Finance Minister Mihály Varga said the growth will make it possible to spend more on public safety, education and health-care next year, while the resources necessary for the coronavirus response efforts will also be available. (Photo: MTI / Tibor Illyés)

Varga: growth will benefit public safety, education, health-care

Virus, economy budget priorities

The government has two key aims with next year's budget, to maintain the state of medical preparedness in the face of the coronavirus pandemic and to support economic growth as much as possible, Finance Minister Mihály Varga said after the budget was approved by Parliament on July 3.

Varga called the government’s economic support measures essential, as in his opinion no substantial growth can be expected without them, as had happened in the 2000s when the Hungarian economy was almost stagnating despite the upward trend of the European economy.

He noted that the 2021 budget envisages 4.8 percent growth while the general government deficit will be 3 percent again and the government debt will fall below 70 percent.

The minister said the growth will make it possible to spend more on public safety, education and health-care next year, while the resources necessary for the coronavirus response efforts will also be available. Varga noted that the government remains committed to supporting families raising children as well as the elderly.

Public debt to decline

The 2021 budget targets expenditures of 23,465.4 billion forints and revenue of 21,974.2 billion forints, resulting in a deficit of 1491.2 billion forints. It targets a decline in public debt as a percentage of GDP to 69.3 percent at year-end from an expected 72.6 percent at the end of 2020.

The budget has an independent chapter for a “Health and Pandemic Defense Fund” with expenditures of 2944.3 billion forints. It also has an independent chapter for an “Economic Defense Fund” with expenditures of 2610.4 billion forints. It allocates 108 billion forints for supporting jobseekers, up from 83 billion this year. Family support schemes will get 2295 billion forints in funding, 67 billion more than in 2020.

Some 2230 billion forints have been earmarked for education next year, Varga said, noting that this is 78 billion forints more than this year’s education budget. A total of 4477 billion forints has been allocated for public sector wages, 387 billion more than this year.

Photo: MTI / Tamás Kovács

The budget earmarks 3915 billion forints for pensions, he said, noting that this also takes into account the reintroduction of the 13th-month pension. It further earmarks 77.0 billion forints of expenditures for a gradual re-introduction of an annual bonus for pensioners.

Local councils will have a budget of 860 billion forints, nearly 120 billion more than this year. At the same time, local councils with a weaker tax capacity will also be required to pay a “solidarity contribution”, which will raise 165 billion forints.

Karácsony, opposition mayors protest cuts

Budapest Mayor Gergely Karácsony and opposition and independent mayors from around Hungary protested budget cuts affecting municipalities and called for strengthening the Alliance of Hungarian Municipalities (MOSZ). Karácsony said the 2021 budget had a “clear political motive to destroy Hungary’s system of local councils”.

 

Karácsony said the budget involved drawing away resources from local councils exactly at a time when they should be helped instead of paying “punitive, extortionate taxes”. Like almost all governments in Europe, the government should get the municipalities involved in crisis management and help them, regardless of party affiliations, he added.

Yet, Prime Minister Viktor Orbán and his government take this opportunity to “destroy local councils”, Karácsony said. He warned that when local municipalities get punished, it is not the mayor but the citizens who elected the mayor that are penalised.

In order to multiply the power of the municipalities, they should join forces, Karácsony said, and called on all towns and villages to strengthen MOSZ. He added that he would propose to the metropolitan council to also join the organisation.

Budget ‘Fidesz’s revenge’

Ruling Fidesz has “taken revenge” on opposition-led municipalities through next year’s budget, a deputy group leader of opposition Párbeszéd has said. Sándor Burány insisted that towns and cities where the opposition won the local elections last autumn would have much smaller budgets next year, including Budapest, whose payments to the central budget would exceed its receivables.

Democratic Coalition deputy leader László Varju said the budget represents “weakness and cowardice”, and it is “political cowardice not to face ramifications of the coronavirus epidemic”.

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