Unlocking EU Funds Will Be No Easy Ride

Hungary is facing a crucial period, as the new government is under pressure not only from the economic situation but also from time constraints if it wants to secure as much EU money as possible from the frozen funds for the term ending in 2027. The challenge is twofold, as it must already begin applying for funds for the new period, and the areas of use are quite restricted.

It will not be easy for the Tisza Party to fulfill its promise (Source: NurPhoto/AFP)

A Narrow Bottleneck

It normally takes a long time, often more than a year, to prepare and finalize such agreements. As a result, it is not expected that a new agreement will be concluded between a Tisza-led government and the European Commission. Therefore, it is likely that cohesion funds, if unfrozen, will be used within the framework of the existing agreement, with only minor reallocations within programs.

“The principles defined by Tisza Party will likely have more impact on how funds from the next EU budget cycle are used, as they will negotiate that partnership agreement themselves. However, even there, the main bottleneck will be what core priorities are set by the European Commission and the Council,” Daniel Molnar said.

According to an analysis by Fitch Ratings, the openly pro-EU stance of Peter Magyar and the supermajority of the Tisza Party are likely to improve cooperation with Brussels. This could include, for example, lifting the blocking of funding intended for Ukraine. According to the credit rating agency, this may allow for the release of EU funds currently frozen for Hungary. However, it remains unclear how quickly a full restoration of EU disbursements would improve Hungary’s economic growth prospects.