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Jun 11, 2020

Finance Minister takes a closer look at 2021 budget

Finance Minister Mihály Varga has told lawmakers that the government expects healthy economic growth of 4.8 percent next year and moderate inflation of 3 percent.

 

Finance Minister Mihály Varga has told lawmakers that the government expects healthy economic growth of 4.8 percent next year and moderate inflation of 3 percent.

Minister Varga said the deficit target is 2.9 percent of GDP, just below the Maastricht threshold, while reserves built into the budget draft provide a ‘safety net’ of more than half a percent of national income. Also, the public debt is set to decline further.

The minister said next year’s budget contains a health insurance and epidemiological fund as well as an economic protection fund. It is also geared towards the protection of families, supporting economic developments and guaranteeing Hungary’s security, he added.

According to MTI, the head of the State Audit Office (ÁSZ) told lawmakers in parliament that the 2021 budget bill was suitable for relaunching the Hungarian economy. László Domokos said the macroeconomic forecast contained in the bill was a good basis for planning the budget, adding that it complied with the rule on reducing the public debt and other legal requirements.

Domokos said Hungary’s economy and public finances had been healthy when the coronavirus epidemic emerged, so activity was likely to resume in most sectors other than those deeply integrated into the world economy such as global trade and tourism. He said Hungary’s economy would perform better in 2021 than in 2019, but it was unlikely to do as well as originally planned.

Here’s the outline for 2021 budget allocation:

-          Almost HUF 2,295 billion (EUR 6.6bn) will be available for family support, up 67 billion year on year.

-          Pension benefits, at HUF 3,907 billion, will be worth 327 billion more than this year, and the money for phasing in the 13-month pension was also available.

-          Education spending will amount to HUF 2,229 billion in 2021, up by 78 billion.

-          HUF 2,115 billion will go towards healthcare, up by 156 billion.

-          HUF 704 billion is being channeled into public security, HUF 154 billion more than this year.

-          HUF 953 billion will be spent on developments in law enforcement, 93 billion more than in 2020.

-          The budget for social security and welfare services such as sickness and jobless benefits will amount to HUF 6,500 billion, an annual increase of 541 billion.

-          More money will be allocated for traditional welfare benefits.

-          The fund for job-preservation and job-creation schemes will amount to more than HUF 2,550 billion forints.

-          The health insurance and epidemic prevention fund contains HUF 3,000 billion.

-           Local councils will receive more than HUF 857 billion in 2021, 118 billion more than this year. They will also have HUF 3,000 billion at their disposal next year without resorting to credit. Local councils will also have access to a HUF 200 billion credit line for investments. Further, the Modern Cities and Villages scheme will continue and EU money will also be used for local council investments.