Fiscal Council raises no objections to draft budget amendments, Matolcsy’s signature missing

The Fiscal Council raised no objections to the government’s draft of amendments to the 2023 budget, but acknowledged risks to achieving fiscal targets in an opinion issued on Tuesday.

The Council said there were “no such fundamental objections that would justify signalling disagreement with regard to the draft amendments” in a resolution.

“Russia’s war against Ukraine, the sanctions introduced in response, the explosive increase in energy prices, and uncertainty connected to the external economic environment present risks to the achievability of fiscal targets laid down in the draft decree,” the Council added.

Addressing the amended 1.5 percent GDP growth target for 2023, the Council said the assumption would depend “to a significant degree” on trends on foreign markets, as it would require exports to increase at a faster pace than imports. It said that the target, which is in line with the forecasts of international organisations, is achievable “if the impacts of the war do not worsen and other risks do not strengthen”, adding that a “conservative policy” with regard to using fiscal reserves is necessary.

The Council acknowledged that the amendments enable the government to achieve the main social-welfare policy goals, namely keeping utility prices low up until average consumption, supporting families, protecting the elderly and strengthening Hungary’s defence.

Further, they create an opportunity for keeping pensions in line with the higher-than-expected rate of inflation, partially compensating public institutions for higher energy costs and financing the higher interests on state debt.