Hungary government introduces first anti-graft bill to avoid losing EU money

Hungary government introduces first anti-graft bill to avoid losing EU money

by Krisztina Than

BUDAPEST (Reuters) – The Hungarian government introduced the first of several anti-corruption bills to parliament on Monday, as Budapest struggled to avoid losing billions of euros in European Union funding.

The European Commission on Sunday recommended suspending funds worth 7.5 billion euros ($7.48 billion) for what it sees as Hungary’s failure to fight corruption and uphold the rule of law.

The European Commission has also set requirements for Hungary to maintain access to funding, including new legislation, which Hungary has said it will meet.

Justice Minister Judith Varga said on her Facebook (NASDAQ:) page that she had submitted the first bill to parliament because the government “will focus on formulating and implementing commitments (to the EU) in the coming weeks and months.”

“Hungary can enter 2023 without losing any money from the European Union,” Varga said.

The bill amends legislation related to Hungary’s cooperation with the EU’s OLAF Anti-fraud Office, ensuring that OLAF has the support of Hungarian Tax Authority officials in its investigation of EU-funded projects and access to data and documents on the scene.

In addition, the law changes the rules governing state asset management institutions, explicitly obligating them to issue public procurement bids for projects and tightening the rules of conflict of interest in their management.

Hungary’s case is the first in the European Union to be subject to a new sanction aimed at better protecting the rule of law and fighting corruption in the 27-nation bloc.

Nationalist Prime Minister Viktor Orban, in power since 2010, has clashed with Brussels repeatedly over his policies he sees as undermining democracy in Hungary.

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However, with significant challenges related to rising energy costs, double-digit inflation, a weak forint, and a slowing economy, the veteran prime minister appears ready to meet the EU’s demands to create institutions that will finally reduce the risks of corruption in EU-funded projects.

“The recent developments in Brussels certainly come at a bad time for Orbรกn, who has a combination of political and economic problems stemming from both global issues, most notably rising energy prices, so he will likely go further to please Brussels.” โ€œDemanding,โ€ said Mojtaba Rahman, managing director for Europe at Eurasia Group.

He said Budapest would likely secure the pending deal, but that it would not resolve all outstanding disputes over other parts of the EU’s money.

“The biggest problem for Orban is the money tied up in the recovery fund, because the commission has more discretion over whether or not to give that green light,” Abdurrahman said.

Like most EU countries, Hungary last year presented its blueprint on how to use EU grants to make its economy more green and high-tech after the COVID-19 pandemic. And she still hasn’t gotten approval for that either.

If Budapest does not get the EU money, the forint – which has lost 8% this year – will almost certainly fall further, complicating efforts to curb inflation and exposing Hungarian assets to any negative shift in global sentiment.

Development Minister Tibor Navraxis, who is in charge of negotiations with the European Union, said on Sunday that Hungary would honor all 17 commitments it made to the commission to avoid losing any funding.

(1 dollar = 1.0025 euros)

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