Rich Prague and European subsidies. According to the municipality, the new drawing rules are disadvantageous for the city – HlídacíPes.org
Prague is “rich” compared to other Czech regions. In assessing entitlements to European subsidies, the European Union ranks exclusively the capital among the more developed regions. In practice, this means that in new programming period 2021-2027 The EU will reimburse Prague only 40 percent of the costs of projects co-financed by European funds. For example, for coal regions that are among the less developed, it will be 70 percent.
“The position of Prague is within cohesion policy in the long run less advantageous than in other regions of the Czech Republic. Already in the period 2007-2013, eight operational programs were available for regions outside the capital city of Prague, with a total allocation of EUR 21.23 billion. Two operational programs were available for Prague, as an economically more developed region, but with an allocation of only 0.42 billion euros, ”explains Jiří Kvíz, director of the consulting company Enovation.
Text by Ondřej Plevák came out originally on the server Euractivwith which HlídacíPes.org cooperates.
In the just completed programming period 2014–2020, the Czech Republic received almost 24 billion euros from the European Structural and Investment Funds. “The only operational program with an allocated amount of 200 million euros was set aside for Prague,” adds Kvíz.
However, this is the logic of the Cohesion Funds – to help close the gap between European regions. The backward and poorer ones therefore deserve more support, while the richer ones should be able to finance the necessary projects primarily from their own coffers.
Prague: We also pay for Central Bohemia
The crucial question is whether this system is ultimately fair in accounting for all revenue and expenditure. It depends, among other things, on how the classification of regions into individual categories works and how the national institutions, ie the relevant ministry, approach them.
There is no denying that Prague is indeed the richest region in the Czech Republic, and even one of the richest in the entire European Union. However, the mayor of Prague, Zdeněk Hřib, will follow up on several problematic areas. The first concerns the assessment of the region’s “wealth”, which the European Commission determines on the basis of GDP per capita. According to Hřiba, the statistics would look different if the EU took into account the entire urban region, ie only the capital, but the entire area with the Central Bohemian Region.
“The limited level of co-financing of European projects has a negative impact on the city budget. We are beaten because, when we count all the resources, practically the same amount of money flows per inhabitant to all cities and municipalities. In addition, we have to provide service to more people than they officially live in Prague, because not everyone is registered, “said Zdeněk Hřib.
This criticism of Prague concerns only European funds, but all the city’s revenues. The amount of money obtained from the state budget does not depend on the municipality’s notification, which does not depend on the economic “performance” of Prague, which is a key indicator for the EU, but on the number of inhabitants.
“Cities and municipalities are paid mainly according to the number of registered persons through the budget determination of taxes, all other sources of finance are minority. Thus, the position in the Eurostat ranking does not really affect how much money we have to address today’s challenges, whether it is ecology, affordable housing or transport infrastructure, “says Mayor Hřib.
Ministries will get the key word
In addition, a new obstacle for the metropolis is the abolition of its own Prague Operational Program – a pole of growth, which operated in the previous programming period. Hřib does not understand why the Ministry of Regional Development came to this decision together with the government. “We fulfill all indicators, we fulfill many of them even better than some other operational programs,” said the mayor.
“For Prague, of course, this is an unpleasant decision, which resulted from the preparation of a new subsidy period and negotiations. Apparently, the opinion prevailed that due to the economic strength of Prague, the available allocation would be so low that it is not efficient and economical to be implemented by its own and independent operational program, “estimates Jiří Kvíz.
According to unofficial information from the Ministry of Finance, the decision is too complicated for the operational program, slow drawing of funds and frequent errors, caused, among other things, by insufficient experience and a small administrative apparatus. Program in the past also criticized the Supreme Audit Office (SAO).
The Department of European Funds of the Prague City Hall does not agree with this criticism and, on the contrary, claims that the program is not complicated, slow or erroneous in comparison with other ongoing operational programs.
Prague is particularly upset that while the municipality has so far set its own priority thanks to its own operational program and administered European money more or less directly, now they will have the main word of the ministry within the national programs.
However, the operational program itself meant that Prague always had to co-finance European projects almost entirely on its own. On the other hand, the programs of the managed ministry for some projects cover this co-financing entirely from the state budget. Thus, less control over priorities also means, as a rule, more money from the state.
The money lies elsewhere
However, the loss of the operational program does not mean that Prague must forget about European subsidies. Like Jiří Kvíz, the capital will be able to use funds from some national programs, although “to a very high extent”. These are, for example, the Integrated Regional Operational Program (IROP) or “thematic” programs – OP Employment or OP Transport. These were available to Prague in the last programming period.
When setting the rules of cohesion policy, it was originally assumed that in the new period 2021-2027, Prague will have to co-finance all European projects implemented on its territory – to always add 60 “own” percent to 40 “European” percentages. Exceptions in this respect are projects relating to schools, public benefit activities or social services where other rules apply.
In April, however Prague managed to negotiate with the Ministry of Finance and the Ministry of Regional Development an additional contribution from the state budget. Projects of the capital city of Prague, city districts and contributory organizations implemented under the European Regional Development Fund (ERDF) will eventually receive a state contribution of 10 percent, the European Social Fund plus (ESF +) will be 15 percent. As Jiří Kvíz reminded, state contributions are quite common in most operational programs.
Although it is clear that Prague will have less European funding from the Structural Funds, the same is true for the whole of the Czech Republic. The more the country gets richer, the less subsidies flow into it. In addition, cohesion funds are not the only available source of funding.
According to Zdeněk Hřiba, Prague is also trying to find ways to ensure direct access to EU funding, for example through programs focused directly on the regions. Opportunities can also be the Modernization Fund or the so-called Renewal Fund.
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