BUDAPEST, April 14 (Reuters) - European Commission President Ursula von der Leyen said on Tuesday that she spoke with Hungary's election winner Peter Magyar and there is swift work to be done to
'Swift work to be done' after call with Hungary's Magyar, EU's von der Leyen says
Main Developments in Hungary-EU Funding Talks
By Lili Bayer and Gergely Szakacs
BUDAPEST, April 14 (Reuters) - European Commission President Ursula von der Leyen said on Tuesday that she spoke with Hungary's election winner Peter Magyar and there is swift work to be done to introduce reforms needed for unfreezing EU funding.
Background: Frozen EU Funds and Required Reforms
Hungary has about 17 billion euros in total of EU funds frozen over rule of law concerns under the outgoing government of Prime Minister Viktor Orban, including some 10 billion euros from the bloc's COVID-19 pandemic recovery fund that it has until the end of August to unlock by implementing reforms.
Credit rating agencies Moody's and S&P Global said any release of the funds would boost Hungary's economy, which has been mired in near-stagnation for the past three years.
Both warned however of multiple risks stemming from tight deadlines and other factors outside Magyar's control.
Von der Leyen's Statement on Priorities
"We discussed immediate priorities," von der Leyen said in a post on social media platform X.
"There is swift work to be done to restore, realign and reform. Restore the rule of law. Realign with our shared European values. And reform, to unlock the opportunities offered by European investments," she added.
Other Pending EU Approvals
Hungary is also still waiting for the European Commission to sign off on a 16 billion euro defence investment plan under the bloc's SAFE loans scheme for defence projects.
Risks and Challenges to Swift Reform
Political Landscape and Legislative Hurdles
RISKS TO SWIFT REFORM DRIVE
Magyar, whose Tisza party won a two-thirds supermajority in Hungary's parliament, has pledged to prioritise unlocking the funds and is now under pressure to quickly implement reforms to unlock the money after his government takes office, likely in mid-May.
On Wednesday, Magyar is scheduled to meet Fidesz-backed President Tamas Sulyok, whom he has repeatedly called on to resign since winning Sunday's election.
Moody's said Magyar's sweeping majority would help pass the required legislation to release the funds. However, his new centre-right government could still face pushback from Orban loyalists installed in key posts in past years.
"Entrenched Fidesz-appointed officials across key institutions may constrain the swift implementation of deep institutional reforms," it said.
S&P Global added that the effectiveness of Magyar's incoming government in terms of governing ability and in implementing key reforms was untested and there was a risk that Hungary might not be able to draw on the recovery funds before they expire.
Extremely Tight Deadline
'EXTREMELY TIGHT DEADLINE'
"The ball is in Magyar's court to prove he's serious about his campaign promises of wanting to mend ties with Brussels," said one EU diplomat. "Now it's time to show, not tell," they added.
Part of Hungary's EU funding is frozen due to lack of compliance with EU standards in areas such as academic freedom and right to asylum.
The 10 billion euro sum from the bloc's post-pandemic recovery fund is frozen until Hungary fulfills requirements to strengthen judicial independence and accountability, with a deadline of August 31 to implement reforms.
Magyar said in a post on Facebook after the call that von der Leyen told him the European Commission would work closely with the new Hungarian government to make sure results are delivered within the "extremely tight deadline" available to release the funds.
Expert and Analyst Perspectives
Officials and analysts say introducing the required reforms will not be an easy feat.
"The most important constraint is the deadline on 31st August for completing all Recovery and Resilience Facility milestones – a window that may prove too narrow to unlock the roughly 10 billion euros of frozen EU funds available," said Liam Peach, an economist at Capital Economics.
Additional Reporting
(Additional reporting by Marc Jones in LONDON; Editing by Makini Brice, William Maclean and Hugh Lawson)
