János Lázár takes the view that a national infrastructure development programme should be launched. He spoke about this at Portfolio’s business conference held on Thursday.
The Minister heading the Prime Minister’s Office specifically highlighted that we need mega-investments in Budapest in the interest of boosting the country’s economic growth. The politician believes that, in order for Hungary’s economic growth rate to be comparable in 2016 with that of this year, EU funds worth minimum two thousand billion forints should be disbursed next year, but within government circles it is held that there is little chance of reaching this figure.
At the event Budapest Economic Forum 2015, the Minister said: in the next few weeks, the Government will – in cooperation with its social partners – start examining as to what means are available for maintaining the country’s economic growth. A growth rate in excess of 2 per cent is an absolute “must” for Hungary.
In this context, Mr Lázár drew attention to a number of risks in his lecture of three quarters of an hour, mentioning among these the volume of corporate lending which will need to increase significantly already in the first half of 2016 both on the part of commercial banks and regarding the placement of state funds. As a goal, he pointed out, the Hungarian Investment Bank (Magyar Fejlesztési Bank) should place minimum HUF 500 billion already next year, while the system of savings cooperatives and the postal service must be reinforced in the fields of agricultural lending and green bank functions.
He further urged the reduction of red tape and of the number of people living off bureaucracy – an issue which the Government should, in his view, decide on within 3 to 6 months – because “it is impossible to sustain economic growth (…) in the long run with such bureaucracy and so many people living off bureaucracy”.
Additionally, the head of the Prime Minister’s Office urged the launch of a national infrastructure development programme because there are some sectors which cannot be financed or can only be financed to a limited extent from EU funding, and without these, he said, it will not be easy to maintain economic growth. In addition to transport projects, he made mention of the funding of home construction projects, the development of the electronic infrastructure, and the widest possible availability of access to the Internet.
Dedicated support should further be provided from a state development fund for the one hundred Hungarian businesses which do not fit into the category of small and medium-sized enterprises and whose development is not compatible with EU Directives, he said.
The Minister specifically mentioned Budapest where, in his view, Hungary needs major developments and symbolic mega-investments in the interest of the country’s economic growth. At the same time, he stressed that the Government should reach deep into its pockets to this end.
The Minister also spoke about Pest County which, similar to Budapest, is excluded from EU funds. Therefore, he said, the central budget will have to compensate for the grants of the localities of the county which will cost some HUF 130 billion in the current seven-year EU fiscal cycle.
At the same time, he indicated that the Government is determined to separate Pest County from Budapest in respect of EU funds by 2021, “if necessary, even at the expense of changing the entire county structure”.
Regarding EU grants, which also come under the supervision of the Prime Minister’s Office, the Minister said that, in order to achieve an economic growth rate in 2016 similar to that of this year, EU funds worth minimum two thousand billion forints should be disbursed next year. He said that he has yet to meet a member of Government who believes this would be possible. In his words, funds in the magnitude of HUF 1,300-1,400 billion could be realistically disbursed, but HUF 1,600 billion may also be within the realms of possibility.
He remarked: Ministries agreed to publish 133 calls for proposals worth HUF 2,700 billion in 2015. So far 27 calls for proposals worth HUF 650 billion have been published. While the possibility of a sudden surge cannot be ruled out altogether, the Minister said, “it will be necessary to deploy certain tools”. In his view, the Government has six weeks to organise the launch of the cycle between 2014-2020 and to avoid the pre-2010 mistakes.
All EU calls for proposals of the cycle between 2014-2020 will be published by 30 June 2017, and as a result, the total available HUF 12,000 billion will be made accessible, he said. He further mentioned as a principle that everyone must be given equal access to the available EU grants.
Mr Lázár also covered the topic of energy efficiency upgrading, and stated in this context: there will be no household energy efficiency upgrading programme from EU funds. There will only be a programme for state institutions in order to reduce the material expenditures of the State. Members of the public will be able to upgrade the energy efficiency of their households partly through the reduction of household utility expenses and partly from bank facilities, he said.
The Minister further spoke about the difficulties of the agricultural sector. In his view, if no efforts are made for the development of the sector, agriculture will lose some of its competitive edge in the next three years due to changes in EU regulations, including, inter alia, the scrapping of milk quotas.
In addition to the internal challenges of the growth of the Hungarian economy, Mr Lázár also drew attention to external ones, making specific mention of the diesel scandal. In this context, the Minister reiterated that the Spanish Government is demanding the repayment by the VW Group of the subsidies provided for the purchase of environment-friendly cars. “The question is whether such concerns will emerge in anyone in Hungary in connection with the subsidies provided for Audi in Győr”, the Minister said.
In summary, the Minister stated that sustaining an economic growth rate in excess of the EU average in 2016 will be an enormous challenge, and the first half of next year “will be decisive” from this respect; however, the Government has means to support growth.
(Prime Minister's Office/MTI)
