Hungary faces EU budget punishment
THE EUROPEAN Commission (EC) yesterday proposed suspending some of its payments to Hungary because it is not satisfied that the country is trying hard enough to bring down its budget deficit.
Hungary is set to lose €495m (£418.26m) next year, representing 0.5 per cent of the country’s GDP and 29 per cent of its income from the EU’s cohesion fund, which is meant to promote economic and social development.
The EC said it had repeatedly urged Hungary to “step up its efforts to end the country’s excessive government deficit,” which has not been below the three per cent limit since the country joined the EU in 2004 and is forecast to hit 3.25 per cent of GDP in 2013.
All 26 other EU members will have to vote through the proposed measure, and if the country persists in borrowing too much it may have all of its cohesion funding stopped in 2015.
EU commissioner Olli Rehn denied the measure is a punishment, arguing instead that it is “to be regarded as an incentive to correct a deviation,” and is a “fair and proportionate” step for the EC to take.