23 Feb 2012

EC threatens to suspend funding for Hungary

7:36 am on 23 February 2012

The European Commission plans to suspend 495 million euros ($US655 million) of EU funds for Hungary next year because of the country's budget deficit.

The sum represents 29% of Hungary's cohesion (development) fund allocation.

Hungary has until 1 January next year to improve its budget finances - otherwise the funds will be frozen.

A statement from the commission said the penalty is unprecedented.

Last month the commission threatened Hungary with legal action over new laws regarding the independence of its central bank and courts.