergency services ...
Austria presents bill to legalise euthanasia
Austria’s government on Saturday presented its proposals for legalising assisted suicide, in response to a Constitutional Court ruling that the ...
Brussels’ Museum Night Fever draws in some 12,000 visitors
Some 12,000 participants took part in the 14th edition of Museum Night Fever in Brussels, with the 29 participating museums filled to the maximum ...
Relaunch of 10,000 steps campaign to get Flemish people moving
The Flemish government is breathing new life into its 10,000 steps campaign to get people in the region moving after a recent survey found that a ...
‘No scientific basis’ for giving everyone third dose, vaccine expert says
The head of Belgium's Vaccination Taskforce has argued that there is not enough scientific evidence to support the Flemish government's decision to ...
Brussels bars linked to alleged sexual assault vouch to improve women’s safety
The management of the two bars in Ixelles, which made headlines in recent days after several young women reported that they had been drugged then ...