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Background: Orbán Unexpectedly Asks Brussels to Disburse EU Reconstruction Fund and Loans

Hungary Today 2022.03.23.

Hungarian Prime Minister Viktor Orbán has sent a letter to the European Commission, or rather personally to Ursula von der Leyen, asking for disbursement of all EU funds allocated for the country, including a loan under the Resumption Fund, but asking for this in order to deal with the Ukrainian refugee crisis. The government previously waived this loan, but is now requesting it. Accordingly, the Cabinet is asking for a credit line totaling about 3,400 billion forints (EUR 9.1bn). The European Commission earlier refused to approve the disbursement of pandemic aid funds to Poland and Hungary because the two countries have not yet implemented rule of law criteria.

This article was originally published on our sister-site, Ungarn Heute.

According to earlier calculations, Hungary would have been entitled to some 5,900 billion forints (EUR 16.1bn) from the EU stimulus program during the coronavirus crisis. Originally, the development plan was designed to cover this amount, but when the concrete program had to be presented last spring, the government unexpectedly canceled its claim to a loan of 3,400 billion forints (EUR 9.1bn), and then raised money on the market in the fall with a gigantic bond issue at a lower price. Most importantly, the government had already communicated at that point that it was only temporarily waiving the restructuring loans and that there was a possibility that Hungary would (partially) draw down the loans later.

So what the government is asking for now was to be expected: asking the Commission for a credit line, among other things, but they claim they are now asking for this because of the additional costs due to the war in Ukraine.

According to the letter, Orbán does not want to spend the reconstruction fund in full for the purposes originally intended, but on strengthening the Hungarian army, protecting the borders, taking care of refugees, as well as alleviating the economic damage caused by the war.

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Extraordinary circumstances require extraordinary measures, PM Orbán wrote in his letter to European Commission President Von der Leyen, stressing that a war is under way at Hungary's borders and in the past weeks alone, nearly half a million Ukrainian refugees arrived in Hungary fleeing the war.Continue reading

So, according to the information, the Prime Minister asked the European Commission to approve the recovery and reconstruction plans, partnership agreements, and operational programs of the European Union member states that protect the EU’s eastern borders. He also called on the Commission to allow rapid, targeted, and flexible use of EU budget funds by lifting restrictions on pre-financing, co-financing, and redeployment.

In his letter, the Hungarian Prime Minister also asks the President of the Commission to make other changes, for example, that the aid available to Hungary under the reconstruction program not to be reduced because of the war in Ukraine, but that the amount of HUF 2,511 billion (EUR 6.9bn) to be maintained.


Due to much higher economic growth than forecast, Hungary will receive less non-repayable funds from the European Union’s Recovery Fund than previously expected. It was expected, based on earlier GDP growth forecasts, that Hungary would receive HUF 2,511 billion in aid under the Recovery Plan, and a plan for the development of that magnitude was presented last May (at that time, the government had already waived the HUF 3,400 billion credit line). However, it has since emerged that the Hungarian economy (and many others in the region) performed better than expected last year, leaving Hungary entitled to only around HUF 2,080 billion under the rules set for 2020. This is the 16% shortfall referred to by the Prime Minister in the letter, but it is precisely this shortfall that he is asking the Brussels decision-makers to eliminate, i.e. to grant the level of aid previously envisaged.

According to government-critical 444, the government has now agreed to even fulfill the conditions that have so far prevented the Commission from approving a significant part of the aid program (fighting corruption, deficiencies in public procurement). According to the newspaper, the Hungarian government has offered, among other things, to set up a new corruption authority based on the Estonian model, which would report annually to the Prosecutor General and inform MPs at the annual hearing in Parliament.

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According to a copy of the March 18 letter addressed to Commission President Ursula Von der Leyen, Orbán wrote that Hungary has so far taken in more than 450,000 refugees from Ukraine, and cited the “shared responsibility” of member states in the crisis as crucial.

To this end, Hungary only aks for immediate and effective access to the EU funds allocated to it, and to be able to use them flexibly for the purposes that are best suited to be dealing with the crisis,

Orbán wrote in the letter.

According to press reports, parallel to the Prime Minister’s letter, the State Secretary for EU Funds, Szabolcs Ágostházy, held talks in Brussels and returned with the message to the Hungarian government that

the credit line can only be opened to Hungary if the money is primarily used to eliminate Russia’s energy dependence

Since the resource allocation rules were decided unanimously by 27 Member States, they can only be changed with the support of 27 Member States, and it is very questionable whether they will be willing to do so. And it is even more questionable whether they will agree to use our 3,400 billion forint credit line to alleviate the refugee crisis, as Orbán points out in his letter.

The letter was also sent to the President of the European Council, the members of the European Council and the President of the European Parliament.

The full letter is available in English HERE .

Sources: Portfolio, 444

Featured image via Balázs Szecsődi/MTI/Prime Minister’s Press Office


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