By Chris Jones - 26th March 2006
Romania and Bulgaria are on track to meet EU membership requirements on reducing the levels of state aid, the European commission said on Monday.
Bulgarian state aid payments reached €65m a year between 2002-2004, or 0.36 per cent of GDP, well below the average for the EU as a whole (0.49 per cent), according to the EU’s state aid scoreboard.
Romania has more work to do, with payments averaging €981m over the three-year period, leaving state aid at around 1.86 per cent of GDP.
But the commission said that this was in line with the levels of state aid seen in the ten new member states prior to accession, and was acceptable as the country continued its passage towards market liberalisation.
“Bulgaria and Romania have made good progress towards a market economy,” said competition commissioner Neelie Kroes.
“However, further efforts are needed to ensure that the state aid is used in the most effective way.”
Countries wishing to join the EU must meet strict requirements on market liberalisation, including keeping state aid to a minimum to reduce the impact on competition.
Kroes warned that the levels of sectoral state aid - which is often used to prop up ailing companies and thus distorts competition – remained high, at 87 per cent in Romania and 55 per cent in Bulgaria, well ahead of the EU average of 32 per cent.
But she conceded that the money was necessary to cushion the blow of privatisation, particularly in sectors such as coal and steel, as the two countries moved towards market economies.
The commission publishes its state aid scoreboard twice a year, and the current edition focuses on candidate countries as well as those already set to join the EU.
Croatia and the Former Yugoslav Republic of Macedonia have already started work on meeting EU standards, introducing new legislation on state aid.
But Turkey is yet to begin the process of overhauling its state aid system, with no new legislation planned and no independent monitoring authority.
Other potential EU members are in a better condition, with Serbia and Montenegro and Albania both recently introducing state-aid monitoring schemes, according to the commission.
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