Much of the EU Budget Will Be Made Up of Loan Repayments, Minister Warns

We are not getting all EU funds because of political disputes, EU Affairs Minister János Bóka told the Economx Money Talks conference on Monday. However, access to funds is still steady: €12 billion is coming in for cohesion and agricultural funding, though €9.45 billion is under suspension, Index reported.

“EU funding issues have become a top political issue in Hungary,” Mr Bóka pointed out. The Minister recalled that the European Union has both a seven-year and an annual budget —the first requires unanimity, but both require the approval of EU member states. The revenue side of the budget is legally the EU’s own resources, but more than half of the expenditure is covered by member states who usually monitor the budget situation in terms of their net contributions. The top beneficiary per capita is Luxembourg, and the big net contributors are of course Germany and France, reminded János Bóka.

However, these payments are constantly in flux, he added. In addition, the EU finances many activities (such as support for Ukraine) through loans.

And with so much borrowing, 20 percent of the EU budget will be made up of loan repayments from 2028, which is bound to spark controversy,

the Minister highlighted.

Among the new challenges, he mentioned the EU’s competitiveness and the defense industry. Speaking about the cohesion funds, Mr Bóka said that attacks on cohesion policy go back to the old days, with many arguing that it is unsustainable, while beneficiaries are arguing for the other side of the coin. Still, in the future, a system could emerge that takes less account of the level of development, he stated.

The second problem is that RRF (Recovery and Resilience Facility) projects make it difficult to access cohesion funds.

However, Hungary’s net position is still a net plus of €4.5-5 billion, János Bóka recalled. He added that due to political disputes, not all EU funds are available with €12 billion coming into cohesion and agricultural funds, while €9.45 billion is under suspension.

In the case of the RRF, we only have access to the advance, but the government’s strategy was “to tackle the blocking causes”. So the government is working on the conditional barriers, and a total of 17 measures have been negotiated with the European Commission accordingly, the Minister reminded. However, when Ursula von der Leyen, President of the European Commission, visited the European Parliament, full access to funds was not made possible, despite the steps previously agreed, he added.

János Bóka stressed that some EU funds would still be accessible, but that there were political risks around EU money.

Hungary will not be able to access the full amount of EU funds overnight, but can only move forward step by step,

he said. “Expect not a linear process, but a Brazilian soap opera,” the Minister concluded. Although he is optimistic, he is not expecting a big cataclysm or a big announcement on EU funds anytime soon.

Via Index, Featured photo via Pixabay