NDA to Pay Penalty Interest to Beneficiaries from 1 April 3 April 2009
Precision and reliability have become even more important for enterprises struggling with financial problems in the wake of the economic crisis. The Government and its body responsible for development policy, namely, the National Development Agency will do everything in their power for beneficiaries allocated funding to suffer the least possible damage on account of the financial market crisis. Accordingly, beneficiaries that failed to receive funding for reasons attributable to the funding body will be paid penalty interest in the future.
The role of development policy particularly increases in a period of economic crisis when financial resources are depleted worldwide and the relevance of investments implemented from European Union funding increases. The institutional system will be working under enormous pressure during this period by assuming a greater volume of tasks and responsibility; moreover, the general public expects it to get more work done faster. The Government acknowledged the grounds of these demands through the amendment of Government Decree 281/2006 (XII. 23.) and by introducing penalty interest.
Through the amendment of the above-specified Government Decree on setting up financial implementation and control systems for the receipt of funding granted by the European Regional Development Fund, the European Social Fund and the Cohesion Fund in the 2007-2013 programming period effective as of 1 April 2009, applicants approved funding are entitled to penalty interest in the future if payment deadlines are not met for reasons attributable to the funding body, i.e. the National Development Agency and intermediate bodies.
The base interest rate valid at the Central Bank on the day the deadline expires constitutes the basis for the payment of penalty interest on the rate of funding specified on invoices paid after the deadline for payment. Liabilities regarding the payment of penalty interest not only apply following 1 April, but are also applicable retroactively to assistance contracts concluded prior to this date.
Applicants approved funding are entitled to penalty interest if
• the claims for payment they submitted are correct in terms of form and content alike,
• they do not have any outstanding public debts,
• they have satisfied requirements specified in legislation, the call for applications and the assistance contract,
• they are not subject to an irregularity or other procedure implying the suspension of payment.
Beneficiaries responsible for the implementation of the concerned project will be notified via mail on the due date and amount of penalty interest. The party entitled to penalty interest (supplier or assignee) will also receive a copy of the letter of notification sent to the beneficiary in the case of supplier financing or assignment.
According to the intention of the National Development Agency, penalty interest will also contribute to providing financial protection for enterprises and applicants, which will help them to successfully implement developments and prevents the failure of projects.