Did you know...
The EU budget is an important tool that puts EU policies into practice. It finances actions that Member States cannot fund on their own or that they can fund more economically by pooling their resources.
The EU budget is adopted through a democratic procedure: it is prepared by the European Commission (the EU’s executive body) and is then discussed and agreed by the Council of the EU (representing EU Member States, including Bulgaria) and by the European Parliament (where the democratically elected Bulgarian representatives sit).
Once adopted, the budget is then managed either jointly by the EU Member States and the Commission, or directly by the Commission.
In practice, 80 % of the EU budget is managed by national or regional governments. Through grants, loans and other forms of financing, the EU budget provides financial support to hundreds of thousands of beneficiaries such as students, scientists, NGOs, SMEs, farmers, towns and regions.
The EU budget is largely financed by ‘own resources’ which are based on three kinds of sources:
This system has been unanimously decided on by the EU Member States for a 7-year period, and has been ratified by all the national parliaments. Its aim is to provide a reliable and sufficient level of revenue for the EU budget, while at the same time taking into account the Member States’ ability to pay. Each Member State thus contributes in line with its wealth.
The other sources of revenue to the EU budget include taxes on EU staff salaries, fines on companies for breaching competition laws and bank interest, etc. There is no direct EU tax. EU countries remain in control of their taxes.
Some 94 % of EU money is spent on the various EU policies, and most of it goes back to Member States. In many cases the EU budget supports large and complex projects. One of them is the European Partnership Action against Cancer, where collective European effort helps to prevent the disease and find a cure for it.
Approximately 6 % of the EU budget is spent on the functioning of the EU institutions. This is used to pay for the salaries and pensions of EU employees, translation and interpretation, security, buildings and IT systems etc. This expenditure is necessary in order to allow the EU to work.
There are around 55 000 EU civil servants and other employees serving 508 million Europeans and countless people in need around the world. By comparison, the German Finance Ministry alone employs more people than the European Commission’s services responsible for financial affairs, taxation and budget (1 850 vs. 1 542).
Furthermore, in order to adapt to the harsh economic situation in Europe, the EU institutions are also cutting costs: the Commission’s wide-ranging staff reform is expected to save EUR 8 billion by 2020, reducing its staff by 5 %, while at the same time increasing its working hours.
The charts below provide an overview of how much the EU invested in each of its Member States in 2013, and show the contribution of European funding to each country’s wealth. In Bulgaria, EU funding represents 5 % of the country’s (GNI).
The Commission has put into place robust internal control measures in order to ensure that funds are spent efficiently and effectively.
As 80 % of the EU budget is managed by national or regional governments, Member States also play an important role in ensuring that rules are observed, and in detecting and addressing irregularities and fraud.
Additionally, the European Court of Auditors reviews the EU accounts every year. For several years the Court has confirmed that the EU accounts are properly kept, but also points out errors in procedures (e.g. accounting errors by national programme participants or claims for non-eligible costs). Errors do not mean that EU money is lost, wasted or affected by fraud. A large part of the money spent in error is recovered.
In addition, the European Parliament approves how the Commission has spent the budget following the end of every financial year.
If you want to see which entities have received EU funding, the Financial Transparency System will show you who has received payments from the EU budget.
Although the EU budget is adopted every year, it must be established within the limits of the multiannual financial framework (MFF). The MFF is an expenditure plan setting the maximum annual amounts which the EU can spend in different fields of activities over a 7-year period. It therefore shapes the EU’s political priorities for 7 years.
For the 2014-20 funding period, the EU wants to meet the targets of the Europe 2020 growth strategy, focusing on what Europe needs in order to overcome the economic and financial crisis and concentrating on areas where it can make a genuine difference. Some of the Commission’s proposals for radical reform were watered down by the Member States, but very important changes remain. Key elements of the 2014-20 MFF include:
In 2013, Bulgaria’s public expenditure amounted to around BGN 30 billion (EUR 15 billion) – that is much less than the BGN 282 billion (EUR 144 billion) EU budget for the same year. However, it represented 39 % of the country’s public GNI, whereas the EU budget for the 28 member countries was roughly 1% of the Union’s GNI.
The EU and national budgets serve different, yet complementary purposes. The EU budget targets areas where EU money can generate added value. For example, a project of such magnitude as the European satellite navigation system Galileo could not be financed by a single Member State alone.
Unlike Bulgaria’s budget – or any other national budget – the EU budget does not fund defence expenditure or social protection, but is mostly investment spending. For example, as an effective transport network is essential for a successful economy, the EU has co-financed the construction of a motorway crossing almost the entire country and linking Sofia to Burgas.
Bulgaria is one of the EU member countries that receives more from the EU budget than it contributes, and this will remain the case throughout the next budgetary period (2014-20). Bear also in mind that this net balance does not accurately reflect the many benefits of EU membership. Many of them, such as peace, political stability, security and freedom to live, work, study and travel anywhere in the Union cannot be measured. In addition, European investments are intended to benefit the EU as a whole, and European funding in one country can benefit other EU members as well.
Operating budgetary balance: the difference between what a country receives from and pays into the EU budget. There are many possible methods of calculating budgetary balances. In its financial report,the Commission uses a method based on the same principles as the calculation of the correction of budgetary imbalances granted to the United Kingdom (the UK correction). It is, however, important to point out that constructing estimates of budgetary balances is merely an accounting exercise of the purely financial costs and benefits that each Member State derives from the Union and it gives no indication of many of the other benefits gained from EU policies such as those relating to the internal market and economic integration, not to mention political stability and security.
The largest area of EU expenditure in Bulgaria is agriculture and rural development. EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. The agricultural income per worker increased by 49 % between 2007, when the country joined the EU and 2012. A small company producing carved wooden furniture in Kuklen is just one example of EU funding in action: the company was able to buy a new high-tech machine, unique in Bulgaria, which increased production and enabled it to find new business partners in Europe.
EU countries have made agriculture a European rather than a national policy. It is the only policy almost entirely funded by the EU. That is why it represents a large proportion of the EU budget. It is also less costly for EU countries as a whole, than implementing 28 different national policies.
The common agricultural policy has undergone a major reform, whereby its share of the EU budget has fallen from 70 % in 1985 to around 40 % today, and is set to continue falling to 33 % in 2020. A new reform which came into force in 2014 further strengthens European agricultural competitiveness, making it more environmentally friendly and reducing the gap for countries receiving less money than the EU average.
The second largest share of the money that Bulgaria receives from the EU budget goes to its regions. EU regional policy aims to reduce the economic, social and territorial disparities between Europe’s regions and countries. It invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. The environment and transport infrastructure are top priorities for Bulgaria. For example, the EU financed half of the construction of Sofia’s second metro line and invested in the modernisation of water systems in Gabrovo and Vratsa.
In addition, thanks to the internal market, which makes it easier for companies to do business with counterparts in European countries, Bulgarian exports steadily increased since the country entered the EU. The country is also progressing in terms of development: between 2007 and 2013, the Bulgarian growth rate increased from 40 % to 47 % of the EU average.
However, Bulgaria is missing out on the development opportunities offered by EU funding because the country spends little of the money it is allocated from the EU budget. The situation has improved since 2007, and measures have been introduced to better prevent and punish fraud – as well as to improve the administrative capacity necessary to deal with EU funds. Nevertheless, Bulgaria still lingers behind in its use of EU funding.
All values in national currencies have been converted using exchange rates from October 2013.
In Sofia, a new 6.5 km section of metro completed the missing central section of line 2. The new link has seven metro stations. It forms part of an expanding metro system that will eventually include three lines, all intersecting in the city centre, and more than 60 stations. The project will cut journey times within the city and reduce road congestion. (EU funding: BGN 308 million – EUR 157.4 million)
A modern motorway stretching 356 km from the Bulgarian capital Sofia to the Black Sea coastal town of Burgas has been built. Under a new project part-funded by the EU, the final missing link – a 115 km stretch between Stara Zagora and Karnobat – has been completed and put into operation on 15 July 2013. Travelling by road to south-eastern Bulgaria is faster and safer. (EU funding: BGN 560 million – EUR 286.2 million)
Four green areas have been given a face lift in Svilengrad: the area now has trees and bushes, playgrounds for children and paths and walking areas. By improving living conditions and quality of life for local residents, the project is helping to dissuade young people from leaving the area in search of better living conditions. (EU funding: BGN 742 140 – EUR 379 456)
Doctors from the military hospital of Sofia are taking part in an EU-funded research project investigating a new treatment for strokes. The new technique involves cooling the patient’s brain and could significantly reduce the number of stroke-related deaths and disabilities. (EU funding: BGN 21.3 million – EUR 10.9 million)
The local high school in the town of Ihtiman is one among 1 880 Bulgarian schools taking part in ‘Making school more attractive for young people’. The initiative is intended to reduce the number of early school leavers by improving employment opportunities. Ihtiman school encourages students to participate in extra-curricular activities that will help them develop personally, intellectually and physically. (EU funding: BGN 111.7 million — EUR 57.1 million)
Bulgaria has an action plan to dismantle 130 large-scale children’s homes and move all residents into more modern, suitable accommodation within 15 years. The plan also foresees support services for children and young people. The initiative is part of the ‘Childhood for All’ project, which supports children and young people with physical and intellectual disabilities. (EU funding: BGN 90.9 million — EUR 46.5 million)
Erasmus + is not only for students. The programme allows new entrepreneurs to spend time in an enterprise in another EU country in order to acquire the skills needed to manage a small or medium-sized enterprise. The stay is partly financed by the European Commission.
Major works in the city of Gabrovo will improve drinking water distribution and treatment, as well as wastewater collection and treatment. This will mean safer drinking water for approximately 63 000 people, while an additional 17 % of the population will be connected to the sewerage system. (EU funding: BGN 94.1 million — EUR 48.1 million)
Bulgaria recently built five new solid waste landfills in the areas of Montana, Ruse, Sevlievo, Silistra and Sozopol. The project brings the nation into line with European standards and avoids potential environmental damage from pollution and unregulated landfills. The landfills also improved recycling and collection of waste in the five areas. (EU funding: BGN 86.4 million — EUR 44.2 million)
A project is restoring populations of birds of prey and other emblematic species in south-west Bulgaria by tackling direct persecution and other indirect threats. The reward will be an increase in the griffon vulture colony in Kresna Gorge from 1-3 pairs to 8-12 pairs, if all goes well. The project will also establish a local breeding centre for vultures, and a rehabilitation and reproduction facility for land tortoises. (EU funding: BGN 368 560 — EUR 188 445)
Bulgaria was granted BGN 1.7 billion — EUR 867.8 million from a special EU fund to help it close and decommission the old Soviet 1- 4 nuclear reactors of the Kozloduy nuclear power plant.
All values in national currencies have been converted using exchange rates from October 2013.