Brussels, 06/03/2012 (Agence Europe) - On Tuesday 6 March, the European Commission adopted a proposal for a recommendation calling on Hungary to take additional budgetary measures by mid-September 2012 in order to come into line with public deficit objectives for 2012 (2.5% of GDP) and 2013 (well below 3% after end of measures accountable just once). Failing this, Budapest will be exposed to a freeze on part of the structural funds to which it is entitled. The Commission's recommendation will be discussed on Wednesday by national ambassadors with the EU (Coreper), ahead of the meeting of European finance ministers scheduled for Tuesday 13 March.
The revised stability pact stipulates that a non-eurozone country may be threatened with suspension of cohesion fund commitments in order to incite it to bring its public finances under control. Hungary is the first European country to find itself in this case. At the end of February, the Commission proposed suspending nearly €500 million in structural funds to which Hungary was entitled (see EUROPE 10559).
Hungary will now have to convince the Commission that it is taking action to bring its deficit under control and to preserve its cohesion fund commitments. In order to direct it onto the best path, the European Commission is expected to provide advice. In the context of preparations for the next Ecofin Council, Coreper will have the emergency procedure referred to it for scrutiny, will study the advice, and will even mark out the ground for suspending part of the cohesion funds intended for Hungary. The finance ministers will then be called upon to endorse the Commission's recommendation, which is all too likely. Hungary will have six months in which to demonstrate that it is making an effort to apply the advice given by the EU in fields such as structural reform and improvements to public finance, as was the case when, in 2009, excessive deficit procedure was triggered.
The Hungarian side is convinced the outcome will be fortunate as Budapest is already working along the right lines. Hungary will be quite able to respect any “reasonable” recommendation made by the Commission and “not a single centime will be taken from Hungary in 2013”, said Hungarian Prime Minister Viktor Orban on NR1 radio last Friday. (MD with MB/transl.jl)