Govt official: Govt to allocate HUF 670 bn to protecting utility price caps

Photo: MTI/Kovács Tamás

The draft budget the government submitted to parliament on Tuesday includes a 670 billion forint (EUR 1.7bn) fund aimed to protect Hungarians from gas and electricity price increases, Péter Benő Banai, a state secretary of the finance ministry, told commercial Hír TV late on Wednesday.

In response to the war in neighbouring Ukraine, defence spending will be raised to 2 percent of GDP in 2023, in compliance with Hungary’s NATO commitments, Banai said.

According to the draft budget, family allowances will come to 3,225 billion forints in 2023, 450 billion higher than this year,

he said. Banai said local governments will be facing utility price increases as the the utility price caps will be scrapped for companies and municipalities in next year’s budget. At the same time, they will also see increased revenues to the tune of 100 billion forints (EUR 252 million) as the business tax cuts for SMEs will also be lifted, he said.

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While governments before 2010 imposed austerity measures directly on households, the Fidesz-Christian Democrat government is keeping wages, pensions and family allowances level while burdening the sectors that have had extra profits, he said.

Additional resources left with families and companies during the pandemic meant hundreds of billions of extra profit for banks, and growing inflation and base rates further boosted the sector, he said. The government is now asking the sector to re-allocate some of that profit to cover public spending, he said.

The draft budget was prepared in consideration of the effects of the war in Ukraine,

he said. The government expects growth to be around four percent while high energy prices and interest rates continue to weigh on the economy, he said. The budget is creating a 170 billion forint reserve for eventualities, he said.