The Impact of Financial Corrections on Local Budgets: 9 Management Challenges in the Implementation of European Projects

Authors:

Pages: 227-237

Abstract:

This research examines the fiscal and managerial consequences of financial corrections imposed on Bulgarian municipalities implementing EU-funded projects. While absorption of Euro pean funds is widely treated as a principal driver of regional development, recurring procurement violations, weak administrative capacity, and limited fiscal autonomy transform grants into a hidden source of fiscal leakage for local budgets. Drawing on empirical data from the ISUN information system, the Public Procurement Register, audit reports of the EU Funds Audit Executive Agency, and analyses by the National Association of Municipalities, the study categorises the most frequent project-management errors and quantifies their fiscal impact during the 2014–2020 and 2021–2027 programming periods. The research proposes a conceptual shift from gross absorption rates towards a “net effectiveness” indicator that accounts for corrections, appeal costs, and opportunity losses. The findings inform strategic recommendations for risk-based control, technological integration, in ter-municipal cooperation, and reform of fiscal decentralisation.

Keywords:

financial corrections; net absorption efficiency; municipal budgets; public procurement; administrative capacity.

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