FinMin: Amount of subsidies withheld by EC not yet finalised

Prague/Brussels/Luxembourg, Oct 16 (CTK) - The amount of money from EU funds that the European Commission will deny the Czech Republic is not final yet and might be lower than the Kc12.5bn announced yesterday, Czech Finance Ministry spokesman Ondrej Jakob has told CTK.

The EC proposed yesterday that it will not pay up to EUR500m (Kc12.5bn) worth of money from EU funds to the Czech Republic this year for its programmes Transport and Environment.

The reason behind the EC's step are shortcomings and errors the Czech Republic had made in the administration and control of the drawing of EU subsidies.

According to Finance Minister Miroslav Kalousek, the EC's proposal, which was agreed beforehand with the Czech side, might have impacts on the deficit of this year's state budget as it can lead to a situation when not all the expected money, which have already been paid from the budget to applicants for subsidies for concrete projects, will be transferred to the Czech Republic from the EU.

"It is, of course, a problem because it means that there were serious mistakes in the past," Kalousek said.

The Czech Republic is not losing the money because it can be used to finance other projects, Prime Minister Petr Necas told CTK in reaction to the EC's announcement.

The same opinion has been expressed by the Local Development Ministry. "The money can be used again, for other projects. This means that the Czech Republic has not lost any money and is not losing it now, either," Deputy Local Development Minister Daniel Braun told the Czech Radio and CTK.

Necas said the Czech cabinet has managed to reduce the EC's original proposal.

"Originally, the Commission proposed (a correction of) over 13 percent for each of both programmes, but now a correction at the amount of 10 percent for Transport and 5 percent for Environment will be applied," Necas said.

"The exact amount of the correction is not final yet. It is highly probable that it will be lower than the announced Kc12.5bn for operational programmes Transport and Environment," Jakob said.

Local Development Ministry spokeswoman Jana Jaburkova said the amount is certainly not final yet because it is still being discussed.

The EC could make further "corrections" in the months to come. The commission might decide in November and December about the money from other problematic programmes such as the programmes North-West and Central Bohemia.

Czech Foreign Affairs Ministry Karel Schwarzenberg said he feared bigger losses of EU subsidies.

"It was clear that there will be some losses after what had happened in our country," Schwarzenberg said yesterday during a meeting with colleagues in Luxembourg.

The EC said again that experts recorded shortcomings in the entire management and control systems of the European Regional Development Fund and the Cohesion Fund, from which billions of euros are transferred to member states for various projects.

This led EC to block the payment of EU money to the Czech Republic in March and demand changes in the system. Czech authorities managed to partly correct the situation in summer and payments to some programmes were renewed.