Written by 10:05 pm EU Investment

NextGenerationEU: Member states approve national plan of Hungary

EU member states welcomed the positive assessment of the Hungarian national recovery and resilience plan by the European Commission. Meeting at the Committee of Permanent Representatives today, ambassadors of EU member states decided to advise the Council to adopt its implementing decision approving Hungary’s national plan, and a written procedure for the formal adoption will be launched.

This comes after a positive assessment by the European Commission of Hungary’s recovery and resilience plan. National plans have to comply with the 2019 and 2020 country-specific recommendations and reflect the EU’s general objectives of creating a greener, more digital and more competitive economy.

Following the formal adoption of the decision and the fulfilment of 27 “super milestones” regarding institutional reforms to strengthen the rule of law, Hungary will be able to use the facility’s funds up to a total allocation of €5.8 billion in grants. This financing will enable Hungary to foster its economic recovery from the COVID-19 pandemic and finance the green and digital transitions.

Reforms and investments

Hungary’s plan includes a set of reforms and investments that contribute to effectively addressing all or a significant subset of the challenges outlined in 2019, 2020 and 2022 country-specific recommendations addressed to Hungary under the European Semester. The plan represents a comprehensive and adequately balanced response to Hungary’s economic and social situation.

The Hungarian plan devotes 48.1% of its total allocation to measures that support the climate objective. The measures included in the plan are expected to contribute to the decarbonisation and energy objectives as identified in the National Energy and Climate Plan 2021-2030. Investments in residential solar power systems and the strengthening of the electricity grid, combined with comprehensive reforms, aim at facilitating the development and connection of renewable energy sources. The renovation of buildings will decrease their impact on overall greenhouse gas emissions and improve air quality. Measures to make transport more sustainable, such as investments in railways, the deployment of electric buses and a reform of the tariff system, are expected to result in a cleaner, smarter, safer and more efficient transport sector.

Hungary’s plan devotes 29.8% of the total allocation to support the digital transition. This includes measures to digitalise and improve education and public administration. The digitalisation of transport, energy and healthcare is expected to foster long-term economic development. The plan fulfils all relevant criteria and that none of the measures therein included is expected to significantly harm the environment, in line with the requirements laid out in the Recovery and Resilience Facility (RRF) regulation.

The plan also includes a comprehensive set of key institutional reforms to strengthen the rule of law. These reforms address the country-specific recommendations addressed to Hungary in relation to the rule of law and also serve to protect the financial interests of the Union. They are also expected to improve the efficiency and resilience of the economy by reinforcing the fight against corruption, promoting competitive public procurement and strengthening the independence of the judiciary. These reforms have been translated into a total of 27 “super milestones”, which must be fully and correctly implemented before any payment under the RRF can be made to Hungary.

Next steps

Disbursements from the facility take place once the member state reaches milestones and targets set for investments and reforms.

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