Hungary to lose €1B in EU funds by year-end

BRUSSELS — Hungary is on the brink of losing €1 billion in EU money that was frozen because of rule-of-law breaches, several officials with knowledge of proceedings told POLITICO.

The European Commission has been withholding over €16 billion in grants to poorer regions as well as post-Covid economic aid to boost growth as part of efforts to pressure right-wing leader Viktor Orbán to reverse reforms seen widely as anti-democratic.

And unless Hungary can carry out 17 measures and gain the European Commission’s approval by Dec. 31 — this step alone normally takes months — around €1 billion in EU cash to poorer regions will be gone for good.

Its efforts so far haven’t hit the mark. Budget Commissioner Piotr Serafin said that Hungary’s moves to unblock the funding are “not quite what we were hoping for” after a meeting on Tuesday with János Bóka, Hungary’s European affairs minister.

Reforms Hungary needs to complete to convince the EU to release the funding include changes to its anti-corruption and conflict-of-interest legislation.

Any country is given two years to claim back funding that was withheld by the Commission, according to the EU’s own rules. Hungary is at risk of permanently losing a share of regional cash from the 2022 budget, which is worth more than €1 billion.

“That’s a lot of money for any country, but especially for Hungary,” said an EU diplomat who was granted anonymity to speak freely about the sensitive discussions.

The potential funding cut comes at a difficult time for Orbán, who will soon end his six-month stint as the head of the EU’s rotating Council presidency, a role which allows him to set the agenda and chair meetings in Brussels.

Economic growth in Hungary is well below the EU’s average, while its government deficit as a proportion of GDP (5.4 percent this year) is among the highest in the bloc.

After over a decade in power, Orbán’s party has been overtaken in polls by a conservative outfit led by Peter Magyar, who pledged to unblock the EU’s funding if he wins the 2026 national elections.

Separately, Hungary is on course to unblock a different, and less conspicuous, share of EU funding that was frozen over alleged breaches to academic freedom, according to two Commission and government officials with knowledge of proceedings.

To access the Erasmus student exchange funds and research grants, Budapest has agreed to remove political figures from a public body that oversees most universities.

But the Commission dismissed suggestions that these changes might affect the remaining share of frozen funds. “This notification does not relate to the frozen Cohesion & RRF (post-Covid) funds,” Serafin wrote on Tuesday.

The European Commission and the Hungarian government didn’t respond to requests for comment.