Brussels has barred four Bulgarian agencies from handling EU funds because of corruption, freezing nearly 1 billion euros in pre-accession aid and threatening future payments, BGNES reported, citing Reuters, which quotes a draft document of the the European Commission.

The report on the management of EU funds in the most recent and poorest newcomer states that: High level corruption and organized crime exacerbate the problems of general weakness in administrative and judicial capacity.

Urgent action is needed because deadlines for contracting some of the funds are approaching after which the funds will be lost to Bulgaria, according to the draft document, which is due to be adopted by the EU executive next Wednesday.

The European Commission will revoke the rights of two Bulgarian agencies to manage EU funds under the PHARE program, the Bulgarian National Television reported yesterday. These are the PHARE Executive Agency at the Ministry of Regional Development and Public Works and the Central Finance and Contracts Unit (CFCU) at the Ministry of Finance.

There are implementing agencies under the PHARE program in three Bulgarian ministries: The Ministry of Labor and Social Policy, the Ministry of Economy and Energy and the Ministry of Regional Development and Public Works.

The fourth agency is State Agriculture Fund, which carries out payments under the SAPARD pre-accession program and the Rural Development Program. Bulgaria is to utilize nearly 4 bln euros under the latter until 2013. The Ministry of Finance gives the final approval on all payments carried out by the four agencies. The total value of the EU funding for Bulgaria in the period 2007-2013 amounts to nearly 12 bln euros.

With the revocation of the accreditation of the four implementing agencies the projects will most likely be approved directly by the European Commission. Bulgaria still has not utilized the funding under the PHARE, SAPARD and ISPA pre-accession programs. More than 600 mln euros of the funding that has not been absorbed has already been blocked by the EC.