Hungary submits new anti-graft bills to avoid loss of EU funds

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BUDAPEST, (Reuters) – Hungary’s government submitted a second batch of anti-corruption bills to the country’s parliament on Friday as Budapest ramps up efforts to avoid a loss of vital European Union funding that could damage its currency and economy.

The EU’s executive on Sunday recommended suspending funds worth 7.5 billion euros over what it sees as Hungary’s failure to combat corruption and uphold the rule of law.

Budapest has pledged to draft all the legislation agreed with Brussels after lengthy talks. Hungary’s forint currency and Hungarian bonds have sold off in recent weeks over fears that Budapest would lose billions of euros in EU money.

The first draft bill on Monday enhanced Hungary’s cooperation with the EU anti-fraud office OLAF, ensuring that OLAF gets support from Hungarian tax authority officials in its investigations of EU-funded projects and increased transparency over how state asset management foundations operate.

On Friday, Hungary’s Justice Minister Judit Varga submitted a raft of further measures, including a bill to establish a body called the Integrity Authority, which will be able to step in when local officials fail to intervene in suspected fraud cases, conflicts of interest or other wrongdoing involving EU funds.

The bill would also set up an Anti-Corruption Working Group made up of government and non-government delegates who will be tasked with improving Hungary’s anti-fraud framework.

“The Hungarian Government is committed to the full implementation of each corrective measure (17) undertaken as a result of the constructive and intensive co-operation with the Commission,” Varga said in the reasoning attached to the bill.

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

Facing rising energy costs, a weak forint and the prospect of a recession next year, Prime Minister Viktor Orban, long at odds with the EU over some of his policies, now looks willing to fulfil EU demands to create institutions that would cut corruption risks in EU-funded projects.

Earlier on Friday, Finance Minister Mihaly Varga said the Hungarian economy was headed for a “difficult period” due to surging inflation and higher energy costs, which means the 2023 budget would have to be reworked.

(Reporting by Krisztina Than; Editing by Paul Simao)

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