Ecofin approves EC recommendation for partial funding suspension
European Union finance ministers on Tuesday approved a European Commission proposal to suspend part of Cohesion Fund allocations for Hungary for 2013 because of the country's failure to address its excessive deficit, Commission Vice President Olli Rehn said on Tuesday.
Ecofin recommended that Hungary make fiscal adjustments equivalent to 0.5% of GDP this year and further measures in 2013 to keep the general government deficit under the 3% of GDP threshold, Rehn said.
Ecofin will take a decision on whether to lift the suspension of €495m in Cohesion Fund commitments from January 1, 2013 based on an assessment of measures that Hungary has taken at a meeting on June 22, he said.
Rehn reiterated that Ecofin's decision as well as the Commission's recommendation should be seen as a "constructive incentive" for Hungary to meet targets.
He added that the most recent macroeconomic outlook for Hungary had been taken into account when defining targets for its fiscal policy.
Rehn said it would be up to the Hungarian government and parliament to decide on measures that should be taken to meet targets, but noted they should be of a "permanent nature".
Margrethe Vestager, the finance minister of Denmark, which holds the rotating Presidency of the Council of the European Union, stressed that the partial suspension of Hungary's Cohesion Fund allocation would be lifted "without delay" if the country takes the necessary corrective action by the council meeting on June 22. "If Hungary does as they say they will we will be ready to lift the suspension," she added.
She acknowledged the "strong commitment" on Hungary's side to pass reform proposals.
The European Commission proposed the suspension of the Cohesion Funding on February 22.
"This unprecedented step follows the Commission's repeated warnings to Hungary urging it to step up its efforts to end the country's excessive government deficit, and its subsequent failure to take appropriate action," the Commission said at the time.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.