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Apr 20, 2020 - Zoltán Kovács

No, Hungary doesn’t receive free money from the EU to fight the coronavirus

It’s time for some myth-busting.

According to a report by the European Stability Initiative (ESI), Hungary, as a percentage of its annual GDP, is receiving seven times as much EU support to combat COVID-19 than, for example, Italy.

The ESI report goes on to explain that the so-called Coronavirus Response Investment Initiative, or CRII, the EU program launched to ease the burden on member states struggling to manage the epidemic), relies on two pillars: unspent EU funds and additional support from the European Structural and Investment Funds.

Now, don’t get me wrong, the math adds up behind the insidious conclusion that, in terms of its annual GDP, Hungary would receive seven times as much money from the EU than Italy. In this case, however, it’s not about the math. While it would be nice of Brussels to hand out billions of euros worth of free money, this is not what’s really happening here.

The European Commission, in fact, has not given a single euro of extra support to Hungary for the defense against the coronavirus compared to what was already agreed upon in the 2014-2020 EU budget. To put it simply: What’s been granted to Hungary within the framework of CRII would have been paid out anyway, regardless of the coronavirus epidemic. At the beginning of every seven-year financial cycle, the European Commission adopts a schedule for conducting cohesion payments to member states. Then, at the end of each accounting period, member states transfer back to the EC any amount left unused, and the process starts over again.

For this budget period, the European Union will not be asking for any unspent money back immediately, but all funds will have to be accounted for at the end of the accounting period. This way, countries that encounter liquidity difficulties due to the current epidemic may use this money as an “interest-free loan” to ease their burden.

Bear in mind, however, that Hungary does not belong in this group. Thanks to the country’s strong economic performance over the past decade, the Orbán Government is able to finance all of its coronavirus protection efforts from its own sources. Even during a global epidemic, Hungary’s economy and budget remain stable.

But don’t take my word for it: According to the International Monetary Fund’s forecast, Hungary’s economy will contract only by 3.1 percent in 2020, the second smallest contraction in the European Union, just slightly behind Malta.

Myth busted.