Hungary faces an unprecedented €1.04 ($1.08) billion EU fund loss
Hungary will lose €1.04 ($1.08) billion from EU funds under the conditionality mechanism, as confirmed by European Commission spokesperson Anna-Kaisa Itkonen.
This marks the first time in EU history that a country will permanently lose such funds due to a lack of governmental action. The Hungarian government failed to comply with requirements set by the EU Council in December 2022, which demanded transparency in the spending of EU funds, especially in public procurement. It also did not introduce mechanisms to prevent corruption. As a result, Hungary faces this unprecedented financial penalty for not adhering to transparency and anti-corruption standards, positioning it as the only country facing such severe EU restrictions due to a lack of rule of law.
The EU Council has suspended €6.3 ($6.6) billion, amounting to 55% of the funds Hungary was to receive under the cohesion policy. Hungary is now losing an initial €1.04 ($1.08) billion tranche. This amount reflects the commitments for 2022 and will not be recoverable. The failure to meet EU fund requirements has triggered the conditionality mechanism, aimed at protecting the EU's financial interests. Furthermore, Hungary has been shut out of funds from the National Recovery Plan, exacerbating its financial difficulties.
The amount might increase
Hungary risks losing more funds by 2025 if it does not implement the recommended reforms. Another tranche, totaling €1.1 ($1.14) billion, could be lost. Brussels holds Prime Minister Viktor Orban’s administration accountable, despite the Hungarian government's efforts, such as reforms in public procurement law. The European Commission remains concerned about the transparency of fund utilization.
As a result, Hungary is the only EU country with both cohesion policy funds and National Recovery Plan funds still frozen. Brussels holds Prime Minister Orban's government responsible for this situation, as Hungary continues to be the sole EU country unable to access funds from the European Recovery Plan. Hungary's National Recovery Plan is valued at over €10 ($10.4) billion, including €6.5 ($6.8) billion in grants and €3.9 ($4.06) billion in loans.
