Today the Commission adopted the Partnership Agreement with Hungary that includes a detailed roadmap to improve Hungary's administrative capacity and tackle challenges such as transparency of, and competition in, public procurement; prevention, detection and correction of corruption; fraud and conflict of interest; and capacity building of beneficiaries of Cohesion Policy funding and partners.
- 22 December 2022
This roadmap has close links with the Recovery and Resilience Plan and Rule of Law Conditionality process.
The agreement worth a total of almost €22 billion for the period 2021-2027 will help the country implement joint EU priorities such as a balanced territorial development and a fair climate and digital transition, whilst supporting an innovative and inclusive social market economy.
The Partnership Agreement is the strategic document laying the ground for investments from EU cohesion funds through the European Regional Development Fund (ERDF), the Cohesion Fund, the European Social Fund Plus (ESF+), the Just Transition Fund (JTF) and the European Maritime, Fisheries and Aquaculture Fund (EMFAF). The Partnership Agreement and the home affairs funds (the Asylum Migration and Integration Fund the Internal Security Fund and the Border Management and Visa Instrument) are all implemented via 11 national programmes - also adopted today - identifying the planned investment priorities and financial allocations per programme.
A just climate transition and clean environment
The Partnership Agreement with Hungary foresees that a total of €6.7 billion under the European Regional Development Fund (ERDF) will be invested to improve the energy efficiency of public and private buildings and increase energy generation from renewable sources. It will also promote the circular economy, water and wastewater management, and sustainable transport. It will help improve air quality and protecting ecosystems and biodiversity.
Over €250 million from the Just Transition Fund (JTF) will support the regions most affected by the phasing out from coal and the lignite-fired Mátra power plant. Funding will be directed to investments in low-carbon technologies supporting this phase out and the reduction of CO² emissions in Hungary by 10%. Funds will also support the economic diversification of SMEs, for instance through research and innovation in energy efficiency. The JTF will also help workers acquire new skills, support job transitions, and promote newstart-ups.
A boost for economic competitiveness
€4.3 billion will promote the country's smart economic transformation and regional ICT connectivity. The majority of these funds will support the technological development of SMEs and offer them mentoring and advisory services.
To improve Hungary's performance in research and innovation, €1.5 billion will be invested in infrastructure and state-of-the-art research equipment (e.g. in science and innovation parks). The funds will promote cooperation between the different actors of the innovation ecosystem, including SMEs.
Around €670 million will promote the digital transformation and innovation of SMEs, including by the uptake of advanced technologies. Funds will also improve access to broadband infrastructure, support the development of new and significantly upgraded digital public services and promote the re-use of public sector information.
€1.7 billion under the Cohesion Fund will help upgrade the country's transport infrastructures in the core rail network of the Trans-European Transport Network (TEN-T), including the development of the Budapest Southern Ring Railand the reconstruction of the Törökbálint-Kelenföld railway section. Funds will also support the modernisation of rolling stock and road safety.
Supporting the labour market, quality education and disadvantaged groups
€5.3 billion from the European Social Fund Plus (ESF+) will support access to the labour market, to quality education, and the integration of disadvantaged groups, including Roma. Specific attention will be paid to the development of skills required to thrive in the green and digital transition.
In particular, almost €1.8 billion will help ensure better access to quality education across the country by providing crucial financing to make the teaching profession more attractive.
The ESF+ will also help reduce material and social deprivation and give better opportunities to disadvantaged children through life-long learning programmes from the earliest age onwards. For example, the programme ‘Focus on children' offers the youngest children the necessary support for a healthy development in their first 1,000 days.
Finally, funds will improve housing, living and health conditions of people living in segregated areas.
Hungary's Partnership Agreement is the last of the Partnership Agreements with the 27 Member States adopted by the Commission.
Enabling conditions
For the implementation of cohesion policy and home affairs programmes, Member States must comply with enabling conditions. These are pre-requisites which Member States have to fulfil to ensure the effective and efficient implementation of the funds. The enabling condition on the Charter of Fundamental Rights requires that all Member States put in place effective mechanisms to ensure that the implementation of the programmes complies with the Charter. Member States also have to put in place a complaint mechanism.
On judicial independence, the Commission considers that Hungary is committed to remedy the deficiencies, as the recovery and resilience plan submitted by Hungary includes reforms aiming at the strengthening of judicial independence. Therefore, the horizontal enabling condition on the Charter of Fundamental Rights is considered fulfilled, once Hungary has taken the measures on the judiciary to which it has committed under the country's Recovery and Resilience Plan.
The Commission considers that the provisions of Hungary's so-called child-protection law, and serious risks to academic freedom and the right to asylum have a concrete and direct impact on the compliance with the Charter in the implementation of certain specific objectives of three cohesion programmes and of the Asylum Migration and Integration Fund respectively. For these parts of those programmes Hungary is therefore currently not fulfilling the horizontal enabling condition on the EU Charter of Fundamental Rights. The Commission is open to further dialogue with Hungary and ready to work together closely.
The rules applicable to cohesion and home affairs funding, i.e. the Common Provisions Regulation, provide that in case of non-fulfilment of the enabling conditions, the Commission cannot reimburse the related expenditure submitted other than for technical assistance and for fulfilling the enabling conditions. In line with the applicable rules, a failure to fulfil an enabling condition does not entail any suspensions of payments of pre-financing.
Conditionality mechanism
The Council adopted an implementing decision under the Conditionality Regulation with regard to Hungary. The decision imposes measures to protect the Union budget against breaches of the rule of law principles in the areas of public procurement, prosecutorial action and the fight against corruption. These measures include a suspension of budgetary commitments from three operational cohesion programmes. The measures adopted in the implementing decision are temporary and can be lifted by the Council, acting on a proposal from the Commission, without loss of Union funding, if the situation is fully remedied within two years.