The European Parliament recognises the efforts made by the Government in the past five years; all support is available for the operation of a development system in Hungary which will make Hungary the region’s most competitive economy by 2020, the Deputy State Secretary for Development Policy Communication at the Prime Minster’s Office said.

This is how Nándor Csepreghy summarised the experiences of the public hearing of the Committee on Budgetary Control (CONT) of the European Parliament held on 14 July.

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The topic of the meeting was the use of EU cohesion funds in the Member States. Hungary and Poland were requested to act as chief rapporteurs; the Hungarian delegation was led by State Secretary Eszter Vitályos.

An institutional system has been created in Hungary which permits the effective use of funds to the full. The EP hearing and the comments made in response to the Hungarian lecture equally prove that the European Parliament recognises the efforts made by the Hungarian Government in the past five years, Mr Csepreghy stressed.

Among the results of the period between 2007-2013, Mr Csepreghy mentioned that the length of newly built and refurbished roads is more than 3,300 kilometres, while that of refurbished railway lines is 216 kilometres in Hungary. Enlargements and developments were carried out in 163 hospitals in total, and the value of health care developments amounted to some HUF 333 billion. 500 schools and 22 higher education institutions were involved in educational developments, almost 1.3 million people took part in training funded under the auspices of the Széchenyi Plan, and the developments implemented in the field of flood and inland water protection concerned more than 3 million people, the Deputy State Secretary said in listing the results.

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Almost seventy thousand calls were implemented from EU funds during the previous seven-year period, or are currently in the phase of completion. In ten thousand of these projects, foreign suppliers and companies were responsible for 100% of the construction works or provision of services, and in another six thousand cases, in addition to Hungarian businesses, foreign contractors were also involved in the developments.

The Government has initiated major changes in the institutional system responsible for the use of EU funds; the goal is for the Hungarian economy to become effectively self-sufficient by 2020, and to raise the state revenues necessary for development purposes. In reference to the crisis in Greece and the referendum to be held in the UK next year, Mr Csepreghy said that it is questionable whether there will be a cohesion policy also beyond 2020. It is much more likely that there will be no cohesion policy, he said.

The Deputy State Secretary further said that the latest calls for proposals have already been released; small and medium-sized enterprises have had the opportunity to submit applications in response to two calls since 9 July.

After the opening of the new calls, some 1,250 proposals have been received for a total allocation of HUF 85 billion, and further proposals are expected to be submitted. The Government will announce new calls worth HUF 2,300-2,400 billion by the end of the year.

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The formal changes introduced with respect to applications, too, contribute to the more effective utilisation of the EU funds of the next development cycle; Mr Csepreghy mentioned as an example the possibility of pre-financing – the withdrawal of a 30 per cent advance – for all awarded businesses. As a result of the changed procedure of settlement, businesses are not required to invest own resources up to the disbursement of 90 per cent of the grants. At the same time, the obligation of providing collateral has been done away with in the case of businesses which have a closed business year and a zero tax debt certificate.

The Deputy State Secretary said: the representative of the European Commission pointed out at the public hearing that the developments implemented from cohesion grants generated profits for the EU 15, that is the Member States which joined before 2004, in the same magnitude as for the newly joined Member States. These investments either had a direct impact on German, Austrian or French business stakeholders through their participation in projects, or exerted an indirect positive effect through the imports generated by the increased domestic demand which manifested itself in the wake of a rise in living standards.

The Polish Government, too, confirmed the trend observed in Hungary that foreign businesses account for a significant percentage of the use of EU funds. The construction industry was mentioned as an example: in Hungary large international construction industry companies dominate the market in almost 50 per cent of public-sector projects. This means that cohesion funds are important not only for the countries in which the given projects are implemented.

In answer to a question, Mr Csepreghy said that the closing of the 2007-2013 period will extend to the end of this year. There are some open issues also in the case of Hungary, fewer than 15, where the European Anti-Fraud Office of the EU (OLAF) is investigating specific projects; the Commission will decide on the proposed actions. The irregular or ineffective use of EU funds is below two per cent in Hungary. The investigations of OLAF are confidential until their closure, and the companies and municipalities concerned have been duly notified in every instance, the Deputy State Secretary said.

(Prime Minister's Office, MTI)