Hungary passes HUF 6,000 bn mark in disbursing EU funds

Portfolio
The amount of European Union funds from the EU's 2014-2020 development budget allocated by Hungarian authorities has passed the HUF 6,000 billion mark by early July, which means the government has used up two-thirds of the total funding available for the seven-year period, Portfolio’s monthly investigation shows. This still leaves more than HUF 3,000 billion that could prop up investments and economic growth in coming years.
Portfolio’s database shows an increase of HUF 42 bn in the volume of new EU funds disbursed since the beginning of June. 256 new winners were announced in this period, not including the latest winners of the Rural Development Programme, increasing total disbursement to HUF 9,303 billion.

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As our summary below shows, by far the largest number of new winners, 164, were announced in the Territorial and Settlement Development Operational Programme (TSDOP/TOP).

Detailed figures show that a number of rural communities were awarded support for local economic development, social, cultural or green community projects, typically to the tune of tens, or at most hundreds, of millions of forints. The second highest number of winners, 52, were announced in the Economic Development and Innovation Operational Programme (EDIOP/GINOP), awarded for apprenticeship schemes, corporate infocommunications development, on the job training and renewable energy developments.

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In addition to the volume of newly allocated funds, it is also worth noting the rate of new monthly disbursements. Payments made in June were nearly identical to the May sum at HUF 105 bn, boosting total disbursement to HUF 6,069 bn by the end of the month, which corresponds to 66% of the HUF 9,184 bn available in the current seven-year programming period. Although the government has already allocated 101% of EU funds that were made available for the seven-year period, a third of the amount has not yet been disbursed domestically, which could provide a substantial crutch for investments and GDP growth in both 2019 and 2020.

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It is also worth tracking payments made by the European Commission to Hungary, because if domestic disbursements continue at a high rate while Brussels falls behind with payments, the financing gap opens too wide and places a burden on the general government (see red arrows). What we saw in June was a decrease in EU payments to EUR 8.2 bn from EUR 8.65 bn in May. Reliable sources indicate that this dip is technical in nature and should be transient.

In the figure below, the blue line in the bottom indicates this technical effect as funds transferred by Brussels decreased slightly and the financing gap between incoming and outgoing EU payments opened up a bit as a result.

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Looking at the percentage rates for the seven-year financing period, we see that the government has announced tenders for 113% of the indicative total amount available, approved projects worth 101% of the budget, paid out two-thirds of the amount so far and has accessed one third of the seven-year budget in EU transfers. The 101% approved project rate puts Hungary at the top of the ranking of member states, while the 33% absorption rate places it in the midfield.

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This article is part of the work programme titled "The impacts of EU cohesion policy in Hungary - Present and Future" which is carried out by Net Média Zrt., the publisher of Portfolio.hu, between 1st April 2019 and 31st March 2020 with European Union financing. The views in this article solely reflect the opinions of the author. The European Commission as the funding entity does not take any responsibility for the use of information presented in this article.
 

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