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Commissioner Hahn's statement on the Commission's proposal to suspend EUR 495 million of Cohesion Fund commitments for Hungary

22/02/2012

Commissioner Johannes Hahn presented today the Commission's proposal for Hungary to suspend EUR 495 184 000 of Cohesion Fund commitments, with effect from 1 January 2013.

Commissioner Johannes Hahn stated: " This proposal is part of the wider reinforcement of the economic governance of the Union. Let me make it clear from the beginning that we don't do this as some kind of punishment. What we table today is an incentive for Hungary to redress its budgetary problems. The overarching aim of this proposal is to prevent further economic difficulties, stimulating the Hungarian authorities to put their house in order.

I am also convinced that this is a proportionate and credible proposal. The rules of the Cohesion Fund allow the European Commission to propose a partial or total suspension of the allocated funding for the following year. We have therefore chosen a balanced approach, suspending only part of the funding for next year. This ensures that certain investments and project planning can continue. We think this is of crucial importance. It gives Hungary the chance to take decisive action, whilst not blocking an important artery for further growth.

Moreover, Hungary has ample time to take effective action. If Hungary decides to do so and takes corrective measures, the resources which we propose to suspend would again become available to Hungary to finance transport and environment projects. At the same time, the partial suspension of the Cohesion Fund we propose is high enough to represent a serious incentive for Hungary to act. Let's not forget that if nothing happens by the end of 2015, these resources are lost for good. So, in order to reap the full benefits from the Cohesion Fund, action is required. The ball is now in the Hungarian camp".

This amount would represents 0.5 % of Hungary's GDP and 29% of Hungary's cohesion fund allocations for 2013. It has been decided that a suspension may in principle not exceed the threshold of 0,5% of the GDP of a Member State. Today's step follows the Commission's repeated warnings to Hungary urging it to step up its efforts to end the country's excessive government deficit, and its subsequent failure to take appropriate action. For more information, please see the press release.