Finance minister: Deficit, state debt to fall further — UPDATE

Mihály Varga Hungarian Finance Minister Photo: facebook.com/VargaMihalyKepviselo

The government will continue to improve budgetary balance, and expects to have budget deficit down at 4.9 percent and state debt at 76.1 percent of GDP by the end of the year, Mihály Varga, candidate for finance minister, told parliament’s budgetary committee on Thursday.

The budget will have to be amended to maintain deficit target, in view of the changes to the economic environment due to high inflation, rising energy prices and the war in Ukraine, he said.

The government aims to preserve stability, keep the economy on a safe growth path and protect earlier achievements such as family allowances,

Varga said.

Read also: Committe hearing: The war also posed a danger to physical, material and energy security, says Rogán

The draft budget for 2023 will be submitted early next month, he said, with an estimated growth of 3-4 percent of GDP and the deficit expected to fall to around 3.5 percent and state debt to 73.8 percent of GDP, he said. Responding to a question, Varga said

next year’s budget was planned with a 5.7 percent inflation.

The government has already started improving budgetary balance, he said: it curbed expenses by 350 billion forints (EUR 910m) and postponed investments worth 700 billion.

Thanks to the government’s successful handling of the coronavirus pandemic, Hungary is now considered one of the fastest-growing countries in the bloc, Varga said. The investment rate was the second-highest in the EU last year, with investements totalling 12,000 billion forints, he added. Varga said

the government did not plan austerity measures or tax raises but “mulling other incentives”.

Responding to a question on whether the government would “allow local governmnets to take out loans”, Varga said the government would continue to review the local authority’s ability to pay back the monies before approving it. This year, 45 requests have already been approved, he said.

The committee approved Varga’s nomination with 11 votes in favour and five abstentions.