14 Mar

The European Commission has approved an unjustifiably optimistic assessment of the functioning of the Recovery Fund, while the disbursement of these funds is extremely cumbersome and slow, Finance Minister Mihály Varga pointed out in a statement to MTI in Brussels on Tuesday.

Arriving at a meeting of the EU’s finance and economy ministers, Varga Mihály said: Hungary has a number of problems with the functioning of the Recovery and Resilience Instrument (RRF): while a third of the available time has already passed, only a fifth of the funds have been allocated. The minister pointed out that five Member States, including Hungary, have not received any of the funds so far. The minister stressed that by withholding the funds, the European Commission had damaged Hungary's competitiveness and interfered in the economic competition among Member States. Hungary achieved economic growth of 4.6% last year, well above the EU average. If it had received the recovery funds it was entitled to, the Hungarian economy would have grown by more than 5 percent, the finance minister stressed.

Mihály Varga also said that the procedure for assessing payment applications is extremely cumbersome and bureaucratic. Based on the applications submitted so far, Member States have made only marginal use of RRF loans. This clearly shows that Member States are distrustful of the Brussels solutions, he said.

The finance minister said that, in addition to these criticisms, it is rarely mentioned that the joint borrowing, with the large volume of Commission bond issuance behind it, could have drawbacks such as the possible exhaustion of credit markets. This could mean that individual Member States would get less access to resources on their own, he said.

To sum up, Mihály Varga underlined that these are the general reasons why the Hungarian government considers the RRF a single use instrument and strongly opposes to the creation of further instruments involving joint EU loans.

Regarding the collapse of the US Silicon Valley Bank, the minister said that in Hungary banks have good capital adequacy ratios. All of the last three ratings show that the Hungarian banking system is strong and viable. "We can face the current situation calmly, the exposure is remote, possibly only some US and European banks may have been affected," the finance minister stressed.

Source: MTI - Hungarian News Agency