Development fund freeze for Hungary endorsed

European Union finance ministers adopted a Commission proposal to suspend Cohesion Fund commitments for Hungary from 2013, Margrethe Vestager, Danish Minister for Finance, told a press conference on Tuesday.

First, finance ministers were reported to be considering postponing a decision to suspend the development funds for Hungary until June. However, after a "long and constructive debate on Hungary", the Council adopted the proposal regarding the partial suspension of cohesion funds from 2013," the Danish Finance Minister said. "We will lift the suspension without delay if Hungary takes the necessary corrective action by our 22 June meeting," she added.

EC Vice President and European Commissioner responsible for economic and monetary affairs, Olli Rehn, reiterated that there is a different deadline for correcting excessive deficits for different countries. It was 2011 for Hungary and it is 2013 for Spain and 2012 for Belgium, he was quoted by the Hungarian financial website portfolio.hu.

Regarding a distinction between euro area and non-Euro zone member states, Rehn emphasized that the logic and the goals are the same but the instruments are somewhat different, which means that while Euro zone members would be fined, with immediate impact, non-Euro zone states would "only" have funds withheld.

"Hungary still has plenty of time to take corrective action" and avoid sanctions, Rehn underlined. He noted that the target date for 22 June is "a good moment of rendezvous" concerning Hungary. "This should be seen as an incentive for Hungary to meet its own fiscal targets," Rehn concluded.