The European Union’s financial watchdog reported on Thursday that due to the rush to use EU funds before they expire, there has been an increase in countries misusing the funds.
The European Court of Auditors discovered that in 2022, €196 billion from the EU budget had irregularities associated with 4.2 percent of the funds. This is an increase from the previous year’s rate of 3 percent.
Nations have the ability to receive reimbursements from the previous budget period until the current year concludes, while funds from the region’s post-COVID recovery plan must be utilized by 2026.
“The member states’ administrations will face increased pressure to expedite the spending of funds,” stated ECA President Tony Murphy in an interview with POLITICO. “The current challenge is that there is a significantly larger amount of money available to be allocated within a limited timeframe.”
He stated that this results in a higher chance of mistakes, subpar projects, or potentially even fraud.
Problems were identified by auditors in 11 out of 13 grants for post-pandemic recovery, totaling €47 billion, that were distributed in 2022.
Mistakes documented in typical EU initiatives varied from requesting funds for unauthorized expenses to inadequate adherence with EU and domestic guidelines for procurement and state aid, along with 14 incidents of possible fraudulent activity.
A farmer in Italy received agricultural subsidies for a plot of land that was believed to have lemon trees, but a review proved that no trees were actually present.
Regarding the fund for recovery, which operates on a performance-based system where countries are given money after meeting investment and reform goals, auditors discovered that 15 out of 281 objectives for which grants were given had not been satisfactorily met or were not qualified for funding, or had been reversed at a later time. However, the Commission disagreed with this finding, stating that all payments made in 2022 were accurate.
Auditors express concerns about the ability of Italy and Spain, two major recipients of EU’s recovery funds, to utilize their allocated regular EU funds. In terms of cohesion funds, Italian authorities have spent 67% while Spain has spent 57%, prompting doubts about their capacity to efficiently and timely use EU recovery funds.