Gabor Kovacs

Gabor Kovacs

As for the economy, the return, what is health, the epidemic. Spending on health is already rising significantly. In the 2022 budget, the government projects a deficit of 3.2 thousand billion forints and economic growth of more than 5 percent.

Hungary’s 2022 draft budget has been prepared in the spirit of the Fidesz election programs (“Let’s go!”), As you go further with the philosophy of revised budgets for 2020 and 2021.

They have given up on the deficit

According to the project, the deficit in the central subsystem (this does not include local governments) will be 3.2 thousand HUF, as the government expects to spend 28.5 billion HUF, but at the same time only 25.4 billion HUF in revenue.

The deficit is projected to reach 5.9 percent of GDP in 2022, which is very high, and even this high deficit will not be borne by the Union – at least in peacetime, but the 3 percent limit should not be maintained in 2022 due to the effects of the epidemic. . The Budget Council expressed its concerns about the rise in the deficit, as it commented on the budget, especially by the Central Bank. According to Finance Minister Mihaly Varga, revival of expenditures is necessary due to the return of the economy.

The government expects the economy to resume, with growth of 5.2 percent expected by 2022 after 4.3 percent in 2021. Other macroeconomic assumptions:

  • Inflation: 3%
  • Increase in the number of employed: 1.1%,
  • Average Earning Growth: 7.7%,
  • Euro exchange rate: HUF 360.9,
  • Dollar exchange rate: 298.7.

Thanks to GDP growth above 5 percent, the ratio of public debt to GDP will decrease somewhat in 2022 (to 79.3 percent), but in numerical terms, of course, it will weigh more.

As for the economy, it is resuming

If we can believe the government, we might think that in 2022, incredible sums will go to restart the economy. Indeed, the practice that began in 2020 in the 2022 budget will continue to ensure that nearly all farm-related expenditures, investment, and a large percentage of the benefits receive the “economic restart” label (noting that the name was “economic protection”).

In fact, the government is sweeping items into the economic restart fund again, like rebuilding a 13-month pension or building the Paks nuclear power plant. Most of the items in the fund, on the one hand, only have the most benevolence in regards to restarting the economy (as long as the money is dumped on the asphalt and someone finds it in the economy), and on the other hand, projects have been decided long in the past, completely independent On the epidemic (as Paks II).

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Speaking of Paks II, it is at least named inside the box, so at least it is known that in 2022, Paks II is named. Zrt in the form of a share capital increase. The purpose of the 550 billion “investment fund” items may be ambiguous. In addition to what could go to 144 billion in “individual building construction investments” and perhaps 40 billion in “investment reserve”. How much money the government will spend on the Budapest-Belgrade Railway in 2022, for example, is ambiguous, which has a good chance of stealing 179 billion “railway development”.

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The government also considers the EU’s 3,000 billion HUF program budget as part of relaunching the economy, and even tax cuts that have followed the schedule for years. Overall, the total is 7.3 thousand billion forints, or 13 percent of GDP. This has been included in a separate table by the government, although it does not explain to what extent an economic relaunch would be to support the churches.

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As for health, the epidemic is protected

In the case of the Economic Restoration Fund, only the Health Insurance and Epidemic Protection Fund suffers the greatest loss of light. This is slightly more than the health insurance fund of HUF 3.6 billion. Exactly Ft166.8 billion is expected, as this is the amount of revenue the Special Fund for Epidemic Protection expects. And specifically from the special retail tax and the auto tax – 40 percent of which, according to them, the government does not want to return to the municipal sector, from which it withdrew in 2020. There are no planned expenditures for the pandemic fund (transfers can of course be made from it), except for the defense reserve of 20 billion HUF.

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Of course, a pandemic (I mean every epidemic) is a health issue, that is, a health insurance issue, so in reality, health insurance is actually protection from epidemics. But kneading the fight against the epidemic in the above figure requires some effort.

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If the government believes that the value of the economic restart action plan is 7.3 billion HUF and the (health insurance and) epidemic prevention fund is 3.6 billion HUF, then the fight against the epidemic crisis will take 10 thousand billion Swiss francs. Or 10,000 billion magic words can be seen in the budget.

You get a lot more money for health care

As for the spending side of the budget, the healthcare segment is undoubtedly increasing in the distribution cake according to state functions: total public funds (that is, including local governments) to HUF 2.88 billion. The increase in resources is not only – or even mostly – unjustified by the epidemic, the Hungarian healthcare system has been essentially underfunded for decades. Long ago, Fidesz wasn’t alone in rejuvenating for over ten years.

Slows down somewhat during the education segment. Numerically, not just as a percentage of total spending. This is clearly not independent of the fact that the government has organized a large portion of higher education into institutions run by boards of trustees full of people close to Fides.

There are, of course, things that will not change, for example, for sports (which is in the main group of entertainment and culture), it is planned to spend more than 400 billion on the total public finances, that is, nearly 100 billion more than in 2021.

Within the government, ministries will reduce it for 2022 with the following spending totals:

  • Ministry of Justice: 19.79 billion HUF.
  • Prime Minister’s Office: 451.83 billion HUF.
  • Ministry of Agriculture: 132.64 billion HUF.
  • Defense Ministry: HUF 1003.05 billion.
  • Ministry of the Interior: HUF 876.04 billion.
  • Ministry of Finance: 458.09 billion Swiss francs.
  • Ministry of Innovation and Technology: 1,158.82 billion HUF.
  • Ministry of Foreign Affairs and Trade: 241.91 billion HUF.
  • Ministry of Human Resources: 3507.77 billion HUF
  • Prime Minister’s Office: 44.42 billion HUF.
  • Prime Minister’s Office: 311.70 billion HUF.
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The state is losing a lot of tax revenue

There are no unexpected innovations on the revenue side, the tax revenue structure is already in place, and there is no intention of Fidesz to change it.

The government expects the lion’s share of revenue (7.2 billion HUF) from consumption-related taxes, including 5.4 thousand billion from value-added tax and 1.3 thousand billion from excise taxes.

The budget projects 3.2 billion residents, mainly in the form of personal income tax: 2.9 billion. 2 trillion HUF can flow from corporations through all kinds of taxes that affect them, and the largest source of revenue is corporate tax (Tao) with 588 billion.

Tax revenue includes the fact that the budget will waive large sums in tax benefits in 2022 as well: a total of 1,500-1,660 billion HUF. The biggest loss is from the family tax credit, as the general government loses more than 310 billion HUF in personal income tax. But in 2022, the discount for those under the age of 25 will also deny nearly $ 140 billion. In Tao, the budget expects to decrease around 250 billion HUF – 100-110 billion will be spent on sports discounts.



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