EU to approve Hungary’s recovery plan, hold payouts until conditions met

BRUSSELS (Reuters) – The European Commission is likely to approve next week Hungary’s post-pandemic recovery plan to keep open the possibility of EU disbursements later, but hold back any payouts until Budapest fulfils all agreed conditions, sources at the EU executive said.

Under the EU recovery scheme, Hungary could get 5.8 billion euros in grants to spend on making the economy greener and more digital — cash that is much-needed by Budapest amid surging inflation, slowing growth and rocketing borrowing costs.

Separately, the Commission is also likely to recommend next week that EU governments suspend 65% of transfers from the EU budget to Hungary, or some 7.5 billion euros, until many of the same conditions as for the recovery fund cash, mainly pertaining to the independence of the judiciary, are met, the sources said.

The Commission move to withhold 13.3 billion euros in total from Hungary will come after months of negotiations with the government of right-wing Prime Minister Viktor Orban to address EU concerns about high level corruption and that Budapest does not respect the independence of courts, non-governmental institutions, media and rights of minorities.

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