Budapest, Apr 29 (IANS): The government of Hungary is ready to settle its dispute with the European Commission over concerns about the rule-of-law situation in the country, Gergely Gulyas, Prime Minister Viktor Orban's chief of staff, said here.

On Wednesday, the Commission sent a formal letter to Hungary kick-starting a process that could lead to the freezing of European Union (EU) funds, reports Xinhua news agency.

In late 2020, EU adopted a mechanism that allows the European Commission cut funding to member states that violate the bloc's rule-of-law standards.

The government "welcomes" and has already studied the letter, Gulyas said in a statement on Thursday.

He said that the government does not consider the launching of the rule-of-law procedure justified and that there are issues on which it is not willing to compromise. These include Hungary's determination to stay out of the conflict in Ukraine.

Still, "there is nothing stopping it" from signing an agreement on the release of recovery funds, he said, referring to Hungary's 7.2-billion-euro ($7.56 billion) slice of the 800-billion-euro 'NextGenerationEU' recovery package, which the bloc has refused to sign off on for nearly a year because of rule-of-law concerns.

"The issues raised in the letter are all issues that we have been negotiating about for months with the Commission," Gulyas said.

There has been progress, he said, but "there are a number of points that remain open".

Hungary's government now has two months to respond to the Commission's letter and submit proposals to resolve the situation.

If the Commission is satisfied with the response, the so-called "conditionality mechanism" will be terminated.

If not, the process could continue for six to nine months, and could end with a proposal to the Council of the EU to suspend payments to Hungary.