Yesterday afternoon, Finance Minister Mihály Varga submitted Hungary’s draft budget for 2020. Keeping in mind the strongest-ever mandate delivered by voters last year, Varga said that the Hungarian government has prepared a draft budget that prioritizes security (both internal and external), economic growth, families and demographic policy.
“The 2020 budget will be the budget for family support, with a focus on implementing the Family Protection Action Plan,” Minister Varga said during a press conference, referring to the government’s seven-point Action Plan announced earlier this year.
And indeed, with a 224 billion HUF (700 million EUR) increase compared to this year, a total of 223 trillion HUF (nearly 7 billion EUR) will be at Hungarian families’ disposal in 2020. Considering that Hungary already has the highest family allowances-to-GDP ratio in the European Union, the family support measures that are yet to begin will put us further out in front.
According to the minister, the four main pillars of the budget are higher family subsidies, an economy protection plan to stave off the effects of a slowdown in western European economic growth, lower taxes and increased defense spending.
Let’s look at the numbers.
For 2020, the draft budget projects 21.79 trillion HUF in central expenditures and HUF 21.42 trillion in revenues, resulting in a central budget deficit of only one percent of GDP, below even the government’s previous goal of 1.5 percent for 2020. What’s more, public debt is expected to continue its downward trend and fall to 66 percent of GDP.
Meanwhile, more funding will be made available for all major budgetary items. Compared to 2010, the 2020 budget will see an increase of 1.26 trillion HUF (3.9 billion EUR) in family subsidies and 840 billion HUF (2.6 billion EUR) in pensions. Some 4.5 billion EUR more will be spent on wage hikes for public administration personnel, and a 2.2 billion expansion of defense spending.
Minister Varga announced that the budget is based on an annual GDP growth expectation of 4 percent, slightly above international forecasts - forecasts that Hungary has consistently outperformed over the last few years.
On Hungary’s brand new Economy Protection Action Plan, Varga said that the scheme is expected to provide 500 billion HUF worth of assistance to Hungary’s economic actors.
Speaking of economic policy, here's a rundown of all 13+1 policy steps: