Economic Policy Review ISSN 1313 - 0544

My money or the European money!?

Author: Peter Ganev / 08.08.2008
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During the past few years in Bulgaria there has been continuous talk about the EU money. People wake up and fall asleep with the term "put the funds to use" in their minds. The impression is created that this money is vitally important to the lives of Bulgarians - without which there would be no infrastructure, there would be no agriculture and human resources would not develop and over all everything would go to hell. However such perception is fundamentally wrong!

The money from the EU, which we all desire so much, are a lot by themselves, but they are not a significant part of the money which will circulate in our economy. In addition, let us leave aside the money which is not redistributed and is moved around only by the market forces - in other words the larger part. If one takes a look only at the funds which are redistributed by the government, we would immediately notice that they are at least ten times greater than the funds that we expect from the EU. Or to put it differently, the money which the State is taking out of our pockets as taxes are at least ten times greater than the EU money, which has been causing all these scandals in the past few days.

Let us illustrate this difference using official data. According to data provided by the Ministry of Finance for the first five months of 2008, the totals amount of revenue and aid according to the consolidated fiscal program is 11 757 million levs - there is the money which under one form or another would be redistributed. From this amount - 10 905 million levs are from the national budget (i.e. collected from taxes) and only 851 million are from the so called European funds. The difference is more than apparent. The truth is that while we argue about the EU funds, we pay less attention to what the Government is doing with our own money.

Source: Ministry of Finance

Actually employing the European funds is a process. Using such data about the middle of a given year does not always give an accurate picture. For that reason let us see how the things are for the period 2007-2010.

For these four years the expected revenues from the programs before joining the EU (PHARE, ISPA and SAPARD), the temporary financial instruments, as well as the programs financed with funds from the structural instruments are a total of 7 171 million levs (Report on the Bill of the State Budget 2008)

This amount really sounds very serious, but what is going to be the amount which the State will have due to collecting various taxes during the same years?

For the period 2007-2010, the revenues from the national budget will be definitely greater than 100 000 million levs. Apparently the data confirms what we mentioned above. Even if we put to use without any problems the EU funds, they would represent about 5-6% of the funds available through the national budget - i.e. the money taken from you and me!

All the audits into the use of EU funds lead to scandals. However these are followed and requirements enforced from outside, i.e. the opportunities for misuse are less. But what should we say about the money from the national budget? Do you think that it is spent in a wiser fashion then the European funds? Since everybody claims that the EU funds can achieve wonders, why than do we need to give so much money to the State? May be it is a better idea to leave some of it in our own pocket and that it should not be taken at all?