Negotiations between the Hungarian government and the European Union have entered a crucial phase, with pension and tax reforms emerging as the main obstacles to unlocking billions of euros in frozen EU funds.
PM Péter Magyar in talks regarding the reform of the pension and tax system
Prime Minister Péter Magyar’s administration is currently in discussions with the European Commission over the release of approximately EUR 17 billion in funding that was suspended during the previous government led by Viktor Orbán due to concerns over corruption and the rule of law.
As Euronews writes, Commission officials believe the new Hungarian government is reluctant to implement both pension and tax reforms, arguing that the measures would place additional pressure on an already strained state budget.
Budapest has reportedly informed Brussels that while it remains committed to pension reform in principle, the country’s fiscal situation and the limited time available make implementation before the relevant deadlines extremely difficult. The issue is politically sensitive for Magyar, whose election campaign included promises to raise minimum pensions and improve benefits for pensioners receiving below-average payments.
August deadline puts pressure on both sides
Hungary risks losing access to EUR 10.4 billion in grants from the EU’s Recovery and Resilience Facility unless it fulfils the required conditions by 31 August. While some milestones could potentially be simplified, EU officials have reportedly ruled out any extension of the deadline.
Adding to the tension, Magyar has publicly rejected calls to phase out Hungary’s windfall taxes on the energy and financial sectors. He has argued that removing the levies under current economic conditions would be unrealistic and would further weaken public finances.
More than twenty European Commission experts travelled to Budapest this week for technical talks aimed at assessing which reforms can realistically be completed before the end-of-August deadline. Sources familiar with the discussions described the Hungarian negotiating team as highly constructive despite the outstanding disagreements.
An agreement is expected in Brussels
Magyar is expected to travel to Brussels next week for talks with European Commission President Ursula von der Leyen. The meeting could result in a political agreement outlining a roadmap towards the eventual release of EU funds.
While largely symbolic, such an agreement would signal a fresh chapter in EU-Hungary relations under the new government. However, Hungary would still need to meet all formal requirements, including dozens of major milestones and hundreds of individual targets, before receiving the money.
Have you heard? PM Magyar claims they will work all summer to bring EU funds home, Brussels signals good prospects
Erasmus breakthrough may be within reach
One area where progress appears more likely is the long-running dispute over Hungary’s participation in the Erasmus+ programme. In 2022, 21 Hungarian universities operating under public-interest foundation structures were excluded from certain EU funding schemes due to governance and transparency concerns. The decision significantly reduced exchange opportunities for Hungarian students.
Brussels and Budapest are now reportedly exploring a compromise that would address concerns about the foundations’ governance without requiring their complete dismantling. If an agreement is reached, it could restore broader access to Erasmus+ programmes and provide one of the first tangible successes of the new government’s negotiations with the EU.
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Featured image: Péter Magyar/Facebook
