EC Clears Hungary RRF Plan but Links Payouts to 'Super Milestones'

EU

The European Commission on Wednesday endorsed Hungary's Recovery and Resilience Facility (RRF) plan, but made payouts conditional on the "full and effective" implementation of remedial measures defined in a set of 27 "super milestones", according to a report by state news wire MTI.

"No payment under the RRF is possible until Hungary has fully and correctly implemented these 27 'super milestones'," the EC said.

EC also said it decided to maintain its initial proposal, made on September 18, to suspend EUR 7.5 billion of Hungary's Cohesion Fund allocation as the country takes steps to address concerns over the rule of law.

The Council has until December 19 to vote on the suspension of the funding. The measure requires a qualified majority to pass.

Hungary had been given a November 19 deadline to implement 17 measures in the framework of a Conditionality Regulation procedure.

EC acknowledged that a number of reforms "have been undertaken or are underway", but said Hungary "failed to adequately implement central aspects" of those measures. "These relate, in particular, to the effectiveness of the newly established Integrity Authority and the procedure for the judicial review of prosecutorial decisions," it added.

At a press briefing on Wednesday, European Commissioner for Budget and Administration Johannes Hahn said Hungary is moving in the "right" direction, "but we are not yet at the goal". He also pointed to the impact of "budgetary incentives" on progress made so far.

EC explained that the 27 "super milestones" include all of the 17 remedial measures agreed on in the framework of the conditionality procedure, such as steps to combat corruption, improve competition and transparency in public procurement, strengthen rules on conflicts of interest, increase audit and control requirements, use the EC's Arachne risk-scoring tool and ensure that the European Anti-Fraud Office (OLAF) can effectively conduct investigations in Hungary. They also cover measures to strengthen judicial independence, including increasing the powers of the independent National Judicial Council, reforming the functioning of the Supreme Court to limit risks of political influence, removing the role of the Constitutional Court in reviewing final decisions by judges on request of public authorities, and removing the possibility for the Supreme Court to review questions that judges intend to refer to the European Court of Justice, the EC added.

The commission said it will stay in "close and constructive" contact with the Hungarian authorities to continue work on the "swift and substantial" resolution of the identified concerns.

EC said that Hungary's RRF plan devotes over 48% of its total allocation to measures that support climate goals and is expected to "contribute significantly" to objectives to reduce Hungary's dependence on Russian fossil fuels and "fast-forward" the decarbonisation of the economy. It added that close to 30p%of the allocation will support digitalisation.

The commission noted that the RRF plan also includes a "comprehensive set of key institutional reforms to strengthen the rule of law" that "effectively address" country-specific recommendations and "serve to protect the financial interests of the Union".

EC said it maintains its proposal that no legal commitments may be entered into with any public interest trust.

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