Hungarian economy could return to a sustained growth path in the second half of this year.Continue reading
A new way of dealing with increased budget deficits and debt levels must be developed in the European Union, but this cannot lead to the European Commission taking over and taking away further elements of national sovereignty from Member States, the Hungarian Finance Minister said in Luxembourg.
Speaking to Hungarian journalists after a meeting of the Economic and Financial Affairs Council (Ecofin), Mihály Varga noted that Hungary, along with other countries, wants to restore its economy to the stable growth path it enjoyed in the period before the COVID epidemic. This is why the question of who gets the power is fundamental, and why each country’s budget should be determined by governments elected by the people in the national interest, not by the EU commission or individual deals or other preferences, the finance minister underlined. He said that
the new system, designed to reduce rising budget deficits and debt levels, would be a pretext for the European Commission to have an even stronger say in Member States’ fiscal policies, and it could also violate the principle of equal treatment.
Hungary is committed to European cooperation, but does not intend to give up its national sovereignty and economic self-determination, he added. The urgency of adopting the reform must not be at the expense of the elaboration of the rules and thus of the interests of the Member States, he said.
The minister also noted that there was a north-south divide on this issue. The north wanted more rigor, the south more flexibility. Hungary is interested in developing a well thought-out system that is acceptable to all, he underlined.
He also stressed the importance of ensuring that interests of Member States prevail, and that economic governance is geared more towards the development of economic growth paths and the appropriate and proportionate management of debt. He said that if a debt-centered reform package is indeed on the table, it will be good news for Hungary.
If the Hungarian government manages to tackle the higher inflation caused by high energy carry-over from the previous period this year, there is a good chance that it will be able to maintain next year’s deficit level, amounting to 2.9 percent of GDP.
Varga also pointed out that countries, especially those neighboring Ukraine, shall be allowed to deduct some form of increased expenditure from their deficits, including the accountability of border protection costs. Since the construction of the fence, Hungary has so far spent HUF 650 billion (EUR 1.7 billion) on border protection, with a “very modest” contribution from the European Commission alone, he recalled. Regarding the evaluation of the Recovery and Resilience Facility, the finance minister said that discussions were under way to bring Hungary closer to receiving the funds to which it is rightfully entitled.
Via MTI, Featured image: Facebook/Varga Mihály