The European Commission announced the proposal to suspend the 29% of the Hungary's cohesion fund allocations for 2013 for not addressing excessive deficit. Hungary had not taken effective action to bring its deficit to below the target of 3% of GDP by 2011 in a sustainable and credible manner. According to the Commission, this is unprecedented step which follows the repeated warnings to Hungary urging it to step up its efforts to end the country's excessive government deficit.

The European Commission has proposed to suspend €495 of Cohesion Fund commitments for Hungary taking effect on 1 January 2013, representing 0.5 % of GDP and 29% of the country's cohesion fund allocations for 2013. This proposal responds repeated failure to take action by Hungary to address the country's excessive government deficit. On 11 January this year, the European Commission concluded, as part of the Excessive Deficit Procedure (EDP), that Hungary had not taken effective action to bring its deficit to below the target of 3% of GDP by 2011 in a sustainable and credible manner. Also in January, the Council adopted a decision on this issue.

The proposed suspension concerns the most recent breach only, and not past fiscal behaviour. Hungary has been under the Excessive Deficit Procedure ever since its accession to the EU in 2004. It is now up to the Member States to endorse the Commission's proposal concerning Hungary. Once effective action is deemed to be taken, the suspension would be lifted without delay. The current Cohesion Fund Regulation explicitly provides for the suspension of the totality, or part of, the Fund in the case of an excessive government deficit and an absence of effective action to correct it. This is the first time such a measure is being applied.

The suspension is 5.7% of the total 2007-2013 allocation and 29% of 2013 commitments. The allocation from the Cohesion Fund for Hungary for this financial programming period of 2007 until 2013 amounts to €8,6 billion in EU-funding, representing 1.26% of GDP. The foreseen allocation for 2013 is €1,7 billion, representing 1.73% of GDP. The Cohesion Fund is available for all Member States who have a GDP which is below 90% of the European average and aims specifically at larger investments in infrastructure and environment in these Member States.