Should Hungary Scrap Utility Price Caps? - Gov't Rejects This EC Advice
- 26 May 2023 11:48 AM
- Hungary Matters
Reacting to the EC’s recently released country-specific recommendations, Gergely Gulyás said that Hungary considered it important to reduce the budget deficit and was the only country where the government had managed to cut the deficit in the last three election years.
“So we can’t be accused of not keeping this in mind, even in times of crisis,” Gulyás said. But how this goal is achieved matters, he said, adding that the government rejected the EC’s proposal to scrap the utility price caps.
Even though the EC’s recommendations say Hungary should phase out its existing energy subsidy measures by the end of 2023, the country can reduce its budget deficit without accepting this advice, Gulyás said.
Commenting on a statement by Johannes Hahn, the Commissioner for Budget and Administration, Gulyás said the conditionality procedure pertained to very little of the “budget resources Hungary is entitled to”.
Talks with the European Commission are ongoing regarding the budget and the resilience and recovery funding, he said.
The European Council approved the Hungarian plan on spending the recovery funding last December, and Hungary amended its judiciary law to comply with the last requirement to access the funds of the 2021-2027 budgetary cycle, Gulyás said.
The conditionality procedure against Hungary involves the partial suspension of three EU programmes, he said. “That should not be conflated with the issues of the budget and the resilience fund.”
Hungary is working to close the conditionality procedure as soon as possible, Gulyás said.
If the EC didn’t set one new requirement after the other, it could have closed the procedure long ago, but sometimes, the goal seemed to be not to close it.” Hungary has a constructive approach to the negotiations and hopes to see results quickly, he added.
Responding to a question on whether the European Parliament could stop Hungary from overtaking the European presidency in the second half of 2024, Gulyás said the EP had no way of doing that.
A recent draft resolution on the matter is “part of the propaganda steaming with anti-Hungarian sentiment” regularly on display in the EP, he added.
Answering questions on the draft budget, Finance Minister Mihály Varga said the government drafted next year’s budget in spring or summer so that families and companies can prepare for next year.
“I don’t think that pushing the drafting back to September or October would make it any more accurate for 2024,” he said. Next year’s draft calculates with a 385 HUF/EUR exchange rate, he said.
Regarding the central bank’s decision to cut the base rate, Varga said the government is expecting a substantial fall in interest rates next year, aiding private and company loans.
The interest burden on budgetary spending may decrease at a slower pace, as those loans have longer terms, he said.
Central bank losses have not been calculated in the draft budget, but talks are ongoing with the Budgetary Council of which Governor György Matolcsy is a member, he said.
Alongside the draft budget, the government will also submit to parliament amendments to tax laws, showing the changes for 2024, he said. “This is the government of tax cuts,” he added.
Extra taxes on companies and sectors making excessive profits during in war-time are expected to be phased out in 2024 for the banking, energy and pharmaceutical sectors, he said.
Health-care funding will grow next year.
The exact numbers will be forthcoming at next Tuesday’s press briefing, he said.
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