Portugal wants to spend EU funds faster

But the Court of Audits is wary of risks of corruption

Portugal passed a law to speed up the slow use of European Union’s subsidies. But after more than a year reviewing amendments, the Court of Audits remains concerned about risks of corruption as Portugal is set to receive even more funds.

Court of Audits of Portugal
The Court of Audits or Portugal warns of risks of corruption by facilitating public procurement contracts | © Tribunal de Contas

Portugal has been slow in allocating and implementing funds coming from the European Union. And it wants to spend it faster.

As a consequence, Portugal passed a law meant to ease processes in public procurement contracts.

The Court of Audits, responsible for reviewing the legal issues on public expenditure, released a report on October 25 where it analyzed the causes of the deficits in performances for the 2014-2020 EU Cohesion policy plan.

The execution of the program was characterized by “good commitment rates, slow execution, low level of absorption of funds, incapacity to meet mid-term objectives in many of the programs, and weak orientation towards delivering results“.

Some of the main reasons lie in Portugal’s slow execution of subsidized projects because of delays in approving programs and their late starts or the incapacity to meet deadlines, the report says.

A lot of EU funds to spend

In the seven years of the plan 2014-2020 EU Cohesion policy plan, only 60%, or 14 billion euros (US $16bn), of the 26 billion dedicated to Portugal has been granted yet.

The EU Cohesion policy program is the Union’s main investment program and almost a third of its budget. It aims at correcting imbalances between regions and countries.

Moreover, along with the remaining budget to spend, Portugal is also set to receive €22.6 billion out of the €392 billion of the EU Cohesion plan for 2021-2027.

And another 50 billion euros in grants between 2021 and 2029 as part of the EU Covid-19 recovery plan.

But relatively speaking, the funds absorption rate in Portugal is better than the EU average (56% in December 2020). Insufficient for the country, which wants to speed up the execution.

President approved modifications given the urgency to spend forthcoming expenditures

But as the Court of Audits praises an acceleration in the process to remove delays, it nevertheless recommends the Minister of Planning to add “new control mechanisms for integrity and transparency in the implementation of European funds“.

In September 2020 already, the Court warned off of the risks of “collusion, cartelization, and even corruption” in public procurement contracts.

And in December 2020, the president of Portugal, Marcelo Rebelo de Sousa, vetoed the decree voted by the Parliament. He asked for more legal controls and administrative transparency in order to counterbalance the simplification of the process.

In fact, changes in the Public Contracts code have been discussed for more than a year before eventually being adopted. The last changes were in the code were done in 2017 only.

And in May, the President eventually accepted to promulgate the decree amending the Public Contracts codegiven the urgency to have the law come into force” ahead of the forthcoming expenditures.

Graph: 41% of Portuguese think corruption in the country increased in the last 12 months
41% of Portuguese think corruption in the country increased in the last 12 months | © Transparency international

More flexibility in public procurement contracts

The amendments give more flexibility in granting contracts, decrease needs for justifications, reduce bureaucracy in order to make the process more agile.

For instance, tender notices are not mandatory for public contracts worth less than 500,000 euros and allocated to small or medium enterprises. Moreover, local authorities may also grant contracts without an open competition to companies with local operation or local headquarters, as long as it remains under thresholds for which a publication in the Official Journal of the European Union would become mandatory.

As a consequence, competition can be reduced at the sole discretion of local authorities or without a public communication, increasing fears of collusion.

In 2020, Portugal is perceived to be the 33rd in the world and the 12th EU member state with the least corrupted public sector according to the corruption perception index. Released every year by Transparency International, the ranking is “based on how corrupt a country’s public sector is perceived to be by experts and business executives“.

In Transparency International’s Global Corruption Barometer – EU 2021, 32% of the 40,000 respondents from the EU thought that corruption was on the rise in their countries. Portuguese were some of the most worried: 41% of Portuguese thought corruption increased in the previous 12 months.

Read more about Portugal

Auditoria ao Portugal 2020, Tribunal de Contas, October 2021, Free access, PDF2021-2027 Cohesion policy EU budget allocations, European Commission, Free accessRecuperar Portugal, Construindo o futuro, Free access, PDFTribunal de Contas, Parliament website, September 2020, Free access, PDFPresidente da República devolveu diploma ao Parlamento, Presidency of the Portuguese Republic website, 2020, Free accessPresidente da República promulga contratos públicos e outros dois diplomas da Assembleia da República, Presidency of the Portuguese Republic website, May 2021, Free accessCORRUPTION PERCEPTIONS INDEX, Transparency International, Free accessGLOBAL CORRUPTION BAROMETER EU: PEOPLE WORRIED ABOUT UNCHECKED ABUSES OF POWER, Transparency International, Free access

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