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Hungarian gov’t to submit an anti-corruption bill to avoid losing EU funds

The Hungarian government will submit the first of several anti-corruption bills to parliament, its spokesman said. It is the first step to avoiding losing billions of euros in European Union funding.

The European Union executive recommended on Sunday suspending funds worth EUR 7.5 billion due to what it sees as Hungary’s failure to combat corruption and uphold the rule of law. The European Commission also set out requirements for Hungary to keep access to the funding, including new legislation, which Hungary immediately said it would meet.

Government spokesman Zoltan Kovacs tweeted that the government would submit legislation to Parliament on Monday and Friday, “including proposals to set up the authority which will supervise EU public procurement procedures.

“The latest developments in Brussels certainly come at a bad time for Orban, who is struggling with a swath of political and economic problems brought about by both global issues, most notably rising energy prices, so he is likely to go further to satisfy Brussels’ demands,” said Mujtaba Rahman, Managing Director Europe at think tank Eurasia Group.

He added that Budapest would likely secure the pending deal but that would not resolve all the outstanding disagreements over other chunks of EU funds.

Development Minister Tibor Navracsics, in charge of negotiations with the EU, said that Hungary would meet all 17 of its commitments made to the European Commission to stave off the loss of any EU funding.

This comes after EU Budget Commissioner Johannes had indicated the way out of this situation for Hungary, saying the steps proposed by Budapest “could in principle be capable of remedying” Commission’s criticisms “if they are correctly specified and implemented accordingly.”

It is the first such case in the EU under a new sanction meant to better protect the rule of law and combat corruption in the 27-nation bloc.

Prime Minister Viktor Orban, in power since 2010, has clashed with Brussels repeatedly over his policies that it sees as eroding democracy in the Central European country. However, with big challenges at home over surging energy costs and double-digit inflation, a weak forint and a slowing economy, the veteran prime minister looks willing to fulfil EU demands to finally create institutions that would cut corruption risks in EU-funded projects.

If Budapest does not get the EU funds, the forint – which has lost 8 percent this year – will almost certainly fall further, complicating efforts to curb inflation and exposing Hungarian assets to any negative shift in global sentiment.

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