Hungary to be buried in state debt?
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When Viktor Orbán came to power again after his landslide victory in 2010, his administration started by announcing the start of the fight against state debt. Orbán said that state debt, reaching 80 pc of Hungary’s GDP, was close to debt slavery. Therefore, the government introduced measures and started to reduce state debt successfully between 2010 and 20220. However, the debt rose to 80 pc by the end of 2020. Did Hungary lose the fight against state debt, or is there a more sophisticated answer to this question?
According to Helló Magyar, Hungary’s state debt was approximately 66 pc in 1990. That increased to a record-high 88.7 pc by 1993, but it started to fall as the economy slowly recovered after the shock caused by privatisation, the lost eastern markets, and becoming part of global capitalism. State debt reached its second inflexion point during the first Orbán administration, becoming a reference point later for Fidesz and its economic experts.
After the Socialists came back in power in 2002, state debt grew again.
It reached its second peak in the post-1990 period in 2009/2010 since the global financial crisis hit Hungary hard. During the second, third, and fourth Orbán government, state debt decreased again until 2019/2020, when the coronavirus epidemic and the lockdowns broke that trend. By the end of 2020, it reached 80.1 pc and started to decrease. Below, you can see a graph summing up all this information:
In the following graph, you can compare how much money the debt increasing and decreasing meant. Currently, Hungary’s state debt is HUF 42,334 bn (EUR 110 bn).
What are the factors that affect state debt?
Helló Magyar argues that Hungary’s economic policies and the global environment strongly influence state debt. In the current case, the following factors are the most important:
weakening forint, the interest on the debt, the 2021 economic fallback, and the money distribution before the 2022 general elections.