Márton Nagy, National Economy Minister, told MTI that Hungary's government will keep fiscal stability a "priority" in 2025 and 2026, even as it undertakes the biggest tax cut program in Europe.
Following an ECOFIN meeting in Brussels, Minister Nagy highlighted the rollout of personal income tax exemptions for mothers of two and three children, the doubling of tax allowances for families raising children and VAT rebates for pensioners.
The minister said that the government had already decided on those measures and wouldn't make any compromises. "We will channel those resources to Hungarian families and pensioners, not to Ukraine," he added.
He pointed to the challenge posed to all countries in Europe by the decline in competitiveness of the European Union and Germany, the need to boost defense spending and the global trade war.
He noted that 16 member states, Hungary included, had requested the activation of an escape clause that would allow for greater fiscal manoeuvre when it came to defense spending.
Minister Nagy acknowledged that the general government deficit had reached 71pc of the full-year target in January-April, as in earlier years. He said expenditures had climbed on interest payments for retail government securities and an annual pensioners' bonus. Budget revenue rose in line with expectations, supported by increasing consumption, even as GDP underperformed expectations, he added.
Minister Nagy noted that the government had earlier modified the full-year general government deficit target to 4.1pc of GDP.
The government is actively analysing budget trends and will make corrections on the expenditure side, if necessary, he said. The "basic rule", he added, was for the general government to break even, excluding debt maintenance costs.
The government will bring down interest expenditures, reducing the deficit and state debt levels in the coming years, he said.