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Ec Suspends Phare Payments

The European Commission sent a letter on February 28 to Bulgaria's Ministry of Finance, demanding the temporary suspension of payments under PHARE pre-accession aid scheme for projects worth 80 million euro, managed by the finance and contracts unit the ministry and PHARE executive agency with the Ministry for Regional Development and Public Works.

The projects in question had been contracted before the executive agencies’ accreditation was completed, while every stage of tender preparations and contracting were monitored by the European Commission Delegation, the finance ministry said in a statement on its website.

The Directorate General for Enlargement of the EU criticised the poor management and lax control over spending, as well as suspected misappropriation of funds and fraud related to absorption of funds under the projects handled by the two agencies.

If Bulgarian authorities fail to provide evidence, certifying that the system has significantly improved and that they have implemented Brussels’ recommendatory correction measures by March 31 this year, the EC will revoke the decision of entrusting the PHARE funds management to those two executive agencies. Consequently, contracts, which they have concluded after June 29, will be regarded inept to the EC’s support, the letter said.

This is the second such request this year. Payments under the ISPA programme were suspended due to recent corruption allegations involving the National Road Infrastructure Fund. The enforced restrictions will not stop the contracting under PHARE 2006 financing agreements.