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News | Wednesday, 25 February 2009

Ministry slams PL charge on €12.6m loss on EU membership

David Darmanin

Reacting to a story featured on sister paper MaltaToday last Sunday, wherein we reported that government left €180 million unspent in EU funds over the past two years, the Finance Ministry yesterday sent its reactions to Business Today to defend its stance over the situation.
Since the start of a seven year agreement for structural funds signed in 2006, Malta’s contributions to EU coffers totalled €12.6 million less than the money it received. Therefore, over the past two years, Malta has virtually been a net contributor to the EU, rather than a net beneficiary as was originally planned prior to accession.
This was pointed out by PL leader Joseph Muscat at a recent party event.
But in rebuttal to this charge, a spokesperson for the Finance Ministry said that besides structural funds, Malta has tapped other sources of EU funding, and therefore has not run at a loss from EU membership.
“The EU approved a new budget for 2007-2013,” the ministry explained. “From this budget, Malta was allocated €855 million. This is in addition to additional funding that are awarded to local companies, other government entities and NGOs that do not fall under this general budget. These include, for example, funds addressed to tackling the issue of illegal migration and the globalisation adjustment fund. These take they funds tally to over €1 billion.”
Furthermore, the ministry pointed out that “a country does not miss out on funds from a seven-year budget in the second year of the running of the same budget. Rather, to the contrary, Government gave evidence that it is administering EU funds in a very effective manner.” . Although the funds will remain at the Maltese government’s disposal in the next few years, spending unused EU funds becomes more difficult as time passes. In last Sunday’s feature, Scicluna compared this situation to keeping “uneaten food in the fridge”.
“It is not thrown away but I cannot imagine any person eating today’s lunch and the previous three days’ refrigerated uneaten food all in one day,” Scicluna said. “It is physically impossible. The same may be said for the EU funds. They will be kept for us, but the problem of spending them all becomes more difficult as time passes.”
Government was clearly irked at this remark, to which the ministry spokesperson answered: “In all honesty, I fail to understand this insistence on the lack of usage of funds when we have explained quite clearly how the EU funds system works.
“A recent EU report that indicated Malta as the country that made the highest use of EU funding – 91 per cent of funds available,” he added.
But if one calculates the €855 million grant for seven years since 2007, and splits the amount into a yearly budget plan, in 2007 government spent 29 per cent of available funds, and 44 per cent the following year.
“However this acceptance was granted in June 2007,” the ministry told Business Today. “So obviously the funds couldn’t have been used in January to June. And obviously no other country could since no other country had the approval before Malta.
“Please appreciate that although in the Operational Programme for Malta we had already identified the major projects that will be carried out through the next seven years, there is a procedure that has to be observed. This implies that only at the end of the project can a country ask for financial allocation that had been already agreed.”
In Malta’s case, the ministry explained, the majority of approved projects are “relatively major or major infrastructural projects”, which means that they will need to be carried out over a number of years. Such projects include the construction or upgrading of a number of major roads; projects that benefit the commercial community and the economic sector in general (such as the expansion of the Kordin Business Incubation Centre and the improvement of industrial estates); construction of new educational premises - such as ICT Faculty in University, and other works at MCAST, Junior College, the expansion of ETC’s Skills and Development Centre; general projects intended to embellish the country (such as the coastal zones in Qawra and Sliema) and the restoration of historical fortifications.
“The EU has already given Malta confirmation that it will be supporting these projects, and many more, by 85 per cent of the approved investment,” the government official said. “Malta has two years following the end of the project to get the available funds. So once again, EU funds do not come at the beginning of the project but rather at its end, up to two years later.”

ddarmanin@mediatoday.com.mt

 

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25 February 2009
ISSUE NO. 571

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