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Hungary sees no obstacles to signing an agreement with Brussels about the release of EU recovery funds to Hungary, Prime Minister Viktor Orban's chief of staff said on Thursday.

The European Commission has been withholding its approval to pay out recovery money to Poland and Hungary because the two countries have yet to address EU recommendations on the rule of law.

The EU's executive also sent a formal letter to Hungary on Wednesday, officials said, the first step in a fresh offensive to safeguard democratic checks and balances that could freeze funds for Prime Minister Viktor Orban over corruption risks. read more

Orban's chief of staff Gergely Gulyas told a briefing the government studied the letter, and he was optimistic about an agreement on the release of recovery funds.

"We have studied the Commission's letter, there is no obstacle to signing the agreement on the recovery fund, as the issues raised in the letter are all issues that we have been negotiating about for months with the Commission," Gulyas told a briefing.

"There is no point where we don't have a shared position, or where we wouldn't have found an acceptable solution."

The European Commission did not immediately respond to a request for comment.

Gulyas said Hungary agreed with an EU proposal to reduce the share of public procurement tenders with a single bidder, and was ready to reduce the share of these contracts below 15%.

"There are also expectations with regard to abuses with EU funds and we have found a solution here as well, which could be sufficient for the Commission," he added as another example.

"I think the common will is there (to sign an agreement), we hope the courage is there as well."

Senior EU officials said the case launched on Wednesday focused on systemic faults in Hungary's public procurement that failed to prevent single bidding, conflict of interests and the risk of corruption.

"Serious concern" about the functioning of Hungarian authorities managing EU funds and controlling how Orban's government spends the money was aggravated by limitations on effective investigation and independent prosecution, they said.

Hungary had irregularities in nearly 4% of its spending of EU funds in 2015-2019, according to the bloc's anti-fraud office OLAF, compared to an EU average of 0.36%. (Reuters)