Finance Minister Mihaly Varga – Photo: MTI

Opposition parties slam draft budget as 'austerity package'

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

Utility price cuts and defence spending are the factors of economic policy defining the 2023 budget, Finance Minister Mihaly 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.

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 670 billion forint (EUR 1.7bn) fund to preserve the utility price caps, and a 842 billion forint 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.

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 Orban 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.

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.

Opposition parties slam draft budget as ‘austerity package’

Opposition parties called the 2023 draft budget “the Orban austerity package” and a “budget of tax hikes and austerity” in Parliament on Wednesday. Democratic Coalition (DK) deputy leader Laszlo Varju called the government’s “rhetoric” of a work-based society “a dead end”. The much-praised investment successes are in reality exposing legally vulnerable, low-earning employees to multinational companies, he said.

At the same time, no other European currency weakened as much as the forint did in the last period, and inflation of food prices is at 25 percent, he said.

The state debt has reached 76 percent of GDP and has risen by 2,000 billion forints (EUR 5.0bn) in the first quarter of 2022 alone, he said.

He insisted that EU resources were not available because the government had “turned the country into a corrupt banana republic”.

While the draft budget earmarked 11 percent more for “bureaucracy” than last year and the budget of public media foundation MTVA would grow by 10 percent, the “government wants to have the people pay the price of their botched economic policy”.

Varju called on the government to scrap VAT on food stuffs until the end of the year and reintroduce a 5 percent tax in 2023, to ease the burden on families.

He noted that according to the draft budget, health-care spending would be reduced to 4 percent of GDP, and spending on public education to 3.4 percent.

Jobbik lawmaker Daniel Z Karpat said the budget calculated with a lot of additional revenues, showing that the government “was preparing to levy a lot of taxes on the Hungarian people”. He called on the government to rework the budget into a “budget building the future” by allocating more for “real family and child protection”. “The government should let go of the hand of multinational corporations and banks, and take the side of families, he said.

Momentum lawmaker Andras Fekete-Gyor said Momentum MPs will not vote for the budget. After years of talking against austerity and tax hikes, the government “tabled an enormous austerity package now, at a time when we have real difficulties,” he said.

Fekete-Gyor called for “investment into people”, saying that Momentum would raise teachers’ wages.

“The problem is not wanting to save money” but that it would hit sectors like public education, health care and social work, he said.

The Socialist Party called the bill the “budget of uncertainty”, saying the geopolitical situation, the outcome of the rule-of-law procedure launched against Hungary and the country’s access to cohesion funds were all uncertain, making the numbers in the budget uncertain as well.

Bertalan Toth, the party’s keynote speaker, said that inflation and the “austerity measures” he said had been imposed by the Fidesz-led government, were, on the other hand, certain. Pensioners, “underpaid teachers”, social-sector workers and families “all live in uncertainty”, he insisted.

Toth said the Orban government had added “one of the highest inflation rates in Europe” to Hungary’s “high public debt and deficit”. The public debt is higher now than it was in 2010 and the 13th month pension and tax rebates paid out at the beginning of the year have been offset by inflation, he said.

He said ruling Fidesz had “gradually dismantled the rule of law and democracy” and had “turned its back on EU values”.

Bence Tordai of the Parbeszed party said the Orban government “must be in despair now that it sees that the house of cards it has built in the past several years has come crumbling down on it”. He accused the government of implementing an austerity package amounting to 7 percent of GDP, cutting 4,000 billion forints from the budget. He said the prime minister had “put together a brutal package that will hurt all Hungarians except oligarchs tied to Fidesz”.

Green LMP said the budget aimed to “keep Hungary in the past” at a time when the country should be reacting quickly to the new situation. Lawmaker Antal Csardi said the 2023 budget was in many ways more important than any other budget of the last 12 years, arguing that “we’re living in a time of crisis after which nothing will be what it once was”. “We are on the verge of a new era and the budget should prove that the government has recognised this and prepared for it,” he said. But he insisted that the government was denying these changes and was “looking to the past”. “But the winners will be the countries that recognise these changes as soon as possible,” he added.

The radical Mi Hazank (Our Homeland) party called the draft budget “the budget of multinational corporations”. Laszlo Toroczkai, the party’s group leader, said the government had no intention of building Hungary’s national economy, and was opening up the country to cheap foreign labor.

He said the government “doesn’t even try to tax tech giants” and deliberately calculated with an optimistic inflation rate.

Toroczkai said the government should levy special taxes on casinos and that the public sector would soon be incapable of functioning due to low wages.

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