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Economy & Policy

Finance Minister Varga: EU agreement within reach

If the Hungarian government's commitments are met, the ongoing dispute with the European Union on the recovery fund will be resolved by mid-November.

Finance Minister Mihály Varga stressed that apart from the coronavirus epidemic and the economic crisis caused by the war, disputes of a political nature are also having a significant impact on Hungary’s economic moves. 

The minister described the EU funds issue, among others, as one such political debate. At the same time, he said that the government’s commitments would resolve the dispute over the recovery fund in mid-November.

Varga warned that we are not facing an easy decade in the face of inflation, the explosion in energy and commodity prices, drought, and migration. 

He said that two of the most important elements affecting a country’s economy are energy and food supply. 

Hungary has a strong food industry, but in terms of energy, the country is much more vulnerable, adding that the dramatic increase in energy prices has created an “abnormal” situation for which we could not be prepared.

Varga noted that the EU had allowed support for energy-intensive companies to be exempted from the ban on state aid. He stressed that if large firms were to fall out of the value chain, the losses would be much higher than the government’s support.

The government had planned a 4.9 percent public deficit for this year, but decided to purchase a significant amount of extra gas, the cost of which will increase the deficit to 6.1 percent by the end of the year, he stressed.

2022 and 2023 will be a difficult period, but from 2024 the Hungarian economy can return to the growth range it was in before, Varga concluded.

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