For the development of the social economy, 27 million BGN have been spent under the leadership of three ministers of labor and social policy. However, the reported outcome after the absorption of these funds amounts to a mere 6.5% fulfillment of the project’s objectives.
In 2022, the Ministry of Labor and Social Policy (MLSP) initiated a project titled “Development of the Social Economy.” As part of this effort, offices were opened and employees hired in six Bulgarian cities to organize and manage project activities. The offices are located in premises purchased and renovated with project funds that were financed under the National Recovery and Resilience Plan.
In Gabrovo, however, some of the premises are unusable, and the ministry will seek funds for new renovations since the project budget has been exhausted, announced Minister Ivanка Shalapatova from the podium of the National Assembly.
Property on “Success” Street
The property in Gabrovo was acquired by the Ministry of Labor and Social Policy in 2023 for nearly half a million BGN. According to the project’s requirements, it is located in the center of Gabrovo, on “Success” Street, and consists of offices on the fifth floor of the building and storage rooms at ground level, which were intended to function as exhibition halls and event spaces.
Less than a year later, these premises are empty due to dampness. The ministry only became aware of this when questions began to be raised. It then became clear that where an exhibition hall should be for meetings and events, nothing was happening because there were leaks and mold on the walls.
Investigating the Water Ingress
The source of the issues in the ground-level premises of the building remains unclear even after an inspection commissioned by Minister Shalapatova. According to the report, the problems “may be a result of a failure in the water supply and sewage system in the adjacent premises, which are not owned by the MLSP. However, a possible cause could also be the ingress of surface water due to a lack of vertical planning or high groundwater levels, combined with a lack of waterproofing on the building’s foundations and the walls bordering the earth.” This was stated by Ivanка Shalapatova in response to a question from Gabrovo MP Valeri Mitov (“BSP for Bulgaria”).
Significant Financial Resources and Questionable Results
The funds used to purchase the property come from the “Development of the Social Economy” project under the National Recovery and Resilience Plan. The implementation of this project aims to create a network of regional centers for social and solidarity economy enterprises in six Bulgarian cities—Gabrovo, Plovdiv, Lovech, Varna, Burgas, and Blagoevgrad.
These regional centers are referred to as focal points and are not only backed by good intentions but are also concentrated with significant financial resources and questionable results.
Against the overall project budget of 27 million BGN, according to MP Valeri Mitov, 2,094 consultations with institutions, individuals, and legal entities were conducted in the regional centers from June 1, 2023, to February 29, 2024. As a result of these activities, 68 applications for registration were submitted to the Register of Social Enterprises; of these, 45 social enterprises were registered, 17 received orders for refusal of registration, and six are in processing. Thus, the effectiveness ratio, based on Mitov’s calculations, is 6.5%. The deputy’s calculations are almost certainly accurate, as Ivanка Shalapatova does not dispute the figures.
Not the Builder’s Fault
“There is a risk of inability to fulfill the stages and consequently the goals, activities, and indicators for the investment in the North Central Planning Region,” she admits, specifying that the Internal Audit Directorate of her ministry has concluded that “the presence of moisture and mold in the rooms located on the first floor of the Gabrovo focal point… has made it impossible to use the room for its intended purpose.”
According to an expert opinion from the Ministry of Labor and Social Policy, “the findings are not the builder’s fault,” and evidence for this should be the fact that “inspections were conducted before and after the purchase of the respective property in Gabrovo, and during these inspections and according to the documents we reviewed, no problems were found,” says the former social minister.
On Paper, Everything Is Fine
This explanation does not address how half of the premises are unusable because they are unfit for use, given that “construction and installation works have been carried out in all focal points, including the Gabrovo focal point, in accordance with Activity I of Component 1 of the project.” Who, and at what stage of the project’s implementation, failed to recognize that half a million BGN is being spent on a venue that will not fulfill its purpose? In response to these questions, the ministry states that the construction and installation works were accepted in February 2023 and “no problems were identified on paper.”
This response raises doubts that the quality of construction and renovation works was accepted only on paper. If this is indeed the case, it is not surprising that a year later, the fully renovated premises are plagued by moisture, but it remains unclear who will bear the responsibility for this.
No Money, We Act
The minister does not deny that it is “necessary to take action regarding the property in Gabrovo,” but at the same time acknowledges that there is no money left. The funds have been spent on property appraisals, staff selection, purchasing office equipment (220,000 BGN), office furnishings (460,000 BGN), cleaning (120,000 BGN), internet provision (24,000 BGN), hiring lawyers, and salaries for employees (ranging from 1,500 to 1,920 BGN for each), as well as a company for organizing events (with the public procurement having a projected value of nearly 900,000 BGN).
Therefore, “given the lack of funds for the investment required for further inspections and repairs, the possibility of funding from another source, including from our ministry’s budget, should be explored,” Minister Shalapatova quoted from the audit report she commissioned. A plan has been developed and approved for implementing the recommendations in this audit, under which “an urgent investigation will be conducted regarding the reasons why the storage facilities located on the first floor of the Gabrovo focal point are unfit for use.”
Empty Promises
“I would like to assure you that as the Minister of Labor and Social Policy, I will make every effort to implement the reforms and investments that are the responsibility of our ministry under the National Recovery and Resilience Plan, including regarding the operations and functioning of the focal points, particularly that of Gabrovo,” Ivanка Shalapatova assured on March 22 this year.
To date, this assurance holds little weight, as the Ministry of Social Affairs has seen its fourth minister in the last two years, who is now tasked with producing results in the development of the social economy.
The establishment of the so-called focal points under the “Development of the Social Economy” project occurred during the tenure of Minister of Labor and Social Policy Georgi Gyokov, now a member of parliament from the BSP. During his time, and that of his successor Lazar Lazarov, 10 million BGN were spent over two years on “developing regional administrative capacity for the modernization of enterprises in the social and solidarity economy and the introduction of individualized software, hardware, networking, and placement solutions.”
If this sounds too complicated, there is a simpler explanation—part of the funds (6.7 million BGN) is for purchasing six offices in six Bulgarian cities, where a focal point is being established. Another portion (close to 3.7 million BGN) is allocated for six regional markets.
After Lazar Lazarov, Ivanка Shalapatova became the Minister of Labor and Social Policy and was replaced just a day ago by Ivaylo Ivanov. It is difficult to predict how long he will remain in office. While the ministers come and go, the walls of the Gabrovo focal point may dry out as summer approaches, but this does not make the investment successful, even though it is located on “Success” Street.
