European Structural and Investment Funds in Hungary

Excerpt from the COM(2015) 639 final, ANNEX II: Country fiches:

1. ESIFs in Hungary

Economic and social challenges in the ESIF context

Although Hungary was severely hit by the economic and financial crisis, the economy began to recover in 2014. Nevertheless, there are still significant gaps in respect of the national Europe 2020 targets. The innovation activity and competitiveness of SMEs is weak. There is a need to increase R&I spending and the use of renewable energies, and to improve energy and resource efficiency. Hungary is struggling with low employment and with poverty that disproportionately affects some disadvantaged territories and groups. Significant inequalities remain at regional and sub-regional level, and rural areas are also lagging behind. These issues are reflected in the policy recommendations made in the context of the European Semester.

Main priorities and results

60 % of all ESI Funds will be dedicated to economic development and job creation. The Funds will enhance the innovation activity and competitiveness of businesses to increase their added value and integration into the international value chain, including through better access to financing. With EUR 2.2 billion of support, the business expenditure on R&D is expected to increase from 0.56 % to 0.71 % of GDP. To extend the knowledge base, Hungary plans to increase the proportion of innovative companies cooperating with research institutions by 20 % compared to 2010. EUR 2.9 billion will be used to help increase SMEs’ net revenues by 25 % and net export revenues by 30 %. This will involve improving the quality and accessibility of business infrastructure as well as direct capacity expansion. Significant support will be provided to modernise the agricultural, fisheries and food sectors, encourage cooperation between farmers, support young farmers and develop short supply chains. The total value of aquaculture production is expected to increase by 42%.

EUR 3.3billion will contribute to strengthen the labour market. at least 150 000 disadvantaged jobseekers are expected to benefit from active labour market policy measures helping them to return to the open labour market. A further 150 000 young people not in education, employment or training will receive personalised services from the employment offices. The quality of and access to childcare will be improved with at least 18 000 new nursery places. Investment will assist the utilisation of endogenous tourism potential and improve employment opportunities in labour-intensive sectors, such as agriculture.

EUR 689 million will be used for measures to support ICT development to narrow the urban- rural divide by increasing broadband coverage and connecting a million additional households to broadband networks as well as to improve business effectiveness.

EUR 3 billion will support the shift towards a low-carbon economy. The energy efficiency of businesses, residential and public buildings is expected to improve and the rate of energy produced from renewable energy sources should reach the national target of 14.65 % by 2020. The measures will also contribute to reducing greenhouse gas emissions. Over EUR1billion has been allocated to promoting climate-change adaptation and risk prevention. More than a million additional residents will benefit from adequate flood protection measures, and better water management will mitigate the adverse effects of climate change. Investments will help improve disaster resilience and disaster management systems. With almost EUR3.4billion, the Funds will support environmental protection and resource efficiency. There will also be funding for waste water management to ensure a larger proportion of the population has access to improved waste water treatment. Funding will also be used to ensure 100 % of drinking water is of adequate quality. The reuse and recycling of waste will also be improved substantially. Interventions will lead to strengthened nature protection and the restoration of degraded ecosystems, improved farming and forestry practices and an enhanced ecological approach in relation to surface and ground water. It is expected that the conservation and development of natural and cultural heritage sites will attract over 1.6 million yearly visits. Support is foreseen also to 100 aquaculture farms providing environmental services.

The EUR 3.3 billion allocation in the field of transport will contribute to over 230 km of new TEN-T roads, more than 275 km of reconstructed or upgraded railway lines, 50 km of new or improved inland waterways, over 130 km of new and upgraded tram lines, metro lines and suburban railway lines, and 48 km of new and 96 km of reconstructed and upgraded roads connecting to TEN-T.

In the field of social inclusion, almost EUR 2.4 billion will contribute to the reduction and prevention of poverty, particularly for children, by providing better access to good-quality public services and improved living conditions, mainly in disadvantaged regions. Funds will also support the transition from institutional to community-based care in the health and social services sectors. Around 70 000 individuals will be covered by active inclusion measures and more than 300 000 will benefit from improved health services. The EUR 1.7 billion allocation to education will focus on reducing early school-leaving rate to 10 %, lowering inequalities in the school system by ensuring equal access to mainstream education for all, including the Roma students and improving the quality of formal and informal education for over 150 000 students. Further measures intend to increase the participation of disadvantaged people in tertiary education and improve the dual vocational education system. Over EUR 600 million will be used to improve the efficiency of public administration and public services, including corruption prevention measures as well as the extensive use of e-government solutions.

Use of financial instruments and territorial tools

With an allocation of EUR 2.3 billion, Hungary is almost tripling its allocation to financial instruments (FIs) compared with 2007-2013. The use of FIs will be expanded to RD&I, energy, ICT and the social economy. A wide range of integrated territorial development instruments will be used. More than EUR 1 billion has been allocated to integrated sustainable urban development measures. Local initiatives will be enhanced by community-led local development in rural and urban areas.

Key information

2. Pre-conditions for effective and efficient use of ESIFs

Strategic frameworks for certain areas of investment have not been completed and need to be delivered in line with the agreed and closely monitored action plans. One of the key unfulfilled ex ante conditionalities concerns public procurement.

3. ESIF management

There is strong central coordination of the use of ESIFs for the 2014-2020 period. Five of the cohesion policy programmes are multi-fund programmes, combining the use of ERDF, CF and ESF. In order to facilitate coordination and ensure consistency between the programmes, a Partnership Agreement-level monitoring committee is to be set up in addition to the individual programme monitoring committees.

4. Simplification for beneficiaries

Hungary is planning several measures to reduce the administrative burden for beneficiaries, such as linking the IT system managing EU assistance to certified public-sector databases, yearly planning of calls for applications, the use of simplified cost options, consolidating certain functions (to provide a one-stop-shop service) and simplifying guidelines. 

Source: COM(2015) 639 final, ANNEX II: Country fiches to the Communication from the Commission Investing in jobs and growth - maximising the contribution of European Structural and Investment Funds, Brussels, 14.12.2015.