Hungary’s coronavirus economic relief package stands out among international examples
Prime Minister Orbán announced this week a five-step economic relief package to curb the negative effects of the coronavirus pandemic. Here’s a look at how Hungary’s response compares to other examples we’re seeing internationally.
With the global spread of coronavirus, and its acceleration in Europe, an increasing number of governments have recently adopted emergency measures aimed not only at stopping the pandemic –the number one priority – but also at easing its negative impact on their economies.
In a video message posted on his Facebook page on Wednesday afternoon, Prime Minister Viktor Orbán announced the Hungarian Government’s first set of economic relief measures including: a moratorium on all loan repayments until the end of the year, short-term business loan extensions, a capped interest rate for new consumer loans, and more.
While some international commentators, including leading Romanian financial magazine Ziarul Financiar, have labeled Hungary’s move to safeguard its economy “the most courageous decision in Europe,” we see key global players developing similar policy initiatives. Here’s a look at steps others are taking:
In the United States, for example, President Donald Trump proposed a three-step coronavirus package worth a total of USD 1 trillion, the second part of which was signed into force this week. The new legislation provides strong economic assistance to American businesses, workers, and families, alleviating financial burdens experienced by those affected by the virus. President Trump’s plan to protect businesses and jobs runs along the same lines as Hungary’s policy to lower the tax burden on companies and minimize employee contributions.
Meanwhile, the United Kingdom and Germany pledged USD 400 billion and USD 600 billion, respectively, in government-backed loans and guarantees in an attempt to protect their economies from a decline caused by the coronavirus. Guided by the same goal of keeping its economy alive, Hungary instituted a capped interest rate for new consumer loans, the central bank’s base rate plus a maximum of 5 percent. With the base rate currently standing at 0.9 percent, this means Hungarians can take out loans with a maximum interest rate of 5.9 percent.
On Tuesday, France announced a EUR 45 billion aid package (on top of a EUR 300 billion loan guarantee), which will mainly take the form of reduced social security contributions for hard-hit sectors of the economy, including tourism and hospitality. Although the Hungarian policy follows a similar logic, Hungary extended the scope of its package to cover sports, entertainment, catering, cultural services and passenger transportation.
Hungary also introduced a couple of extra measures focused on the above-mentioned sectors, including an exemption for employers from paying payroll taxes until June 30, a reduction in employees’ required payroll contributions, a moratorium on pension contributions, and capped health insurance premiums. What’s more, the new rules forbid the termination of rental contracts and place a moratorium on rental price increases while also suspending tourism development contributions until June 30.