Short-term concern about EU Commission audit may be out of the way

HUNGARY - In Brief 26 Nov 2017 by Istvan Racz

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In our November report, we wrote that the payment of about EUR 1.1bn of due reimbursement by the EU Commission to Hungary before end-2017 seemed to be at risk, due to an ongoing audit by the Commission at the Prime Minister's Office in Hungary, the administrative unit responsible for the distribution of EU development transfers within the country.Now the most recent good news is that this concern may be out of the way, as according to 'reliable sources' cited by Portfolio.hu yesterday, a decision was made by the EU Commission's administration on November 24 that the execution of reimbursement payments by the EU can continue, given that the audit had not found in Budapest irregularities serious enough to justify suspension of the payment process.If this is true, Hungary is essentially sure to get the funds in question by end-December. And we think it is quite likely to be true, given the direct source of the news. In fact, we suspect that Portfolio.hu's 'reliable source' was probably a speaker from the government itself. The news website also claimed that due to the said decision, Hungary could get even more of reimbursements from Brussels before end-year, should the government be able to send out about EUR 1bn worth of additional invoices of completed development projects by early December, as they are actually planning to do. But we think this latter is pretty much unsure, given that the EU Commission has a 60-day deadline for making reimbursement payments, after the date when invoices are received, and that deadline reflects the time needed to properly administer the job.Anyway, one potential problem which could make financing of the central budget difficult in late ...