EU unlocks €16.4 billion for Hungary as new government lifts veto on Ukraine arms reimbursements

Funds unlocked for Hungary

European Commission President Ursula von der Leyen announced on May 29 that the EU would unlock €16.4 billion of previously frozen funds for Hungary, citing progress in reforms under the new government of Prime Minister Peter Magyar. The package includes €10 billion from the Next Generation EU recovery fund, €4.2 billion in cohesion funds, and a further €2.2 billion tied to academic freedom reforms.

I can confirm that it is €10 billion that have been unfrozen or will be unfrozen from Next Generation EU, then the €4.2 billion from the cohesion conditionality and 2.2 billion for the academic freedom, which makes it €16.4 billion.

The funds are seen as critical for an economy that has practically stagnated for three years. The new government inherited a swelling budget deficit that the Commission estimates could reach 6.2% of GDP in 2026, following heavy pre-election spending by former Prime Minister Viktor Orban, who was ousted in an election last month.

Central bank holds steady

Hungary's central bank left its base rate unchanged at 6.25% on May 26, a decision that was widely expected. The bank noted a significant improvement in the inflation outlook, supported by strong gains in the forint. The currency has been boosted by market hopes that EU funds would be unlocked.

We will bring this money home, as we promised, to rebuild Hungary, to jump-start the economy, to restore and develop public services, and to strengthen the competitiveness of Hungarian companies and small and medium-sized enterprises.

Magyar said the deal demonstrated that his government's anti-corruption measures were paying off. Fighting corruption, which was rampant under the Orban government, had been one of the key conditions set by the EU for unfreezing the money.

Veto on Ukraine arms reimbursements lifted

In a parallel shift in foreign policy, Hungary's new government has lifted the veto imposed two years ago by Viktor Orban on partial EU reimbursements for weapons sent to Ukraine. The decision was announced Monday by Hungary's ambassador to the Political and Security Committee, according to six European diplomats cited by Politico.

The European Peace Facility (EPF), an extra-budgetary EU fund, provides for the reimbursement of roughly 40% of the value of arms that a member state sends to Ukraine from its own stocks. Because EPF decisions require unanimity, Orban had been able to block the mechanism through the EU's foreign policy decision-making process.

Backlog of €40 billion cleared

The blockage had led to an accumulated backlog of €40 billion in reimbursements, angering major donor countries such as Germany and the Netherlands. It also forced the EU to seek alternative solutions to ensure Ukraine did not run out of crucial weapons and ammunition at a time of maximum danger from Russian forces.

The decision to lift the veto will lead to the immediate release of €6.6 billion in reimbursements, with further payments to follow. The move reverses one of the most persistent obstacles to EU military support for Ukraine.

Broader diplomatic thaw

Beyond the financial and military support issues, the new government in Budapest has signaled a broader rapprochement with both Brussels and Kyiv. Hungary has also lifted its veto on a €90 billion EU loan to Ukraine and indicated it will no longer oppose Ukraine's EU candidacy. Additionally, Budapest plans to begin discussions with Kyiv on the rights of the ethnic Hungarian minority in Ukraine.

That is quite a sum, but the Hungarian people deserve it. Again, many, many thanks for the outstanding work that has been done.