BUDAPEST BEACON: Three weeks after asking Hungary not to send any more invoices to Brussels for payment, the European Commission is still waiting for a detailed explanation from the Hungarian government regarding its reorganization of the system by which EU funds are administered and distributed in Hungary. According to napi.hu the Hungarian government has to “make a routine administrative step towards the EC, but this still has not happened.”
Brussels’ interim decision not to accept invoices from Hungary from April 15 affects some HUF 300-350 billion (USD 1.3 billion – 1.6 billion) in funds scheduled for payment in May and June of this year.
At the end of 2013 the Hungarian government wound up the National Development Agency (NFÜ) responsible for administering EU funds, transferring its responsibilities (and much of its personnel) to the Office of the Prime Minister and other ministries.
Effective April 15 of this year the government did away with the so-called cooperative bodies—independent, non-profit private or public companies responsible for overseeing the actual tendering processes: inspecting invoices and confirming the completion of the work–apparently without informing Brussels about the planned changes. Previously they had been supervised by the NFÜ. However, as part of sweeping changes to the administration of EU funding in Hungary, these bodies were incorporated into various ministries, apparently without first seeking EC approval.
According to index.hu, informally notifying the member state not to send invoices is the first step in a three-step disciplinary process. If Hungary disregards this request, then Brussels may formally notify Hungary what its problem is. The third step is suspending the member country’s participation in the EU grant program.
Napi.hu’s sources in Brussels believe the problem arises from failure on the part of the Hungarian government to properly administer the funds. It seems that after reorganizing the system for administering EU funds the government of Hungary neglected to inform the European Commission of the method by which EU tenders are to be issued, evaluated, and EU funds paid out.
Napi.hu quotes knowledgable sources as saying that “the Hungarian government should know what information to provide the European Commission when making these kinds of changes since Hungary has been an EU member for 10 years and previously there were changes to organizations and the tender system”.
Experts are at a loss to explain why the Hungarian government failed to inform the European Commission of the changes. The reorganization overseen by Fidesz MP and state secretary Janos Lazar reportedly involved replacing a number of experts with individuals lacking the necessary experience and knowledge. In other words, writes napi.hu “there is a shortage of those who know precisely what to do in this situation and what information should be sent to the EC”.
The problem could be resolved within days but the Hungarian government has yet to send the information regarding the new money distribution system. In the absence of such information the EC cannot say whether EU money is being used in Hungary according to regulations, and cannot approve payment of invoices submitted to Brussels by Hungary. Were the EC to officially reject invoices submitted by Hungary, it would have a bearing on future payment and take much longer to rectify.
Napi.hu writes that the temporary suspension of EU funds is problematic for two reasons.
Firstly, Hungary has limited time in which to call down and utilize EU funds from the 2007-2013 funding period. The EC has already given Hungary until 2015 to complete projects qualifying for EU funding during the previous seven year budgetary period.
Secondly, nearly all improvements in Hungary over the past few years have been financed with EU funds, and the country’s future development policies are predicated on continued levels of EU funding.
Referenced in this article:
Brüsszelben sem értik a magyar kormány bénázását, index.hu, 8 May 2014
Ezért van veszélyben 1500 milliárd forint kifizetése Bajnai szerint, napi.hu, 8 May 2014
Csepreghy: Csak nem küldhetünk számlát, napi.hu, 28 April 2014
Fel is függesztették az uniós pénzeket, meg nem is, index.hu, 28 April 2014
