“The European Recovery Plan is essentially a concept that is tailored to the requirements of southern member states, the undeclared goal of which is to prevent the economic collapse of these countries, which have been struggling with financial and structural problems for a long time”, Minister of Finance Mihaly Varga said with relation to the European Commission’s package of measures published at the end of May.
During a meeting of EU finance ministers (Ecofin) today, Varga declared: “Hungary’s standpoint is that the European Union must act in a fair and balanced manner during the mitigation of the damage caused by the coronavirus epidemic”.
“The European Recovery Plan is an aid program of unparalleled proportions in the history of the EU, with which the European Union is attempting to mitigate the economic and social consequences of the coronavirus epidemic with non-returnable finding financed from market credit”, the minister explained. “In its package published on 27 May, the EC put forward a proposal for a 750-billion-euro economic recovery fund, two thirds of which would enable funding to be reinvested into the EU’s budgetary programs, while one third would be disbursed in the form of credit”, he added.
“With relation to the distribution of the funding, the Commission has included several restrictions that are particularly disadvantageous to member states with lower levels of income”, he noted. According to the minister, this is a particular concern in light of the fact that the EC has made no tangible changes to its February proposal regarding the upcoming 2021-2027 multiannual financial framework, which will also play an important role in recovery.
“Accordingly, the new budget would continue to mean an unreasonably large loss of cohesion funding for Hungary”, Varga added. “The disproportionality is clearly indicated by the fact that the EC plans to distribute the 50 billion euros in additional cohesion funding in such a way that 65 percent of it would be received by the four southern member states, Italy, Spain Greece and Portugal, but the four countries of the Visegrad Group would receive only 12 percent”, the minister pointed out.
According to Varga, a true recovery program is required that also takes into account the fact that the future cost of recovery could represent a larger burden for countries that practice a disciplined fiscal policy, but are less developed and have more open economies. “For this reason, changes in GDP and unemployment indices that have occurred as a result of the crisis, and the role of sectors affected by the crisis within the economy, must be given greater weight during the distribution of funding”, he declared.