• Tue. Sep 20th, 2022

EC: Prime Minister Orbán’s rapid loan request is still under consideration

ByChad J. Johnson

Mar 24, 2022

“The European Commission is still examining the letter that Prime Minister Viktor Orbán sent last Friday to the Presidents of the Commission, the European Council and the European Parliament”, responded Andrea Masini, press officer for economic affairs at the European Commission, to a question from the Hungarian economic news portal Private bank. Hungarian Prime Minister Viktor Orbán sent a letter to the European Commission, or Ursula von der Leyen personally, request that all EU funds allocated to the country be disbursed, including a loan from the reconstruction fund, after requesting it to deal with the Ukrainian refugee crisis.

This article was originally published on our sister site, Ungarn Heute. Translated by Julia Tar.

The European Commission is examining Hungary’s request for the early mobilization of the recovery fund, but requires adequate justification and schedule, as well as reassessment and approval of the plan already submitted, according to the EU authority’s response to the Hungarian Business Portal Private bank. However, based on past experience with different EU processes, this could be a lengthy procedure.

As we reported, Hungarian Prime Minister Viktor Orbán has asked the European Commission in a letter to partially draw on the credit line made available to the country under the EU recovery plan, with effect immediate. Besides the wave of refugees from Ukraine, the Prime Minister based his request mainly on the fact that “the economic impact of the war and the sanctions weighs heavily on the Hungarian economy”, referring to the invasion of Ukraine by Russia and punitive measures by the EU. against Russia.

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Asked by the portal whether the Commission was open to the Hungarian proposal and when a decision on this issue could be expected, the press officer did not give a specific answer, stressing that the evaluation of the letter does not was not yet finished.

Andrea Masini added, however, that Hungary had not yet submitted a concrete request for “loan aid” under the recovery plan according to its rules (i.e. Viktor’s letter Orbán might just be a first step).

Made

According to previous calculations, Hungary would have been entitled to some 5,900 billion forints (16.1 billion euros) from the EU recovery program during the coronavirus crisis. Originally, the development plan was designed for this amount, but when the concrete program had to be presented last spring, the government canceled the right to a loan of 3,400 billion forints (9.1 billion euros) and then raised funds on the market in the fall. with a gigantic loan issue at a lower price. More importantly, the government had already communicated at that time that it was only temporarily waiving the restructuring loans and that it was possible that Hungary would (partially) reduce the loans later.

He also noted that member states can apply for loans up to a maximum of 6.8% of their GDP (gross national income) for 2019 until August 31, 2023 (according to the Hungarian Central Statistical Office, GDP of Hungary in 2019 was 47,524 billion forints, of which 6.8% or 3,232 billion forints – ed.).

At the same time, he stressed that Hungary should justify the request and demonstrate the need for more funding, further reforms and investments with agreed milestones and targets.

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Masini also said the Commission would then reassess the plan, which still needed to be approved by the European Council.

The press officer referred to the plan that the Hungarian government submitted to the Commission last May on how it intended to use the money to which Hungary was entitled from the Restoration Fund. However, this plan was “only” for spending grants and the Hungarian government did not want to use loans at that time (the fund consists of two main parts: grants and loans – ed.).

However, unlike the plans of most Member States, the Hungarian plan has not yet been approved by the Commission.

Featured image via Zoltán Fischer/MTI/Prime Minister’s Press Service