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Jun 16, 2017 - Zoltán Kovács

Hungary’s 2018 ‘budget of working citizens’ and families

Hungary’s economic growth -- 2 percent in 2016 and forecast to grow to 4.3 percent in 2017 – translates into an anticipated 1 trillion additional HUF (3.3 billion EUR) for the 2018 budget. Public debt is expected to drop by some 2 percent, and the deficit is expected to be 2.4 percent.

It’s that time of year: the Orbán Government has presented its budget, and last week the Parliament accepted the proposed amendments. The Orbán Government has made it a priority to pass the budget early in the year to inject some fiscal stability. It has also made a priority of fiscal discipline by slashing budget deficits, keeping it well below the Maastricht criteria.

The 2018 budget, according to Minister of National Economy Mihály Varga , is the “budget of working citizens.” It focuses on the well-being and security of families and wage-earners, allocating an additional 20 billion HUF (65 million EUR) to programs that support savings programs, child allowances, student loan relief for child-rearing familes, childcare and more. The new budget envisions further tax cuts and aims to reduce unemployment and promote previously launched wage increases.

“The government could sacrifice 260 billion HUF (847 million EUR) in revenue from tax cuts with peace of mind,” Minister Varga said. That’s because the government has confidence in the returns the economy will reap from the tax cuts.

Hungary’s economic growth -- 2 percent in 2016 and forecast to grow to 4.3 percent in 2017 – translates into an anticipated 1 trillion additional HUF (3.3 billion EUR) for the 2018 budget. Public debt is expected to drop by some 2 percent, and the deficit is expected to be 2.4 percent.

In the “budget of working citizens,” families remain a big priority. Families with three or more children can expect a debt write-off from their housing loan and child-bearing families may be eligible for a partial or total relief of their student loan debt. The budget also includes allocations for renovations of child care centers around the country and savings plans for ethnic Hungarian children born outside Hungary.

Hungarian citizens can also look forward to further tax cuts, including a decrease to 5 percent in the VAT on internet services and fish or meat products.

All of this would have seemed unimaginable back in 2009 before the Orbán Government took power. The country was under the EU’s excessive deficit procedure with a budget deficit of 4.6 percent, compounded by negative GDP growth at -6.6 percent and a debt-to-GDP rate of 77.8 percent and rising.

We were condemned as “unorthodox” back then when we rejected austerity and introduced our own economic policies. Good that we stuck to our guns. It’s now bearing fruit.