The race to spend EU funds before they expire means there’s been a rise in countries misspending the money, the bloc’s financial watchdog said on Thursday.
Investigations into €196 billion in funds paid out from the EU budget in 2022 found there were irregularities connected to 4.2 percent, according to the European Court of Auditors. That’s up from 3 percent a year earlier.
Countries can claim payments under the previous budget cycle until the end of this year while money under the bloc’s post-pandemic recovery fund must be spent by 2026.
“The administrations within the member states will be under much more pressure to spend the money quickly,” ECA President Tony Murphy told POLITICO. “The issue this time is that there’s so much more money around to be spent within a short period of time.”
He said this “increases the risk of either errors, or suboptimal projects, or, at the worst end of it, it means fraud as well.”
Auditors also found problems in 11 out of 13 post-pandemic recovery grants disbursed in 2022, amounting to €47 billion.
Errors recorded in regular EU programs ranged from claiming ineligible costs to poor compliance with EU and national procurement and state-aid rules, as well as 14 cases of suspected fraud.
In one case, a farmer in Italy claimed agricultural subsidies for a plot on which there was said to be lemon trees but an audit confirmed no trees were there.
As for the recovery fund, which is a pay-for-results scheme where countries receive money upon fulfillment of investment and reform objectives, auditors found 15 out of 281 objectives for which recovery grants were paid out were not satisfactorily fulfilled or weren’t eligible for funding or the measure had later been reversed — a finding which the Commission rejected. “We maintain that all payments in 2022 were made correctly,” a Commission spokesperson said.
Auditors worry Italy and Spain, two of the largest beneficiaries of the EU’s recovery cash, are struggling to spend regular EU funds allocated to them. Italian authorities have spent 67 per cent, and Spain has spent 57 percent of cohesion funds, raising questions about their capacity to spend EU recovery money on time and appropriately.
