News & Analysis

Hungary fined 1.67 billion euros for mismanagement of EU funds

The Hungarian government has agreed to pay a fine of at least 560 billion forints (around 1.67 billion euros) for poorly managing European Union funds from the Multiannual Financial Framework (MFF), the EU’s 2014-2020 budget for supporting member states.

The European Commission assessed that financial corrections should be made in the running of 30 operational programmes in 15 EU member states in 2018.

EU rules would have allowed the Hungarian government to reject the fine and challenge the European Commission’s findings project-by-project, but instead it decided to accept what is known as the 10 per cent flat-rate financial correction, or 10 per cent of all the funds Hungary has received received from the EU in the current budget cycle.

The Hungarian press, however, has reported that further penalties are expected, which could push the fine up to 2.1 billion euros.

According to Jávor Benedek, a former Hungarian Green MEP who investigated the government’s use of EU funds and made the news public, the fine is “Hungary’s cost for the corruption” of oligarchs close to Hungarian prime minister Viktor Orbán.

The Hungarian government has long been accused of abusing EU funds, with the Hungarian public procurement system allegedly favouring the companies operated by allies and relatives of the country’s prime minister, Viktor Orbán.

Commenting on the EU’s decision, Hungary’s innovation and technology ministry stressed that the fine did not mean cutting the remaining 25 per cent of funds allocated for the country within the current MFF.

“Hungary will not suffer any harm, our country will not lose any EU funds,” the ministry said in a statement, calling the news “political hysteria.”