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Gulyas: Government caps prices of eggs, potatoes

The government is capping the prices of fresh eggs and potatoes sold in shops, delivery services and supermarkets at the retail price level of those products on Sept. 30, the prime minister's chief of staff told a government press briefing on Wednesday.

Marketplaces are exempt from the price cap, which will be in force until Dec. 31, Gergely Gulyas said.

The measure is expected to bring the price of eggs down by 25 percent and that of potatoes by 10 percent, and curb inflation by 0.1-0.2 percent, he added.

At the cabinet meeting on Tuesday, the government again pointed to sanctions-related inflation as the main cause of the Hungarian economy’s ailments, Gulyas said. Gas prices jump every time the EU announces a new sanctions package, he said. That is then mirrored in growing food prices, but the government is committed to reducing inflation by half by the end of 2023, he said. Household energy bills will stay capped up to average consumption levels, as well as fuel and food price caps for private consumers and interest caps for SMEs, in an attempt to curb inflation, he said.

The government is committed to its scheme to cap energy bills, he said, adding that the network usage fee must not be passed on to households next year. The government is imposing a tax on excessive profits on power producers that provide electricity balancing services, generating 80 billion forints (EUR 199m) over two years, he added.

This is the reason why the tax on excessive profits will apply to power plants that provide balancing power, Gulyas said, adding that a 13 percent rate applies this year and a 10 percent rate in 2023. The measure is expected to raise 40 billion forints in revenue this year and the same amount in 2023.

Gulyas said that in line with a request by the European Union, Hungary will clarify the jurisdictions of various judicial branches. Hungary has fulfilled several of the EU’s requests so that Hungary can access the EU resources it is entitled to, but the EU keeps coming up with new requirements, Gergely Gulyas said.

At the same time, the request to more clearly delineate the jurisdiction of particular branches of the judiciary is not against the interests of the country or the judiciary, so Hungary will comply, he added.

He said the amendments will mainly pertain to the competencies of the National Judicial Council and the National Office of the Judiciary, “to remedy the last of the concerns of the EU and clear the last obstacles from the way of an agreement on the recovery funding,” he said.

As the judiciary is fully independent in Hungary, constitutionally as well as organisatorially, the government sees the EU’s concerns baseless, “but as the required changes are possible, they will probably be adopted in the spring session,” he said.

Regarding EU sanctions imposed on Russia in response to the war in Ukraine, Gulyas said: “If the EU wants to impose [new] sanctions, they should stay away from the energy sector and gas supplies.” The Hungarian government is holding all negotiations on that requirement as a baseline, he added.

Regarding the midterm elections under way in the US, Gulyas said the Senate race was still undecided, but said it was unlikely that the Republican party would garner the majority there. Regardless of the results, Hungary will respect the American people’s choice, he said.

Responding to a question on the “National Consultation” survey on EU sanctions, government spokesperson Alexandra Szentkiralyi said about one-third of the questionnaires had not yet been delivered. The turnout will be published at regular intervals, she said.

The PM’s chief of staff, Gergely Gulyas, said the government will announce on Monday support measures for shops in small settlements. Big retailers will not receive government support, however, he added. Various price caps will apply until the end of the year, he said, and any decision to prolong them will be made all in one go.

He said the rate of inflation was linked to a country’s exposure to the energy market, and Hungary is highly dependent on purchases of gas and oil, which explained wby the country’s inflation rate was higher than the European Union average. Hopefully gas prices will be lower next year, he added.

Gulyas said electricity balancing service providers would still enjoy healthy profits in spite of the new tax on excessive profits targeting them.

The minister said the government shared the view that teachers’ pay should be increased exponentially amid the current period of crises, and much of the European Union monies owed to the country would be channelled towards realising that goal should they be forthcoming. The budget will supplement the rest of the pay increase, while after 2025 it will assume the entire burden of paying teachers’ salaries.

Discussions with the European Commission concerning the matter will be limited to the issue of wages, while other aspects such as the so-called career model — a pay scale linked to qualifications and experience — will not be on the table, he said. No plans are afoot to change the status of teachers as state employees, Gulyas said.

Meanwhile, on the subject of financial support for Ukraine, Gulyas said Hungary had agreed to delivering funding but Hungary’s contribution would be handed over bilaterally. Hungary opposed joint borrowing in 2020, and continues to do so, he said.

On the subject of the judiciary, he said administration of the courts took place entirely independently from the government, and the government had no interest in the branch beyond ensuring its efficient administration.

Regarding ratification of Sweden and Finland’s NATO membership, Gyulas said parliament was working to adopt the legislation necessary to conclude an agreement on EU funding with the European Commission. “Once the EC stops voicing new requirements,” parliament will have time to table the ratification, he said. Hungary supports Swedish and Finnish NATO membership, he said. “As we can count on them, so they can count on us,” he added.

Responding to a question on the government’s increased VAT revenues due to inflation, Gulyas said the surplus had been eaten up by increased inflation-related expenditures such as higher pensions. The government is also buying energy at higher prices, and so the excess spending will come to around 1,500-2,000 billion forints, he said.

Commenting on German Chancellor Olaf Scholtz’s visit to China, Gulyas said Hungary would benefit from “free markets expanding worldwide”. The US’s objections stem from an ideological disagreement with China, but the EU must look to its own interests, he said. Hungary has a vested interest on the freest possible trade, he said.

Meanwhile, he said inflation in Hungary was expected to recede in the first quarter of 2023, as it is not directly linked to an agreement with the EC, he said.

Commenting on the opposition Democratic Coalition’s campaign to collect money for households struggling to pay their energy bills, Gulyas said the price of electricity had doubled and gas tripled during the tenure of DK’s leader Ferenc Gyurcsany during his stint as prime minister between 2004 and 2009, while DK has also lambasted the current government’s efforts to cut household energy bills, “so it seems unclear what they are collecting money for, unless it is for party financing,” Gulyas said.

He called the foreign funding of leftist parties “unlawful and a political outrage, which is being investigated by parliament’s national security committee.”

On another topic, Gulyas said that while Ukraine is a country under attack, its “biggest mistake is how it treats ethnic minorities”. That is incompatible with European legislation, and should be changed, “especially after Hungary supported Ukraine’s membership candidate status in the EU, and provided other aid,” he said.

Commenting on reports that NATO was mulling the installing nuclear weapons in Europe, Gulyas said the report was a clear sign that the situation was moving towards “a cold war-like situation rather than a thaw”. Since the alliance’s member states were in disagreement on the issue, “Hungary cannot influence the events,” he said.

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