By Krisztina Than
BUDAPEST (Reuters) – The Hungarian government will submit the first of several anti-corruption bills to parliament on Monday, its spokesman said, as Budapest scrambles to avoid losing billions of euros in European Union funding.
The European Union executive recommended on Sunday suspending funds worth 7.5 billion euros ($7.48 billion) due to what it sees as Hungary’s failure to combat corruption and uphold the rule of law.
The European Commission also set out requirements for Hungary to keep access to the funding, including new legislation, which Hungary immediately said it would meet.
It is the first such case in the EU under a new sanction meant to better protect the rule of law and combat corruption in the 27-nation bloc.
Government spokesman Zoltan Kovacs tweeted late on Sunday the govermment would submit legislation to Parliament on Monday and Friday, “including proposals to set up the authority which will supervise EU public procurement procedures.”
Nationalist Prime Minister Viktor Orban, in power since 2010, has clashed with Brussels repeatedly over his policies that it sees as eroding democracy in the Central European country.
However, with big challenges at home over surging energy costs and double-digit inflation, a weak forint and a slowing economy, the veteran prime minister looks willing to fulfil EU demands to finally create institutions that would cut corruption risks in EU-funded projects.
Kovacs did not reply to Reuters questions asking which pieces of legislation would come on Monday, but the forint firmed close to 1% versus the euro in early trade.
“The latest developments in Brussels certainly come at a bad time for Orban, who is struggling with a swath of political and economic problems brought about by both global issues, most notably rising energy prices, so he is likely to go further to satisfy Brussels’ demands,” said Mujtaba Rahman, Managing Director Europe at think tank Eurasia Group.
He said Budapest would likely secure the pending deal but that would not resolve all the outstanding disagreements over other chunks of EU funds.
“The bigger problem for Orban is the money tied up in the Recovery Fund, because the Commission has more discretion over whether it gives that the green light or not,” Rahman said.
Like most EU countries, Hungary last year submitted its blueprint on how it would use EU grants to make its economy more environmentally friendly and high-tech after the COVID-19 pandemic. It has yet to receive approval on that as well because of EU concerns over corruption, and the rule of law.
If Budapest does not get the EU funds, the forint — which has lost 8% this year — will almost certainly fall further, complicating efforts to curb inflation and exposing Hungarian assets to any negative shift in global sentiment.
Development Minister Tibor Navracsics, in charge of negotiations with the EU, said on Sunday that Hungary would meet all 17 of its commitments made to the European Commission to stave off the loss of any EU funding.
This comes after EU Budget Commissioner Johannes had indicated the way out of this situation for Hungary on Sunday, saying the steps proposed by Budapest “could in principle be capable of remedying” Commission’s criticisms “if they are correctly specified and implemented accordingly.”
($1 = 1.0025 euros)
(Reporting by Krisztina Than, additional reporting by Gabriela Baczynska; editing by Raissa Kasolowsky)
