EU, Hungary Reach Deal That Could Unlock 16.4 Billion Euros in Funding (Worthy News In-Depth)

by Stefan J. Bos, Worthy News Europe Bureau Chief

BRUSSELS/BUDAPEST (Worthy News) – The European Union and Hungary said Friday they had reached a landmark agreement that could eventually unlock up to 16.4 billion euros ($18.8 billion) in previously suspended funding if Prime Minister Péter Magyar’s government completes sweeping anti-corruption and rule-of-law reforms.

European Commission President Ursula von der Leyen welcomed the breakthrough following talks with Magyar in Brussels, saying Hungary’s new government had completed “a great deal of work in a very short time.”

However, European Commission officials stressed that no funds have been transferred and that Friday’s accord remains a political agreement outlining reforms Hungary must complete before any payments can begin.

“We haven’t agreed to disburse the funds,” a senior Commission official said. “We’ve agreed on a list of commitments which, if completed by August 31, will trigger the payment of those funds.”

REFORMS NEEDED BEFORE PAYMENTS

Von der Leyen said the deal sets out the conditions for unlocking 10 billion euros ($11.5 billion) from the EU’s Recovery and Resilience Facility, alongside 4.2 billion euros ($4.8 billion) in cohesion funding and 2.2 billion euros ($2.5 billion) linked to academic freedom and higher education reforms.

She also confirmed that Hungarian university students will once again be eligible to participate in the Erasmus+ student exchange program beginning with the next academic year.

Under the agreement, Hungary will join the European Public Prosecutor’s Office, strengthen its Integrity Authority, tighten asset-declaration rules, reform public procurement procedures, and phase out controversial public-interest foundations established during the former Prime Minister Viktor Orbán’s administration.

The funding is viewed as crucial for reviving Hungary’s economy, which has struggled with weak growth, a widening budget deficit, and years of uncertainty over access to EU support.

The new government inherited a deficit that European Commission estimates suggest could reach 6.2 percent of gross domestic product in 2026 following heavy pre-election spending under the previous administration.

ECONOMY COULD RECEIVE BOOST

Hungary’s central bank kept its benchmark interest rate unchanged at 6.25 percent on May 26, citing global energy-price pressures and fiscal risks, though policymakers noted improving inflation prospects supported by a stronger forint.

Analysts say expectations that EU funding may eventually begin flowing have contributed to the Hungarian currency’s recent gains.

Magyar described the agreement as a “historic breakthrough” representing roughly 13 percent of Hungary’s gross domestic product.

“We are bringing home the EU funding that the Hungarian people are entitled to,” he said, arguing that previous explanations for the suspension of EU resources had been misleading.

“For years, Hungarians were told this was an ideological conflict between Brussels and Budapest. Today, we proved that the issues here in Brussels were not ideological but related to fighting corruption, restoring the rule of law, and strengthening transparency.”

GOVERNMENT PLEDGES REFORMS

Magyar told reporters that the resources would help rebuild Hungary’s economy, improve public services, and strengthen the competitiveness of businesses and entrepreneurs.

The Hungarian government said it would use the money to support transportation infrastructure, healthcare, education, electricity-grid modernization, railway upgrades, digital development, rental housing projects, and small and medium-sized enterprises.

Magyar added that the agreement demonstrated that his government’s anti-corruption measures were already producing results.

His administration has pointed to new investigations that it says highlight the need for greater transparency and accountability.

New information has emerged about funds allegedly funneled through the Ministry of Culture to entities and individuals linked to Orbán’s Fidesz party, according to government officials.

DOZENS OF TRASH BAGS

Authorities reported finding dozens of trash bags containing what appeared to be shredded documents in the ministry’s basement.

Officials say that, based on current information, some 286 billion forints (more than 800 million euros or about $815 million) in expenditure connected to the Ministry of Construction and Transport cannot be accounted for in this year’s budget.

European Commission officials stressed that the release of billions in funding remains subject to “verification and formal approval procedures.”

Hungary is expected to submit more detailed plans outlining its anti-corruption measures, along with a revised recovery plan, to the European Commission, the EU’s executive arm, in the coming days. The proposal must then be approved by the EU’s executive arm and endorsed by member states before any payments can begin, Worthy News learned.

However, Commission officials noted that around 2 billion euros ($2.3 billion) in cohesion funding has already been permanently lost because previous spending deadlines expired, while more than 530 million euros ($608 million) remains suspended over separate disputes involving migration, asylum, and LGBTQ-related concerns.

UKRAINE’S EU BID

Both von der Leyen and Magyar emphasized that the negotiations are unrelated to Ukraine’s bid for European Union membership.

Hungary has made clear it wants to see an improvement in minority rights, including for the roughly 150,000 ethnic Hungarians living in western Ukraine, before it can agree on Ukraine joining the 27-nation EU.

Yet, while no funds have been released and significant reforms remain outstanding, the deal marks the most substantial improvement in relations between Brussels and Budapest since Magyar defeated Orbán’s Fidesz party in April.

The agreement also suggests growing confidence in Brussels that Hungary’s new government can restore cooperation with the European Union after 16 years of often tense relations under Orbán.

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