Slovakia prepares for €800 million EU funds loss

Slovakia still has to spend over 30% of its cohesion funds – a total of €4.3 billion – but with less than seven months before the deadline, €800 million, or 5% of the overall sum, is set to be lost.

While the previous government kept quiet on the emerging crisis, new technocratic ministers presented calculations within a month of taking office. Their plan includes moving funds and widening the buffer for failed projects. Still, €800 million, or 5% of the overall sum, is set to be lost.

“We will not lose billions. But spending the entire allocation is unrealistic,” remarked Deputy Prime Minister for EU funds, Lívia Vašáková.

Technocrats plan to divert €1,04 billion of unspent money to household’s and firm’s energy bills. This became possible with new flexibility introduced during the REPowerEU negotiations last year. Then Prime Minister Eduard Heger went on record saying the country would “financially collapse” if the exception, dubbed SAFE, was not made possible.

Another sum of €315 million is earmarked for Ukrainian refugees, using another crisis tool, FAST CARE. These moves will bring Slovakia’s implementation of the 2014-2020 envelope to 80%. That still leaves €2.94 billion to be spent this year.

As is the norm, projects were planned to cover for more than the allocated sum, as a buffer. This means that there should be a potential to spend €5.3 billion, comfortably more than needed.

However, the problems with administration and implementation are such that the government is still expecting almost €1 billion to be returned. One issue is that at this point, the possibility to move finances from badly performing programs to others is gone.

Multiple programs are highly problematic, particularly in environmental, infrastructural, digital, social and cultural areas. Large sums of money are divided between many small projects and the rise in building materials costs means that some projects are no longer feasible. Spending for marginalised communities is also historically low, as structural racism prevents local politicians from uptaking projects.

According to EURACTIV Slovakia sources, the European Commission has refused to push back Slovakia’s deadline. Appearing lax on oversight would look bad when it comes to fighting for a cohesion budget after 2027. Even though it gave Slovakia more time in the previous programming period, th having to give back around €500 million.

Government still has a few tricks up its sleeve, but those are unlikely to bring spending to 100%. €25 million may be switched from donations to financial instruments, to be invested in affordable housing. Phasing will also be implemented where possible, splitting costs between two programming periods.

Another issue is that fighting to save remaining funds is preventing officials from giving attention to the 2020-2027 envelope. Three years after its start, Slovakia is yet to present calls for the main cohesion programs, putting its future spending at risk as well.

(Barbara Zmušková, Marián Koreň | EURACTIV.sk)