Cutting the red tape

In order to maximize the efficient distribution of funds, Gęsicka said that the government would amend the public procurement act and simplify transfer procedures. Currently, Poland has allocated a paltry EUR 380 (zł.1,483) million out of the total EUR 11 (zł.43) billion available to it for the period of 2004-2006. She said Poland's low rate of absorption was not unusual since most of the 10 new EU member states were also struggling to dole out funds efficiently.

"The problem lies on the domestic side, in our jungle of rules and regulations," said Gęsicka. "Once this is fixed, and it should take several months, the system should be more effective."

Despite the delays, Gęsicka said that all of the cash would probably be used as Poland has until 2008 to make use of the funds designated for the 2004-2006 period. "Once the machine starts rolling, when the fund take-up is at its peak in 2007 and 2008, GDP may be higher by one to two percent."

Many local governments have applied for funds to modernize infrastructure and improve the environment, and some EUR 5-6 (zł.20-23) billion has already been contracted out. Companies are also jumping on the bandwagon. "Every third entrepreneur employing between nine and 250 people has applied for EU funds," Gesicka said. (Reuters)