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Can Hungarian Villages Be Saved? Govt Kicks Off Rural Development Project Once Again

Ábrahám Vass 2019.03.25.

The government recently announced the kick-off of a Hungarian Village Funding Scheme aimed at halting depopulation and improving the living circumstances in rural areas. Although the program certainly addresses an existing problem, it also raises a plethora of red flags.

The end of communism left many rural areas at the mercy of domestic migration, aging and a brutal job shortage. Several rural settlements faced depopulation as the younger generations began migrating to bigger cities at home and abroad. The grim circumstances facing rural communities often resulted in a hopeless population reliant on drugs and alcohol.

The previous left-wing administrations were unable to rectify the situation and often made it worse by annulling public transport lines. In contrast, Orbán and his party have supported rural areas for years, both before and after Fidesz came to power again in 2010. In 2018, the party is still favored overwhelmingly by people residing in rural, and often poor, areas.

Aside from some loud success stories (the restitution of terminated public transport lines and the fostered work scheme), the current administration frequently faces criticism for fostering murky ties with certain businessmen and for its flashy measures which often fail to provide meaningful, long-lasting solutions.

Population change in Hungary by settlement type (2001-2015). Source: nepesseg.com

€472 million in the first year

PMO chief Gergely Gulyás announced the approval of the Hungarian Village Program in October of last year. Recently, in February, he detailed the financial goals of the program. Of the 150 billion forints (eur 472m) allotted, 75 billion (eur 236m) will be earmarked for developing public services. Around 25 billion (eur 79m) will be spent on home purchase subsidies (CSOK) aimed at helping village residents remain in their communities. In addition, a further 50 billion (eur 157m) will go towards road network development.

In an interview with Mandiner, Program head Alpár Gyopáros argued that while villagers do tend to migrate to big cities, city-dwellers are also finding their way to the country-side. Gyopáros believes this confirms there is a need for village life and stated that the government’s ultimate goal is to ensure that the choice between living in the country and the city is not based on quality of life, but on lifestyle.

Rural CSOK

The rural edition of CSOK will be tailored to towns and villages with fewer than 5,000 residents, and particularly those wherein the number of inhabitants has decreased below the Hungarian average since 2003. Hungary has 3,200 settlements in total, and currently, 2000 villages fit the criteria.

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Some of the same rules will still apply: 600,000 forints (EUR 1,890) in support is available after one child, 2.6 million forints after two children and 10 million forints after three children. However, this time around, the support can also be used to buy, expand and revamp homes in the villages affected.

Job creation should also be a priority

Many critics fear that these measures will prove just as superficial as some of the government’s previous plans (National Rural Strategy 2012-2020 and Rural Development Programme 2014-2020). Others lament the lack of plans aimed at tackling the inadequate level of jobs and services available, such as education, health care and infrastructure.

Senior analyst of ING Bank, Péter Virovácz, told economic investigative site G7 that it is senseless to raise CSOK if the government doesn’t also intend on implementing a job creation program. After all, he argued, villages are not emptying because of a lack of real estate, but because of a shortage of jobs.

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Investment expert Viktor Zsiday readily admits that urbanization is a complicated worldwide phenomenon hard to address. However, he claims that although it is good that the government is making strides, it is still going about it in an inadequate way. Aside from the job shortage, Zsiday cites the poor level of education in the area and explains that it is a prominent problem in and of itself as evidenced by the results of the competency evaluation.