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PM announces new interest-free loan to SMEs

Orbán: Government launches action plan to reopen economy

As part of its action plan to relaunch the economy after the coronavirus pandemic, the Hungarian government has decided to introduce a new interest-free loan to help SMEs, Prime Minister Viktor Orbán said on Thursday. SMEs can raise an interest-free loan with ten-year maturity of up to 10 million forints (EUR 28,000), with repayments deferred by three years, Orbán told the annual opening meeting of the Hungarian Chamber of Commerce and Industry.

The Hungarian economy was breaking records before the pandemic, Orbán said. Although the economic fallout rocked the economy, it managed to stay on its feet, he said.

The government’s action plan to protect the economy has succeeded in its primary goal of preserving jobs, Orbán said.

The number of jobholders reached pre-pandemic levels in December, rebounding to 4.5 million, with the country’s jobless rate being the third in the European Union, he said.

The government introduced a loan moratorium and a wage support scheme to support particularly hard-hit sectors, Orbán noted. To bolster vulnerable players, the social contributions were scrapped and the business tax slashed by half, he said.

The investment support scheme has helped 1,434 companies so far, helping preserve 280,000 jobs while creating tens of thousands of new ones, he added.

The government “resisted the temptation to revert to a subsidy-based economy,” Orbán said.

The prime minister noted that coronavirus-related restrictions in Hungary were based on the results of a National Consultation survey, ensuring a “stable” system based on joint efforts made together with the general public. While crisis management in western Europe consisted of alternating periods of restrictions and easing measures, “which could cost hundreds of lives,” the Hungarian system has been in place since November, he said.

A new online national consultation survey will be launched in February on “issues regarding reopening” the country, he said.

“A new economic era will be ushered in by the wide-spread use of the vaccine,” he said, adding that the provenance of the vaccine was not a political issue.

After the results of the survey are available, he said decisions would be made from March to early April, which is Easter time,” Orbán said.

“If we’re disciplined and adhere to the regulations, our lives may be freer from then on,” he said.

Orbán said the action plan to relaunch the economy would have three phases. The first already began on Jan. 1, he said, and would conclude on April 1, with VAT on new home constructions slashed to 5 percent, a 6 million forint loan for home renovations half of which is a non-refundable, and the phasing in of the 13th month pension. The government has also decided to exempt people below the age of 25 from paying a personal income tax from 2022.

The aim of the home construction programme is for 40,000 homes to be built each year, he said.

The second phase will take place from April 1 to July 1, focusing on higher education, he said. Finance Minister Mihaly Varga has allocated 1,500 billion forints for developments, Orbán said, adding that “hopefully, that can go up to 2,000 billion.” Universities that indicate their intention to take part in the transformation will have enough time to take that step by April 1, he said.

The third phase between July and October will be a period of “big developments” focusing on green energy, developing a circular economy and full digitalisation, Orbán said.

The prime minister said Hungary was at loggerheads with the European Union regarding certain issues, including traditional family values and migration, but they were the closest of allies regarding others, such as the green economy and digitalisation. He said that launching the first tenders in connection with Hungary’s agriculture and rural development strategy was an important part of the plan to restart the economy.

The government is competing with others to attract foreign investments and has launched a robust investment promotion scheme, Orbán said.

Hungary wants to preserve its significant position in the region when it comes to the switchover from conventional to electric cars, he added.

Meanwhile, Orbán said Hungary’s economic recession in 2020 was expected to be closer to 5 percent than 6 percent.

He also spoke of the development of Hungarian ownership in the economy, noting that Hungarian ownership in the energy sector has increased from 29 percent in 2010 to 59 percent, in the banking sector from 40 percent to 57 percent, and in media from 34 percent to 55 percent. He added that a breakthrough had not taken place in the retail sector, and this situation needed to change.

“We’d like to see ownership above 50 percent Hungarian in the infocommunications sector, in building material production and in rolling stock production, too,” he added.

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