EU Commission agrees to unlock €16.4 billion for Hungary
Hungary to Receive Unfrozen EU Funds Following Reform Progress
By Jan Strupczewski and Krisztina Than
EU Commission’s Announcement
BRUSSELS, May 29 (Reuters) - Hungary's progress in reforms under its new government will allow the European Commission to unlock €16.4 billion of previously frozen EU recovery and cohesion funds for the country, European Commission head Ursula von der Leyen said.
Breakdown of Released Funds
Von der Leyen told reporters after meeting Hungary's Prime Minister Peter Magyar that the EU would unlock €10 billion ($11.6 billion) from the recovery fund, called Next Generation EU, and €4.2 billion in cohesion funds, with a further €2.2 billion as the reforms are completed.
"I can confirm that it is €10 billion that have been unfrozen or will be unfrozen from Next Generation EU, then the €4.2 billion from the cohesion conditionality and 2.2 billion for the academic freedom, which makes it €16.4 billion," von der Leyen said.
"That is quite a sum, but ...the Hungarian people deserve it. Again, many, many thanks for the outstanding work that has been done," she said.
Economic Impact on Hungary
The EU money is crucial to kick-start the Hungarian economy that has practically stagnated for 3 years.
Budget Deficit and Fiscal Challenges
The new government inherited a swelling budget deficit that according to the Commission might reach 6.2% of GDP in 2026 after heavy pre-election spending by former Prime Minister Viktor Orban, ousted in an election last month.
Central Bank Policy and Currency Strength
Hungary's central bank left its base rate steady at 6.25% on May 26, as expected, after a rise in global energy prices and domestic fiscal risks, but noted a significant improvement in the inflation outlook amid strong gains in the forint. The forint has been boosted by hopes the EU funds would be unlocked.
Government Response and Anti-Corruption Efforts
Prime Minister’s Statement
"We will bring this money home, as we promised, to rebuild Hungary, to jump-start the economy, to restore and develop public services, and to strengthen the competitiveness of Hungarian companies and small and medium-sized enterprises," Magyar told the news conference.
Anti-Corruption Measures
He said the deal on the EU money showed his government's anti-corruption measures were paying off -- fighting corruption, rampant under the Orban government, was one of the key conditions for the EU to unfreeze the money.
Exchange Rate Information
($1 = 0.8589 euros)
Reporting Credits
(Reporting by Jan Strupczewski and Sudip Kar-Gupta in Brussels and Krisztina Than and Anita Komuves in BudapestEditing by Sudip Kar-Gupta)
