State to bail out EU grant winners hit by weakened forint

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Hungary’s National Development Agency (NFU) will compensate recipients of European Union development funding for higher costs resulting from a weakening of the forint, under a decree issued by the National Development and Economy Ministry in the latest issue of official gazette Magyar Kozlony.

Winners of development funding whose grant money is insufficient to cover the cost of their investment because of a weaker forint may apply for compensation before taking receipt of the last part of the funding. However, several conditions are attached. Contracts in foreign currency for equipment or technology and its delivery must account for at least one-quarter of the entire project cost. The rise in costs resulting from the weaker forint must be at least 4pc of total costs or no less than HUF 5m, and more than 80pc of the project’s cost must be covered by grants.

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JD says:

January 12, 2010 at 2:46 pm

Don’t get me wrong, I am sure there have been impacts due to the weakening Forint, however, I am damn glad to see these sensible conditions attached for the top-up.

Afterall;

1. If they were granted in Euros, they may have even gained by the weakened Forint

2. It would mean that they are investing outside of Hungary with the grant otherwise the costs would be fixed in Forint and subject to inflation and any other daft tax this government imposes.

3. This should be a grant for a project to stimulate it and not a free lunch, the 80% grant to project cost ratio seems appropriate in this case.

Sounds like there will be some genuine cases and also some ‘good excuse to get some more cash’ cases. I hope the latter are filtered out.
Timeframe says:

January 12, 2010 at 4:53 pm

Sounds like another convoluted fraud scheme to me.
My assumption is based on the fact that the forint has strengthened relatively speaking against the euro, pound, and dollar in recent times.
It would also depend on when the grants where authorized and paid. (Exchange rates etc.)
Second thoughts.This is definitely just another scam for the administrators to squeeze the last drop
of money from the EU funding whilst nobody (hopefully) is looking.