On October 19, 2010, the European Commission published its communication on the budget review. The main conclusions of the document consist in the fact that current regulations on the European Union budget determine a slow reaction to unforeseen events, while many complexities hinder efficiency and transparency.
The CE Communication shows that the EU budget has been determinant in developing key projects on economic growth, security, safety; however, when sudden circumstances arise (crises, natural disasters etc.), it has a slow reaction rhythm. Also, current rules make shifting funds a difficult process.
“The review principles are the background of the future EU budget for the period beyond 2013. At times where public spending is under pressure, we suggest ways to achieve a European budget that is up to the challenges we are facing collectively, not necessarily through increased expenditure, but by focussing on the right priorities, the added value, results and the quality of European spending. On the revenue side, it is high time to promote a fair and transparent system”, declared the European Commission President José Manuel Barroso.
The current system of budget criteria is focused too much on consumption, instead of actual results. The EC underlines that budget negotiations should be guided by European financing priorities. “The budget review is not about giving figures for the next financial framework, it is about suggesting ways to adapt the budget to tomorrow’s requirements. Also, the EU budget should focus on programmes that have a real positive impact”, declared Janusz Lewandowski, European Commissioner for Financial Programming and Budget.
The budget review establishes the objectives of the Commission who commits to recast the aspects that constituted its elaboration. The budget will help develop a sustainable economy in the EU. Consequently, by 2020, EU has to make decisions to set the foundation of a sustainable society. To that end, it is necessary to revive the economy, review the infrastructure policy and provide long-term stability. More flexible procedures are necessary so that the budget could meet the changes imposed by circumstances and, at the same time, support long-term investments. “In times of fiscal constraint, innovative financial instruments play a major role in determining the impact growth and the establishment of EU priority projects, so that all could be achieved. This is why, the budget needs to be redirected to maximise the benefits of each euro spent towards economic growth”, shows the Communication on the Budget Review.
Therefore, EU funds will be directed towards viable projects that have a positive impact on the European economy. This aspect is also clearly underlined by Commissioner Lewandowski: “the budget must help deliver key policy priorities for European citizens, it must intervene where a euro spent at EU level brings more benefits than if spent at national or regional level”, pointed out the European Commissioner for Budget.
Stricter rules imposed for infrastructure project financing
The document on the budget review stipulates the fact that sectors such as transports, communications and power supply networks bring “enormous benefits to society”, but market failures can prove that added value EU projects can fail to attract the necessary investments coming from private companies. “The outcome costs EU in terms of competitiveness and the efficient operation of a single market”. Financial support at European level can help initiate extremely important projects with long-term commercial potential.
Countries such as the US or China implement projects that require massive infrastructure investments. To that end, maintaining competition determined the EU to grant special strategic interest to infrastructure projects which sustain long-term economic growth.
For transports to have an intense economic contribution, it is necessary to eliminate deadlocks on strategic Trans-European routes, encourage their expansion and the development of cross-border and intermodal connections. “To select the best projects, it is necessary to impose stricter criteria: those which can prove that they have the necessary management capacity and which can be launched in a reasonable time frame and need to establish reference targets in terms of sustainability. Railway infrastructure projects such as construction of new transport networks where needed will always require public investments. Another important criterion are the areas capable to attract private investments”, shows the Budget Review document.
In order to determine the investment priorities, it is absolutely necessary to jointly approach the EU and national budget, between the EIB and private investments. This requires a new European regulation to accumulate public and private resources. EU also pays special attention to projects which include extension beyond EU borders to the benefit of more than one party.
by Pamela Luică
Share on:
