Everyone was laughing and smiling when Brussels gave this first tranche payment the green light last summer, but now real queries surface on how competent spending controls will be

Portugal receives first shot of EU bazooka

€1.6 billion arrives for 17 investments and 21 reforms

Europe Day is being celebrated in Portugal by the arrival of the first tranche of the long-awaited ‘bazooka’ of post-pandemic recovery funding.

A total of €1.6 billion is coming into the country to be used in 17 investments highlighted by Portugal’s PRR (plan for recovery and resilience) and 21 reforms.

Among them are upgrades planned for ‘underprivileged areas of Lisbon and Porto’, the purchase of 600,000 computers for schools and investment in enlarging the network of ‘collaborative laboratories’.

As reports have explained, the PRR has to be completed by 2026. The original plan was for Portugal to receive  €16.6 billion for multiple projects – €13.9 billion of which will come in grant funding (ie non-repayable), €2.7 billion in loans.

The payments will be phased, and on the proviso that Portugal complies with 341 pre-defined goals.

Today’s payment refers to €555 million in grant funded projects, and €609 million in loans. They fall under the categories of resilience, green transition, digital transition and social policies.

In the resilience category, reports refer to the “expansion of collaborative laboratories which are centres for the creation of economic and social values where companies, research centres and universities come together. There is also a sum earmarked for the Blue Fund (Fundo Azul) to support scientific activities and investigations related to the economy of the sea, its protection and monitoring of maritime safety”.

For green transition (meaning climate action), the disbursement allows for the payment of “first tranches in projects that will be transversal to the entire PRR period”, explains Jornal de Notícias. These include industrial decarbonisation and the production of renewable gas (including hydrogen). Two new schemes are also financed in this category: the General regime for Waste Management and the Integrated Management System for Rural Fires.

The 600,000 computers for pupils and teachers in compulsory education (ie up to the 12th year of State education) are covered by the digital transition category, as are 17 centres (‘polos’) for the National Network of Digital Innovation aimed at “developing technologies for companies”.

Money arriving for social sciences will cover “various reforms, like the creation of a National Plan for Urgent/ Temporary accommodation, the funding of a National Strategy for the Inclusion of People with disabilities, 2021-2025, a National Strategy for Combating Poverty, Mental Health Reform, and ‘action plans for underprivileged communities in the metropolitan areas of Lisbon and Porto’. A public housing project in the Azores is also due to receive some of the money, for ‘repairs and constructions’.

FIFTH COUNTRY TO RECEIVE 

Portugal was the first country to get its PRR into Brussels, but it has been the 5th to receive this first disbursement. Ahead have been Greece (€3.6 billion), Spain (€10 billion), France (€7.4 billion) and Italy (€21 billion).

The reason for coming 5th concerns the time it took Portugal to satisfy Brussels’ pre-defined goals. 

Says JN, if the country goes on achieving these goals, the next payment (of €1.82 billion) should come in the second half of this year, with a third payment of €2.331 billion scheduled for the first half of 2023.

More funds likely

… and there is more money likely to come. JN explains that the €16.6 billion originally outlined referred to projected economic calculations on falls in Member States’ GDP. “Portugal’s loss came in above predictions, which will make the final value (of PRR) greater”. JN has suggested another €1.59 billion could be sanctioned, in non-refundable grants, calling the extra money a ‘mini-PRR’.

“There are no concrete dates for when this mini-PRR will be drawn up, thus the additional value that Portugal will have a right to will only be confirmed in June”, says the paper.

Public Ministry lambasts financial controls

JN’s article today was as bland as it was informative. It made no mention of the scathing Public Ministry report on the Commission tasked with monitoring the spending of Portugal’s bazooka funding.

According to tabloid Correio da Manhã the report was so “devastating” that its publication was advised against.

“The document to which CM had access analysed the vigilance system implemented by the Commission for Accompaniment and Control (CAC) of the PRR”, says the paper.

“The Public Ministry took the conclusions of the general inspectorate of finances (IGF) which said the system of internal control ‘needs improvement, with a view to ensuring its necessary and full compliance with regulatory requirements and applicable guidelines”.

In other words, right now, as far as financial inspectors are concerned, these regulatory requirements are not ensured.

Says CM, the Public Ministry thus ‘queries why this first tranche payment has been given the green-light’.

It has also highlighted the inconvenient fact that there is “no segregation of functions” in this process. Put that way, it sounds suitably vague – but what it means is that the president of CAC is none other than the president of IGF (who said internal controls need improvement…)

Another important grey area is the lack of personnel in the Mission Structure “Recover Portugal”, says the paper. “The government attributed this structure 60 members of staff, yet at the end of 2021 there were only 29”.

“There are also fragilities in checking for so-called ‘double-financing”. This means there is no way of easily identifying projects that, “having the same objective, can candidate for funding from Portugal 2020, Portugal 2030 and from the PRR”.

Finally, there is the “non-existence of any formal audit or control strategy on the part of CAC” says the paper, stressing the outline for such a strategy was floated at a meeting in February, but “three months on no definitive document has been presented”.

natasha.donn@algarveresident.com