The European Union’s executive arm plans to recommend cutting funding for Prime Minister Viktor Orban’s administration on concerns about widespread graft in Hungary, according to senior EU officials.
(Bloomberg) — The European Union’s executive arm plans to recommend cutting funding for Prime Minister Viktor Orban’s administration on concerns about widespread graft in Hungary, according to senior EU officials.
The European Commission plans to formalize its assessment on Sunday, said the officials, who asked not to be named because the position hasn’t been officially finalized. EU governments will then make the final decision within three months and a qualified majority of member states will be required for the executive’s proposal to take effect.
The forint fell as much as 1.1% against the euro. Investors have cited the uncertain outlook for EU funds as contributing to a disproportionate selloff in Hungarian assets this year.
Hungary is the first country to be subjected to a probe under new rules that allow the EU to penalize members that undermine its financial interests. The commission has spent months investigating the erosion of the rule of law during Orban’s more than a decade in power.
Orban’s cabinet, which has lost access to the bloc’s funding pending the outcome of the probe, is hoping to tap more than 40 billion euros ($40 billion) in EU financing through 2027. It has recently offered to set up an anti-graft agency and to amend a number of laws including on public procurements to allay the concerns of the EU executive.
The commission plans to suggest that EU leaders give Orban time to make good on his pledges to rein in corruption, according to one of the officials. Hungary will have one month to act on the EU executive’s recommendations but that deadline can be extended up to a maximum of three months.
Budapest-based Nepszava newspaper reported the developments earlier on Wednesday.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
