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KLSH report: Increase in expenses for PPP and arbitrations, risk for the budget

KLSH report: Increase in expenses for PPP and arbitrations, risk for the budget

Concession contracts have once again been highlighted by the High State Control, as one of the main fiscal risks for the budget. According to KLSH, this is related to the fact that the expenses for these contracts have increased.

"The increase in expenditures for concessionary contracts/PPP from year to year constitutes a fiscal risk for the budget, moreover, in the absence of measurable indicators of their performance, it is questionable the timely achievement of their objectives with efficiency, economy and effectiveness" says the report. Mostly, KLSH has referred here to health concessions and mainly to those for sterilization, which was also the subject of the audit and where increased expenses resulted.

On the other hand, KLSH has brought to attention the mutual obligations in the electricity sector which are also seen as a fiscal risk. A weight in this aspect is also the obligations that the water supply companies have with this debt, for which a reduction plan was approved but which, according to the report, has not been very effective.

"Mutual obligations in the electricity sector tend to increase from year to year, being increasingly exposed to the demand for budget financing. The same situation is also observed in the water supply and sewerage sector, resulting in the failure of the cooperation of the MFE and the MIE in the implementation of the two joint orders of 2020 and 2021 "For the approval of the plan of measures to reduce the obligations of backlogs in the electricity sector".

Likewise, the intensification of relations and cooperation with the institutions and main actors in the field have not been fruitful either: the Water-Sewage companies with MIE, as well as with the companies of the energy sector," says the KLSH document.

The same underlines that the accumulation of arrears of the central and local government units is also a problem, moreover, the arrears are not calculated and are not included as a value in the public debt reports and statistics, underestimating the latter.

The last issue that is seen as a fiscal risk is that of the obligations that come from the arbitrations, where from the Bechetti case to the last ones related to Kurum or EMS, the procedures continue.

"The actions and inactions of the MFE for the non-execution of the ECtHR's decisions create a high risk for additional effects to the detriment of the state budget, as a result of the delay interest that can be claimed for non-implementation of the decisions on time. Arrears and obligations from ECtHR/Arbitration decisions continue to be high and constitute an increased risk for budget indicators.

From the audit, it is found that an analysis on the causes, level and increase of them is missing. This analysis would enable the drawing of correct conclusions and the provision of recommendations as appropriate and in need of the created situation.

As a result, the arrears present a fiscal risk, not only for the budget indicators of the responsible institutions, but also at the macroeconomic level for public finances, since despite the fact that these obligations are not calculated and not recorded in the public debt indicators, they imply and underestimate this the last, as they are liabilities that will be repaid in the future," the report states./ Monitor

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