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BCRCD - Bjelovar Center for Civil Society Development

Denial of disbursement of previously approved funds through ZNSs

19. May 2020.Categories: EU projects
Uskraćivanje isplate ranije odobrenih sredstava kroz ZNS-ove

A large number of beneficiaries of EU grants from the European Social Fund received a notice last week stating that the funds previously granted to them as part of the Request for Reimbursement of Funds (ZNS) will be withheld to a large extent during payment. This new situation is the result of insufficient liquidity of the state budget caused by the decline in economic activity during the COVID-19 pandemic, HUP reports.

Namely, the users received a notice stating the following in the previous days:

following the Ministry's letter (PT1), the Intermediary Body Level 2 (PT2) made a correction to the approval of the Request for Reimbursement of Funds (ZNS), which is changed "only" in the part related to the payment of the approved amount.

The final result of the above could be seen through the shutdown of project activities, but also by putting users in a situation where they would have to return all the money they had previously spent through the project. Such a sudden change puts users in an extremely unfavorable position, disrupting liquidity and not sharing responsibility for results and deadlines.

As mentioned earlier, the newly created situation with a lack of liquidity is the result of the decline in economic activities caused by the COVID-19 pandemic, and to some extent it may be a reasonable intention of the state to pay for expensive medical and protective equipment from abroad with diverted funds from the European Social Fund, but the state must also be aware obligation towards all projects in implementation, i.e. their users who, if this practice continues, will find themselves in problems with liquidity and the impossibility of completing the project. Therefore, this unilaterally communicated decision by the state authorities to reduce part of the already approved funds during the payment by a part of the advance from the beginning of the project implementation brings exceptional problems for users in the form of jeopardizing jobs and business.

Projects financed by the European Social Fund are largely financed at 100% intensity, which means that the users of these funds do not budget their participation in the projects. This is especially important when it is taken into account that these funds are used to finance vulnerable groups of civil society as well as other community stakeholders for whom European funds should be a catalyst for success and a generator for the creation of new jobs and added value.

The advance, which in the case of ESF projects is usually up to 40% of the total amount of the project, should provide the user with liquidity for the project activities because they would not be able to finance them themselves. If advance payments and later requests for reimbursement of funds were within the prescribed deadlines, these changes would not cause major difficulties, but as in practice, payments for ESF projects are delayed by more than half a year, unplanned reductions in payments could shut down many projects.

Given that, as a rule, advance "justification" (that is, the reduction of approved amounts for payment) in projects financed by the European Social Fund is carried out only at the end of project implementation, and neither the contracts nor earlier cases in practice provide for earlier "justification" of the advance, this precedent raises the question of the correctness and transparency of the actions of the state institutions that manage European money and which should benefit the end users, not harm them.

Therefore, this measure is imposed as illogical, wrong and counterproductive because non-payment of the approved amount also means the survival of jobs and businesses of a whole series, for the successful functioning of society, of important subjects, and therefore we hope that the state will see the same and change such bad decisions.

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