From the Hungarian point of view, the European Commission’s new Multiannual Financial Framework proposal and the Recovery Instrument, which supports the relaunch of national economies, do not give us too much confidence

2020. 05. 27.

Today, European Commission President Ursula von der Leyen presented EU proposals for recovery from the economic crisis caused by the coronavirus epidemic. The European Commission’s package includes the proposal of the previously discussed, but not yet approved, Multiannual Financial Framework (MFF) and the new Recovery Instrument. The size of the Recovery Instrument is proposed to be €750 billion, and in the Multiannual Financial Framework €1,100 billion would be spread over seven years.

Tamás Deutsch, Head of the Fidesz-KDNP Delegation, said that “it is a success that the proposal would not create the new Recovery Instrument at the expense of the resources of the MFF thus at the expense of traditional EU development policies, regional development programs and the Common Agricultural Policy (CAP). These development programs have already proven their usefulness on several occasions.” He added that “regarding the MFF, two-thirds of the Member States, including Hungary, have also made previous criticisms of the new proposal, criticisms that are well-founded concerning the new proposal, as it is almost unchanged compared to the previous MFF proposals.”

“Hungary has achieved outstanding economic success in recent years and is also at the forefront of tackling the epidemic. As a result, the crisis caused by the coronavirus is expected to take up less of the Hungarian economy than the EU average,” said MEP Enikő Győri, member of the Committee on Economic and Monetary Affairs of the EP. She added that “At the same time, it would be unreasonable for the Member States in Central and Eastern Europe to not be able to benefit adequately from the resources because they have managed the epidemic successfully and reduced their public debt over the years through their disciplined fiscal policies.” The crisis has affected all countries; it is important that recovery funds also benefit Member States inside and outside the Eurozone in a fair way, under the same conditions. “It cannot happen that poorer Member States fund richer ones,” she emphasized.

In connection with the resources of the Recovery Instrument supporting the Cohesion Policy, Tamás Deutsch, member of the Committee on Budgets and Regional Development of the EP, highlighted that “like the Cohesion Policy, all Member States will benefit from them and the flexible implementation rules previously introduced will apply. However, it is also important to take into account the differences in economic development between Member States and the state of the economic sectors affected by the crisis when allocating resources.” He added that “promoting catching up and economic growth through the Cohesion Policy will have a key role in the aftermath of the crisis.”

“Hungary’s position on the budget of the Common Agricultural Policy (CAP) remains unchanged: it should be kept at the current level in real terms,” said Balázs Hidvéghi, member of the Committee on Agriculture and Rural Development of the EP. He added that “much higher environmental expectations of the new CAP could place a significant additional burden on farmers, which will only be exacerbated by the Commission’s objectives set out in the two strategies (Farm to Fork and  Biodiversity Strategy) published last week.” “The targets set out in the strategies currently seem impracticable; they jeopardize the security of food supplies and can lead to higher food and raw material prices,” MEP Hidvéghi said.

Tamás Deutsch noted that the €750 billion for the new Recovery Instrument will be raised by the European Commission through long-term loans. The loan will be repaid by Member States over 30 years, in proportion to their contributions to the EU’s Multiannual Financial Framework budget. Hungary, with its 1% contribution rate, has to repay 1% of the 750 billion debt, 7.5 billion euros. Compared to this debt, it is unacceptable for Hungary to receive a non-repayable subsidy of just EUR 8.1 billion, which amount is only a little higher than the debt.