Hungarian minister of finance: EU’s euro billions ‘closer’

When the government’s commitments to the European Union are enforced, disputes with the EU over the recovery fund are expected to be resolved by mid-November, Mihály Varga, the finance minister, told a conference of economists in Szeged, in southern Hungary, on Friday.

As well as the economic crisis owing to the Covid pandemic and the war in Ukraine, political disputes are also having a major effect on Hungary’s economic policy, Varga noted. One such dispute is EU pressure on Hungary in respect of the recovery fund, he said. Varga said the government would have to amend next year’s budget. While 2022 and 2023 are expected to be “difficult years”, there is reason to hope that Hungary’s economic growth will be back on track by 2024, he added.

The government’s budget deficit is expected to be around 6.1 percent of GDP this year, up from the previously targeted 4.19 percent, owing to additional gas purchases to ensure the necessary reserves, he said. Inflation, skyrocketing prices of energy resources and raw materials, this year’s drought, and migration “show that the decade ahead will not be easy”, Varga said. “Those crises point to an unprecedented loan and financing crisis,” hitting countries with high debts the hardest, he added.

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While Hungary’s robust food industry can protect the country from a food crisis, its exposure to foreign energy resources makes it vulnerable on that front, he noted. The current energy price increase was an “unforeseeable” situation that “was impossible to prepare for”, he said.

Medium-term economic planning will therefore have to rely on energy efficiency, he said. Accordingly, the government has taken measures to cut gas consumption and reduce heating in public buildings, and has launched energy efficiency programmes, Varga said, citing an insulation programme for residential buildings as an example.

Meanwhile, the government’s crisis management programme is focusing on large corporations and small and medium-sized firms, he said.