Astonishing feat by the government, with a 'little help' from Hungarian taxpayers

Portfolio
The Hungarian government has managed to draw virtually all available EU funds in the 2007-2013 programming period. In other words, it has successfully avoided a financial penalty that could have reached EUR 1-2 billion, Portfolio has learned. The happy ending is somewhat tarnished by the fact that this feat would not have been able without the assistance of every single Hungarian taxpayer. The cabinet used their money once more last autumn to restart the collection of 2014-2020 EU funds.
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Portfolio was the first to report last September that Hungary had to accept financial sanctions to the tune of tens of billions of forints to close a number of ongoing accounting disputes regarding irregular use of funds and reset the flow of EU funds both from the 2007-2013 and the 2014-2020 programming periods.

Although the contents of the agreement reached regarding the 2007-2013 budget period were not made public, the deal led to roughly HUF 20 bn in EU funding being transferred as the payment counter rose 0.3% to 98.73%. We have taken another look at the EU fund absorption records and found that the count is up at 99.64%, i.e. Hungary managed to draw almost the entire available 7-year EU budget (EUR 23.1 bn). 

So, sometime between the end of September and the end of December Brussels paid Hungary nearly HUF 70 bn worth of EU funds in the 2007-2013 cycle. Unfortunately, in the detailed budget report for the January-November period the Finance Ministry does not have a breakdown of funds received in the previous and the current programming periods, and the data for the whole of 2019 have not been published yet. 

although the 2007-2013 fiscal cycle is long gone, we can state with certainty only in view of the 99.64% absorption rate that hungary "survived" its first full 7-year eu fiscal cycle without surrendering major eu funds.

In 2012-2013 it was a very real thrat that due to various irregularities and the lack of a sufficient volume of 'good' projects Hungary may lose EUR 1-2 billion of EU funds that would have been 4-8% of all the funds available for the country in the 2007-2013 programming period. In other words, the cabinet managed to salvage hundreds of billions of forints of EU funds over the last few years.

Note, however, that in order to achieve this Hungary had to carry out up to 10% more developments than planned for the entire 7-yr period and call all available funds. In practice this meant that the share of Hungarian taxpayer money in projects co-financed by the EU was a lot greater than originally planned. This was necessary to avoid losing EU funds do to irregularities. 

About HUF 24 bn worht of EU funds were 'stuck' in Brussels in the 2007-2013 programming period, which is negligible compared to previous estimates of HUF 300-500 bn losses.

With a 99.64% absorption rate Hungary beat such old EU member states as the Netherlands (99.62%), France (99.58%) or Spain (99.54%). 

Here are a few more absorption rates (EU28=98.2%):

  • Estonia - 99.42%
  • Sweden - 98.44%
  • Czech Republic - 97.84%
  • Germany - 97.6%
  • Bulgaria - 97.33%
  • Austria - 96.86%
  • UK - 99.64%
  • Slovakia - 99.08%
  • Italy - 94.14%
  • Romania - 90.49%
  • Croatia (newcomer) - 84.24%

Cover photo by Tom Weller/picture alliance via Getty Images

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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