Bulgaria to finance projects after EU suspends aid over corruption

Aug 7, 2008, 11:32 GMT

Sofia - Bulgaria said Thursday it would itself pay for projects which the European Union has refused to finance over corruption suspicions.

'We have the right to finance projects with national means,' Deputy Premier Meglena Plugchieva, who is tasked with bringing the handling of EU aid funds into order, said.

Because of widespread mishandling of aid, Brussels two weeks ago halted almost 500 million euros (773 million dollars) intended for agriculture and infrastructure development of Bulgaria, which joined the EU along with Romania in 2007.

Bulgaria's Socialist-led, three-party ruling coalition nevertheless agreed to push the development projects along with financing from a budget currently running at a surplus of 3.8 billion leva (3 billion dollars).

The EU on Wednesday approved Bulgaria's plan, packaged together with additional spending controls.

Brussels halted its payments after a European Commission report cited evidence suggesting that senior Bulgarian officials had diverted EU aid. The European Anti-Fraud Office (OLAF) audited Bulgaria's EU aid agency in June.

The cut-off involves yet-to-be spent 250 million euros from the so-called PHARE programme that helps new members build institutions, 121 million euros for rural development and 115 million euros from a fund for major infrastructure projects, mainly highways.