Economy & Policy

FM Varga: Hungary has the resources it needs for next year

The Minister of Finance expects a roughly HUF 1.7 trillion loss of revenue this year.

The Hungarian budget and public finances are stable, Varga announced in his latest interview with VG.hu

The finance minister stressed that they have calculated a GDP decline of 6.4 percent and expect a roughly HUF 1.7 trillion loss of revenue for 2020. Expenditures, on the other hand, are rising, as the epidemic and economic protection have required immediate action and financing. Like other economies, Hungary has suspended fiscal austerity, and the government is helping. It means that instead of the originally planned deficit of 1 percent of GDP, the budget deficit could be around 9 percent by the end of 2020.

The public debt, which was 65.4 percent of GDP last year, is now estimated to rise to 78 to 80 percent of GDP. The minister highlighted that the Hungarian government can’t afford the economy to stop. The Economic Protection Fund has therefore been opened up, which means that whatever financial resources are needed must be made available, he added. 

He stressed that there are no plans for any further issuance of foreign currency bonds, and the government has not abandoned its goal of keeping its ratio of foreign currency debt below 20 percent, reduced from 53 percent. With the success of the EUR 2.5 billion foreign currency bond issue in November, there is no need to raise a new foreign currency source until the beginning of 2023.

He also pointed out that the debate on the resources of Next Generation and MFF could drag on and result in there being zero resources next year. One exception is the HUF 500 billion in agricultural support, which comes directly to farmers from Brussels. 

In the case of an agreement, an additional source of up to HUF 2.5 trillion can be expected. 

According to Varga, how quickly the economy recovers depends greatly on the coronavirus vaccination. There will be no financial obstacles to mass vaccination, and the money needed for the purchase of vaccines will be available in the reserve, he added. 

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