Hungarian government submits 2020 budget bill to parliament

Finance Minister Mihály Varga submitted Hungary’s 2020 budget bill to parliament on Tuesday.

Before presenting the document to Speaker of Parliament László Kövér, the minister said the bill is designed to support families with a focus on implementing the government’s family protection action plan.

He highlighted increased support for families, the economy protection action plan, tax cuts and increased spending on security as the budget’s four main pillars.

Next year’s budget targets annual economic growth of 4 percent and a budget deficit of 1 percent of GDP, he said. The public debt is seen dropping to 65.5 percent of GDP by the end of the year and inflation is targeted at 2.8 percent, according to the figures released on Parliament’s website.

He said the government had once again drafted a balanced budget.

The government will spend an extra 224 billion forints (EUR 691m) on family support while the economy protection action plan will pump another 500 billion forints into the economy, Varga said.

Meanwhile, Kövér confirmed that lawmakers will vote on the budget on July 12.

The 2020 budget bill submitted to lawmakers targets a narrower deficit and more than doubles the size of reserves from this year.

The budget bill targets revenue of 21,424.7 billion forints and spending of 21,791.7 billion, producing a deficit of 367 billion.

The revenue target is 9.4 percent higher than the target in the 2019 budget while the spending side is 5.9 percent higher.

The 2020 deficit target is less than half the 2019 target.

The bill sets aside 488 billion forints in reserves, including 378 billion in the National Protection Fund and 110 billion for “extraordinary government measures”, more than double the total of 225 billion of reserves in the 2019 budget.

The cost of debt maintenance targeted in the bill is 1,078.5 billion forints, 9.8 percent above the 2019 target.

The bill targets VAT revenue of 4,967.8 billion forints, up 15.8 percent from the previous year’s target. Revenue from personal income tax is set to grow by 10.5 percent over the 2019 target to 2,608.9 billion.

The Prime Minister’s Office and its related institutions will altogether get 752.4 billion forints. The budget chapter on the office targets over 46.5 billion forints in revenues.

Parliament will have a budget of 37 billion forints.

In health-care spending, GPs will receive 139.5 billion forints. The government will spend 2,681.4 billion forints on the health insurance fund compared with 2,442 billion forints this year.

Spending on local governments will rise by 6 billion forints from this year’s 729 billion forints to 735 billion forints.

The interior ministry will have a budget of 724 billion forints. It will get to spend 862.9 billion forints on counter-terrorism measures.

Pension funding for women who choose to retire early will be 286 billion forints. Spending on old-age pensions will be more than 2,800 billion forints next year. Orphan support will decrease slightly to 29 billion forints and funding for widow’s pensions will be 356 billion forints compared with 357 billion this year.

The allocation in the chapter for a capital raise in the project company for the upgrade of the Paks nuclear power plant is 77 billion forints.

Government spending on sports and leisure activities is pencilled in at 228 billion forints.

The defence budget will be increased by over 100 billion forints to 616 billion forints, or 1.26 percent of GDP. In 2012, the government adopted a resolution in which it pledged to increase defence spending by 0.1 percent of GDP from 2016.

Meanwhile, Kövér confirmed that lawmakers will vote on the budget on July 12.