Changing Intermediary System of Repayable EU Funds in Hungary (2007-2013, 2014-2020)

Hungary was among the first member states where financial instruments of the EU were introduced in lager scale and scope in 2007. However, in the new development phase (2014-2020) experiences of the delivery system have been just partly applied. The renewed, centralized model has a lower level diversity in terms of the type of financial institutions responsible for financial intermediation. Despite their numerous advantages the structural changes hold many risks on growth and on local economic development as well, since the embeddedness of the financial intermediaries in local economies and their diversity are among the core features to provide the properly customised financial services for the targeted enterprises. This institutional change causes a rapid spending of repayable subsidies but hindering the delivery of the original objectives of the cohesion policies. The intermediary system territorially does not give priority to the disadvantaged regions, furthermore contact points are concentrated on urban areas with higher level of economic growth. Beside this, the microcredit objectives cannot be put into practice, the average credit amount increased sixfold in the new development period.