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Saturday, 10 March 2012


EC proposes suspending euro 495m funds to Hungary

Brussels, 22 February 2012 - The European Commission has today proposed to suspend EUR 495 184 000 of Cohesion Fund commitments taking effect on 1 January 2013, representing 0.5 % of GDP and 29% of the country's cohesion fund allocations for 2013. 

This unprecedented step follows the Commission's repeated warnings to Hungary urging it to step up its efforts to end the country's excessive government deficit, and its subsequent failure to take appropriate action. On 11 January this year, the European Commission concluded, as part of the Excessive Deficit Procedure (EDP), that Hungary had not taken effective action to bring its deficit to below the target of 3% of GDP by 2011 in a sustainable and credible manner (see IP/12/12and MEMO/12/7). The European Commission therefore proposed to step up the Procedure. This recommendation was endorsed by the Council of Ministers on 24 January, paving the way for a suspension of part of the Cohesion Fund commitments for Hungary.
Commenting on the proposed suspension, Olli Rehn, the European Commission Vice-President for Economic and Monetary Affairs and the Euro said: "Today's proposal should be seen as a strong incentive for Hungary to conduct sound fiscal policies and put in place the right macro-economic and fiscal conditions to ensure an efficient use of Cohesion Fund resources. It is now for the Hungarian government to act before the suspension takes effect".
Johannes Hahn, Commissioner for Regional Policy, added: "It is now up to the Hungarian authorities to take the necessary measures without delay, in order to be able to reap the full benefit of the Cohesion Fund. Today's proposal is proportionate and leaves the possibility to continue investments via the Fund, whilst giving Hungary the chance and time to redress the situation.''
The current Cohesion Fund Regulation explicitly provides for the suspension of the totality, or part of, the Fund in the case of an excessive government deficit and an absence of effective action to correct it. This is the first time such a measure is being applied. The proposed suspension concerns the most recent breach only, and not past fiscal behaviour. It is now up to the Member States to endorse the Commission's proposal concerning Hungary. Once effective action is deemed to be taken, the suspension would be lifted without delay.
Hungary has been under the Excessive Deficit Procedure ever since its accession to the EU in 2004. After deciding in January and November 2005 that Hungary had not taken effective action, the deadline for correcting this situation was postponed in October 2006, from 2008 to 2009. In July 2009, against the background of a severe economic downturn which triggered fiscal adjustment measures and the provision of EU/IMF balance of payments support, the Council concluded that Hungary had taken effective action and issued revised recommendations under Article 104(7) TEC, setting 2011 as the new deadline to correct the excessive deficit in a sustainable manner.
Although Hungary is expected to notify a sizeable budgetary surplus of 3.5% of GDP for 2011, the country has achieved this surplus only thanks to one-off measures worth some 10% of GDP altogether (Hungary transferred private pension funds of 9¾ of GDP to the budget. In addition, extraordinary levies were introduced). Without these one-off measures the deficit in 2011 would have reached 6 % of GDP. Moreover, and in stark contrast to the recommended cumulative fiscal improvement of 0.5% of GDP, the structural budgetary position deteriorated by a cumulative 2½ % of GDP in 2010 and 2011.
In 2012, the budgetary outcome will swing into deficit again. In 2013, the deficit is forecast to reach 3¼% of GDP and thus again breach the reference value of the Treaty.
This is why the Council took a decision under Art. 126 (8) of TFEU on 24 January 2012 that Hungary has not taken effective action. Under the Cohesion Fund Regulation, failure to comply with the recommendations under the excessive deficit procedure can lead to the suspension of Cohesion Fund commitments, as is the case with Hungary today.
The decision on the amount of Cohesion Fund commitment appropriations to be suspended should ensure that the suspension is both effective and proportionate, whilst taking into account the current overall economic situation in the European Union and the relative importance of the Cohesion Fund for the economy of the Member State concerned. Accordingly, it is appropriate, in case of a first application of Article 4 (1) of Regulation (EC) No 1084/2006 to a given Member State, to set the amount at 50 % of the allocation of cohesion funds for 2013, without exceeding a maximum level of 0.5 % of the nominal GDP of the Member State concerned as forecast by the Commission services. This formula will apply for the rest of the 2007-2013 programming period.
The suspension is 5.7% of the total 2007-2013 allocation and 29% of 2013 commitments. The allocation from the Cohesion Fund for Hungary for this financial programming period of 2007 until 2013 amounts to 8,6 billion Euro in EU-funding, representing 1.26% of GDP. The foreseen allocation for 2013 is 1,7 billion Euro, representing 1.73% of GDP. The Cohesion Fund is available for all Member States who have a GDP which is below 90% of the European average and aims specifically at larger investments in infrastructure and environment in these Member States.

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Love the article on Gaddafi
We must rise above tribalism & divide & rule of the colonialist who stole & looted our treasure & planted their puppets to lord it over us..they alone can decide on whosoever is performing & the one that is corrupt..but the most corrupt nations are the western countries that plunder the resources of other nations & make them poorer & aid the rulers to steal & keep such ill gotten wealth in their country..yemen,syria etc have killed more than gadhafi but its not A̷̷̴ good investment for the west(this is laughable)because oil is not in these countries..when obasanjo annihilated the odi people in rivers state, they looked away because its in their favour & day! Samosa Iyoha

Hello from
I was amazed to find a website for Africans in Hungary.
Looks like you have quite a community there. Here in SA we have some three million Zimbabweans living in exile and not much sign of going home ... but in Hungary??? Hope to meet you on one of my trips to Europe; was in Steirmark Austria near the Hungarian border earlier this month. Every good wish for 2011. Geoff in Jo'burg

I'm impressed by
ANH work but...
Interesting interview...
I think from what have been said, the Nigerian embassy here seem to be more concern about its nationals than we are for ourselves. Our complete disregard for the laws of Hungary isn't going to help Nigeria's image or going to promote what the Embassy is trying to showcase. So if the journalists could zoom-in more focus on Nigerians living, working and studying here in Hungary than scrutinizing the embassy and its every move, i think it would be of tremendous help to the embassy serving its nationals better and create more awareness about where we live . Taking the issues of illicit drugs and forged documents as typical examples.. there are so many cases of Nigerians been involved. But i am yet to read of it in So i think if only you and your journalists could write more about it and follow up on the stories i think it will make our nationals more aware of what to expect. I wouldn't say i am not impressed with your work but you need to be more of a two way street rather than a one way street . Keep up the good work... Sylvia

My comment to the interview with his excellency Mr. Adedotun Adenrele Adepoju CDA a.i--

He is an intelligent man. He spoke well on the issues! Thanks to Mr Hakeem Babalola for the interview it contains some expedient information.. B.Ayo Adams click to read editor's mail
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