Hungary could lose billions of euros in EU funding over ‘corruption risks’

brussels eu european commission flag EU funds

Hungary risks losing billions in EU funding by December 2024 unless it addresses rule of law concerns and implements anti-corruption reforms. Despite some progress, key milestones remain unmet, jeopardising additional billions in cohesion and recovery funds, and potentially worsening the country’s deficit.

Risk of losing billions

24.hu reports that Hungary risks losing over EUR 1 billion in EU funding if the suspension of funds is not resolved by the European Council in December 2024. The suspension, linked to Hungary’s failure to address rule of law concerns, has been in place for two years, and without progress, the funds will be permanently lost. Currently, EUR 6.3 billion in cohesion funds—55% of three operational programmes—remains frozen, with an additional EUR 14 billion withheld under the Recovery and Resilience Instrument (RRF). The European Commission cites insufficient reforms by Hungary, especially regarding corruption risks and non-compliance with EU regulations, as reasons for maintaining the suspension.

European Union Hungary Poland venice commission EU funds
Photo: facebook.com/EuropeanCommission

Further potential loss

Hungary faces the potential loss of EU funds beyond the EUR 1 billion already at risk if the suspension of the 2022 allocation is not resolved by December 2024. Although Hungary is set to receive EUR 30 billion in EU funding over seven years, any unresolved issues with the rule of law conditionality procedure could result in further losses by the end of 2025. The government has pre-financed EUR 4.3 billion worth of development projects from the national budget, but delays in tendering have put around EUR 1.2 billion at stake, according to Portfolio. Additionally, the loss of EU funds would worsen Hungary’s already high deficit, with the European Commission initiating an excessive deficit procedure against the country.

Small progress last year

Hungary’s access to EU funds remains uncertain due to unmet conditions set by EU institutions. To unlock the suspended funds, Hungary must fulfil 27 “super-milestones” linked to the recovery fund and implement 17 anti-corruption measures under the conditionality mechanism, many of which overlap. While the European Commission acknowledged progress in judicial reforms, releasing over EUR 10 billion in funds in November 2023, Transparency International (TI) argues that judicial independence remains compromised. According to sources, Hungary has met only four of the 27 milestones, making further progress unlikely by December 2024. Therefore, failure to meet these conditions could result in the permanent loss of around EUR 1 billion in EU funds.
euros money
Photo: publicdomainpictures.net CC0

Lack of transparency?

Hungary’s progress in meeting EU fund conditions remains limited, with key anti-corruption and transparency measures lagging. According to Transparency International, government actions on many non-justice milestones are either partial or contradictory. A notable issue is the high abuse in public procurement, with single-bid contracts still prevalent. Despite some reduction in EU-funded tenders, domestic public procurement remains problematic. Asset declarations by public figures also lack transparency, with recent changes seen as a step backwards.

The Arachne risk assessment system, crucial for overseeing EU fund spending, remains only partially operational. While anti-corruption bodies have been established, they lack sufficient powers, and Hungary’s anti-fraud strategies have been deemed inadequate. TI highlights the challenge of addressing systemic corruption in Hungary, where the government prioritises maintaining power over meeting EU conditions, limiting the impact of reforms aimed at ensuring the proper use of EU funds.

Read also:

Source:

Tags
OSZAR »