Parliament passes 2024 budget
In the general debate, Finance Minister Mihaly Varga qualified the budget as a “defence budget”, saying that in times of war Hungary must guarantee its security, protect families, pensions, jobs and maintain low utility costs.
The budget assumes a GDP growth rate of 4 percent, an annual average inflation rate of 6 percent and targets a fiscal deficit of 2.9 percent of GDP.
Central reserves amount to 220 billion forints (EUR 573.1m), and the cabinet aims to spend any additional revenues generated by higher than expected economic growth towards further reducing the public debt.
The budget targets a year-end public debt-to-GDP ratio of 66.7 percent.
It targets revenue of 38,240 billion forints and expenditures of 40,755 billion forints. The deficit target is 2,514 billion forints.
The operating budget will have revenue and expenditures of 34,150 billion forints.
The budget targets expenditures related to EU-funded developments of 3,605 billion forints, while transfers from Brussels for those programmes are set to reach 2,479 billion, with a deficit of 1,125 billion forints.
Expenditures on debt servicing are targeted at 3,144 billion forints, up from 2,541 billion in the 2023 budget.
The budget allocates 1,340 billion forints for the utilities protection fund as against this year’s 2,579 billion, with 917 billion forints to be earmarked for keeping household utility prices low. Central budget support for the fund is set at 483 billion forints, while payments, contributions and windfall profit taxes from companies in the energy, mining, telecommunications, airline and pharmaceutical sectors will cover the rest of the fund’s expenditures.
The budget earmarks 1,309 billion forints for the defence fund, up from this year’s 842 billion, increasing Hungary’s total defence spending to more than NATO’s required 2 percent of GDP.
After submitting the draft budget to parliament, Varga said more than 3,300 billion forints will be channeled to support families. More than 3,430 billion forints are allocated for education and over 6,500 billion forints are set aside for pensions.
A total of 226 billion forints are allocated towards prenatal baby support compared with this year’s 178 billion. A total of 449 billion forints will be available for the payment of 13th monthly pensions and an additional 20.5 billion will be released for the pension premium.
More than 4,423 billion forints are allocated for the health insurance fund, with 2,550 billion earmarked for curative and preventive care.
The budget allocates 1,049 billion forints in support for local councils compared with 968 billion this year, while their solidarity contributions will rise to 307 billion forints from 237 billion.
Government official: Parliament approved ‘defence budget’
Parliament approved on Friday a “defence budget” which will protect families, the utility price cap scheme, pensions, jobs and Hungary’s physical security, a cabinet parliamentary state secretary said.
Csaba Domotor told the press after the vote in Parliament that the most important circumstance taken into consideration while planning the budget was the protracted war in Ukraine and that Europe was paying the price for it in terms of the economy. In the months ahead, an important target for the Hungarian government is that peace talks and peace should be achieved by all possible means because once this happens, Europe and Hungary can return to the path of growth, he added.
It has become a custom now for several years that the budget gets passed by parliament in the summer, which helps with planning ahead and predictability, he said. This year, all considerations had to be subordinated to defence, he added.
The government is determined to protect Europe’s most diverse family support system and it has therefore allocated over 3,000 billion forints for this purpose, Domotor said. The budget also ensures the protection of pensions and jobs in a period when Europe faces the threat of recession, he added.
He also said that even in the current difficult period, allocations have been increased to such important areas as health care and education.
Opposition slams budget
LMP deputy group leader Antal Csardi told a press conference ahead of the vote that the bill had been submitted too early and its projections would be impossible to fulfil. He said the greatest problem was that it cemented the government’s energy policy which he described as ill-conceived. Debt servicing is to increase by 1,777 billion forints (EUR 4.7bn) from 2021 and the country’s energy bill will increase by 8,000 billion forints, he added. He said that ruling Fidesz-KDNP was planning to handle problems through austerity and debt increase, which would result in exhausting the resources needed for the future. He called for stopping “excessive support” to multinationals and using renewable energy instead of importing fossil fuels.
Parbeszed co-leader Rebeka Szabo told an online press conference that the party group would vote against the bill because it involved austerity for people who are already in a difficult situation. At the same time, she said the bill failed to promote the “green transition” needed to enable Hungary to cope with the challenges caused by the climate crisis and the decrease in natural areas.
Democratic Coalition (DK) deputy leader Laszlo Varju told an online press conference that the budget was not viable, stating that “nothing will be fulfilled from next year’s plans in their current form … as proven by a government decision hinting at further restrictions”. He demanded an answer from the cabinet about whether child benefits, family tax allowances, maternity support and large family benefits would be reduced or scrapped.