Hungary may say goodbye to HUF 4.2 trillion of EU funds for good
The European Commission is expected to announced on June 4 that it will not extend the post-pandemic recovery fund beyond 2026, which will dismay major beneficiaries of the scheme, notably Italy, Spain, Portugal and Poland — all of which were pushing for a delay to the expiration date.
Hungary could lose all of the €10.4 billion (4.2 trillion forints) allocated to it through the Recovery and Resilience Facility.
This means that it will not receive the €6.5 billion grant or the €3.9 billion RePowerEU soft loan.
The countries that have not been banned from accessing funds on the basis of rule-of-law criteria, unlike Hungary, have been the biggest beneficiaries of the programme so far. They were all hoping for an extension of the RRF deadline and to be able to draw more funds from the €650 money pot created in 2021, but the European Commission will say
there are no legal grounds to extend its expiration date,
according to several officials who spoke to Politico on condition of anonymity.
Member States can only access EU funds if they meet the agreed reform and investment targets – but this system has caused significant delays in many countries. The energy crisis and inflation resulting from the war in Ukraine have led to many national plans having to be amended, further slowing down the process.
To maximize takeup, the EU executive may now focus on helping countries jump through the required hoops before the deadline strikes, as an extension is not on the table.
Member states need to urgently review their plans and remove any measures that are no longer feasible,
Economy Commissioner Valdis Dombrovskis said earlier this month.
Under the current rules, countries must request payments before a 31 August 2026 cut-off date. That leaves enough time for the Commission to give a green light to the requests and distribute the cash before that date.
However, faced with the real risk of losing EU funding, countries are devising workarounds to secure the money ahead of the deadline.
This week, the Commission approved Poland's request to transfer almost €6 billion from under-subscribed green project loans to popular defence initiatives. While the money can’t be used to buy weapons directly, it can still, according to the original rules, be channeled into “dual-use” projects such as building roads for tanks, and shelters.
Under the workaround, the money will be managed by a special fund linked to the Polish development bank, Gospodarstwa Krajowego.
While the Polish government will still have a say over how the money is spent, drawing in the development bank creates a holding bay for the funds beyond the 2026 deadline.
The European Commission also appears willing to offer more flexibility. For instance, they could extend the deadline for performance assessments from August to November 2026 and allow faster processing of payment claims.
Cover image (for illustration purposes only): Getty Images
