The Funding of Priority Regional Projects
Asen Vasilev proposed a budget of 1 billion leva for the financing of priority regional projects through an established mechanism. This proposal came in the autumn of last year, when he was still the Minister of Finance and was seeking support for Budget 2024 from his coalition partners from GERB and DPS. His colleague, Andrey Tsekov, head of the Ministry of Regional Development and Public Works, called it a “mini-revolution”. Perhaps it seemed that way to them, as until then, funding for capital investments in municipalities was carried out en masse through resolutions of the Council of Ministers. But what about the money?
The Controversial Allocation of Funds in Municipal Budgets
Allocations in municipal budgets have always been a topic of discussion and debate. While some funds are clearly earmarked for specific projects in the respective municipalities or the Ministry of Regional Development and Public Works, there is also a mysterious “black hole” in the Central budget from which every government draws resources in a less transparent manner.
Ultimately, this approach allowed the municipal capital program to grow several times larger than the initially planned 1 billion levs. The first detailed list of municipal projects was created by Vasilev immediately after the local elections in 2023, at the insistence of the Movement for Rights and Freedoms. This was set as a condition by the Movement to preserve the coalition.
Local Authorities Seeking Funding for Projects
Recently, local authorities have been scrambling to submit details of their projects to the Ministry of Finance in order to secure funding. Among the most active in requesting funds are the mayors affiliated with the DPS party. Some smaller municipalities, controlled by DPS, with populations of around 10,000 people, have requested as much funding as mayors of some regional cities. As the state budget went to the National Assembly for review, the list of projects had grown to 764, requiring a total of 2.6 billion levs.
Expansion of the Project List for Funding
The project list has now doubled to 1627 projects, with the required funding reaching 4 billion leva by 2024. In addition, coalition partners from PP-DB, DPS, and GERB have decided to extend the program until 2026, with the total funds needed now at 4.9 billion leva. A key point of discussion in parliament was the possibility of updating the list even after its approval, allowing unprepared mayors to react. Initially, the idea was to update it once by March 1st, but it was later decided that updates would occur 3 times after each of the first three quarters of the year.
Challenges in Implementing Investment Programs
After the first update in April, the list continued to grow, along with the necessary state funding – reaching 4.5 billion BGN by 2024 and a total of 5.9 billion BGN for the entire 3-year period. Now, the second update is in progress, adding more projects and increasing the required funding. The number of projects has reached 2529, needing 4.6 billion BGN for this year alone, and a total of 6.2 billion BGN for the 3-year period.
Are the municipalities ready for this? The transformation of the investment program from its inception to its second update seems massive from a financial perspective.
Local Governments Increase Funding Requests
Local governments are becoming more ambitious in their funding requests, with the total amount increasing from 1 billion to 6.2 billion. A detailed review of the updated list shows that municipalities are not only seeking funding for important projects, but they have also carefully calculated their ideas to receive the maximum funding available under the program’s conditions. However, despite their ambitious goals, readiness is not satisfactory. By the end of June, only 62 million in advances and 70 million for interim payments have been provided out of the total 4.5 billion. Detailed data from the Ministry of Regional Development and Public Works show that municipalities are the most active.
Towns and Cities in Bulgaria
Bulgaria is a country with a rich history and diverse culture. Some of the notable towns and cities in Bulgaria include Pazardzhik, Lom, Knizha, the Ivanovo Rock Churches in Ruse, Blagoevgrad, Kresna, the coastal town of Tsarevo, Avren, and Byala. Other towns like Kozloduy, Dimovo in Vidin, Oryahovo in Vratsa, Dryanovo in Gabrovo, Jebel, Momchilgrad, Georgi Damyanovo in Montana, Silistra, Botevgrad, Godech, Ihtiman, and Kostinbrod, Pavel Banya, Radnevo, Lyubimets, and Topolovgrad also hold significance.
While agreements are made quickly, the implementation of projects in these towns and cities is often slow. The readiness of the municipalities to carry out these projects is not high, and it will be a challenge to adequately continue the program,” commented Andrey Tsekov in the regional commission on Friday.
State Investment Program Faces Funding Challenges
The financial ministry has confirmed that there is an increasing amount of money needed for the investment program. The budget has allocated funds for it to be financed from the central budget, but as always, in case of emergency, the state capital program will be used – that eternal buffer that covers the failures of Bulgarian financial ministers. A total of 10 billion leva has been earmarked for capital projects, and if necessary, funds will be provided to the Ministry of Regional Development and Public Works,” stated Finance Minister Lyudmila Petkova.
The growing number of projects that need to be completed in a timely manner poses a challenge for the government. With limited funds available, prioritizing and managing these investments effectively will be crucial to the success of the program.
Construction Projects in the Region are Finally Taking Off
With a tight deadline looming, a true construction tsunami is on the horizon, signaling that projects are finally starting to be implemented. The issue was reported to the regional ministry as early as March – before the updates. Concerns were raised by mayors, who at that time pointed out that due to the ambitious investment program, there is a high probability of a capacity shortage on the part of construction companies. Some mayors even said that for some of the already announced public tenders, there is only one candidate for execution. Financing for what is needed is still uncertain, but progress is being made.
Challenges in the Municipal Investment Program
One of the main issues with the Municipal Investment Program is the lack of a selection process. Initially, the idea was to invest in priority streets and utilities, but it quickly expanded to include all ideas proposed by the mayors. This led to projects such as the construction of a museum dedicated to Georgi Parzalev in Levski, a park in Lovech, a swimming complex in Chelopech, and sports halls in over 20 municipalities being included in the program.
There is no filter for the projects proposed by local authorities, as long as they do not exceed the total funding limit for the respective municipality category and have “full documentary readiness”. This lack of oversight has raised concerns about the transparency and efficiency of the program.