Hungary will ensure EU cohesion funds are paid, says official

The European Commission will propose suspending Hungary's cohesion funds from next year, according to reports, but Hungary will take measures to ensure that such an eventuality does not prevail, a senior Hungarian economic official said on Tuesday.

Zoltan Csefalvay, the economy ministry state secretary, reacting to a report that the Commission would propose on Wednesday suspending the funds over Hungary's failure to reduce its budget deficit in a sustainable way, pledged to make sure Hungary met its convergence obligations.

The Commission document, seen by Reuters, listed a proposal for European finance ministers to suspend the funds. "It... also noted that this decision was an incentive for Hungary to correct its excessive deficit (rather than a 'punishment') and that the suspension would be reversible if sufficient action was taken by Hungary," the document, obtained by Reuters, said.

Csefalvay, speaking after a meeting of EU competitiveness ministers, said that even if the Commission should tender such a proposal for next year, and finance ministers of the community approved it, Hungary would take appropriate measures to meet EU expectations in the country's convergence and reform programmes in the spring, and in next year's budget in the autumn.

Hungary will be able to keep its deficit under 3 percent of gross domestic product in 2012 as required, Csefalvay said.