Head of the PM’s: Foundations of economy stable, strong

Photo: MTI/Illyés Tibor

The foundations of the Hungarian economy are “stable and strong” despite “difficulties reflected by the markets or the forint rate”, Gergely Gulyás, head of the Prime Minister’s Office, told a regular weekly press conference on Thursday.

Hungarian economy

Gulyás said that Hungary’s industrial output had been 9.4 percent higher in May than in the same month last year. He added that the country had reached full employment, government revenues had increased and “a large part of them will probably prove to be under-planned”.

He insisted that the government had taken all measures to ensure stability of the budget, and the deficit targets could be met both this year and in 2023.

Gulyás said the exchange rate of the forint was heavily influenced by energy prices, primarily the price of gas, adding that the euro had also weakened against the dollar. “All that is caused by the war and the sanctions (against Russia) from which the whole of Europe suffers,” he said, noting that even Germany’s trade balance was in the red.

Concerning inflation, Gulyás said Hungary was “doing somewhat better” than other countries in the region, but added that the exchange rate of the national currency was “somewhat worse”.

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Hungary and the EC

On another subject, Gulyás said the government had made progress in talks with the European Commission concerning Hungary’s access to the EU’s recovery funds and adopted the EC’s positions in four areas.

The government will reduce the ratio of public purchases with a single bidder below 15 percent, and ensure legal remedy at a law court against the prosecutor’s decision in corruption cases, Gulyás said.

The government will also ensure broader social consultations before submitting draft laws to parliament, and will reduce the number of fast track legislative procedures, he said.

The government has agreed to dedicate a significant part of community funds to efforts aimed at increasing Hungary’s energy independence, Gulyás said. Once there is an agreement on recovery funding, Hungary could also apply for an EU loan before August next year, which could entirely be spent on building energy independence, he said. The government is aimed at “reaching an early agreement through adopting the commission’s recommendations”, Gulyás added.

The minister slammed Hungary’s leftist MEPs for “intensely lobbying” to prevent an agreement on the recovery fund, and insisted that the European Parliament’s Wednesday resolution on Hungary was proof of such efforts. He insisted that the leftist parties would “prevent the country from accessing funds to increase the wages of teachers or health care workers”. “This, in a wartime situation, is unprecedented irresponsibility,” he said.

The government is considering ways to reduce energy dependence, such as restarting now defunct blocks at the Matra Plant, Gulyás said, adding that three new gas turbines could be constructed in the next 2-3 years, while the government will also propose increasing the life span of the older nuclear blocs at Paks.

The government is planning to increase domestic gas extraction from the current 1.5 billion cubic metres to 2 billion, Gulyás said. He said that increasing gas prices now made profitable extracting shale gas at Mako, in southern Hungary. Hungary’s current solar plant capacity of 3 gigawatts could also be doubled before the end of next year, the minister added.