Council of theEuropean Union
Brussels, 5 December 2022
(OR. en)15447/22
Interinstitutional File:2022/0414 (NLE)ECOFIN 1259
UEM 341
FIN 1280LEGISLATIVE ACTS AND OTHER INSTRUMENTS
Subject:

COUNCIL IMPLEMENTING DECISION on the approval of the assessmentof the recovery and resilience plan for Hungary

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COUNCIL IMPLEMENTING DECISIONof …
on the approval of the assessment of the recovery and resilience planfor Hungary

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EU) 2021/241 of the European Parliament and of the Councilof 12 February 2021 establishing the Recovery and Resilience Facility1, and in particular Article 20
thereof,
Having regard to the proposal from the European Commission,

1

OJ L 57, 18.2.2021, p. 17.

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Whereas:(1)

The COVID-19 outbreak has had a disruptive impact on the economy of Hungary. In 2019,
the gross domestic product (GDP) per capita of Hungary was 48 % of the Union average.
The real GDP of Hungary declined by 4,5 % in 2020 and increased by 2,3 % cumulatively
in 2020 and 2021. Long-standing challenges with an impact on medium-term economic
performance include productivity growth, the availability of skilled labour, investment in
human capital and institutional quality.

(2)

On 9 July 2019, on 20 July 2020 and on 12 July 2022, the Council addressed
recommendations to Hungary in the context of the European Semester. In particular, theCouncil recommended Hungary to continue the labour market integration of the mostvulnerable groups, to improve the adequacy of social assistance and unemployment
benefits, to improve education outcomes and to increase the participation of disadvantaged
groups in quality mainstream education. The Council also recommended Hungary toincrease the resilience of the health system and improve access to quality preventive andprimary care services. Moreover, the Council recommended Hungary to reinforce theanti-corruption framework, including by improving prosecutorial efforts and access topublic information, to strengthen judicial independence, to ensure effective involvement ofsocial partners and stakeholders in the policy-making process and to improve competitionin public procurement. Hungary was also recommended to continue simplifying the tax
system, while strengthening it against the risk of aggressive tax planning, as well as toimprove competition and regulatory predictability in the services sector, and to applycompetition scrutiny systematically in business transactions.

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The Council also recommended Hungary to ensure that any emergency measures bestrictly proportionate and should not interfere with business activities. Furthermore, theCouncil recommended Hungary to implement measures to ensure liquidity support forsmall and medium-sized enterprises in the context of the pandemic, to frontload public
investment projects and to promote private investment to foster the economic recovery.
The Council also recommended Hungary to improve the long-term sustainability of thepension system, while preserving adequacy in particular through addressing income
inequalities. Hungary was recommended to focus investment on the green and digitaltransition, in particular clean and efficient production and use of energy, sustainabletransport, and digital infrastructure for schools, and to promote reform and investment onsustainable water and waste management and the circularity of the economy, thedigitalisation of businesses, green and digital skills, and research and innovation. Finally,
Hungary was recommended to reduce overall reliance on fossil fuels by accelerating the
deployment of renewables, in particular by streamlining the permitting procedures and theupgrading of the electricity infrastructure, to diversify imports of fossil fuels by, inter alia,
strengthening interconnection with the participation of other countries, and to reduce thedependency on fossil fuels in buildings and transport by stepping up efforts on energy
efficiency measures for all, especially in residential houses and on the electrification oftransport.

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(3)

The recommendations addressed to Hungary on 20 July 2020 contained more specificpolicy guidance to overcome the COVID-19 pandemic. Having assessed progress in theimplementation of those country-specific recommendations at the time of submission of
the recovery and resilience plan (‘RRP’), the Commission finds that the recommendation
on taking necessary measures to effectively address the COVID-19 pandemic, sustain theeconomy and support the ensuing recovery has been fully implemented. Substantial
progress has been achieved with regard to the recommendation on providing liquidity
support to small and medium-sized enterprises and on promoting private investment.

(4)

On 11 May 2021, Hungary submitted its national RRP to the Commission, in accordancewith Article 18(1) of Regulation (EU) 2021/241. That submission followed a consultation
process, conducted in accordance with the national legal framework, involving local andregional authorities, social partners, civil society organisations, youth organisations andother relevant stakeholders. The version submitted in May 2021 was complemented andupdated by Hungary, in accordance with Article 19(1) of Regulation (EU) 2021/241, and aconsolidated version was submitted to the Commission on 3 November 2022. National
ownership of the RRPs underpins their successful implementation and lasting impact atnational level and credibility at European level. Pursuant to Article 19 of that Regulation,
the Commission has assessed the relevance, effectiveness, efficiency and coherence of the
RRP, in accordance with the assessment guidelines set out in Annex V to that Regulation.

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(5)

The RRPs should pursue the general objectives of the Recovery and Resilience Facility
established by Regulation (EU) 2021/241(the ‘Facility’) and of the European Union
Recovery Instrument set up by Council Regulation (EU) 2020/20941 in order to support therecovery in the aftermath of the COVID-19 crisis. They should promote the Union’s
economic, social and territorial cohesion by contributing to the six pillars referred to in
Article 3 of Regulation (EU) 2021/241.

(6)

The implementation of the Member States’ RRPs will constitute a coordinated effort
involving investment and reforms across the Union. Through the coordinated andsimultaneous implementation of these reforms and investments and the implementation ofcross-border projects, such reforms and investments will mutually reinforce each other andgenerate positive spillovers across the Union. Therefore, about one third of the impact of
the Facility on Member States’ growth and job creation will come from spillovers fromother Member States.

1

Council Regulation (EU) 2020/2094 of 14 December 2020 establishing a European Union
Recovery Instrument to support the recovery in the aftermath of the COVID-19 crisis(OJ L 433I, 22.12.2020, p. 23).

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Balanced response contributing to the six pillars(7)

In accordance with Article 19(3), point (a), of and Annex V, criterion 2.1, to Regulation(EU) 2021/241, the RRP represents to a large extent (Rating A) a comprehensive andadequately balanced response to the economic and social situation, thereby contributing
appropriately to all of the six pillars referred to in Article 3 of that Regulation, taking thespecific challenges faced by and the financial allocation of the Member State concerned
into account.

(8)

The RRP includes measures that contribute to all of the six pillars, with a number ofcomponents addressing multiple pillars simultaneously. The RRP includes a broad range ofmeasures, with a particular focus on the green transition, digital transformation, building
economic, social and institutional resilience, and on policies for the next generation. The
RRP also includes measures to support smart, sustainable and inclusive growth, and social
and territorial cohesion, in line with the European Industrial Strategy.

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(9)

The RRP contributes significantly to the green transition and digital transformation. The
green transition is supported in particular through reforms and investments in the field ofsustainable transport, energy, water management and the circular economy. Key measures
include investments in zero emission public transport, energy grid developments andrenewable energy generation. Several components contain measures aimed at improving
the energy efficiency of public and residential buildings. The digital transformation is
supported in particular through measures to promote the digitalisation of education and the
public administration, as well as the digitalisation of the health, energy and transport
sectors, and the development of digital skills.

(10)

A significant number of reforms and investments in the RRP aim at improving healthcare
and the economic, social and institutional resilience. Measures in the healthcare sector are
expected to improve efficiency and access to care for all. Measures also include
improvements to housing conditions for people living in the poorest settlements. Key
institutional reforms are expected to improve the resilience of the economy throughstrengthening the fight against corruption and the independence of the judiciary. The
envisaged reforms aim to simplify the taxation system and to strengthen it against the riskof aggressive tax planning, as well as to enhance the role of public consultations andimpact assessments in the law-making process so as to improve regulatory quality andpredictability. Smart, sustainable and inclusive growth is expected to be achieved inparticular through various measures aiming to increase competition in public procurement,
including targeted actions to facilitate the participation of small and medium-sizedenterprises, and to promote research and innovation.

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(11)

Social and territorial cohesion is expected to be promoted through a wide range ofmeasures in the RRP, in particular reforms and investments supporting the development ofa qualified and competitive workforce, including through the development of digital andvocational skills, as well as reforms to improve the sustainability of public finances. In
addition, several measures aim to address the specific challenges of the mostdisadvantaged settlements, and measures in the field of healthcare also contribute to morecomprehensive primary care services and accessibility of quality hospital care. Finally, asignificant part of the RRP is dedicated to policies for the next generation, in particular bydigitalising education, improving access to quality and inclusive education and increasing
the availability of early childhood education and care.

Addressing all or a significant subset of challenges identified in country-specific recommendations(12)

In accordance with Article 19(3), point (b), of and Annex V, criterion 2.2, to Regulation(EU) 2021/241, the RRP is expected to contribute to effectively addressing all or asignificant subset of challenges (Rating A) identified in the relevant country-specificrecommendations addressed to Hungary, including fiscal aspects thereof, or challenges
identified in other relevant documents officially adopted by the Commission in the context
of the European Semester.

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(13)

The RRP includes an extensive set of mutually reinforcing reforms and investments that
contribute to effectively addressing all or a significant subset of the economic and social
challenges outlined in the country-specific recommendations addressed to Hungary by theCouncil in the European Semester in 2019, 2020 and 2022, in particular regarding thegreen and digital transition, education, labour market, social policy, healthcare, theanti-corruption framework, judicial independence, competition in public procurement, thequality and transparency of decision-making, taxation and aggressive tax planning, and thepension system.

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(14)

The RRP contains several relevant measures to address the challenges related to the green
transition. With regard to energy production and energy efficiency, the RRP includes
reforms to improve permitting procedures for renewable energy production, simplify thegrid connection of small renewable power plants, and remove obstacles to the developmentof wind energy. Hungary committed to increasing the total capacity of renewable energy
production authorised to be connected to the grid to at least 10 000 MW by 2026. The RRP
also includes investments aiming to increase the deployment of solar energy production, as
well as to improve the electricity network in order to allow for the secure integration ofenergy produced from renewable sources. The RRP further includes several investments
for the energy efficiency renovation of public buildings, in particular in the areas ofeducation and healthcare, as well as of residential buildings. As for sustainable transport,
the RRP includes investments to develop the suburban rail network, the rail network on
TEN-T corridors, zero-emission bus transport and the central traffic management on
TEN-T railways. Moreover, Hungary will introduce a single national tariff, ticketing andpassenger information system for bus and rail. The RRP also comprises measures aiming at
promoting reforms and investments on the circular economy and sustainable waste
management, as well as sustainable water management, including through the promotionof nature-based water retention.

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(15)

The RRP also contains several relevant measures to address the challenges related to thedigital transition. The RRP includes measures aiming to provide digital notebooks andrelevant training for teachers and pupils in public education, information andcommunications technology (ICT) devices for primary and secondary schools, including
vocational education and training schools, for universities and adult learning institutions,and to increase the digitalisation of the healthcare and transport sectors. Moreover, the
RRP includes some measures to increase the digitalisation of the public administration, inparticular through electronic reporting platforms for taxation purposes, further
development of the electronic procurement system and improving the file management
system of the prosecution service.

(16)

The RRP includes several measures to address challenges in education. The RRP featuresreforms to improve the attractiveness of the teaching profession through a mechanism that
ensures gradual convergence of teachers’ wages to at least 80 % of the average wage oftertiary graduates, to decrease segregation in schools as well as to ensure access to quality
school education, in particular by providing pupils and teachers with the devices necessary
to participate in modern digital education, and by developing the digital skills of pupils andteachers. The RRP also contains investments aiming to provide retraining opportunities forteachers and specific management training to heads and deputy heads of schools, tosupport the integration of students with special education needs into the mainstream
education and to launch a process of integration of lower secondary classes of small,
low-performing schools into bigger schools, with a view to improving the efficiency andquality of education. Moreover, challenges related to research and innovation are
addressed by setting up national laboratories to improve the ecosystem for science andinnovation.

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(17)

The country-specific recommendation on the integration of the most vulnerable groups inthe labour market is addressed through the creation of additional places in crèches, thepromotion of employment opportunities for those living in the most disadvantaged
settlements, and investments in digital educational equipment, digital learning content,
adult training courses, and modernised learning environment in vocational education andtraining institutions and universities.

(18)

The RRP includes various measures to address specific challenges related to social policies
by providing comprehensive support to the inhabitants of the 300 most disadvantaged
settlements. These measures aim to promote employment and skills development
according tolocal specificities, to achieve better learning outcomes throughcommunity-oriented pedagogy, to build and renovate social houses, and to establish social
solar power plants.

(19)

The RRP sets out a wide-ranging set of reforms and investments to address the mostcritical challenges of care services. This includes in particular investments in upgrading
hospital infrastructure and equipment, optimisation of the hospital care network, and thedevelopment of primary and preventive care by establishing communities of generalpractitioners providing integrated healthcare services. This is complemented byinvestments in digital healthcare, such as digitalisation programmes and remote monitoringfor elderly care. Another measure supports the eradication of gratuity payments in thehealthcare system.

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(20)

The RRP includes a number of measures to reinforce the anti-corruption framework. These
include the establishment of an Integrity Authority to effectively reinforce the prevention,
detection and correction of fraud, conflicts of interest and corruption as well as otherillegalities and irregularities concerning the implementation of Union support in Hungary,with a particular focus on public procurement and ensuring the validity of asset
declarations. According to the RRP, the Integrity Authority should have extensive powers
to intervene in all cases where in its views competent national authorities have not taken
the necessary steps to prevent, detect and correct fraud, conflicts of interest, corruption andother illegalities or irregularities that affect or seriously risk affecting the sound financial
management of the Union budget or the protection of the financial interests of the Union.
The Integrity Authority’s full independence should be guaranteed, including through theselection process of its staff, management and the process for establishing its budget.
Another measure consists of the setting up of an Anti-Corruption Task Force, withsignificant involvement of independent non-governmental organisations, to continuously
examine the existing anti-corruption measures and draw up proposals concerning theimprovement of detection, investigation, prosecution and sanctioning of corruption andother practices such as nepotism, favouritism or ‘revolving doors’ between the public andprivate sectors. According to the RRP, the Task Force should be chaired by the presidentof the Integrity Authority, but it should work independently from that Authority. In
addition, the RRP includes measures to support a strengthened cooperation with theEuropean Anti-Fraud Office (OLAF), to put in place an extended personal and material
scope for asset declarations, and to reinforce the oversight and transparency of how public
interest asset management foundations performing public interest activity, and legal
persons established or maintained by them, make use of Union support.

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The RRP also includes a number of reforms that aim at strengthening the legislative,
institutional and practical arrangements to more effectively prevent, detect and correct
fraud, corruption, conflicts of interest and other illegalities in the use of Union support.
The RRP also comprises a reform to strengthen the anti-corruption framework by
establishing the possibility of a judicial review of decisions by the prosecution service or
the investigating authority to dismiss a crime report or terminate criminal proceedings. A
measure also envisages the full implementation of Hungary’s current National
Anti-corruption strategy and action plan as well as the preparation of a new National
Anti-corruption strategy and action plan. Several measures in the RRP contribute toincreasing transparency of and access to public data, also with an aim to reinforce theanti-corruption framework by facilitating independent oversight. Such measures include
setting up and operating a searchable central register on the use of public funds,
eliminating or limiting the costs related to requests for public information, shortening court
procedures on cases related to access to public information, and regular checks on all
public bodies to assess whether they comply with their respective requirements onproviding access to data of public interest.

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(21)

The country-specific recommendation on strengthening judicial independence is addressedby several reforms in the RRP, which are expected to strengthen the independence andimpartiality of courts and judges established by law in accordance with Article 19 of theTreaty on the European Union and the relevant Union acquis, thus raising the standard of
judicial protection and improving the investment climate in Hungary. The RRP includes
measures to strengthen the relative role and powers of the National Judicial Council in
relation to the powers of the President of the National Office for the Judiciary. The
exercise of effective control over the President of the National Office for the Judiciary by
the National Judicial Council is expected to reduce the possibility of arbitrary decisions in
the central administration of courts, including in relation to judicial appointments, and,
therefore, strengthen judicial independence. According to the RRP, this should be achievedin particular by introducing the requirement for a binding reasoned opinion of the National
Judicial Council on individual decisions, such as the suitability of candidates for the postsof President and Vice-President of the National Office for the Judiciary, based onsuitability criteria; the annulment of appointment procedures for judicial and court
executive positions; the transfer of judges; and the removal of judges from the pool ofjudges that hear special, including administrative, cases. The National Judicial Council
should also give a binding reasoned opinion on regulations such as the points system forjudicial posts, the conditions for the award of bonuses, the training of judges, the national
workload and the number of judicial posts.

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Finally, judges-members of the National Judicial Council should have the possibility to be
re-elected for the next term of office, and the National Judicial Council should have accessto all documents, legal capacity and autonomy in disbursement of its budget, and right toseize the competent court and the Constitutional Court to defend its prerogatives.
Non-discretionary rules on designation of ad interim court presidents and a prohibition for
the reintegration of judges to a higher court instance following their secondment should
also be introduced. Another reform is expected to strengthen the judicial independence of
the Supreme Court (Kúria), in particular by amending the rules on the election of the Kúria
president, who should have at least five years’ experience as a judge and should not havethe possibility to be re-elected. The National Judicial Council should give a binding
reasoned opinion on the suitability of candidates for President and Vice-President of the
Kúria. The reform should also remove the possibility for members of the Constitutional
Court to be appointed to the Kúria outside of the normal application procedure, improvethe case allocation scheme, and ensure stronger powers for the judicial council of the
Kúria. Further reforms are expected to remove obstacles to references for preliminary
rulings to the Court of Justice of the European Union and to remove the possibility,
introduced in 2019, for public authorities to challenge before the Constitutional Court final
judicial decisions in order to ensure that final judgments are taken by the competent
independent courts.

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(22)

The RRP also includes several measures to address challenges related to competition in
public procurement, including by reinforcing the integrity of public procurement
procedures. A reform consists of the development and continuous use of a monitoring toolassessing the level and cause of public procurement procedures resulting in single bids.
Another reform aims to develop a performance measurement framework to regularly
assess the efficiency and cost effectiveness of public procurements, and the reasons forlimited competition in the sectors most affected by the low level of competition. An action
plan should be drawn up and implemented, on the basis of good international practices, toincrease the level of competition in public procurement. Building on those reforms, the
RRP includes a commitment for Hungary to reduce and maintain the share of public
procurements resulting in single bids to below 15 %, both for procedures financed either
fully or partially from Union support and for procedures financed solely from national
resources. To accompany these reforms, the RRP includes training opportunities and a
support scheme to facilitate the participation of micro-, small and medium-sizedenterprises in public procurement procedures, and measures to develop the electronic
public procurement system to facilitate the independent oversight and analysis ofcompetition in public procurement.

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(23)

The RRP includes reforms to improve the quality and transparency of the decision-making
process through effective social dialogue, engagement with other stakeholders and regularimpact assessments. Related measures aim to ensure that draft legislative acts prepared by
the Government systematically undergo public consultation for a sufficient period of time,
unless there is a due justification, and that impact assessments are consistently preparedand made available publicly for all draft legislative acts. The explicit involvement of social
partners and stakeholders in decision-making is also a prerequisite condition for manymeasures in the RRP. The involvement of stakeholders in the implementation andoversight of the RRP itself is also envisaged through the setting up and operation of amonitoring committee, of which at least half of the members should come from civilsociety organisations fully independent from public authorities.

(24)

The RRP also comprises measures regarding the business environment, in particular on
improving the tax system. The RRP includes reforms aimed at tackling aggressive tax
planning more effectively, such as increasing the data reporting on transfer pricing, theintroduction of minimum substance requirements for corporate income tax for shellcompanies and broadening the scope of non-deductibility rules for outbound payments tolow- or zero-tax jurisdictions. As for tax simplification, the RRP includes measures toreduce the number of taxes and on the digital transformation of tax compliance procedures.

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(25)

The RRP includes a reform roadmap to improve the medium- and long-term sustainabilityof the Hungarian pension system, while increasing lower-income pensioners’ entitlements.
The RRP is also expected to contribute to the sustainability of public finances through theimplementation of spending reviews.

(26)

The recommendations related to the immediate fiscal policy response to the pandemic canbe considered to fall outside the scope of Hungary’s RRP, notwithstanding the fact that
Hungary has generally responded adequately and sufficiently to the immediate need tosupport the economy through fiscal means in 2020, 2021 and 2022, in line with the generalescape clause of the Stability and Growth Pact.

Contribution to growth potential, job creation and economic, social and institutional resilience(27)

In accordance with Article 19(3), point (c), of and Annex V, criterion 2.3, to Regulation(EU) 2021/241, the RRP is expected to have a high impact (Rating A) on strengthening the
growth potential, job creation, and economic, social and institutional resilience of
Hungary, contributing to the implementation of the European Pillar of Social Rights,
including through the promotion of policies for children and youth, and on mitigating the
economic and social impact of the COVID-19 crisis, thereby enhancing the economic,
social and territorial cohesion and convergence within the Union.

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(28)

Simulations by the Commission services show that the RRP, together with the rest ofmeasures of the European Union Recovery Instrument, has the potential to increase theGDP of Hungary by 1,0 % to 1,4 % by 2025, not including the possible positive impact ofstructural reforms, which can be substantial. The RRP is expected to promote smart,sustainable and inclusive growth, with a major contribution to investments that support
successful green and digital transition, promote innovation, digitalise the public
administration and public services, and enhance competition in public procurements. The
measures are expected to lead to higher energy efficiency in public buildings and a higher
share of renewable energy production. They are also expected to increase digital skills andimprove health outcomes.

(29)

In the medium-to-long term, the RRP is expected to increase the supply of skilled workers
through reforms and investments in public education, vocational training and higher
education. The RRP is expected to make a particular contribution to digital skills, throughthe increasing use of digital tools and solutions in education and healthcare. Reforms andinvestments in healthcare can also contribute positively to labour supply. The innovative
potential of the economy is expected to be boosted by investments that foster thecollaboration of various research and development actors in several fields of strategic
importance. Measures that aim to improve competition in public procurement, fightcorruption, strengthen judicial independence, improve the quality of legislation and thequality of public spending can also stimulate potential output by enhancing the quality ofinvestment, especially in the public sector.

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(30)

The RRP is expected to support the green transition and reduce dependence on fossil fuelimports. Reforms and investments in renewable energy, and investments in the power gridto accommodate more renewable energy sources, are expected to markedly increase theshare of zero-emission power generation. In addition, energy efficiency investments inpublic and residential buildings are expected to reduce fossil energy consumption andgreenhouse gas emissions. Measures on sustainable mobility, including improved suburban
railway lines and electric buses, are expected to improve the quality and efficiency of
public transport as well as reduce greenhouse gas emission and improve air quality, withpositive effects on health outcomes and productivity.

(31)

Measures of the RRP that are expected to have a positive impact on social cohesion andcontribute to reducing the social and economic risks of vulnerable groups include thedevelopment of early age childcare facilities, the promotion of digital skills in schools,
increasing the participation of disadvantaged pupils and students with special educationneeds in quality mainstream education, reduction of the risk of segregation in schools, anda healthcare reform package that aims to ensure a more equitable access to healthcare
services through investments and the eradication of informal gratuity payments in thehealthcare sector. A comprehensive set of measures is also envisaged to support the mostdisadvantaged settlements according to specific needs.

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Do no significant harm
(32)

In accordance with Article 19(3), point (d), of and Annex V, criterion 2.4, to Regulation(EU) 2021/241, the RRP is expected to ensure that no measure for the implementation ofreforms and investments projects included in the RRP does significant harm toenvironmental objectives (Rating A), within the meaning of Article 17 of Regulation(EU) 2020/8521 (the principle of ‘do no significant harm’).

(33)

In accordance with the technical guidance provided in the Commission Notice ‘Technicalguidance on the application of “do no significant harm” under the Recovery and Resilience
Facility Regulation’2, Hungary has provided justification that no measure in its RRP doessignificant harm to any environmental objective. Where needed, Hungary has proposed theimplementation of mitigating measures to avoid significant harm. Those mitigating
measures should be enshrined in the relevant milestones and targets.

1

2

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020
on the establishment of a framework to facilitate sustainable investment, and amending
Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).
OJ C 58, 18.2.2021, p. 1.

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(34)

Particular attention has been paid to measures whose impact on environmental objectives
warrants close scrutiny. For measures that involve the construction and refurbishment ofwater supply infrastructures, relevant milestones ensure that no significant harm is done tothe environment in particular by ensuring that the results and conditions of environmental
impact assessments are implemented in compliance with Union environmental law and by
ensuring that relevant water abstraction permits are granted and that the good ecologicalstatus of the surface and groundwater bodies affected by those investments will beachieved.

Contribution to the green transition, including biodiversity(35)

In accordance with Article 19(3), point (e), of and Annex V, criterion 2.5, to Regulation(EU) 2021/241, the RRP contains measures that contribute to a large extent (Rating A) tothe green transition, including biodiversity, or to addressing the challenges resulting
therefrom. The measures supporting climate objectives account for an amount which
represents 48,1 % of the RRP’s total allocation calculated in accordance with themethodology set out in Annex VI to Regulation (EU) 2021/241. In accordance with
Article 17 of that Regulation, the RRP is consistent with the information included in the
National Energy and Climate Plan 2021-2030.

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(36)

Reforms and investments on the increased use of renewable energy, improvements of thegrid, and energy efficiency measures are expected to help Hungary achieve its 2030
decarbonisation objectives and to support the transition to the low-carbon economy. This is
expected to be achieved in particular by revising the legal and administrative framework topromote the use of renewable energy sources. The removal of the existing general
restrictions for onshore wind power plants, and the creation of ‘go to areas’ in the windiest
regions to further facilitate the installation of wind turbines, are expected to allow for the
installation of new wind power capacities. The improvement of the permitting proceduresfor power plants relying on renewable energy sources is expected to foster the deploymentof renewable energy. Increased transparency, predictability and availability of the gridconnection procedures for renewables are also expected to contribute to their development,with the objective of achieving 10 000 MW of renewable energy production capacities
authorised to connect to the grid by 2026. In accordance with the RRP, such reforms
should be complemented with investments for the development of transmission anddistribution grids and smart grids, including smart meters, and for the installation of solar
panels and storage facilities. Renovation of public buildings, in particular in education andhealthcare facilities, and of residential buildings, in particular the replacement of windows
and the modernisation of residential heating, will contribute to increasing energy
efficiency.

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(37)

A comprehensive package of reforms and investments in sustainable transport aims to
support public transport of passengers and transport of goods by rail. This is expected toboost the overall mobility ecosystem, which should benefit the economy, and contribute to
the decarbonisation of the transport sector.

(38)

The RRP also comprises reforms and investments on sustainable water management,
aiming to improve water supply in specific regions affected by water scarcity in particularthrough reconstructing elements of the existing water management system and creating
new water supply routes, to develop nature-based water retention solutions, to upgrade
Hungary’s water management monitoring system at local and national levels, and topromote sustainable water management practices among farmers. Investments related towater management are expected to contribute to improving water retention in the areas
affected by water scarcity and to protect groundwater resources. Relevant milestones
ensure that the results and conditions of environmental impact assessments are
implemented in compliance with Union environmental law, as well as that relevant water
abstraction permits are granted and that the good ecological status of the surface andgroundwater bodies affected by those investments will be achieved.

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(39)

The RRP includes reforms and investments on sustainable waste management which are
expected to contribute to the green transition by creating a sound and enabling legal
environment to foster the transition to the circular economy and by supporting the use of
secondary raw materials. Those measures are expected to help Hungary reach the 2025
and 2030 Union waste management targets.

(40)

While the RRP does not contain specific measures focusing on biodiversity, it contains
measures that contribute to climate change mitigation, which may also be beneficial to thepreservation of biodiversity, as climate change is one of the major threats to biodiversity.
Hungary has carried out a systematic ‘do no significant harm’ assessment indicating thatnone of the proposed measures generates harm to biodiversity.

Contribution to the digital transition(41)

In accordance with Article 19(3), point (f), of and Annex V, criterion 2.6, to Regulation(EU) 2021/241, the RRP contains measures that contribute to a large extent (Rating A) tothe digital transition or to addressing the challenges resulting from it. The measures
supporting digital objectives account for an amount which represents 29,8 % of the RRP’s
total allocation calculated in accordance with the methodology set out in Annex VII toRegulation (EU) 2021/241.

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(42)

The RRP includes several measures aiming to improve the digital skills in education at alllevels, provide broad access to digital education for pupils, students and teachers as well as
integrate digital education solutions in vocational education and training and higher
education. In view of those objectives, the RRP includes digital training of teachers andinvestments in the ICT equipment of schools, teachers and students, with a dedicated focus
on the most disadvantaged students. The RRP also supports the development of digitallearning content for vocational and tertiary education.

(43)

The RRP contains measures aiming at the digitalisation of specific sectors, in particular
health, transport and energy. The digitalisation of healthcare covers a wide range ofinitiatives such as the establishment of a remote diagnostics centre, the introduction of an
artificial intelligence-based system for the emergency service, the development of mobile
health apps and a remote patient monitoring system for the elderly. The deployment of acentral traffic management system for railway lines and of a single national passenger
information and tariff system for bus and rail is expected to improve the safety, quality andattractiveness of public transport. Smart electricity grid development is expected to betterlink additional decentralised renewable energy generation capacities to the current system,in order to adapt networks to future requirements and to allow better regulation of energy
production.

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(44)

Measures to strengthen government ICT solutions and services are also expected tocontribute to the modernisation and improvement of the public administration. The RRP
includes measures, among others, on the digital transformation of tax compliance
procedures, on the further development of the electronic procurement system and on thefile management system of the prosecution service.

Lasting impact(45)

In accordance with Article 19(3), point (g), of and Annex V, criterion 2.7, to Regulation(EU) 2021/241, the RRP is expected to have a lasting impact on Hungary to a large extent(Rating A).

(46)

The lasting impact of the RRP is underpinned by a series of measures across various
sectors. Reforms supporting the green transition include a more effective administrativeand legal framework promoting the deployment of renewables, a new policy framework
for the circular economy, a better monitoring of water resources and improved awarenessregarding sustainable water management. In addition, improvements to the efficiency of
public services through their digitalisation, including in healthcare, are expected tocontribute to the lasting impact of the plan. Further measures with a lasting impact relate toimproving the labour market integration of the most vulnerable groups and the education
outcomes and participation of disadvantaged groups and least developed areas ineducation. This is complemented by investments in digital skills.

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(47)

The RRP is expected to make a significant contribution to strengthening the institutional
resilience of Hungary. This is expected to be achieved by reinforcing the anti-corruption
framework, strengthening judicial independence, and improving the quality andtransparency of the decision-making process. The business environment is expected to be
improved through measures on improving the tax system, regulatory predictability, andincreased competition in public procurement. The RRP is also expected to contribute to thesustainability of the Hungarian pension system and to sound budgetary management
through spending reviews.

(48)

The lasting impact of the RRP can also be enhanced through synergies between the RRP
and other support programmes, including those financed by cohesion policy funds, inparticular by addressing in a substantive manner the deeply rooted territorial challenges
and by promoting a balanced development.

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Monitoring and implementation(49)

In accordance with Article 19(3), point (h), of and Annex V, criterion 2.8, to Regulation(EU) 2021/241, the arrangements proposed in the RRP are adequate (Rating A) to ensure
effective monitoring and implementation of the RRP, including the envisaged timetable,
milestones and targets, and the related indicators.

(50)

The deputy state secretariat responsible for the implementation of the RRP (the ‘National
Authority’) in the ministry responsible for the implementation of Union support is
responsible for the overall coordination of the RRP and for monitoring progress towards
fulfilling the milestones and targets. It is also in charge of coordinating the reporting on
milestones and targets, including the related indicators, and the provision of data, such as
on final recipients. The National Authority is responsible for the drawing-up of thepayment requests, management declarations and summary of audits. To carry out thesetasks, the National Authority has clearly assigned responsibilities and relies on a dedicatedstructure for implementing the RRP. Progress towards the satisfactory fulfilment of
milestones and targets will be monitored through regularly updated data in a monitoring
information system, to be in place at the latest before the submission of the first payment
request, along with adequate arrangements to ensure the timeliness, reliability and veracityof data in the monitoring information system. In addition, specific monitoringarrangements should be put in place for the various measures, to allow early identificationof implementation risks and delays, and intervention as necessary, thus ensuring that theimplementation of the measures in the RRP remains on track.

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(51)

The milestones and targets in the RRP are appropriate for monitoring its implementation.
The milestones and targets reflect adequately the overall level of ambition of the RRP, andare clear and realistic. They are well designed, with relevant, acceptable and robust
indicators which should ensure proper monitoring during implementation. Milestones andtargets are also relevant for measures already completed which are eligible under
Article 17(2) of Regulation (EU) 2021/241. The satisfactory fulfilment of these milestones
and targets over time is required to justify a disbursement request.

(52)

Member States should ensure that financial support under the Facility is communicated andacknowledged in line with Article 34 of Regulation (EU) 2021/241. Technical support may
be requested under the Technical Support Instrument established by Regulation(EU) 2021/240 of the European Parliament and of the Council1 to assist Member States in
the implementation of their RRPs.

Costing(53)

In accordance with Article 19(3), point (i), of and Annex V, criterion 2.9, to Regulation(EU) 2021/241, the justification provided in the RRP on the amount of the estimated total
costs of the RRP is to a medium extent (Rating B) reasonable and plausible, is in line withthe principle of cost efficiency and is commensurate to the expected national economic andsocial impact.

1

Regulation (EU) 2021/240 of the European Parliament and of the Councilof 10 February 2021 establishing a Technical Support Instrument (OJ L 57, 18.2.2021, p. 1).

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(54)

Hungary has generally provided detailed breakdowns of individual cost estimates forinvestments and reforms with an associated cost included in the RRP. The cost assessmentshows that most of the costs in the RRP are reasonable and plausible. The evidence
supporting cost estimates provides a reasonable explanation of the key cost drivers of the
proposed measures, even though the degree and depth of the evidence provided vary acrossmeasures. For the most part, previous projects, actual tender data or other comparative cost
data for the main cost drivers were presented to serve as a benchmark for the costestimates. In some cases, details on the methodology and assumptions used to make thecost estimates are limited, hindering a full positive assessment of the cost estimates.
Hungary has also provided detailed supporting documentation for most measures tounderpin the justification and the evidence of the cost estimates. Furthermore, Hungary has
provided sufficient information and assurance to ensure that the costs of the RRP are notcovered by other existing or planned Union financing. Finally, the estimated total cost of
the RRP is in line with the principle of cost-efficiency and is commensurate to the
expected national economic and social impact.

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Protection of the financial interests of the Union(55)

In accordance with Article 19(3), point (j), of and Annex V, criterion 2.10, to Regulation(EU) 2021/241, the arrangements proposed in the RRP and the additional measurescontained in this Decision are adequate (Rating A) to prevent, detect and correct
corruption, fraud and conflicts of interest when using the funds provided under that
Regulation, and the arrangements are expected to effectively avoid double funding fromthat Regulation and other Union programmes. This is without prejudice to the applicationof other instruments and tools to promote and enforce compliance with Union law,
including for preventing, detecting and correcting corruption, fraud and conflicts ofinterest, and for protecting the Union finances in line with Regulation (EU, Euratom)
2020/2092 of the European Parliament and of the Council1.

1Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16
December 2020 on a general regime of conditionality for the protection of the Union budget(OJ L 4333 I, 22.12.2020, p. 1).

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(56)

In accordance with Article 20(5), point (e), of Regulation (EU) 2021/241, milestones
linked to the protection of the financial interests of the Union should be set out in order toensure compliance with Article 22 of that Regulation, through the establishment of anadequate control system. The satisfactory fulfilment of those milestones is expected toguarantee the adequacy of the internal control system, in accordance with Article 19(3),point (j), of Regulation (EU) 2021/241. Taking into account that a robust and effective
anti-corruption framework, reinforced arrangements to effectively prevent, detect andcorrect fraud, corruption, conflicts of interest and other illegalities when implementing
Union support, a competitive and transparent public procurement system, and judicial
independence are prerequisites for the functioning of an effective internal control system,
milestones should be set out for the respective reforms, and disbursements under the
Facility should be conditional upon their fulfilment. Taking into account that thosemilestones should be established to ensure the protection of the financial interests of theUnion and the establishment of an adequate control system, before any payment under the
Facility is authorised by the Commission, Hungary should fulfil all milestones related tothe control system1 before the submission of the first payment request, and no payment
under the Facility should be made before their fulfilment. This requirement is in line withand without prejudice to the remedial measures Hungary has proposed in the context of theprocedure under Article 6 of Regulation (EU, Euratom) 2020/2092 on a general regime of
conditionality for the protection of the Union budget2.

12This is the case for milestones 160, 166, 169, 171, 174, 175, 195, 197, 198, 200, 201, 213,
214, 215, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227 and 228.
As defined in COM(2022) 485 final – Annex to the Explanatory Memorandum of theCommission proposal for a Council implementing decision on measures for the protectionof the Union budget against breaches of the principles of the rule of law in Hungary.

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(57)

In particular, a robust and effective anti-corruption framework is indispensable to prevent,detect and correct irregularities, such as fraud, corruption, or conflicts of interest, and thus
to ensure effective audit and control arrangements for the RRP and the protection of thefinancial interests of the Union. In this context, a number of measures should be
implemented as part of the RRP, in order to ensure compliance with Article 22. These
include the establishment of an Integrity Authority to effectively reinforce the prevention,
detection and correction of fraud, conflicts of interest and corruption as well as otherillegalities and irregularities concerning the implementation of Union support, with aparticular focus on public procurement and ensuring the validity of asset declarations. A
credible and effective Anti-Corruption Task Force should also be established, withsignificant participation of independent non-governmental organisations, to examine theexisting anti-corruption measures and draw up proposals concerning the improvement of
the detection, investigation, prosecution and sanctioning of corruption practices and otherpractices such as nepotism, favouritism or ‘revolving doors’ between the public and private
sectors. In addition, rules should be put in place to extend the personal and material scopeof asset declarations, and to reinforce the oversight and transparency on how public interest
asset management foundations performing public interest activity, and legal persons
established or maintained by them, make use of Union support. Establishing the possibilityof an effective judicial review of decisions taken by the prosecution service or theinvestigating authority to dismiss a crime report or terminate criminal proceedings should
also contribute to reinforcing the anti-corruption framework, and indirectly to thestrengthening of prosecutorial efforts to address corruption. Increasing transparency of andaccess to public data concerning, in particular, the use of public spending should also be
strengthened, as it can contribute to reinforce the anti-corruption framework by facilitating
independent oversight. Six milestones should therefore be set out to ensure that thosemeasures are effectively implemented before the submission of the first payment request.

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(58)

The reinforcement of arrangements to effectively prevent, detect and correct fraud,corruption, conflicts of interest and other illegalities when implementing Union support ingeneral are important preconditions for ensuring that audit and control arrangements for
the RRP are effective, and that the financial interests of the Union are effectively protected
throughout the implementation of the RRP. In this context, a number of measures shouldbe implemented as part of the RRP. In order to reinforce the prevention against and thecontrols over conflicts of interest when implementing Union support, a new Directorate ofInternal Audit and Integrity should be established to ensure regular and effective control ofconflicts of interest declarations and investigate reported suspicions of conflicts of interest.
Reinforced legal provisions should ensure that risk-management, prevention, detection andcorrection of fraud, corruption, conflicts of interest and double funding are strengthened;that effective rules, procedures and control mechanisms are put in place concerning
conflicts of interest declarations; and that staff in sensitive positions are regularly rotated
and their effective oversight is ensured. Adequate guidelines to ensure that all bodies
involved in the implementation and control of Union support at any level are aware of theirtasks, responsibilities and obligations in preventing, detecting and correcting conflicts ofinterest should also be in place. In addition, a comprehensive and effective anti-corruption
and anti-fraud strategy related to any Union support should be put in place and should becomplemented with a detailed action plan. Appropriate procedures should also be put inplace to ensure the full and effective use of the Arachne data-mining and risk-scoring tooland to ensure the effective follow-up of risks identified by that system. Finally, in order toreinforce the detection of fraud, legislative arrangements should be put in place to ensurethat OLAF can effectively carry out its investigations and on-the-spot checks. Eight
milestones should therefore be set in order to ensure that those measures are effectively
implemented before the submission of the first payment request.

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(59)

Increased transparency and competition in public procurement is indispensable forpreventing irregularities, including fraud, corruption, or conflict of interest and thus aprerequisite for the effective functioning of an internal control system. In this context, anumber of measures should be implemented as part of the RRP. These should include thedevelopment of a monitoring tool assessing the share of public procurement procedures
resulting in single bids, the development and putting in place of a performancemeasurement framework to regularly assess the efficiency and cost effectiveness of public
procurements, and the reasons for limited competition in the sectors most affected by low
level of competition. A support scheme to facilitate the participation of micro-, small andmedium-sized enterprises in public procurement procedures, and measures to develop theelectronic public procurement system to facilitate the independent oversight and analysis
of competition in public procurement, should also be in place, as preconditions for
effectively delivering on the commitment to reduce the share of procurement procedureswith a single bid and to facilitate the public oversight of the public procurement system.
Five milestones should therefore be set out to ensure that those measures are effectively
implemented before the submission of the first payment request. In addition to thosemilestones, subsequent targets should also be included in the RRP to allow for themonitoring and enforcement of the reduction of the share of procurement procedures witha single bid throughout the implementation period of the RRP.

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(60)

Taking into account that effective judicial independence is a prerequisite for thefunctioning of an internal control system, milestones should be set out for reforms tostrengthen the relative role and powers of the National Judicial Council in relation to thepowers of the President of the National Office for the Judiciary, strengthen the judicial
independence of the Supreme Court (Kúria), remove obstacles to references forpreliminary rulings to the Court of Justice of the European Union and remove thepossibility for public authorities to challenge final judicial decisions before theConstitutional Court. These reforms are expected to contribute to the protection of thefinancial interests of the Union. This requirement is without prejudice to the obligation of
Hungary to comply at any time with its obligations under Union law, in particular
Article 19(1) of the Treaty on the European Union, as interpreted by the Court of Justice of
the European Union, which constitutes a key component of the Union acquis. Four
milestones should therefore be set out to ensure that those measures are effectively
implemented before the submission of the first payment request.

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(61)

The control system and arrangements proposed in the RRP are based on robust processes
and structures, clearly identifying the roles and responsibilities of different bodies involvedin the implementation, monitoring, control and audit of the plan, as well as for theirinteractions. These provide for a clear segregation of the control and audit functions andresponsibilities. The National Authority is responsible for the overall coordination of the
RRP, for monitoring progress on milestones and targets, for performing controls on
implementing bodies, sub-granting bodies and final recipients, and for the preparation andsubmission to the Commission of the payment requests as well as the related management
declarations based on verified data from the monitoring system. The role of audit authorityof the RRP is assigned to the Directorate General for the Audit of European Funds(EUTAF), which should have the necessary capacity and has administrative experience tocarry out the related audit tasks in line with internationally accepted audit standards.
EUTAF is responsible for performing system audits and substantive testing of theimplemented milestones and targets which serve as basis for the summary of audits
submitted to the Commission with the payment requests. In addition, in order to ensure theeffective audit of the implementation of the RRP, EUTAF is expected to adopt an effective
audit strategy which is in line with internationally accepted audit standards. Adequate
resources should be made available to ensure that the independence of EUTAF issafeguarded and its ability to effectively carry out its tasks in a timely manner isguaranteed. The related two milestones should be fulfilled before the submission of thefirst payment request.

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(62)

The administrative capacity of the central services charged with the implementation andcoordination of the RRP, namely the National Authority, is expected to be adequate to
conduct their envisaged roles and tasks. The work of the National Authority should be
supported by implementing bodies tasked with carrying out certain implementation tasks
on behalf of the National Authority, following a verification that they have the necessary
resources and expertise to carry out those tasks in an effective and timely manner. Regularand systematic controls on final recipients should be carried out by implementing bodies
and the National Authority. The National Authority should also supervise the work of theimplementing bodies in a regular manner. In addition, regular controls related to conflictsof interest should also be carried out by the newly-established Directorate of Internal Audit
and Integrity independently from the other control bodies. A milestone concerning theentry into force of a government decree establishing the legal mandate for all the bodies
involved in the implementation, audit and control of the implementation of the RRP should
be fulfilled before the submission of the first payment request.

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(63)

Adequate procedures are expected to be put in place to ensure the collection, storing andavailability of all required data on final recipients, contractors, subcontractors andbeneficial owners in the monitoring information system developed for the purposes of the
RRP. Detailed multi-layer control mechanisms are in place to ensure the reliability andveracity of data in that monitoring information system. A milestone should therefore be set
out to ensure that the necessary functionalities of the repository system for monitoring theimplementation of the RRP are rendered fully functional and operational, including at least
the functionalities of ensuring the collection of data and monitoring of the achievement of
milestones and targets, and collection, storage and ensuring access to the data required by
Article 22(2), point (d), of Regulation (EU) 2021/241. This milestone should be fulfilled
before the submission of the first payment request.

Coherence of the RRP(64)

In accordance with Article 19(3), point (k), of and Annex V, criterion 2.11, to Regulation(EU) 2021/241, the RRP includes to a high extent (Rating A) measures for the
implementation of reforms and public investment projects that represent coherent actions.

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(65)

The RRP represents a balanced mix of reforms and investments that are consistent andmutually reinforcing. Coherence is ensured within the components, with investments
accompanying relevant reforms, as well as between the different components in the RRP.
Measures across several components aim to improve the education outcomes, with actions
targeted at pupils, teachers and schools and with a focus on disadvantaged students anddigital education. As regards the green transition, the RRP includes measures to provide
investment support for energy efficiency investments both for residential and publicbuildings, in particular for education and healthcare facilities. The digital transformation issystematically promoted across the RRP through a combination of reforms in the form ofdigitalisation initiatives and investments in ICT equipment and skills development insectors such as education, healthcare, energy, transport and in the public administration.
The implementation of many investments in the RRP requires effective public procurement
procedures, and the RRP includes an effective set of measures to improve the competition,
efficiency and transparency of the public procurement system. Some reforms are expected
to have a cross-cutting impact on the quality and effectiveness of legislation in all areas,such as the measures aiming to improve the quality and transparency of decision-making.
The proposed measures within the components do not contradict or undermine each other’seffectiveness and no inconsistencies or contradictions between components have been
identified.

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Equality(66)

The RRP contains a number of measures to respond to the challenges in the area of genderequality and equal opportunities. The increased availability of early childcare facilities is
expected to enhance equal participation in the labour market and to contribute to thework-life balance of parents. The support for the education of children and pupils withspecial needs is expected to strengthen inclusive education. The delivery of laptops topupils and teachers following the development of a means-testing strategy and theequipment of schools with modern display tools and other IT devices, while priority isgiven to schools with high share of disadvantaged students, is expected to improve equal
access to education and to contribute to reducing social inequalities. The integration oflower secondary classes from small, low-performing schools into larger ones in theneighbouring settlements is expected to improve access to high-quality education for
low-achieving and disadvantaged children. Measures to incentivise primary andlower-secondary schools to increase their proportion of disadvantaged students are
expected to reduce segregation in public education institutions. Investments in the transport
sector, such as low-floor buses and renovated train stations, are expected to improveaccessibility to persons with disabilities. The RRP also includes integrated interventions topromote social inclusion, with a focus on those living in disadvantaged settlements,
including Roma. The digitalisation measures for elderly care are expected to contribute to
the implementation of the European Strategy for the Rights of Persons with
Disabilities 2021-2030.

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Security self-assessment(67)

A security self-assessment has not been provided as it has not been considered appropriate
by Hungary, in accordance with Article 18(4), point (g), of Regulation (EU) 2021/241.

Consultation process(68)

The draft RRP was published for comments in March-April 2021. In addition to having
made the information available to the general public, Hungary reached out directly to 461
organisations, such as municipalities, non-governmental organisations, higher education
organisations, trade unions, science organisations to encourage them to provide their views
and suggestions. Of those, 88 submitted input, with over 1 260 different suggestions.
Certain comments led to amendments of the draft RRP, for instance to better focus thescope of the measure supporting sustainable heating systems for households. However,some stakeholders criticised the process, arguing that the detailed content of the RRP was
not made public early enough to allow them to make meaningful comments and that theircomments could not be taken into account. In addition to the formal consultation, several
stakeholder conferences were held at regional and national levels, with different thematic
focus over the year 2021. Hungary published a new version in August 2021 but did not
make public any amended version since then and did not engage in additional consultation
processes regarding amendments made to the RRP in 2022.

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(69)

To ensure ownership by the relevant actors, it is crucial to involve all local authorities, andstakeholders concerned, including social partners throughout the implementation of theinvestments and reforms included in the RRP. For that purpose, the RRP contains ameasure to develop a strategy for ensuring the effective involvement of stakeholders in theimplementation of the RRP, including setting up a monitoring committee with strong
participation from independent civil society organisations to closely follow the
implementation of the RRP and provide recommendations to the National Authority. In
addition, a number of measures include specific commitments to explicitly ensure thesystematic involvement of social partners and stakeholders in the implementation process.

Positive assessment(70)

Following the positive assessment of the Commission concerning the Hungarian RRP withthe finding that the RRP satisfactorily complies with the criteria for assessment set out inRegulation (EU) 2021/241, in accordance with Article 20(2) of and Annex V to that
Regulation, this Decision should set out the reforms and investment projects necessary forthe implementation of the RRP, the relevant milestones, targets and indicators, and theamount made available from the Union for the implementation of the RRP in the form of
non-repayable financial support.

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Financial contribution(71)

The estimated total cost of the RRP of Hungary is HUF 2 299 592 927 602, which equals
EUR 5 824 260 891 on the basis of the average EUR HUF ECB reference rate in the period
from 1 April 2022 to 30 September 2022. As the RRP satisfactorily complies with thecriteria for assessment set out in Regulation (EU) 2021/241 and, furthermore, as theamount of the estimated total costs of the RRP is higher than the maximum financial
contribution available for Hungary, the financial contribution allocated for Hungary’s RRP
should be equal to the total amount of the financial contribution available for Hungary.

(72)

In accordance with Article 11(2) of Regulation (EU) 2021/241, the calculation of the
maximum financial contribution for Hungary was updated on 30 June 2022. As such, in
accordance with Article 23(1) of that Regulation, an amount for Hungary not exceeding the
maximum financial contribution referred to in Article 11(1), point (a), of that Regulation
should be made available for a legal commitment by 31 December 2022, and an amountnot exceeding the updated maximum financial contribution calculated in accordance with
Article 11(2) of that Regulation should be made available for a legal commitment from
1 January 2023 until 31 December 2023.

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(73)

The support to be provided is to be financed from the borrowing by the Commission on
behalf of the Union on the basis of Article 5 of Council Decision (EU,
Euratom) 2020/20531. The support should be paid in instalments once Hungary has
satisfactorily fulfilled the relevant milestones and targets identified in relation to theimplementation of the RRP.

(74)

This Decision should be without prejudice to the outcome of any procedures relating to theaward of Union funds under any other Union programme than the Facility or to procedures
relating to distortions of the operation of the internal market that may be undertaken, inparticular under Articles 107 and 108 of the Treaty on the Functioning of the European
Union. It does not override the requirement for Member States to notify instances ofpotential State aid to the Commission under Article 108 of the Treaty.

HAS ADOPTED THIS DECISION:

1

OJ L 424, 15.12.2020, p. 1.

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Article 1
Approval of the assessment of the RRP
The assessment of the RRP of Hungary on the basis of the criteria provided for by Article 19(3) ofRegulation (EU) 2021/241 is approved. The reforms and investment projects under the RRP, thearrangements and timetable for monitoring and implementation of the RRP, including the relevant
milestones and targets, the relevant indicators relating to the fulfilment of the envisaged milestones
and targets, and the arrangements for providing full access by the Commission to the underlying
relevant data are set out in the Annex to this Decision.

Article 2
Financial contribution
1.

The Union shall make available to Hungary a financial contribution in the form of
non-repayable support amounting to EUR 5 811 147 7171. An amount of
EUR 4 639 429 967 shall be available to be legally committed by 31 December 2022. A
further amount of EUR 1 171 717 750 shall be available to be legally committed
from 1 January 2023 until 31 December 2023.

1

This amount corresponds to the financial allocation after deduction of Hungary’s
proportional share of the expenses referred to in Article 6(2) of Regulation (EU) 2021/241,
calculated in accordance with the methodology set out in Article 11 of that Regulation.

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2.

The Union financial contribution shall be made available by the Commission to Hungary
in instalments in accordance with the Annex to this Decision. The instalments may be
disbursed by the Commission in one or several tranches. The size of the tranches shall be
subject to the availability of funding.

3.

The release of instalments in accordance with the agreement provided for in Article 23(1)of Regulation (EU) 2021/241shall be conditional on available funding and a decision by
the Commission, taken in accordance with Article 24 of that Regulation, that Hungary has
satisfactorily fulfilled the relevant milestones and targets identified in relation to theimplementation of the RRP. In order to be eligible for payment, Hungary shall complete
the milestones and targets no later than 31 August 2026, subject to the entry into force ofthe legal commitments referred to in paragraph 1.

Article 3
Addressee
This Decision is addressed to Hungary.
Done at Brussels,

For the Council
The President

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