European Structural Funds in Slovakia: Characteristics and Selected Realization Problems 20042006

1
European Structural Funds in Slovakia
Characteristics and Selected Realization Problems
2004-2006

• Juraj Nemec, Prof., PhD., Faculty of Economics,
  Matej Bel University Banska Bystrica, Slovakia
  and WSB Gdansk, Poland,
• Marta Orviska, Assoc. Prof., PhD., Faculty of
  Economics, Matej Bel University Banska Bystrica,
  Slovakia
• Peter Pisar, PhD., Director, Regional European
  Information Centre Banska Bystrica, Slovakia,

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EU structural funds Slovakia 2004-2006

• Slovakia, in spite of really fast economic
  development during last years is still eligible
  (except for Bratislava region) for the Objective
  I ERDF allocations, representing the largest
  source of potential incomes of the country from
  EU finances.

3
EU structural funds Slovakia 2004-2006

• Except for Objective 1 ERDF allocation several
  other important direct and indirect structural
  allocations have been made available for
  Slovakia, namely
• European Social Fund allocation
• European Agricultural Guidance and Guarantee Fund
  allocations
• Financial Instrument for Fisheries Guidance
  allocation
• Objective 2 allocation for Bratislava region
• Objective 3 allocation for Bratislava region
• Interreg allocation
• Equal allocation

4
Main financial tools

• - OP Basic Infrastructure
• - SOP Human Resources
• - SOP Industry and Services
• - SOP Agriculture and Rural Development

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OP Basic Infrastructure

• The main goal of this OP was to improve the
  economic potential of Slovak regions by
  supporting the development of public
  infrastructure. Following key priorities were
  defined
• Transport infrastructure.
• Environmental infrastructure.
• Local infrastructure.

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OP Basic Infrastructure

• The management body for this programme was the
  Ministry of Building and Regional Development of
  the Slovak Republic.
• Seven Slovak regions (except for Bratislava)
  became eligible for the use of support from this
  source and 422 363 452 from ERD was allocated.

7
SOP Human Resources

• The main goal of this SOP was to support solving
  of the unemployment problems via the support of
  disadvantaged citizen and improvement of
  employment chances. The main priorities were
• active labor policy,
• social inclusion and equality of chances at the
  labor market,
• improving qualification and adaptability of the
  labor force and new entrants into the labor
  market.

8
SOP Human Resources

• Seven Slovak regions (except for Bratislava)
  became eligible for the use of support from this
  source, financed from ESF by 284 480 923 and
  the Ministry of Labor, Social Affairs and Family
  of the Slovak Republic served as the management
  body.

9
SOP Industry and Services

• This SOP focused on the support of
  competitiveness of industries and services on the
  Slovak territory with following priorities
• Improving competitiveness of the national
  industries and service branches. The focus was on
  small and medium size enterprises, supporting the
  creation of new capacities and implementation of
  new technologies.
• Development of tourism, increased proportion of
  tourist industry revenues on GDP.

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SOP Industry and Services

• Seven Slovak regions (except for Bratislava)
  became eligible for the use of support from this
  source with allocation 151 210 683 from ERDF
  and the Ministry of Economy of the Slovak
  Republic served as the management body.

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SOP Agriculture and Rural Development

• The main idea behind this SOP was improved
  competitiveness and quality of agricultural
  production in Slovakia and the rural development
  support, with two defined priorities
• Support of productive agriculture.
• Support for sustainable rural development.

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SOP Agriculture and Rural Development

• Similarly to other OP seven Slovak regions
  (except for Bratislava) became eligible for the
  use of support from this source with allocations
  from EAGGF - 181 158 922 and FIFG - 1 829 065
  and the Ministry of Agriculture of the Slovak
  Republic served as the management body.

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Specific sources for structural financing

• The Objective 2 focused on the increased
  competitiveness in the sphere of small and medium
  enterprises, tourism and improved attractiveness
  of target regions for visitors and provided
  sources for Bratislava region. Its 2004
  2006 ERDF allocation was 37 168 218 and the
  management body for this source was the Ministry
  of Building and Regional Development of the
  Slovak Republic.

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Specific sources for structural financing

• The Objective 3 focused on similar priorities as
  SOP Human Resources and provided resources in
  this area for Bratislava region. Because of lover
  unemployment in Bratislava in comparison with
  other regions the supported projects were more
  targeted towards limiting the social isolation,
  support of re-qualification courses covering
  needs of new or restructuralized enterprises. It
  was co-financed from ESF and allocated in 2004
  2006 total 44 939 754 . The Ministry of Labor,
  Social Affairs and Family of the Slovak Republic
  served as the management body.

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Specific sources for structural financing

• The initiative INTERREG focused on the improved
  economic and social cohesion and was realized in
  2004 2006 on three lines
• INTERREG A (development of neighboring border
  areas),
• INTERREG B (state cooperation projects),
• INTERREG C (regional cooperation projects).

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Specific sources for structural financing

• The programme EQUAL supported SOP Human
  Resources, supporting projects focusing on
  innovations, partnerships and multinational
  associations, aiming on the fight against
  racisms, xenophobia and equality of men and women
  in the labor market.

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Specific sources for structural financing

• The Rural development plan financed by the EAGGF
  supported activities of the SOP Agriculture and
  Rural Development and financed projects with
  similar goals but of different type to avoid
  double financing.
• Cohesion fund sources supported projects in the
  area of transport and environment from the date
  of joining EU.

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Financial picture

• The total allocation for structural funds for
  the period 2004 2006 was 1 178 071 934 ,
  distributed to respective years as follows
• 2004 sum of 285 864 474 ,
• 2005 sum of 393 094 678 ,
• 2006 sum of 499 112 782 .
• During the implementation Slovakia was able to
  achieve on 30. 6. 2008 the contracting level
  101,57 , but the real realization was much
  lover.

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Table 2 Use of allocated resources
Source Ministry of Finance
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Main implementation problems

• Management and monitorig
• typical problems are delayed administrative
  control by the management bodies, the use of
  invalid forms, the limited quality of controlling
  the reality compared to what is invoiced, double
  financing of some activities from more sources,
  late submission of control protocols, formal
  controls, formal control reports, lack of ex-ante
  control, findings are not converted to measures
  to cope with them (including time frame for
  improvements), financing of non-eligible
  projects, formal mistakes in the contract,
  signing of contracts with bodies without legal
  status, during the review of monitoring reports
  the reality of submitted indicators of progress
  is not controlled (was the goal really
  achieved?), the real amount of generated project
  revenues is also not reported and controlled
  properly.

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Main implementation problems

• Payment process
• problems like dual payments for the same
  activity within one project, low quality of
  submitted evidence (control lists, summarization
  protocols), non-accepted expenditures were
  reimbursed.

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Main implementation problems

• Public procurement
• Very many problems are connected with this part
  of the realization process, like low quality and
  effectiveness of control of procurement, tender
  documentation is frequently different from
  delivery, the final contract is different from
  tender documentation, the winner was not selected
  according the tender documentation, the frequent
  use of direct purchasing, the qualification
  requirements for candidates/applicants were too
  comprehensive, non-eligible selection criteria
  were used, the contract prices were increased
  during the realization process, mistakes in
  procurement documentation.

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Main implementation problems

• Projects selections and evaluation
• - unfortunately also this crucial part of the
  process was connected with important failures.
  Formal probity control of submitted projects was
  not realized in some cases, the suggestions of
  evaluation committees were not followed (like
  budget cuts, conditionalities). In some cases
  even the final allocation was higher than
  requested sum or projects were realized
  differently from what was approved by the
  evaluation committee.

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Main implementation problems

• Non-eligible expenditures
• invoicing of services not related to the
  contract, reimbursing from different payment
  source, low quality of documentation proving the
  eligibility of invoiced sums, payment of salaries
  before the performance, invoicing non-realized
  services, invoicing more services than really
  used, non-eligible travel costs, corrections in
  the documentation, invoicing telecommunication
  services not used, purchasing computers after the
  realization of a training course, the same person
  was paid from two projects for activities in the
  same day.

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Conclusions

• Too many problems are connected with processes
  of the use of structural funds in Slovakia,
  resulting in the program period 2004 2006 into
  the high risk of under spending (during the last
  half year of this period almost 25 of
  allocations still needs to be invoiced and
  reimbursed, what is not realistic). This
  situation is partly caused by the general
  societal environment in the Slovak society (not
  discussed in the paper), but very much also by
  many intentional and non-intentional
  implementation mistakes.