The government explained how it would deal with the economic challenges
The utility price reduction protection fund and the defense fund are necessary to ease the burden on families, preserve the achievements of the government and, in response to the war situation, guarantee the peace and security of the country, Finance Minister Mihály Varga told public television station Kossuth Rádió. on Sunday.
Varga noted that in 2019, before the pandemic hit, the budget forecast a 1% deficit, but the figures had to be revised due to the crisis. High energy prices, rising inflation and rising interest charges from debt servicing have dramatically increased spending, he said, but the government has pledged to restore budgetary discipline.
Next year’s draft budget will ensure that the deficit and public debt will fall in 2023, to 3.5% (of GDP) and 73.8%, respectively,
The utility price drop protection fund and the defense fund are planned for two years, 2022 and 2023, he said.
The utility price reduction fund is expected to reach 670 billion forints next year and the defense fund 842 billion forints. With the latter, Hungary will reach its target set earlier as a NATO commitment to spend at least 2% of its GDP on defense by 2024 as early as next year, as defense spending will significantly exceed 1.3 trillion forints, Varga said.
Varga said Hungary’s utility price reduction program, in place since 2013, now faces a big challenge due to high energy prices and inflation.
The government has decided to maintain this system; payments from the utility price reduction fund should be used to keep energy prices at their current low levels for families, he said.
He said negotiations were still ongoing over the recovery fund with the European Union, but he was confident a deal would be reached. On the other EU-related issue, the seven-year budget, he said negotiations could be completed by the end of July so that these funds could already be factored into the 2023 budget, he said. -he declares.
Finally, Varga said that monetary and fiscal policies aim to curb inflation as much as possible;
the government expects the upward trend in consumer prices to stop and next year’s budget projects inflation between 5 and 6%.