Ujhelyi Questions Government on Use of EU Recovery Fund Loan Component

The government has already indicated in several statements that, contrary to its earlier claims, after all, it intends to draw down the loan part of the so-called Recovery Fund, but it is still not known how much of this amount will be used and for what purposes; moreover, the government is obliged to consult widely on these issues before submitting the detailed plan, MEP István Ujhelyi said at his online press conference on Saturday.

The Member of the European Parliament’s S&D Group pointed out that Hungary is currently in a very difficult budgetary situation due to, among other things, the government’s misguided economic policies and the resulting high inflation. Ujhelyi added that Hungary is the only country that has so far been unable to draw on the so-called Recovery Fund, which was set up by the European Union, due to problems with the rule of law and corruption at the state level. The politician recalled that the HUF 2,300 billion in non-reimbursable aid to Hungary is currently blocked by the European Commission, but he said that the same fate could befall the HUF 3,400 billion loan component if the government does not restore the rule of law and does not try to draw down these funds in accordance with the rules.

István Ujhelyi recalled that in the spring of 2021, Viktor Orbán had „arrogantly” declared that the Hungarian government would not ask for the loan component of the Recovery Fund because „paradisiacal conditions exist in Hungary”, yet a year later they indicated that they would still apply for it.

The Social Democrat politician pointed out that according to the latest decision published in the Hungarian Gazette, Minister for Regional Development Tibor Navracsics, and his deputy Csaba Lantos, are responsible for negotiating the call for this loan package, which means that the process has now started. Ujhelyi stressed that this HUF 3400 billion loan component can only be used in the same targeted way, for instance, to support the transition to green or renewable energies, digital transformation, strengthening competitiveness and productivity, social objectives, or, for example, to increase the resilience of the health system.

The MEP also pointed out that the government has to formally indicate in the next few days whether it will request the recovery loan component and that the detailed use plan and request must be submitted to Brussels by the end of August.

Ujhelyi warned that under current legislation, which is particularly important to respect at a time of rule of law investigation, it is mandatory to hold a public consultation on the government’s proposal, including with local authorities, trade unions and civil society organisations. The government is also obliged to submit a summary report on this to the European Commission, and if this is not done and the stakeholders are not properly informed and given the opportunity to have their say, we will not receive the loan component of the Recovery Fund.

„The European Union’s expectation is for a national plan that invests in the future and – whether the powers that be like it or not – that goes beyond the Orbán regime,” the founder of the Community of Chance added in the online briefing. Ujhelyi called on the government to provide substantive information on its plans for using the loan facility and how it intends to conduct a real public consultation on it.

A video recording of the press conference – in Hungarian – can be found at: https://bit.ly/3xTHPSU

Budapest/Brussels – 25/02/2023

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