News | Sunday, 15 March 2009

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Malta’s EU funds are not being spent – Scicluna

Labour MEP candidate Edward Scicluna said the government is accounting for EU funds it has not yet spent, playing down claims that Malta is at present a net beneficiary of European funding.
He said millions from the EU’s Structural and Cohesion fund programmes have not yet been spent from the 2007 and 2008 allocation and that Malta needs to start spending the money now.
On 2 March, Labour leader Joseph Muscat declared that Malta had become a net contributor to the EU budget due to the non-utilisation of EU structural and cohesion funds.
Malta’s permanent representative to the EU, Richard Cachia Caruana replied saying that Malta had made a net gain of over €200 million since EU membership.
Labour claims that Cachia Caruana is including a €46 million advance to Malta, deposited by the EU at the Central Bank, that is so far unutilised.
While Labour claims the money has not yet been transferred to the Maltese government, Cachia Caruana says the €46 million are Maltese funds and are deposited in a Central Bank of Malta account belonging to the government.
The €46 million are ‘advance payments’ on the €855 million Malta will receive up to 2013 in EU funds – for which the government must identify projects to claim the money.
Scicluna says the money is being conjured as an income for Malta because of an “outdated accounting system”.
“These monies will be given to the beneficiaries of the EU Structural and Cohesion funds, that is, contractors. If the government owes them millions for their services rendered in 2008, writes them the cheques which will be paid out in 2009, how is it accounting for them? Given the current outdated cash-basis system, it will claim the expense when they pay out the cheques in 2009 and not when the services were rendered in 2008.
“In this case I’m afraid the €46 million, although belonging to the government, technically will be reported as EU programme expenditure when the beneficiaries receive and subsequently cash the respective cheque. I am afraid RCC is not correct to add them in order to prove Joseph Muscat wrong.”
Scicluna says that with accrual accounting, the money is accounted for when it is actually owed, and not when the cheque is finally paid out.
Labour has accused the government of being unable to tap the EU funds successfully. But Cachia Caruana says Malta can invoice the EU for payment of the funds within four years of the allocation – meaning it can invoice the EU for the 2010 allocation as far as 2013. “EU payments are low in the first years but increase throughout the programming period as projects are completed. Malta receives higher advance payments to have liquidity in hand to kick-start the implementation of projects.”
But Scicluna says Malta is not even spending the money now. “Malta hasn’t spent half the allocations for 2007 and 2008. Given that 2009 is a recessionary year, the European Commission has allowed us to use up the 2010 funds this year to accelerate works and get the economy going. But how can a government that didn’t yet spend half its monies in the past two years, be expected to spend the other half, and all of 2009’s and 2010’s allocations?
“We need the money to be spent now – it’s like a baby that needs a full bottle of milk but is only given half now and the other half kept in the fridge. Why, if the baby needs it all now? And our economy needs these EU funds to be spent now.”

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