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Govʼt restructures budget to pre-finance EU funding

Initiatives

The government has increased the pre-financing allocation of European Union development funding by HUF 700 billion in a recent resolution in order to manage a liquidity shortage in affected programs, according to reports Tuesday.

The 2017 central budget originally earmarked HUF 618.4 billion in pre-financing of various EU-funded programs that are affected by the current resolution, the Prime Ministerʼs Office told state news agency MTI.

The additional funding is bridging funding withdrawn as soon as the respective funds arrive from the EU, shows the resolution published in the official gazette Magyar Közlöny on August 11.

Online news portal index.hu notes that a similar situation arose last fall, when the delayed results of an audit of the Economic Development and Innovation Operational Program (GINOP), which aims to stimulate the economies of less developed regions in Hungary, meant money was not received from Brussels.

The portal writes that the government did not dare issue invoices to the EU at the time due to early unfavorable signs from the GINOP audit, with the potential suspension of all EU funding at stake. Eventually, it adds, this was avoided when Hungary agreed to certain legislative amendments.

Index.hu reports that the cause of the present situation is not known for sure, but the government is set to issue a total of EUR 3 bln in invoices to Brussels in the fall, so that in theory the current increased HUF 700 bln budgetary allocation will only apply for a couple of months.

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