Monitoring EU spending in Hungary

Twenty years ago, over half of the EU budget went to support the agricultural sector. For a long time, the Common Agricultural Policy was the single largest item in the budget. In the latest financial framework for 2007-13, there appears a change in emphasis with the
largest proportion of funds being used for ‘competitiveness and cohesion’. Increasingly, the programmes that support regional development absorb the largest amounts. The main policy objectives of these cohesion and convergence programmes are to stimulate growth and competitiveness in economically disadvantaged regions by encouraging investment, job creation and improving the infrastructure.

The allocation to Hungary for 2004-06 was EUR 2,837 million, and a further EUR 22,395 million is expected for the current 2007-
2013 programming period (European Commission, 2006). It is well known that the majority of these development funds are spent and, at 82%, Hungary’s ‘absorption rate’ was the highest amongst the new member states in 2007, almost on par with the EU-15’s 84% ( Euractiv, 2008). These spending rates regularly make the headlines in Hungary and elsewhere in Central and Eastern Europe. What is less well studied or discussed is the question of how effective these resources are in reaching longer-term development goals, and what methods are used for allocating these funds. This is despite the fact that new member states were required to establish new
structures and procedures and adhere in both letter and spirit to the practices of ‘partnership’, which constituted significant departures from previous administrative practice.

Whilst then the headlines focus on good and bad absorption rates, there are real risks that ineffective national policy frameworks, ‘weak implementation capacities, and inexperience with … development partnerships … [lead] the new member states to adopt approaches to the EU funds that are formalistic and mechanical, rather than truly ‘developmental’’ (Marinov et al, 2006: 7). The issue of ‘spending development monies well’, rather than merely spending, raises a multitude of practical and political questions concerning the nature of programming, management and evaluation, along with significant normative considerations on transparency, accountability and democratic oversight.