The EU will not provide Hungary with Recovery Fund (RRF) support until the Hungarian government commits to judicial reform that guarantees the independence of the judiciary and significantly reduces corruption around subsidies. Writes People’s word. The expenditure of the Local Recovery Fund established by the Hungarian government is 450 billion HUF. For this purpose, HUF 370 billion is missing on the revenue side. At the same time, the government has underestimated inflation and economic growth projected in both 2021 and 2022, so this period may bring surprising revenue for public finances.
According to OTP analysts, in 2021-22, government revenues could be one and a half percent higher than GDP. With this in mind, they say the government is unlocking the opportunity to reduce deficit and debt by spending all available (excess) resources. Thus, the general government deficit for this year will be no less than the previously planned 7.5 percent and in 2022 5.9 percent of GDP.
According to the most favorable scenario, given the shortage of RRF funds, an additional 0.7 percent of GDP – 350 billion Swiss francs – will appear by mid-2022. However, on a more bleak view, the amount could reach 3.4% of GDP Total – 1700 billion. In the previous scenario, an agreement would be reached early this year, and only this year’s money would be left out.
According to the worst version, the deal takes place only after the elections. According to OTP analysts, however, the A donation They can cover the subsidies that the EU has lost without violating public debt rules by using their large cash reserves – central bank deposits – and surplus revenue, as well as by issuing unplanned foreign-currency bonds.
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