EU Budget Hungary 2014-2020 update November 2014

HUNGARYUPDATE | 11| 2014

EU BUDGET2014 | 2020

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Global Europe

Administration

Compensation

Security & Citizenship

€ 199.828

€ 959.988in current prices: € 1.082.555

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The five European Structural and Investment Funds;

| The European Regional Development Fund

| The European Social Fund

| The Cohesion Fund

| The European Maritime and Fisheries Fund

| The European Agricultural Fund for Rural Development

ESI FUNDSTHE 5

| EU Member States are required to draw up and implement

strategic plans with investment priorities covering the five ESI

Funds.

| These Partnership Agreements (PAs) are negotiated between the

European Commission and national authorities, following their

consultation of various levels of governance, representatives from

interest groups, civil society and local

and regional representatives.

AGREEMENTSPARTNERSHIP

Under the regional guidelines, areas which have a GDP per capita

below 75% of the EU average are eligible in priority for regional

investment aid, as the main purpose of regional aid is to foster the

development of the less advantaged regions of Europe.

| Under the new map, regions accounting for 70.4% of the population of

Hungary fall under this category and will continue to be eligible for regional

investment aid at maximum aid intensities varying between 25% and 50%

of the eligible costs of the relevant investment projects.

AID PERCENTAGESMAXIMUM

Under the guidelines, other regions in a relatively disadvantaged

situation in relation to the EU or national average can also be made

eligible provided that they comply with certain criteria.

As these regions are less disadvantaged from a European perspective

than areas with a GDP per capita below 75% of the EU average, both the

geographical scope and the aid intensity are limited. 6.33% of the

Hungarian population living in the region of Pest will be eligible for regional

investment aid under this category, at maximum aid intensities varying

between 20% and 35%.

AID PERCENTAGESMAXIMUM

CU

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STotal number

of OP s submitted

per country

Countries have

their OP s

adopted:21 OP >Denmark

1 OP >Lithuania

| Partnership Agreement Adopted 26 – 08 – 2014

| 7 Operational Programme’s submitted

| Adoption of OP’s by European commission in Q4 2014

| Exp.1st grant calls Q1 2015 for funding priorities related to OP’s

OPs should be submitted by Member States within 3 months following the

submission of the Partnership Agreement.

The Commission makes observations within 3 months and adopts the OP

no later than 6 months from the date of its submission.

PLANNING

The PA focuses on the following five main national development

priorities as already identified in the Hungarian National

Development and Territorial Development Concept.

| Improving the competitiveness & global performance of business sector

| Promoting employment through economic development, employment,

education and social inclusion policies, taking account territorial disparities

| Enhancing energy and resource efficiency

| Tackling social inclusion and demographic challenges

| Implementation of local and territorial development aimed at promoting

economic growth

PRIORITIESFUNDING

The ESI funds will assist Hungary in strengthening social, economic and territorial cohesion and in particular achieving national targets of EU2020 and its flagship initiatives:

|• R&I expenditure in relation to GDP is to increase from 1.3% (2012) to 1.8% (2020) levering private R&I spending from 0.34 to 0.8 GDP.

|• In relation to energy objectives, ESI Funds will provide a significant contribution to reducing energy consumption in buildings and enterprises and facilitate achieving the target of 14.65% share of renewable energy in total energy consumption by 2020 (9.6% in 2012).

RESULTSEXPECTED

•| Concerning education, the ESI Funds will contribute reaching the 30.3%

target of people acquiring higher education degrees (30-34 age cohort)

and reduce early school leaving to 10% (11.8% in 2012) by 2020.

•| The funds aim to improve the Hungarian business environment by

reducing administrative burden for businesses and improve investors'

confidence.

RESULTSEXPECTED

In 2014-2020 Hungary is allocated around €21.9 billion (current prices) for Cohesion Policy (ERDF, ESF, Cohesion Fund) including €49.8 million for the Youth Employment Initiative and €361.8 million for territorial cooperation.

| Additional €3.45 billion will be devoted to development of the agricultural sector and rural areas from the European Agricultural Fund for Rural Development (EAFRD).

| The allocation for European Maritime and Fisheries Fund (EMFF) amounts to some €39 million.

ALLOCATIONSFINANCIAL

| € 15 billion for less developed regions:

Közép- Dunántúl, Nyugat-Dunántúl, Dél-Dunántúl, Észak-Magyarország,

Észak-Alföld and Dél-Alföld

| € 463.7 million for the more developed region (Közép-Magyarország)

| € 6 billion under the Cohesion Fund

| € 361.8 million for European Territorial Cooperation

| € 49.8 million for the Youth Employment Initiative

Of this, the ESF will represent € 4.7 billion, 30,46% of the Structural Funds

resources.

BREAKDOWNFINANCIAL

1. Research, technological development and strengthening of

innovation.

2. Access to information and communication technologies, technologies

to improve the quality of use.

3. The small and medium enterprises, agriculture, fisheries and

aquaculture sector to improve competitiveness.

4. Towards a low carbon-emission economy to shift support from all

sectors.

5. Adapting to climate change adaptation, risk prevention and promotion

management.

GOALSTHEMATIC

6. Promoting environmental protection and the efficiency of resource

use.

7. Promoting sustainable transport and removing bottlenecks in key

network infrastructures.

8. Employment and labor mobility.

9. Combating poverty and promoting social inclusion.

10. Education, skills and throughout the lifelong learning project.

11. Enhancing institutional capacity and an efficient public administration.

GOALSTHEMATIC

Cohesion policy will be delivered through 7 operational

programmes (OPs), meaning a simplified programme architecture

compared to the 2007-13 period (15 OPs):

•| 2 national OPs co-financed by ERDF and ESF (Economic Development

and Innovation OP, Human Resources Development OP)

•| 2 national OPs co-financed by ERDF and CF (Integrated Transport OP,

Environment and Energy Efficiency OP)

ARCHITECTUREPROGRAMME

•| 1 national OP co-financed by ESF and CF (Public Administration and

Services OP)

|• 2 territorial OPs co-financed by ERDF and ESF; one covering all less

developed regions and the other the more developed region of Central

Hungary

Moreover there is 1 Rural Development Programme (financed by EAFRD)

and 1 Fisheries programme (financed by EMFF).

ARCHITECTUREPROGRAMME

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THEMATIC OBJECTIVE& BY FUNDALLOCATION BROKEN DOWN BY

ALLOCATED FUNDS

OPERATIONAL PROGRAMMES

Operational Programmes Abbreviation

Economic Development OP EDOP

Transport OP TOP

Social Renewal OP SROP

Social Infrastructure OP SIOP

Environment and Energy OP EEOP

State Reform OP SROP

Electronic Administration OP EAOP

West Pannon OP WPOP

South Great Plain OP SGPOP

North Great Plain OP NGPOP

Central Hungary OP CHOP

North Hungary OP NHOP

Central Transdanubia OP CTOP

South Transdanubia OP STOP

Implementation OP IOP

THEMATIC OBJECTIVE& BY FUNDALLOCATION PERCENTAGES BY

OPERATIONAL PROGRAMMES