Hungary’s regional development minister has warned that Central and Eastern European countries may receive less cohesion funds in the future, while southern regions, Moldova and Ukraine are slated to receive more with the prospective change of criteria for allocation of funds.

Budapest will continue to push for the retention of a regional development focus, fearing that any change in allocation could hinder economic convergence.

Public Administration and Regional Development Minister Tibor Navracsics, speaking at a panel alongside National Economy Marton Nagy and EU Affairs Minister Janos Boka, noted that some of the net contributors to the EU budget are advocating a shift from a territorial-based funding to social-focused policies.

Current cohesion funding is distributed according to each region's level of economic development, he said, adding that Hungary's interest in maintaining current policies.

Cohesion policy is reviewed every seven years, mostly based on a report published every three years.

While regional economic development will remain a key criterion, social indicators such as unemployment and migration pressures will likely play a larger role in determining which regions receive funds.

With Ukraine, Moldova and potentially the Western Balkan countries on the path to EU membership, these countries are likely to become significant beneficiaries of future cohesion funds, which could result in reduced support for current beneficiaries.

Navracsics warned that incorporating new criteria in cohesion policy from the next budgetary period (2028-2034), such as youth unemployment, could reduce Hungary's share.

The country's regions, aside from Budapest, remain underdeveloped compared to the EU average, and Hungary has relied heavily on cohesion funds for infrastructure and development projects since joining the bloc. 

This was highlighted in a recent study by the IMF, which said ongoing twin digital and green transitions could worsen these regional inequalities within the country.

Eurostat data unveiled that three Hungarian regions were among the 20 poorest in the EU, and Budapest stood out generating 40% of the country’s GDP.

Marton Nagy echoed concerns about EU competitiveness, which seems to be the dominant theme of the current rotating presidency, even as Hungary is also seen as being the laggard in this category. Nagy stressed that the EU had already been lagging before the pandemic, and the subsequent energy crisis worsened the situation.

While the US and China are investing in improving their competitiveness, the EU limits member states' budget deficits to 3%, hindering similar efforts, referring to the tight fiscal rules. 

Where will the money come from, Nagy asked the audience of the University of Public Administration. He voiced his opposition to plans that would finance the green and digital transition from joint borrowing funds, arguing that it would increase the bloc's overall deficit. He also criticised proposed punitive tariffs on Chinese electric vehicles, warning that China might retaliate by restricting EU-made products.

Besides ensuring the smooth transition at EU institutions after the EP election, outlining political priorities for the future of Europe is another priority of the rotating presidency, Janos Boka noted.

The EU’s competitiveness and accession of Western Balkans is also at the top of its agenda, he added.