Hungarian Prime Minister Viktor Orban said Friday that he would continue to block the EU's budget and coronavirus recovery fund over rule-of-law criteria, although his veto ally Poland signalled a possible compromise.

Budapest and Warsaw last month vetoed the EU's 1.8-trillion-euro ($2.1-trillion) budget and coronavirus rescue package over its tying of funds to respect for the rule of law.

Both governments are accused by Brussels of rolling back democratic freedoms, notably judicial independence in Poland and press freedom in Hungary.

Polish Deputy Prime Minister Jaroslaw Gowin said late Thursday that Warsaw could yield if a document is attached to the rule-of-law regulation to clarify how the criteria are applied.

Orban dismissed the idea and insisted Warsaw and Budapest have agreed to hold out on separating the funds from any rule-of-law conditionality.

"For us such a solution... that some kind of statement is attached to it, like some kind of reminder note pinned to a cardboard placard, will not work," Orban said during a public media radio interview.

He added that "the Poles cannot back out of the veto" after signing a deal with Hungary last week.

At their Budapest meeting, Orban and Polish counterpart Mateusz Morawiecki proposed decoupling EU payments from the row over the rule of law.

But Gowin said that Poland now wants certainty that the link between money and the rule of law only applies to issues related to transparent and fair use of EU funds.

A "binding interpretive declaration" from Brussels on the rule of law conditions could be enough to clinch a compromise, he told Polish media.

Hungarian leader Viktor Orban is digging in his heels over the EU budget
Hungarian leader Viktor Orban is digging in his heels over the EU budget AFP / Aris Oikonomou

Orban has portrayed the rule of law criteria as "blackmail" against member states opposed to immigration, and insisted Friday that it was the planned mechanism, not Hungary, that was holding up the package's approval.

"We can agree on the financial package but not on the political questions arising from the rule of law decree criteria attached to it," said Orban.

"As we must not waste time...the two things should be separated," he said.

Pressure on Orban grew this week as a close ally and prominent MEP from his ruling Fidesz party was embroiled in a sex scandal in Brussels.

Belgian police said Tuesday that it caught Jozsef Szajer, 59, fleeing an illegal sex party last week while in possession of ecstasy.

Szajer, who was the main author of Hungary's new ultra-conservative constitution after Orban came to power in 2010, resigned two days before the scandal erupted citing only "personal reasons".

Critics at home and abroad say the affair shows the moral hypocrisy of Fidesz, which paints itself as a Christian conservative party based on traditional "family values".

Orban said Friday he could "imagine" that the affair is "part of the pressure" applied on Hungary by external forces, but said he does not see any proof to link the scandal to the budget row.