Hungary has secured a political agreement with the European Commission on the release of €16.4bn in previously frozen EU funds, including both the grant and credit leg of the RRF money, after committing to a sweeping package of anti-corruption and rule-of-law reforms, Prime Minister Peter Magyar and European Commission President Ursula von der Leyen announced at a joint press conference in Brussels on May 29, state news agency MTI writes.

The deal unlocks roughly HUF6 trillion in funding, or around 13% of Hungary's annual budget, marking one of the most significant breakthroughs in the country's long-running dispute with Brussels over democratic standards and corruption concerns.

Under the agreement, Hungary will join the European Public Prosecutor's Office (EPPO) and strengthen the powers of its Integrity Authority, an anti-corruption body with limited scope set up by the previous government as one of the supermilestones. Budapest will also overhaul public procurement rules and gradually dismantle the controversial public-interest asset management foundations that Brussels has long viewed as vehicles for political influence and conflicts of interest.

At the press briefing, Magyar called the agreement a historic one and said bringing home EU funds had been one of the key promises of the campaign.

"Within less than a month, we managed to accomplish what [former prime minister] Viktor Orbán and his departing government failed to achieve over three or four years, or perhaps never intended to achieve, we can't say," he said.

The new government will introduce anti-corruption safeguards "even stricter" than those requested by the European Commission, such as tightening rules on asset declarations by public officials. Under the planned changes, false declarations would become a criminal offence punishable by up to two years' imprisonment, he added.

"We are declaring zero tolerance for corruption. We will eliminate any opportunities for those in power to divert public assets into their own pockets, or to their oligarchs, or to their family members," he stated.

Magyar claimed that the scale of corruption in recent years had been unprecedented, and that the EU had blocked the release of funds due to rule-of-law and corruption concerns rather than ideological disputes, as the outgoing cabinet claimed.

Magyar took a swipe at Hungarian President Tamas Sulyok, who earlier in the day turned to the Venice Commission for help after the prime minister called for his removal, a call he repeated during the press conference. 

Sulyok's office said "the head of state's removal for political reasons, and the resulting calls that are incomprehensible under the Fundamental Law (Constitution)" and asked the Venice Commission to "provide expert assistance" in resolving the situation.

Regarding the use of released funds, Magyar said they are expected to support transport, healthcare, environmental and social infrastructure projects, as well as SME financing.

Nearly €2bn is earmarked for new railway and suburban train procurement, while substantial resources are also expected to flow into electricity grid upgrades and renewable energy projects, and to address the housing crisis by building new rental housing and student dormitories, he continued.

Von der Leyen said the Hungarian government had made "clear commitments" in the fight against corruption and the restoration of the rule of law. She also pointed to symbolic gestures such as the formation of the new parliament on May 9, the return of the EU flag to the parliament building, and the playing of the European anthem during the inaugural session.

The head of the EU executive confirmed that €10bn would become accessible through the RRF facility once agreed reforms and investment milestones are implemented. Earlier reports suggested that the EU recommended that the Tisza government agree to let go of the credit leg of the financing scheme, but, as Magyar said, the government fought for every euro.

In addition, the European Commission has already released €4.2bn in cohesion funds linked to progress under the rule-of-law conditionality mechanism, and a further €2.2bn in cohesion funding could become available if Hungary completes reforms related to academic freedom and conflict-of-interest rules.

This includes the restructuring of universities run by foundations that had previously lost access to Erasmus and Horizon Europe programmes.

As part of the deal, Hungarian students will regain access to the Erasmus exchange programme from the next academic year, a move von der Leyen described as "an important symbol of European cooperation".

Magyar confirmed to reporters that the Matthias Corvinus Collegium (MCC) and other public-interest asset management foundations (KEKVAs) will be abolished by the end of August 2026, with their public-service functions either returned to the state or reassigned to new ownership structures.

Those foundations operating universities will undergo a transition period lasting until August 2027, due to their broader institutional responsibilities, including, in some cases, the management of hospital services alongside higher education.

Von der Leyen and Magyar stressed that the agreement is unrelated to Ukraine's EU accession process, amid speculation in Hungarian political circles that Brussels could tie funding decisions to Budapest's stance on enlargement and sanctions policy. This was one of the main accusations Fidesz levelled against the Tisza Party in the campaign.

Von der Leyen said investors were already responding positively to the reforms and that confidence in Hungary was beginning to return, potentially providing further momentum for economic recovery and institutional reform.

Markets did react positively to the news, although it was widely anticipated, with the forint and stocks rallying. The benchmark BUX gained 2.2%, led by a 3.3% rally in OTP, but smaller shares linked to business circles close to Fidesz also performed well, with 4iG up 3.8% and Opus rising 5.8% before the close of trading. The EUR/HUF pair was trading below 353, the strongest level in five years.

Tisza's supermajority has triggered a positive market reaction in the past two months, supported by expectations that improved EU relations under the new government, combined with signals of long-term fiscal stabilisation and potential discussions around euro adoption, could strengthen investor sentiment. Hungary's 10-year benchmark bond yield has fallen below Poland's, while the spread over German Bunds has narrowed to multi-year lows.

Analysts expect credit rating agencies to give the new government until the autumn to present a credible new fiscal path before taking any rating action. S&P, which currently rates Hungary just one notch above junk with a negative outlook, is also expected to maintain a wait-and-see approach in its scheduled review on May 29 after the bell, following Moody's move a week ago. Fitch will release its review on June 5.