Hungarian govt decides not to apply for EUR 9.4 bn loan from the EU
“We do not wish to become indebted.” That is the Hungarian government’s official reasoning for why they have decided to forgo one part of the European Union’s Recovery and Resilience Facility and only apply for a grant of 7.2 billion euros.
As Telex reports, this is a rather unexpected turn of events, as Hungary had previously revealed plans detailing what the entire amount of 16.6 billion euros that Hungary is eligible for would be spent on. The government’s official plan, submitted on the 12th of May, almost two weeks past the original deadline, will be assessed over the next two months to see if it complies with the European Union’s regulations. The Recovery and Resilience Facility (RRF) is the EU’s response to the coronavirus pandemic; however, its goals extend past managing the financial effects of COVID-19: it was conceived to provide the Member States with the means to undertake sustainable projects that serve the common good of European citizens. Consequently, plans must meet the requirements set out by the EU, for instance, that 37% of the funds received need to be dedicated to achieving climate goals and 20% to fostering the digital transition.
The sector to suffer the biggest loss following the government’s decision is education.
Hungarian universities were due to receive more than 3.3 billion euros from the RRF in an effort to modernise them. The idea was not without controversy, as we wrote here, since the government had established a number of private foundations to operate a large proportion of Hungarian universities, which the opposition saw as a tactic to funnel EU funds straight into the pocket of government allies. Now, without the loan, approximately 1.5 billion euros remain allocated for education-related projects in total. The most emphasis is placed on the development of the healthcare system, which is due to receive 34.1% of all funds, followed by 25% for the development of environmentally-friendly transport methods.
According to Népszava,
it could have been exactly the transfer of previously state-owned universities to private foundations that led to the government’s decision not to avail of the loan.
The announcement that Hungary would submit a different plan to the EU came one day after PM Orbán’s dinner with Ursula von der Leyen, President of the European Commission, and Céline Gauer, Head of the Recovery and Resilience Task Force. According to an informant, Von der Leyen and Gauer had made it clear to the Prime Minister that they were most certainly unwilling to approve funding that would not be spent in a transparent way, as in the case of foundation-supported Hungarian universities.
As Telex points out, the government is not entirely opposed to loans: they seem very much willing to take on a Chinese loan of 1.2 billion euros in order to build Fudan University’s campus in Budapest.
Source: telex.hu, nepszava.hu