OREANDA-NEWS The Government would like to publish calls for proposals worth HUF 1,000 billion in European Union grants before the end of this year, and will seek to make the entire allocation available to applicants by next March and to contract the entire sum in 2017, János Lázár, the Minister heading the Prime Minister’s Office said at a conference regarding the utilisation of EU development funds held in Budapest.

Mr Lázár pointed out at the conference entitled Hungary is becoming stronger which was organised by the Prime Minister’s Office: the greatest risk of the planning of the 2016 economic year was, from a fiscal point of view, the amount of EU funds to be disbursed. The planned disbursement amounted to HUF 2,000 billion, while the actual payments will amount to HUF 1,600-1,700 billion, which by far exceeds the expectations of a number of economic analysts who estimated this sum to be around HUF 1,000 billion. The calls published will amount to some HUF 7,800-7,900 billion, Mr Lázár indicated.

According to his information, regarding the cycle between 2014-2020, 291 calls for proposals worth HUF 6.746 billion were released up to 21 November, which accounts for 75 per cent of the entire available allocation. 76,323 project applications to the value of HUF 7,914 billion have been received so far, 16,042 projects have been contracted for funds totalling HUF 3,194 billion, and funds have been actually disbursed in respect of 2,450 projects to date.

The Minister said that Hungary has become significantly stronger since the previous fiscal cycle. At the same time, however, the external environment is increasingly more uncertain as there will be elections during the period to come in a number of countries, and Europe may find itself either stronger or weaker by autumn 2017. He stressed that Hungary has no interest in the weakening of the EU.

He further told his audience that Hungary’s growth rate exceeds the EU’s average, but is among the lower ones in the region. Prospects for the next few years are reassuring: there is a low interest environment which favours investments, there is effectively no inflation, and the sovereign debt is on the decrease. The country’s international financial perception has improved considerably, unemployment is below 5 per cent, exports are increasing, industry has developed significantly, and the year will be closed with a trade surplus. Hungary has not been in such a favourable situation for 30 years which is an enormous opportunity, he stressed.

There are, however, weaknesses as well, the Minister warned. One of the gravest problems is the shortage of capital which cannot be supplied from our own resources in the next 20 to 30 years. Our demographic features, too, pose a serious economic challenge.

He pointed out: there is a need for the transformation of the health care system and the improvement of the general state of the population’s health. Unless the number of years spent in good health increases and the mortality rates improve, in particular, in the age group between 55 and 60 years, this will create genuine problems on the labour market, he said.

He further mentioned among weaknesses the fact that work force will become more expensive, while there is no answer to the question of what could offer a competitive advantage to businesses instead of cheap labour, and there is likewise no answer to the question as to how the country can take part in the technological revolution.

Mr Lázár took the view that it is undeniable that the funds spent in Hungary – together with EUR 39 billion in agricultural funds between 2007 and 2014 – have left their mark on the country, and according to preliminary international surveys, they contributed 10 to 11 per cent to our growth.

The greatest achievement is that the deficit of the budget could even be zero, and the EU funds have created scope for manoeuvring for the Government in reducing the fiscal deficit by releasing the existing reserves, he said.

The Minister pointed out: in the previous fiscal cycle, the promotion of the economy was not the number one objective. Between 2007-2014, only 15 to 17 per cent of EU funds were spent on the development of the economy directly, while in the current cycle they are planning to allocate 60 per cent for this purpose.

Developments have significantly improved the infrastructure, however, there are major weaknesses in the fields of health care and education. There was a change of regime in education, but there was no change of content, and the performance of public education is declining continuously by international standards, Mr Lázár said.

He mentioned bureaucracy as a further weakness. A breakthrough has yet to take place in the bureaucracy of taxation, and the Government will review this before the 2018 elections. There have been changes in public administration, and despite the available European framework, access to EU funds has been made more convenient.

Mr Lázár also told his audience that Hungary is constantly criticised on the score of corruption. According to the European Commission, there is less competition because the percentage of single-bidder public procurements is too high. This, however, is not a Hungarian specificity, and it is not fair to speak about the corruptness of a region when there are quite evidently structural problems, he stressed.

By his account, upon the revision of the public procurement law, they consulted seventy organisations. „We want to make the rules more stringent indeed, and full publicity is the best means to achieve this”, Mr Lázár pointed out. He added: the introduction of e-public procurement will create full publicity by the end of 2017, and there will be full transparency.