The absorption of EU funds inched up to CZK147bn (25.2% of total) at the end of January, according to figures of the regional development ministry. There was a very slight increase in monthly terms, up by 1.0% m/m, with a slightly bigger increase of negotiated funds, payment applications and payment requests, all reporting an increase of 2.1-2.4% m/m. There was a notable increase in annual terms, however, as absorption alone rose by 14.2% y/y. The bulk of the increase came in the second half of the year, when efforts to absorb EU funding really stepped up, primarily because certain programs were under threat to lose negotiated funding due to the nearing of the 3-year deadline, set for EU funds’ absorption.
Problematic programs are mostly those related to regional development, which still sports the lowest absorption rate, at 17.4% of total at end-January, as well as programs related to competition. Rural development programs continue to be the best-performing ones, with absorption at 46.2% of total. Even though the bigger part of the programs have an absorption rate lower than the average, the regional development ministry claims that no money will be lost for projects negotiated in 2014-2015. We don’t believe everything has blown over, since absorption continues to climb at a very slow rate, but it appears that an immediate crisis has been averted.