This year, the deficit of the budget to GDP could be somewhere between 7 and 9 per cent, Minister of State at the Ministry of Finance Péter Benő Banai said on Kossuth Radio’s programme ‘Good morning, Hungary’ on Tuesday. He added that consolidation, however, could start as early as next year.

The Minister of State said economy protection expenditures will be required, and therefore this year the government is expecting a deficit of the budget higher than projected earlier. He stressed that this process was not specific to Hungary; all 27 Member States of the European Union are expecting a decline and a rise in the deficit of the budget for 2020. He mentioned as examples the Czech Republic where the deficit could be around 9 per cent and Slovakia with a deficit figure above 8 per cent.

According to the estimates of the Minister of State, in the second half of the year some HUF 500 billion will be spent on the protection of the economy; at the same time, based on his calculations, the expenditures of the anticipated containment efforts in health care will be lower than earlier. This is due to the fact, he explained, that all protective equipment is now available and a number of infrastructure developments have been carried out. He stressed, however, that the Hungarian situation also depends on what is happening in Europe.

While in the first half of the year the economy declined, this decline was lower than the EU average, Mr Banai said, adding that the budget was required to finance both the arising health care expenditures and the expenditures related to the protection of the economy. However, consolidation could start as early as next year, he pointed out.

He said at this time it is uncertain whether the budget for 2021 will need to be adjusted; this depends on the number of incidences and the epidemic situation on Hungary’s export markets, and therefore they are continuously analysing the relevant circumstances. He added that the government is ready to respond to them appropriately. In next year’s budget, the government expects a growth above 4 per cent and a deficit below 3 per cent.

Regarding this year’s high deficit, he observed that “we are no longer used to high numbers,” given that in the last few years, the deficit of the budget to GDP has always been below the EU limit of 3 per cent. Additionally, among EU countries Hungary was the only one that had been able to reduce the sovereign debt to GDP every year since 2011.

The Minister of State said there is a special situation now, there has not been such an epidemic for a hundred years and there has not been such an economic crisis for ten years. These affect every aspect of processes in the economy. He took the view that after the first wave of the epidemic we may state that the containment of the epidemic was successful in Hungary, also in light of international data.

(Ministry of Finance / MTI)