Thursday, October 25, 2012

Inefficiency to cost Romania some EU development cash- PM

By Luiza Ilie

CALAFAT, Romania, Oct 24 (Reuters) - The European Union will reduce development funds for Romania because it is judged too inefficient to use them properly, Prime Minister Victor Ponta said on Wednesday.

Romania, the EU's second-poorest member which joined in 2007, has struggled to use some 20 billion euros in development funds allocated by the bloc until 2013 - a quarter of it for transport - due to red tape and poor administration.

The EU money is designed to help emerging EU states to improve education and other projects, but Romania has used less than a tenth of its funds although the poor state of its infrastructure is stifling growth.

"We will receive official audit results which ... will not be encouraging," Prime Minister Victor Ponta told reporters in the southwestern border town of Calafat, where he inspected works on a bridge built largely with EU funds.

"The solution will be for Romania to accept financial corrections."

Poor rail and roads are among the chief complaints from foreign investors, who say decrepit transport cancels out Romania's advantageous location at a trading crossroads and relatively low labour costs.

Works have been marred for years due to poor legislation, slow land expropriations and poor allocation of funds. The World Economic Forum ranks Romania third lowest out of 144 countries for road quality and 132nd for overall infrastructure.

Earlier this year, the EU suspended payments to Romania on several programmes pending the results of an audit. Ponta - who is favourite to win a December parliamentary election - said he did not know by how much Romania's overall funding would be cut.

When the bridge at Calafat opens next year, it will be only the second permanent link along hundreds of kilometers of the river Danube between Romania and Bulgaria. It has no highway link on either side and is 320 km on bumpy roads from Bucharest.

The project was first agreed in 2000 by then Prime Minister Mugur Isarescu - now central bank governor - and would have made a big difference at the time, when a Serb trade embargo was still in force and goods had to travel through Romania.

"I am the fifth prime minister after the one who signed. That says a lot about how public administration works," Ponta said. (Editing by Stephen Nisbet)

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