Hungary to lose €1.04 billion in historic EU funds cut
Hungary will lose €1.04 billion from EU funds under the conditionality mechanism, confirmed European Commission spokesperson Anna-Kaisa Itkonen.
Due to the conditionality mechanism, Hungary is set to forfeit €1.04 billion from EU funds. This marks the first instance in EU history, as European Commission spokesperson Anna-Kaisa Itkonen stated in an interview with PAP. These funds will be permanently lost due to the Hungarian government's inaction.
The decision to withhold funds stems from Hungary's failure to meet the requirements set by the EU Council in December 2022. The Hungarian government did not ensure transparency in spending EU funds, particularly regarding public procurement, nor did it implement mechanisms to prevent corruption. Hungary's forfeiture of €1.04 billion in EU funds through the conditionality mechanism is unprecedented in the European Union. The funds have been withheld due to Hungary's lack of action on transparency and anti-corruption measures, as mandated by the EU Council. This situation places Hungary as the only country facing such significant restrictions from the EU due to a failure to uphold the rule of law.
The EU Council suspended €6.3 billion, representing 55% of the funds assigned to Hungary under the cohesion policy. Budapest is now losing the first tranche of €1.04 billion. These funds, intended for 2022 commitments, will not be recoverable. The Hungarian government's failure to comply with the conditions for using EU funds has resulted in this initial loss of €1.04 billion. The conditionality mechanism activated against Budapest aims to safeguard the financial interests of the EU. Furthermore, Hungary has also lost access to funds from the National Recovery Plan, placing the country in a challenging financial predicament.
The amount might increase
Hungary could face the loss of additional funds if it fails to implement the prescribed remedial measures. By the end of 2025, there is a risk of forfeiting another tranche of €1.1 billion. Brussels attributes this situation to Prime Minister Viktor Orban’s administration. Despite efforts by the Hungarian government, such as reforms in public procurement law, the European Commission has maintained its concerns regarding the transparency of fund allocation.
As it stands, Hungary remains the only EU country with frozen funds from both the cohesion policy and the National Recovery Plan. The European Commission holds Prime Minister Orban's administration accountable for this situation.
Currently, Hungary is the sole EU nation unable to access funds from the European Recovery Plan. Hungary's National Recovery Plan is valued at over €10 billion, comprising €6.5 billion in grants and €3.9 billion in loans.
