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Brussels, 26 January 2000

Commission proposes new farm funding rules for candidate countries

The European Commission adopted a communication on the financial management of the new agricultural pre-accession instrument SAPARD(1). The Commission envisages a decentralised management approach - from project selection to payments. Each candidate country will have to establish a SAPARD agency which will be audited by the Commission before first payments will be made. To ensure the proper use of euro 520 million of EU funds a year for targeted rural development measures a clearance of accounts procedure shall apply, allowing for financial corrections in the case of non-respect of SAPARD rules like, for example, a lack of controls at national level. In the weeks to come the Commission will put forward a formal implementing regulation which follows the guidelines of the present communication.

«It is of course necessary to make the 520 million euro foreseen per year available as soon as possible. But while speed is important, we also need efficiency and controls. Today's decision lays the ground to achieve both. In the run-up to accession the candidate countries still have to overcome huge structural weaknesses in their agricultural sectors. Hence, I see SAPARD as the showcase of our strategy to rather focus on investments to improve the competitiveness of the sector also after the accession.», Franz FISCHLER, Commissioner for Agriculture, Rural Development and Fisheries, commented.

In the framework of Agenda 2000 the agricultural pre-accession instrument SAPARD (see Annex) was established. The proposed financial management system is in line with the principles of EAGGF-Guarantee and the relevant External Aid provisions. It allows a rapid implementation of the SAPARD programme by delegating the management tasks to implementing agencies in the candidate countries.

The proposed financial management system (see also Annex)

    1. Establishment of a SAPARD agency by each candidate country :

Any of these paying/implementing agencies are installed under the responsibility of the Applicant Country. It has to be accredited by the National Fund, the competent authority within the Ministry of Finance. After the verification by the Commission the management and payment tasks are delegated to the candidate country, the first annual Financial Memorandum be signed and the working capital be transferred. In case the accreditation criteria are no longer fulfilled, accreditation has to be withdrawn.

    2. Enhanced control by a clearance of accounts procedure

Building on the positive experiences of the clearance of accounts procedure in the Common Agricultural Policy (CAP), the annual accounts of the national paying agency have to be certified by an independent body. The Commission audits the accounts and the expenditure declared. Audits include on-the-spot checks. When the Commission considers that expenditure was not effected according to the SAPARD rules, it may exclude expenditure from financing. In addition, where controls have not correctly been established or executed by the SAPARD agency, flat-rate corrections will be applied.

    3. A differentiated appropriation system

In order to follow the relevant EU rules on foreign aid expediture, SAPARD appropriations are established as « differentiated appropiations ». This allows to commit and charge payments from the EU budget at different moments. This may help to avoid difficulties with candidate countries caused by possible underspending during the first years.

Following today's adoption, the Commission services will prepare an Implementing Regulation covering the financial management aspect described in the present communication. After its adoption, these rules will be laid down in bilateral agreements with the candidate countries.

Annex 1

SAPARD : preparing for enlargement

The SAPARD programme was created to support the efforts being made by the applicant countries in the run-up to accession as they prepare for their participation in the common agricultural policy and the single market. The plan is to fund a wide range of structural adjustment and rural development schemes in these countries and forms part of the broader pre-accession strategy being pursued under the "Accession Partnerships" that have been set up between the Commission and the applicant countries. Seven-year development plans have been received from the applicant countries. Once these plans have been assessed and approved by the Commission, they will form the basis for each country's agricultural and rural development programme. In financing the programmes, the Community may contribute up to 75% of total public expenditure.

Measures eligible for Sapard assistance

Investment in agricultural holdings;  improvements to methods for processing and marketing agriculture and fishery products;  veterinary and plant health controls, food quality and consumer protection;  production methods that protect the environment and conserve rural heritage;  diversifying economic activities and developing alternative sources of income;   farm relief services and farm management services; setting up producer groups;  village renewal and conservation of rural heritage;  land improvement and reparcelling;  updating land registers;  vocational training;  improvement of infrastructure in rural areas;  management of water resources for agriculture;  forestry and farm woodland projects, investment in private forest holdings, processing and marketing of forest products;  technical assistance (studies, monitoring, information, publicity campaigns).

Sapard: annual indicative budget allocations (in EUR million, at constant 1999 prices)

Bulgaria        52,124

Czech Republic     22,063

Estonia        12,137

Hungary       38,054

Lithuania       29,829

Latvia        21,848

Poland      168,683

Romania    150,636  

Slovenia      6,337

Slovakia      18,289

Total      520,000

Annex 2

How the financial management of SAPARD works

(see next page)

[Graphic in PDF & Word format]

(1) Special Accession Programme for Agriculture and Rural Development

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