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Jun 24, 2019

OPINION: Hungary aims for balanced budget in 2020

Péter Novoszáth writes that Hungary will have a balanced budget in 2020, which shows how far the economic policy of the current government has taken the country in the past nine years.

Writing for Magyar Nemzet, economics professor Péter Novoszáth writes that Hungary will have a balanced budget in 2020, which shows how far the economic policy of the current government has taken the country in the past nine years.

The 2020 budget can be considered a historic one for several reasons: this will be the first zero-balance budget in thirty years, meaning that public spending will entirely be covered from revenues without the need for external financing, while the country’s debt to GDP ratio will fall to 66 percent, compared with the 80 percent when the current administration took over.

Rmx.news points out that during that time, the conservative government also inherited a 20 billion euros IMF-World Bank loan. It took the country thirty years to realize the importance of proper fiscal discipline and also have an economy that is strong enough to allow for a balanced budget.

Successive liberal governments kept promising, but were never able to deliver a balanced budget. Moreover, in 2006 the Socialist-Free Democrat cabinet produced a budget deficit of a whopping 10 percent. They also kept promising to reform the major subsystems of society, but never got beyond some emergency patch-ups.

In contrast, not only is the country’s 2020 budget balanced, the healthcare system will also be funded from its own revenues as well, while total healthcare spending will grow. Additionally, family support, education, pensions and defense spending will all increase.

And, should the government have the luxury of not spending the reserve amount in the budget, the balance would be exactly zero. The budget also serves Hungary’s long-term economic goals: a GDP growth two percentage points above the average of the European Union, reducing public debt to below 60 percent of GDP and cutting income taxes to single-digit levels.

Photo: About Hungary