Hungary to Resist EU ‘Blackmail’ on Frozen Funds, Orban Says

Andras Gergely and Marton Kasnyik
·2 min read
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(Bloomberg) -- The European Union won’t be able to sway Hungary to change its controversial policies on asylum and LGBTQ rights by withholding fund payments, Prime Minister Viktor Orban said.

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Orban spoke a day after the European Parliament approved a non-binding resolution calling on the EU to withhold further funds from Hungary until the government satisfies all criteria aimed at reversing the erosion of the rule of law.

“They can’t blackmail us financially in these questions,” Orban said in a state radio interview on Friday.

European Commission President Ursula von der Leyen has come under criticism for the EU executive’s decision last month to release about €10.2 billion ($11.1 billion) to Hungary, about a third of the funds that were blocked a year earlier for democratic backsliding and graft under Orban’s rule. On Wednesday, she told EU lawmakers that the around €20 billion still frozen will “remain blocked until Hungary fulfills all the necessary conditions,” including on LGBTQ and asylum rights.

The forint extended losses on the deepening standoff over EU funds as well as the central bank’s signal on Wednesday that it will consider boosting the pace of cuts to the EU’s highest borrowing costs after faster-than-expected disinflation. The forint has fallen 1.3% against the euro over the past four days, the worst-performance among 23 emerging-market currencies.

The central bank is on track to reduce interest rates this year in a way that will help boost economic growth while shielding the forint, Orban said on radio after speaking with Governor Gyorgy Matolcsy on Thursday. The recovery from a recession, more so than inflation, should be the focus of both the government’s and the central bank’s policy this year, he said.

The EU has set out 27 so-called super-milestones to push Orban to rebuild some of the democratic guardrails after years of cajoling, legal wrangling and the threat of suspending Hungary’s vote in the bloc failed to bring him into line. But there’s little sign that the pressure is affecting Orban, who has ruled by decree since the Covid pandemic and has been able to finance the budget from the market.

Hungary sold €1.5 billion in green Eurobonds on Thursday, on top of $2.5 billion in debt raised from international investors earlier this month.

“No amount of money” will convince Hungary’s government to change its policies restricting asylum and LGBTQ rights, Orban said.

(Updates with background, markets throughout.)

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