The EU executive approved Hungary's pandemic recovery plan but it won't get any payments until further reforms are made. /Bernadett Szabo/Reuters
The European Commission has approved Hungary's post-pandemic recovery plan but said Budapest would not get any of the payments - worth some €5.8 billion ($6bn) - until it addresses corruption and carries out reforms of its judicial system.
The Commission also asked EU governments to freeze €7.5 billion euros ($7.8) earmarked for Hungary from the EU budget for equalizing living standards in poorer EU member states.
The decision from the bloc's executive to block the funds comes after months of talks with Prime Minister Viktor Orban's far-right government over high-level corruption, judicial independence, and minority rights.
"We are today giving our positive assessment to Hungary's comprehensive recovery and recovery plan. Regarding the rule of law, Hungary has committed to significant reforms. Only once these reforms are implemented in full will access to the EU's recovery fund be unlocked," Commission Vice President Valdis Dombrovskis said.
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The recovery plan is part of an EU spending scheme to help struggling member states recover from the economic impact of the COVID-19 pandemic.
Hungary will have to deliver "fully and correctly" on a set of 27 "super milestones" to unblock the money from the Recovery and Resilience Fund (RRF), the Commission said.
Hungary's minister responsible for negotiations on EU funds said he hoped that EU funds would be released in 2023 as the European Commission's proposal earlier in the day opens the door to a final agreement on funds.
Tibor Navracsics added that the suspension of some of the money was down to some legislation still pending approval.
The additional move to freeze the €7.5 billion euros of regular EU funds for Hungary is the first time the Commission has made use of new powers to protect the European budget if there is an alleged risk that the money could be misspent.
EU governments have until December 19 to vote on the suspension proposal, which requires a majority to pass.
If the Commission's recommendation is approved, and provided that Budapest has addressed Brussels' concerns on judicial independence and corruption, the funds will be unblocked.