Economy
Hungary could lose EU funds if it fails to cut deficit - Rehn
EU Economic and Monetary Affairs Commissioner Olli Rehn said efforts to reduce the Hungarian deficit in 2011 were due to one-off measures and without them the deficit would have been 6% of economic output."Hungary has not taken effective action," Reuters reported Rehn as telling a press conference.
"As Hungary is not a member of the euro, it won't face the prospect of a financial sanction," Rehn said.
"It could nevertheless face a suspension of commitments from the cohesion funds from next year, from Jan. 2013 onwards," Rehn added, referring to the EU's long term-term aid to poorer EU states.
According to EU officials cited by Reuters, Hungary could lose up to 1.7% of GDP, which would be the total effect on the Hungarian economy of the funds being suspended in 2013, rather than the precise size of the funds withheld.
The Commission said that although Hungary did take steps to reduce the gap, they were mainly one-off measures that would not bring the shortfall down in a sustainable way.
Hungary's budget shortfalls have exceeded the European Union's threshold of 3% of GDP since it joined the bloc in 2004.
"As Hungary is not a member of the euro, it won't face the prospect of a financial sanction," Rehn said.
"It could nevertheless face a suspension of commitments from the cohesion funds from next year, from Jan. 2013 onwards," Rehn added, referring to the EU's long term-term aid to poorer EU states.
According to EU officials cited by Reuters, Hungary could lose up to 1.7% of GDP, which would be the total effect on the Hungarian economy of the funds being suspended in 2013, rather than the precise size of the funds withheld.
The Commission said that although Hungary did take steps to reduce the gap, they were mainly one-off measures that would not bring the shortfall down in a sustainable way.
Hungary's budget shortfalls have exceeded the European Union's threshold of 3% of GDP since it joined the bloc in 2004.
