Press Releases

24. 2. 2012 14:30

Statement of the Prime Minister regarding the European Commission’s proposal to suspend future payments from the Cohesion Fund for Hungary

The Czech Republic appreciates the efforts of the European Commission aimed at fostering fiscal discipline of the Member States of the European Union, and is well aware that budgetary consolidation constitutes a pivotal element of macroeconomic stability.

Nevertheless, it is difficult to support the European Commission’s proposal to partially suspend future payments from the Cohesion Fund as a sanction for Hungary for failure to effectively address its excessive deficit. The Czech Prime Minister perceives suspension of funding as a measure of last resort that should be used if a Member State breaches the deficit limit and fails to take appropriate corrective action.

The Czech Prime Minister is convinced that the Hungarian Government is conscious of its commitments made at the European level and that it is carrying out the necessary steps which will persuade the European Commission of the Hungarian good will to achieve satisfactory progress in terms of budgetary discipline.

Given the current fragile economic situation, the increased sensitivity of the financial markets and the serious nature of the measure, the suspension of Cohesion Fund commitments should be exercised very carefully and in a just manner: all Member States must be judged equally. It is therefore quite extraordinary to propose a suspension from the Cohesion Fund based only on mere predictions of future development of Hungary’s government deficit.

Otherwise, we risk that the newly introduced measures enhancing the credibility of the excessive deficit procedure will be viewed more as a political instrument than as a reliable and efficient incentive to correct budgetary deviations.

After a thorough examination of all the circumstances and facts to the case, the Prime Minister would appreciate if the European Commission first carried out further investigation not based on political pre-decision, before proposing such grave measures that could endanger the reputation of the Member State in question in the financial markets.

The European Commission should proceed in this matter as an administrative body and the nature of the sanction imposition procedure should be automatic not political. The European Commission’s conduct should not be casting doubt over its administrative tasks and apolitical role.

The Prime Minister of the Czech Republic therefore recommends that the Council does not decide on the European Commission’s proposal to suspend future commitments from the Cohesion Fund before further recommendations of the Council to Hungary in the excessive deficit procedure and the concrete conditions under which this decision on the suspension will be lifted are made clear.

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