STATE AUDIT OFFICE
- Press Release -
Skopje, 25 January 2023
Lack of system for using EU funds for co-financing strategic projects
Using funds through Western Balkans Investment Framework (WBIF) initiative imposes obligation to design a more efficient system
The State Audit Office conducted performance audit on the topic "Process of obtaining and using funds from the Western Balkans Investment Framework (WBIF)", in line with the Annual Work Program to answer the question: "Is there efficient and effective system for obtaining funds through the Western Balkans Investment Framework?
WBIF objective is to increase the capacity of Western Balkans region for financing key infrastructure and priority investments in accordance with the accession priorities and to improve the overall coordination of assistance.
Due to the role of WBIF in IPA III for greater absorption of funds as well as the importance of EU financial assistance for the Western Balkans determined in EU Economic Investment Plan for the Western Balkans amounting to 9 billion euros for regional projects worth 20 billion euros, there is an obligation to design more efficient and economical system for obtaining and using funds through WBIF with national legal framework that clearly regulates the role and competences of all institutions involved in the process.
A change in the policy of financing projects with budget funds or public-private partnership is the reason behind losing approved grants for technical assistance and inability to co-finance projects with investment grants through WBIF, which ultimately results in ineffective application of this instrument.
European Union is allocating funds for co-financing of infrastructure projects for technical assistance and investment grants by publishing calls for proposals. According to data obtained from the Secretariat for European Affairs (SEP) and published on WBIF website, WBIF has financed projects with total value of 2.6 billion euros, for which 43 grants in the amount of 421.8 million euros were approved, i.e. 391.9 million euros for investment grants and 29.9 million euros for technical assistance.
At the end of July 2022, within the sixth investment call for 576 million euros approved by the European Union for the first projects for implementation of the EU Economic and Investment Plan for the Western Balkans, 230 million euros were approved for the Republic of North Macedonia, i.e. 40 % of total assets.
From 2009 to 2022, the Republic of North Macedonia applied to 28 calls for technical assistance and 7 calls for investment grants, of which investment grants worth 385 million euros were approved for 12 projects. For most projects, the investment has not started, grant agreements have not been signed and there is a standstill in the planned dynamics.
If the projects are not completed and not in use within the stipulated period, there is a risk of losing granted funds or creating obligations for returning the investment grant.
The system for receiving funds through WBIF does not have clearly defined legal and institutional framework with competent institutions and bodies, no appropriate national legal framework for using WBIF, and the single list of projects does not provide clear picture of the most strategically important and "mature" projects in conditions of limited fiscal borrowing space.
With the set up of a National Investment Committee and a Single List of Projects in 2015, the Republic of North Macedonia fulfilled the conditions for participation in calls for investment grants as a beneficiary country.
The audit ascertained that due to the requirement for application of projects financed with loans from official creditors, there is no prioritization of projects.
Namely, the National Investment Committee is responsible for setting up the Single list of projects, but it does not have the authority to select projects for application to calls for technical assistance and investment grants. End users submit individual applications which are approved by the Government of the Republic of North Macedonia, before being submitted to the European Commission.
Republic of North Macedonia has applied for four investment projects and has received support for all: construction of East Corridor VIII (third phase) in the amount of 155 million euros, Skopje sewage treatment plant in the amount of 70 million euros and construction of photovoltaic power plants in Oslomej I, Oslomej II and Bitola in the amount of 6.7 million euros.
Press contact:
Albiona Mustafa Muhadziri +389 72 228 203 [email protected]
Mijalche Durgutov +389 70 358 486 [email protected]
Martin Duvnjak +389 75 268 517 [email protected]