Bulgaria is recording a slowdown of EU funds’ absorption, which could limit new investments in infrastructure and the energy efficiency of the building stock, according to research by the Eastern European Construction Forecasting Association (EECFA).
Throughout the years, the EU funds have supported Bulgaria’s investments in energy efficiency of the residential and non-residential buildings, urban mobility, road and railway connectivity and utilities.
“However, as of May 2024 EU funding, along with national sources, prove to be absolutely underutilized for various internal and external reasons. These include the insufficient administrative capacity, the lack of project readiness, new priorities at EU level due to the pandemic (as the RRP was prepared as response to it) and Russia’s war against Ukraine,” according to Yasen Georgiev EPI, EECFA Bulgaria.
The research shows that the average disbursement rate of all EU-funded programmes and instruments during the ongoing budget cycle since 2021 is around 4% as of May 2024.
On the one hand, the low absorption rate is due to the delays in finalizing EU projects within the previous financial framework (2014-2020) and the late approval of the new EU programmes within the current budgetary framework (2021-2027).
On the other hand, this performance is linked to home-made political and bureaucratic deficiencies that struggle with the new concepts for EU funding that is made available provided that commitments to reforms are met within strict deadlines.
Furthermore, Bulgaria is in the fifth implementation period of its Recovery and Resilience Plan (RRP) but has met only the respective milestones and targets that are set in the first period (with a deadline in June 2022). Thus, projects under the RRP will have to be either downsized and/or implemented with national funding only.
Georgiev pointed out that the outcome of the elections and the lack of a strong political coallition in government could have a negative impact for Bulgaria’s EU funds absorption efforts.
