Orbán has time until midnight: EUR billions at stake, HUF may collapse
Based on the latest calculations of the GKI economic research institute, if Hungary does not receive the EU recovery funds, the euro value might stabilise at around HUF 430. Prime minister Viktor Orbán and his government have time to send their response letter on the issue to the European Committee until this midnight. That document might play a key part in receiving the EU money or Brussel’s rejection concerning the Hungarian plea for the recovery fund.
Orbán has time until midnight
According to atv.hu, without receiving the EU’s recovery funds, the Hungarian GDP growth might fall 2-3 percent. Furthermore, 1 euro will cost 430 forints, and that exchange rate will remain. That is what the GKI economic research institute projects now, based on their latest financial calculations.
The Hungarian government’s deadline to notify the European Commission of what they would like to do to stop corruption is this midnight. The letter will play a key part in whether Budapest will receive the EU funds estimated to be HUF 15 thousand billion (USD 36.7 billion). In 2021, Hungary’s GDP was USD 182 billion, so the EU’s recovery fund is undisputedly a considerable amount of money.
The president already included a message to Brussels last Saturday in her August 20 speech. Katalin Novák said “the precondition for our cooperation [with the EU – editor] is that they do not blackmail us either with the money we are entitled to or ideologies that have been rejected by Hungarians,” the president said. Hungary wants to make Europe stronger and the continent’s “voice louder”, Novák said. “This is how we’ll have a chance to protect Europeans and preserve the parts of our history and culture that made Europe great,” she added.
The European Council will decide
However, the European Commission expects a written answer from the Hungarian government. Orbán’s fifth cabinet has time until Monday midnight to send that letter. What Brussels wants to know is how the government would like to use the recovery funds.
After receiving the government’s letter, the EC will have one month to decide whether they accept it. If they do, the fund will start to flow into Hungary. However, if not, Hungary will not receive all the money. According to a foreign affairs expert, former MEP and ambassador, István Szent-Iványi, the latter is more likely to happen.
Opinions differ on the rate that withdrawal will reach. Commissioners Vera Jourová and Reynders would like a more severe punishment. However, some commissioners would be more lenient on the issue. The European Council will make the final decision with a qualified majority. That means the Hungarian prime minister cannot veto.
Billions of euros at stake
There is a huge amount of money at stake. Hungary could receive 5.9 billion euros from the recovery fund and 22 billion euros from the long-term EU budget for 2021-2027.
The CEO of the GKI believes that without that money, the Hungarian GDP will fall by 2-3 percent, and the euro exchange rate will be 430 HUF/EUR. That is because the government would have to reduce its spending. Furthermore, inflation would be higher, decreasing investment and consumption.
The government made two gestures towards the EU. The parliament may accept the modifications of the law on legislation and the criminal procedure code in September. István Ujhelyi, the MEP of the Socialists, said that the European Union expressed specific demands concerning the rule of law in Hungary, the prosecution service and the courts.
ATV asked the Ministry of Justice whether they sent their response to the EC or not but has not yet received an answer.
GKI is a private economic research institute in Hungary, specialising in economic analyses and forecasts. It specialises in analyses and forecasts of economic policy, impact analysis on the economic policy of the EU, financial and market analyses, forecasts for strategic decisions, market research with surveys and econometrics, industrial, sectoral and regional reports, zsi.at writes.
UPDATE
Source: zsi.at, atv.hu,