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May 27, 2020

Coronavirus Update: 2021 budget outlined by Finance Minister

Next year’s budget will focus on supporting families while restarting the economy and helping to create jobs to make up for the ones lost due to the epidemic.

 

The finance minister said the government’s 2021 budget bill targets annual economic growth of 4.8 percent. Presenting the bill to parliament, Mihály Varga said inflation is expected to be around 3 percent, level with the National Bank of Hungary’s mid-term “price stability” target.

Minister Varga said the 2021 budget will serve to protect the economy while catering for a possible recurrence of the coronavirus epidemic. Next year’s budget will focus on supporting families while restarting the economy and helping to create jobs to make up for the ones lost due to the epidemic, he said.

The bill targets expenditures of HUF 23,373.6 billion (EUR 66.6bn) and revenue of HUF 21,882.4 billion, resulting in a HUF 1,491.2 billion deficit. Calculated according to the European Union’s accrual-based accounting rules, the deficit will come to 2.9 percent of GDP. The bill targets a decline in the public debt to 69.3 percent of GDP by the end of the year from an expected 72.6 percent at the end of 2020. The bill sets asides reserves equivalent to more than 0.5 percent of GDP.

Local government budgets will be increased to a total of HUF 857 billion from HUF 739 billion in 2020. Funding will be increased for local government public education spending to HUF 213 billion, while spending on culture and social services will rise to HUF 82 billion and HUF 174 billion respectively.

The draft budget allocates HUF 2,229 billion to education, HUF 80 billion more than last year. The healthcare sector receives HUF 2,145 billion, HUF 186 billion more than in 2019, he said. The bill allocates HUF 2,295 billion to support families raising children, Varga said, noting that that sum has grown 2.5 times of what it was in 2010. Pensions and other retirement payments will rise by HUF 325 billion to HUF 3,090 billion, he said. Defense spending is being raised by 30 percent to HUF 778 billion, he said.

The budget bill contains an independent chapter for a Health and Pandemic Defense Fund, with expenditures of HUF 2,935.0 billion. It also contains an independent chapter for an Economic Defense Fund with expenditures of HUF 2,555 billion.

Political parties will have a total of HUF 5.78 billion allocated, the equivalent of this year’s funding before it was slashed by half due to the coronavirus epidemic. Of the parliamentary parties, ruling Fidesz will receive HUF 968 million, Jobbik HUF 510 million, the Socialists HUF 305.5 million, LMP HUF 218 million, the Democratic Coalition HUF 207 million, the junior ruling Christian Democrats HUF 180 million and the Párbeszéd party HUF 91 million forints. House Speaker László Kövér said parliament will debate the draft on June 29, with a vote possible on July 3 or 6.

A call center set up for advice on the coronavirus can be reached on +36-80-277-455 and +36-80-277-456 or by email koronavirus@bm.gov.hu