Conflict with the EU does not affect current transfer payments

HUNGARY - In Brief 01 Dec 2020 by Istvan Racz

---

Today, Hungary is receiving a €200 mn payment from the EU, the first instalment of a €504 mn loan to cover fiscal spending on the health care sector and job protection, both in relation to the Covid epidemic. The loan, which is part of the EU-s bond-financed SURE program, will be repayable in 15 years.This event suggests that the existing conflict between Hungary & Poland and the EU is not quite as bad as to impair the execution of transfer payments under ongoing programs. We mean legally it should not, but political considerations may make life occasionally complicated.By the way, even though there is absolutely no sign of an early compromise on the conditionality mechanism and the Hungarian/Polish budget veto, the Hungarian authorities are seen hastily working out the details of how they want to spend the money out of the budget they are currently blocking. Actually, they have already sent important pieces of documentation out to Brussels regarding this subject.But other than that, there is really no sign of any of the parties in the conflict giving in or making gestures or working on a compromise, except for a seemingly unsubstantiated optimistic comment by German foreign minister Heiko Maas a week ago that a compromise was coming within days. Indeed, the prime ministers of Poland and Hungary have taken the position of not moving away any little from their position, waiting for the German Presidency to make a new proposal. Behind this, there is the expectation of some urgency on the EU's and Germany's side, as not only the common budget should be in place by January 1 for any new spending programs to start in time, but also it is less likely that Germany would want ...