budget

Socialists slam 2023 ‘budget of uncertainty’

TóthBertalan

The opposition Socialist Party has slammed the government’s 2023 budget passed by lawmakers on Tuesday, calling it “a budget of uncertainty and pillage”.

Bertalan Tóth, the party’s co-leader, told a press conference that the last three months had proved that ruling Fidesz “has deceived its voters”.

The Socialists had submitted multiple amendment proposals to the draft budget, he said, noting that his party has called for more funding for health care and higher wages for hospital workers and teachers. The Socialist parliamentary group had also pushed to exempt local councils from having to pay market utility prices and called for pension increases, he added.

Since Fidesz had rejected these proposals, the Socialists did not support with their votes next year’s budget which Tóth said would threaten the livelihoods of millions.

Zoltán Vajda, the (Socialist) head of parliament’s budgetary committee, said the budget contained “dire austerity measures”, arguing that the taxes on excessive profits would be passed on to customers, the changes to the itemised tax for small businesses (kata) were actually a tax increase, and the caps on household utility bills “have basically been gutted”.

He said the 5.2 percent inflation rate, the 4 percent GDP growth rate and the euro exchange rate of 375-377 forints per euro envisaged in the budget were “already unrealistic”.

Read alsoParliament passes 2023 budget

Socialists: Hungary’s next year’s draft budget ‘unsustainable’

The 2023 draft budget is “unsustainable” and “fictitious”, the head of parliament’s budgetary committee, of the opposition Socialists, said on Wednesday.

Zoltán Vajda told an online press conference that the inflation figure included in the budget proposal would be impossible to maintain. “Even the central bank does not believe that inflation will be halved at 5.2 percent next year and projects 8-9 percent instead,” he added.

The budget has been calculated with 4 percent GDP growth for next year, yet Márton Nagy, the minister of economic development, talks about the threat of a recession in Hungary, Vajda said.

The euro exchange rate of 370 against the forint projected in the budget is unsustainable, he added. European Union resources of 2 000 billion forints (EUR 5bn) have been budgeted for 2023, but if these monies fail to arrive, the budget will collapse, he said.

The government refuses to cut its own costs but wants to save costs on the people by introducing taxes on extra profits for companies, which they will pass on to customers, he said. Vajda said the government’s economic policies had no credibility.

He urged the government to introduce anti-corruption measures demanded by the EU, to introduce the euro and to take effective steps to dampen the effects of a subsistence crisis.

Retail sector Hungary Aldi
Read alsoTrade union: shops should close on Sunday afternoons in Hungary

Finance minister Varga: Opposition proposals would boost spending by EUR 11.5 bn – UPDATE

Proposals submitted by the leftist opposition to next year’s budget would increase spending by 4,600 billion forints (EUR 11.5bn) and require tax hikes amounting to 3,240 billion forints, the finance minister said on Facebook on Monday.

Mihály Varga said the 436 opposition proposals would involve changes worth approximately the same amount the government would allocate for family assistance, and the utility cut protection and defence funds.

The leftist opposition would increase the public burden by 3240 billion forints, the proposals including introduction of a “carbon tax” of 200 billion forints, as well as corporate tax increase aimed at collecting an extra 2,360 billion forints, Varga said.

According to Varga, the opposition proposals are aimed at “eating up” budget reserves, through spending 1,900 billion forints as opposed to the originally reserved 1,260 billion forints.

“Our purpose is to preserve our achievements and maintain stability even amid a wartime crisis,” Varga said, adding that passing the opposition proposals into law would result in a higher deficit and state debt.

As we wrote earlier, utility price cuts and defence spending are the factors of economic policy defining the 2023 budget, Finance Minister Varga said in parliament, presenting the 2023 draft budget, details HERE.

Hungarian Defence Minister: ‘Peace requires power’

Heroes' Day in Hungary

“For the first time in a long period, Hungary now has a national strategy within an alliance but with full sovereignty,” Defence Minister Kristóf Szalay-Bobrovniczky said in an interview published by the weekly Mandiner on Thursday.

On future tasks, the minister said “peace requires power”, adding that next year’s budget would provide “sufficient guarantees” for his portfolio through the new defence fund. He said the country’s defence spending would reach 2 percent of GDP in 2023, a ratio which would be maintained in years to come.

Szalay-Bobrovniczky said the government had been “prudent” to start the military reform years ago, which, in light of the war in Ukraine, was a “considerable advantage” on competitors in the region. Further developments will focus on staffing and their remuneration, he added.

The minister also confirmed that Hungary would maintain its earlier commitments to NATO. He warned, however, that being a member of that alliance “is not enough in itself”. It is crucial that Hungary has a “voluntary, well-trained and equipped, large national military” which is “confident, able and respectable”.

Concerning the war in Ukraine the minister said “this is not Hungary’s war and we will stay out”. Hungary supports peace and will work to ensure that “the bloodshed in Ukraine is at last stops and talks start”.

Viktor Orbán Nokia handy old technology
Read alsoYou would never guess how old PM Orbán’s mobile phone is!

Finance Minister: Hungary’s 2023 budget dedicated to utility price cuts, defence

varga mihály finance minister hungary

Utility price cuts and defence spending are the factors of economic policy defining the 2023 budget, Finance Minister Mihály Varga said in parliament on Wednesday, presenting the 2023 draft budget.

The government maintains a disciplined fiscal policy with an aim of preserving stability and improving balance indicators, he said. Measures to increase revenues were paired with those cutting expenditures to cut state debt and the deficit, he said.

Draft budget

The draft budget calculates with GDP growth of 4.1 percent and has a 3.5 percent-of-GDP target deficit. It sees state debt falling to 73.8 of GDP and puts inflation at 5.2 percent for next year, he said.

The draft budget contains a HUF 670 billion (EUR 1.7bn) fund to preserve the utility price caps, and a HUF 842 billion (EUR 2.13bn) defence fund, he said.

The former was set up so that Hungarians will not have to “pay the price of the war and Brussels’ sanctions policy”, and the latter “because preserving Hungary’s peace and security is not subject for discussion”, he said.

No extra burden for Hungarian citizens

Hungarians will not bear extra burdens for the funds as they will be financed form the windfall taxes levied at sectors turning excessive profits in the past years, he said.

Meanwhile, Varga noted that the 13th consecutive budget of the Orbán government is facing an uncertain environment “unprecedented since the economic crisis of 2008”.

The government is committed to following the values it had signed up to earlier: to independent, value-based politics and economic policy representing the interests of Hungary and Hungarians, he said.

Successful emergence from crisis and new challenges

Hungary has emerged successfully from a health and economic crisis with a 7.1 percent growth rate in 2021 and 8.2 percent growth in the first quarter of 2022, he said. The number of jobholders is at an all-time high and investments are growing, he said.

The war in Ukraine brought new challenges and an even more uncertain environment, he said. The budget takes into account the impact of the sanctions on Russia, the war-related energy crisis and inflation and the economic crisis in Europe, he said.

Despite those challenges, the government will keep its promise to use resources to bolster the goals most important for Hungarians such as family support, pension protection, preserving the achievements of the utility cost cut scheme and strengthening security, as well as preserving and creating jobs. Keeping the economy growing is also a priority, he said.

budapest balloon
Read alsoGet a bird’s eye view of Budapest! – PHOTOS

Budapest mayor: Orbán cabinet plans to pass on ‘severe austerity’ to local councils

budapest council Karácsony gergely mayor

The government’s 2023 draft budget would pass on the responsibility for enacting “severe austerity measures” to local councils, Gergely Karácsony, the mayor of Budapest, said on Monday, adding that the opposition parties plan to submit a package of amendments.

Karácsony told a press conference that the opposition proposals were aimed at ensuring the operability of municipalities “in these difficult times”.

It is crucial for Budapest to get the package passed, but the proposals would also ensure “important opportunities” for all localities, Karácsony said after talks with opposition representatives.

The government, he added, lacked the courage to enact the austerity measures itself.

Outlining the details of the opposition proposals, Erzsébet Gy. Németh, deputy leader of the Democratic Coalition, said localities’ “solidarity” tax should be reduced to 2019 levels, when Budapest had to pay an annual 10 billion forints (EUR 25m). In 2022, Budapest is expected to pay 36 billion forints, and 56 billion next year if the government’s draft is passed unchanged, she said.

Next year, Budapest will have to pay a much larger sum for energy as municipalities have been removed from the energy price-cap scheme, Gy. Németh said, and suggested that the electricity produced by Budapest’s waste incinerator should be used for public lighting.

Rebeka Szabó, MP of the Párbeszéd party, said the vehicle tax should be returned from central coffers to the municipalities, and localities should also be given 25 percent of the excise tax on fuels for the maintenance and resurfacing of roads. Also, the central budget should pay out 6 billion forints to Budapest for the renovation of the Chain Bridge, a sum the government had earlier pledged to contribute, she added.

Zoltán Vajda, Socialist head of parliament’s budget committee, proposed that the government and the city of Budapest should take an equal share in financing the city’s public transport, and called for funds for the city to buy new vehicles, adding that monthly public transport passes should be exempted from VAT.

Answering a question concerning an earlier proposal to introduce a fee for drivers during the rush hour, Karácsony said the city council would launch consultations with residents in September, but added that such plans were “not timely in the current situation” and he would not support such a proposal.

As we wrote before, the Hungarian government plans extremely high tax revenues – who will pay?

Orbán cabinet: the closer a country is to the war, the higher inflation is there

Market in Hungary

It is primarily “the Hungarian people’s wallets” that need to be spared from war inflation, government spokeswoman Alexandra Szentkirályi told public news channel M1 on Monday.

Szentkirályi said there was a clear link between the outbreak of the war in Ukraine and high inflation, which was why the government had looked into how it can use its own tools to help people.

“We must prevent a situation where people are worse off, where businesses are in worse shape and where we risk the achievements that have allowed many people to have jobs and families to feel safe,” Szentkirályi said.

She also said she expected a “fierce battle” with Brussels when it came to the issue of sanctions. As a European Union member state, Hungary has an interest in agreeing on a joint European position, but this cannot supersede the government’s goal of representing the Hungarian people, she said. If the EU’s proposed sanctions are not good for Hungarians, the government will make that clear, Szentkirályi added.

“If the original proposal for the oil embargo would have been equivalent to Europe shooting itself in the foot, the gas embargo would practically be akin to a shot in the lungs,” Szentkirályi said, arguing that European countries would not be able to properly substitute Russian gas imports.

Concerning the taxes on extra profits introduced by the government, Szentkirályi said the measure had not been introduced for the businesses it applies to not to comply with it. She noted that the government could order a consumer protection review of any company that tries to transfer the extra burdens to consumers.

Meanwhile, Szentkirályi told public broadcaster Kossuth Radio that the closer a country is to the war, the higher inflation is there. Estonia is experiencing inflation of 20 percent, Latvia and Lithuania have seen their inflation rates exceed 16-18 percent and inflation is also higher in Slovakia, Bulgaria, Poland and the Czech Republic, she said.

Szentkirályi said the government had decided to extend price caps on food and petrol until October and the loan moratorium and cap on mortgage rates until the end of the year with a view to shielding Hungarians from the effects of war inflation.

Fidesz proposes cutting state funding for parliamentary groups

Budapest Parliament Hungary Danube

The ruling Fidesz and Christian Democrat parties are submitting a bill on cutting state funding by 3 billion forints (EUR 7.5m) for opposition parliamentary party groups and by 2 billion forints for their own groups during the current parliamentary cycle, the group leader of Fidesz said on Tuesday.

Through the “trickery of sending six party groups to parliament”, the left-wing parties would cost much more in the forthcoming cycle than they did in the previous one, even though they lost 800,000 voters and ten seats after the April 3 general election, Máté Kocsis said.

The left-wing parties’ demand for an extra 3 billion forints is “unfair”, fails to reflect the voters’ will, and should not be supported from either the fiscal or the political points of view, he said.

Kocsis noted that the monthly state funding for a pro-government MP amounted to 2.2 million forints and for an opposition MP to 3.1 million forints in the previous cycle. If the system were left unchanged, he said, the monthly funding would increase to 2.6 million forints and 4.5 million forints, respectively, he said. As a consequence, the parliamentary groups would cost the taxpayers 6 billion forints more in four years than in the previous cycle, he said.

The governing parties will table the bill next Tuesday. Once approved, the new rates will take effect on January 1 next year, he said.

Hungary repays 1.2 billion of US dollar of debt

Hungary has repaid 450 billion forints’ worth of debt, the finance minister said on Tuesday.

Mihaly Varga said on Facebook that after having issued a bond oversubscribed twofold last week, Hungary redeemed 1.2 billion of US dollar bonds.

“Hungary’s public debt maturity is now more favourable and its financial stability is now stronger as a result,”

Varga said.

Even amidst war and an uncertain international environment, Hungary has managed not only to repay its debt on time, it has done so before the expiry, he added.

Hungary’s finance minister submitted the government’s draft 2023 budget to parliament – UPDATE

draft Hungary budget 2023

Hungary’s finance minister on Tuesday submitted the government’s draft 2023 budget to parliament, declaring the bill would “protect the government’s achievements, ensure the security of Hungarian families and keep the economy on a growth path.”

The budget had been calculated with an economic growth target of 4.1 percent of GDP, a budget deficit target of 3.5 percent, and

a public debt level of 73.8 percent of GDP by the end of next year,

Mihály Varga told a press conference before handing over the proposal to Speaker of Parliament László Kövér.

Inflation is expected to average 5.2 percent in 2023, he added.

The government has taken into consideration the impact of the Ukraine war and sanctions against Russia while drafting the budget, as well as high inflation, a slowdown in the European economy, and global economic uncertainties, Varga said, adding that

“the environment of the budgeting process has never been as unpredictable as at the current time”.

UPDATE

The minister noted that two new funds appeared in the draft budget drawing on revenue from the taxes on extra profits: a 670 billion forint (EUR 1.72bn) “general protection fund” and another defence fund totalling 842 billion (EUR 2.16bn).

The first will ensure that Hungarians “do not pay the price of the war in the new world economic environment”, he said, while the second will ensure that the government hits its commitment to NATO to expedite the boost in defense spending to end-2023.

An extra 730 billion forints will be spent on pensions, while education and health care will receive additions of 200 billion and 100 billion forints, respectively, he said.

Support for families will exceed 3,200 billion forints in 2023, with 450 billion forints more in spending in this area than this year, he added.

Varga said the Fiscal Council had approved the bill, declaring that it complied with the requirements of the constitution.

The finance minister said the government expected local councils to manage their finances soundly and contribute to “a balanced distribution of burdens”.

Varga said he was confident that talks with the European Union would conclude soon, and an agreement would be reached on recovery fund resources for Hungary.

Kövér said

the final vote on the budget is scheduled for July 15-18, and the general debate will start on June 21.

Minister for economic development wants majority Hungarian ownership in retail

Márton Nagy, minister for economic development hungary

Under the present circumstances, Hungary is in need of not just a self-sufficient economic policy but also a self-sufficient economy in order to achieve sustainable convergence, Márton Nagy, the candidate for minister for economic development, said on Wednesday.

“We are living in a turbulent decade in which we are simultaneously threatened by war, constant pandemic waves and the resulting energy and food crises,” Nagy said in a hearing before parliament’s economic committee.

Hungary must protect its economic achievements in a way that it emerges stronger from the crisis, he said.

Nagy said that

though 51 percent of the economy was under Hungarian ownership, the majority of the building materials, food retail, insurance and telecommunications sectors were still under foreign ownership.

He also said Hungary needed reduce its energy dependence, pointing out that the country’s energy imports accounted for 4 percent of GDP.

Hungary, however, “is in good shape” when it comes to food production, he said, arguing that the country produced twice as much as it consumed and that net food exports account for 1.6 percent of GDP.

Nagy said Hungary’s level of development was at 76 percent of the European Union average, with the country having overtaken Greece and Portugal and closing in on Poland.

If Hungary’s annual GDP growth rate exceeds that of the EU by 3 percentage points,

the country could reach 90 percent of the bloc’s level of development by 2030, Nagy said.

An edge of 3.5 percentage points a year in growth would put Hungary at 100 percent of the EU’s development level, he added.

He added, at the same time, that levels of development within Hungary were significantly uneven. Whereas Budapest is at 153 percent of the EU’s average level of development, certain rural regions are around 50 percent, he said.

Nagy also said that

Hungary had practically achieved full employment and that the investment rate was among the highest in the EU.

He added that

Hungary had the lowest fuel, electricity and gas prices in the bloc.

Nagy’s nomination was approved with 10 votes in favour and 4 against.

As we wrote yesterday, Hungary’s GDP grew by an annual 8.2 percent in the first quarter, albeit from a low base, a first reading of data released by the Central Statistical Office (KSH) on Tuesday shows. Details HERE.

Orbán cabinet has to take responsibility for the rise in food prices it had caused, says DK

At a time when basic necessities are luxuries for some Hungarians, the government has to take responsibility for the rise in food prices it had caused, the deputy leader of the opposition Democratic Coalition said on Wednesday.

László Varju said in a statement that inflation had reached twenty-year records, and he cited the Central Statistical Office as saying that some Hungarians had been forced to cut the amount of food they buy due to skyrocketing prices.

“Many families refrain from buying meat, vegetables or coffee. The price hikes are mainly due to the weakest Hungarian forint in history, the results of the work of [Prime Minister] Viktor Orbán and [central bank governor] György Matolcsy in the past few months,” he said.

The government should admit that the central bank has no exchange rate target, he said.

“It is time Matolcsy told Hungarian families that the they cannot do their shopping or afford meat, and their mortgage payments are going up, because the central bank has no exchange rate target,”

Varju said.

As we wrote yesterday, annual inflation in Hungary was almost in double digits in April.

Hungary’s cash flow-based budget deficit close to EUR 6.9bn at end-April

forint exchange rate - daily news hungary

Hungary’s cash flow-based budget deficit, excluding local councils, reached 2,635.6 billion forints (EUR 6.9bn) at the end of April, the finance ministry said in a preliminary release of data on Monday.

The central budget deficit reached 2,669.7 billion forints at the end of April. The social security funds were 18.7 billion in the red, while the separate state funds had a surplus of 52.8 billion forints.

The deficit widened from 2,309.4 billion forints at the end of March.

The full-year cash flow-based general government deficit target is 3,152.7 billion forints.

The ministry reiterated the government’s commitment to “improving balance indicators” in the release.

“In the unpredictable global economic environment caused by the war, Hungary’s stability must be preserved,” it said.

The ministry affirmed it expects the accrual-based general government deficit, relative to GDP, to reach 4.9 percent this year, while the year-end state debt ratio declines to 76.1 percent.

It calculates with GDP growth of 4.3 percent.

Read more news about Hungary’s budget

EC identifies ‘serious risk’ for sound financial management of EU budget in Hungary

Reynders

The European Commission has identified issues in Hungary that indicate sound management of European Union monies are at risk, European Union Commissioner for Justice Didier Reynders said in a European Parliament debate in Strasbourg on Tuesday.

“I very much regret. that I am not in a position today to be able to report back to you about positive trends when it comes to the rule of law in Poland and Hungary,” Reynders said in the debate on the ongoing hearings under the EU’s Article 7 procedure regarding the two countries.

The EC does not hesitate to use the tools at its disposal to protect the bloc’s fundamental values and financial interests and will not delay in initiating proceedings if the rule of law is under threat, the commissioner said.

Reynders noted that the EC last week activated against Hungary the mechanism linking EU funding to the rule of law. He said

the rule-of-law issues identified by the EC “affect or seriously risk affecting” the sound management of the EU budget and the EU’s financial interests.

Fidesz reaction

Addressing the debate, Fidesz MEP Balázs Hidvéghi said the accusations levelled at Hungary were “not factual, they are not of a legal nature, but clearly are only political”.

The left-liberal forces “propagating the new religion, multiculturalism and open society a la [US financier] George Soros” do not like Hungarian policies that allow the country to decide freely on matters that do not fall under EU competency, Hidvéghi said.

They criticise Hungary because it distinguishes between refugees and economic immigrants, defines marriage as the union of a man and woman and asserts that the father is a man and the mother a woman, he said.

Hidveghi said

Hungary more recently had “come under attack” over its decision to protect children and its stance that parents should have the exclusive right to decide on the sex education of their children.

Those who claim press freedom is lacking in Hungary do not like that “unlike in western Europe, in Hungary, right-wing, conservative, Christian Democratic media exists and flourishes”, he said.

All of Hungary benefits from the country’s economic growth, otherwise the government would not keep getting re-elected with such a large majority, the MEP said.

Hidvéghi said

Brussels had become a “self-righteous postmodern witch hunt club” which used sanctions as blackmail and wanted to “impose a radical and narrow ideology on everyone else”.

It is time to stop the attacks against Hungary and respect Hungarians’ right to decide on matters concerning their country, he said.

Hungary trade balance shows EUR 117 m deficit in Feb

Hungary’s trade balance showed a 117 million euro deficit in February, the Central Statistical Office (KSH) confirmed in a second reading of data released on Monday.

Hungary, an export-driven economy where trade surpluses are the norm, had a trade deficit for the eighth month in a row, KSH said.

Exports rose by an annual 18.7 percent to 11.500 billion euros and imports climbed by 30.5 percent to 11.617 billion euros.

Trade with other European Union member states accounted for 76 percent of exports and 70 percent of imports.

Hungary’s terms of trade deteriorated by 7.1 percent during the period as the forint edged up 0.3 percent to the euro but weakened by 6.3 percent against the dollar.

Read more about Hungary’s budget

Hungary’s cash flow-based budget deficit over EUR 6.2bn

Hungary’s cash flow-based budget deficit, excluding local councils, was at 2,309.4 billion forints (EUR 6.2bn) at the end of March, the finance ministry confirmed in a detailed release of data on Monday.

The central budget shortfall was 2,331.4 billion forints, while social security funds were 17.2 billion in the red. Separate state funds had a surplus of 39.2 billion.

The deficit target for the full year is 3,152.7 billion forints.

The ministry said expenditures on home subsidies and on pensions were higher in January-March than in the base period.

It noted that Hungary’s year-end state debt-to-GDP ratio was a 76.8 percent in 2021, while the budget deficit reached 6.8 percent of GDP.

“In the current situation of war, it is of crucial importance that Hungary’s economy and budget remain stable, and that households do not bear the burden of the war,” the ministry said.

“The budget must continue to manage, as a priority, border defence, assistance for refugees, family support and maintaining tax reductions,” it added.

“Maintaining the stability of the budget in the current situation is a task of priority importance for the government,” the ministry added.

Read more news about Hungary’s budget

The state budget’s deficit reached 794m EUR in February alone!

Hungarian forint state budget historic lows

Hungary’s current account had a 794 million euro deficit in February, widening from a 763 million euro gap in the previous month, preliminary monthly data released by the National Bank of Hungary (NBH) on Thursday show.

Hungary had a 316 million euro trade deficit for the month, the balance of an 660 million euro deficit in trade of goods and a 344 million euro surplus in trade of services.

The primary income balance showed a deficit of 319 million euros, as investors repatriated 428 million euros from direct investments.

Money laundering Budapest
Read alsoBiggest ever money-laundering scheme busted in Budapest – VIDEO

Minister: public debt down more than earlier projected

Hungarian forint banknotes

Fresh data show that the public debt dropped to 76.8 percent of GDP by the end of last year, lower than earlier projected, while the ESA budget deficit was 6.8 percent, as against the earlier projection of 7.5 percent, Finance Minister Mihály Varga said on Friday.

Varga said on Facebook that Hungary’s public debt was falling while the European Union average exceeded 90 percent, and the European Commission projected further debt increases in the bloc.

“Not only did we make a promise, we fulfilled it, too,”

Varga said. The minister said the data vindicated the government’s approach to the pandemic-related crisis of supportive spending rather than austerity.

Hungary was the quickest in Europe to relaunch its economy, he said, and this handed it an early advantage when it came to improving the balance indicators.

Varga said the government’s policy of reducing Hungary’s exposure to foreign debt financing while increasing the role of Hungarian households in the bond market had proven “correct”.

The minister noted that the government boosted financial reserves at the end of last year, thereby reducing the country’s financial vulnerability before the Ukraine war broke out.

“Hungary today is stronger and more resilient than ever before,” Varga said.

Read alsoShocking! Hungary’s government sector had a 10.15 mn EUR deficit in 2021