The Government keeps its word, and with the calls for proposals to be released next week, 100 per cent of the calls for proposals of the EU grant cycle between 2014-2020 will be published. As a result, Hungary will be 30 to 40 per cent ahead of its counterparts in the region, the Minister heading the Prime Minister’s Office said at the conference Portfolio EU Funds 2017 held on Thursday in Budapest.

János Lázár added: there will be no loss of funds, the settlement of the previous period will be closed by 30 June, and the percentage of cases in dispute is minor. Hungary is also at the top of the rankings in the region as regards the percentage of grants announced, contracted and disbursed, one half of the funds, some HUF 4-4.5 thousand billion is already contracted, and disbursements stand at 22 per cent with HUF 2.000 billion in total. The percentage of problematic accounts fell from 5-8 per cent to 2-3 per cent, which indicates that the EU has no major problems with the Hungarian accounts rendered and the projects implemented.

Regarding the period beyond 2019, he said that „it is not yet crystal clear” as to what will happen, and what the Hungarian economy will be capable of without EU grants and permitted state subventions. It is certain, however, that the era of a competitive advantage that is based on cheap labour is coming to an end, and we need innovation for competitiveness.

He said that the study prepared by the consulting firm KPMG that was commissioned by the Prime Minister’s Office with respect to the utilisation of EU funds will be published soon. One of the findings of this report is that the bulk of the funds made available in the previous cycle was not used by the awarded bidders for the purposes of business development, but for supplementing the incomes of businesses. They would like to change this trend, he added.

He pointed out that the work of the some 1,800-2,000 civil servants who process the calls for proposals has been essential in making this success happen. They receive a twelve-month bonus upon the disbursement of HUF 2,200 billion, and a 24-month bonus upon the disbursement of HUF 2,700 billion. He remarked: it is good news that his colleagues „are prepared to work for money” as, in his words, this is not the case in Brussels and Western-Europe where not even money necessarily provides a true incentive.

They have set up a state project assessment system with 3,000 appraisers with a view to reducing corruption and enhancing transparency. This system will be slower than the system that functioned on a market basis, but it provides much greater transparency and serves social purposes.

Mr Lázár said that in Brussels there are strong aspirations to centralise the institutional system, without the involvement of the national institutions. This is a very grave issue concerning political and economic sovereignty, he remarked. He said that Hungary is at this point in time only able to render average results in gaining access to the centralised, directly available funds, where research and development is perhaps the only exception. The Minister took the view that the fact that the European Commission finally approved the maintenance of the capacity of the Paks atomic power station is the most important victory in the economic history of the past 27 years. This will be a project worth EUR 12.5 billion which will have the biggest impact on the Hungarian economy between 2019-2022, he added.

According to Nándor Csepreghy, Minister of State at the Prime Minister’s Office, it clearly indicates the European Commission’s „political sense of reality” that it fails to take account of the consequences of Brexit, despite the fact that the British „money tap” will be turned off in 2019. Based on the Commission’s current capability of enforcing interests, the Minister of State believes that the body is quite evidently unsuited for inducing the net contributors to make excess payments in the magnitude of tens of billions of euros. Consequently, they can only take funds away from the Member States which will have failed to absorb the available funds by that point in time, he said. He took the view that this is another reason for the „rush” in the drawdown of funds, which drives prices upwards in the calls for proposals and increases the project costs that emerge between planning and implementation. This is why the Government adopted a decision to the effect that it permits a rise in costs up to maximum 30 per cent, subject to a variety of conditions, he said.

László Domokos, President of the State Audit Office took the view that the integrity risks are considerable in the case of large projects implemented from public funds, and remarked that adequately functioning integrity management systems must be in place also in the case of the individual projects in order to counter corruption, fraud and embezzlement. The report of the European Anti-Fraud Office (OLAF) is almost completely in harmony with the findings of the report of the State Audit Office published in 2010 regarding the metro 4 project, he said. The report of the State Audit Office drew attention to the fact, inter alia, that the general conditions of the project were characterised by disadvantageous contractual commitments and public procurement irregularities, he reiterated.

According to the President, it is a great achievement of Hungary that it managed to draw the totality of the funds available during the 2007-2013 EU grant cycle, thanks to the 10 per cent over-drawing limit to the value of HUF 900 billion which the Government undertook to finance. However, this sum had to be regrouped from other areas. He was of the opinion that during the cycle between 2014-2020, the allocation of EUR 25 billion that is at the country’s disposal should not be drawn with the aid of excess drawing facilities, but through the publication of the calls for proposals at the earliest possible time, and with adequate utilisation and financial settlement.

Tamás Bernáth, Chair-Chief Executive of MFB Zrt. highlighted that in addition to the current 442 MFB points, another 200 may be opened throughout the country with the involvement of consortium partners as of September, and this network would thereby become the country’s largest branch network serving SMEs, he said. He also pointed out that the allocation of the bank’s 0 per cent credit facility programme was exhausted this week: the entire HUF 70 billion has been absorbed in less than a year.

Ádám Balog, Chair-Chief Executive of MKB Bank told his audience that the role of capital market financing will increase beyond 2020, and EU funds play a significant part in the preparations for this. At this point in time, the various grants mostly make up for the shortage of capital in Hungary, he said.

(MTI)