Parliamentary debate on next year’s budget is still ongoing. The general discussion of the 2022 budget continues through Friday, with a total time frame of thirty hours.
Mihaly Varga He previously emphasized that restarting the economy due to the coronavirus pandemic is the most important component of the 2022 budget, while next year’s budget will also retain the government’s values so far:
- protect families;
- support for those who raise children;
- Appreciation of the elderly.
The Finance Minister had already said in a debate in Parliament on Wednesday that
They forecast a deficit target of 5.9 percent of GDP, moderate inflation of 3 percent and dynamic economic growth of 5.2 percent next year.
Putting the debt ratio on a downward trajectory remains a key goal, such that after 80.4 percent of GDP last year, public debt will fall below 80 percent this year and 79.3 percent of GDP next year.
Mihaly Varga added that I would like Hungary to be one of the five most successful countries in the European Union by 2030, and for the crisis to continue to be managed not by austerity but by increasing subsidies and tax cuts, putting into place the budget deficit and public debt. On a downhill track again.
This time, a contingency reserve of HUF 233 billion was created to fund unexpected expenses
– Also revealed from the opening speech of the Prime Minister.
Mihaly Varga also noted that the 2022 budget will maintain the two main pillars of this year’s budget: about 3,600 billion Swiss francs are available in the Health Insurance and Pandemic Protection Fund for healthcare and, if necessary, for pandemic expenditures. The Economic Restart Action Plan includes 13 percent of GDP, HUF 7308 billion.
It could be a problem if we start consuming
At the same time, the Financial Council (SC) continues to consider stronger reduction in deficit and debt ratios in order to restore balance more quickly and avoid economic overheating, said the budget discussion. Arpad Kovacs, Chairman of the AK Party, explained that
In the event of a dynamic increase in household consumption and private investment activity, stimulus measures could overheat the economy, increase inflationary pressures and endanger the external balance.
Therefore, the Board considers it appropriate to make the use of certain spending appropriations conditional and to spend the planned amounts only when they are really necessary to strengthen the economy. In this way, under favorable economic conditions, some planned expenditures can be saved or postponed, and a greater step can be taken towards restoring budget balance, reducing public debt, or providing a cover for unexpected expenditures without increasing the deficit, as explained by the expert.
A pandemic can still rewrite anything at any time
At the same time, the 2022 budget provides flexibility for Hungary, builds on last year’s economic protection measures and focuses on areas that will support recovery from the crisis in the long term, said the head of the state audit office.
According to László Domokos, meeting the public debt norm and improving the budget balance means a significant competitive advantage for Hungary even in the short term. However, the SAO chief also noted that further waves of the coronavirus pandemic will have an impact on the viability of the budget.
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