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Finance Minister: Gov’t to Use Credit to Finance Its Own Recovery Program

MTI-Hungary Today 2021.09.18.

To keep Hungary on a growth path the government must launch its economic recovery and resilience programme in all parts of the country, Finance Minister Mihály Varga said on Friday.

As Hungary does not have time to wait for Brussels to approve its post-pandemic recovery plan, the government will use credit to finance its own 2,500 billion forint (EUR 7bn) recovery programme, the minister said at the Jász-Expo and Festival in Jászapáti, in central Hungary.

Hungary can continue debating Brussels regarding the recovery plan, “but we are entitled to these funds, Varga said, adding that once the disputes had been settled and Hungary receives the money, it would be able to pay it back quicker.

Due to Delay of EU's Recovery Fund, Issuance of Hungary's FX Bonds Hits Record High
Due to Delay of EU's Recovery Fund, Issuance of Hungary's FX Bonds Hits Record High

The Orbán administration had previously forgone the HUF 3.4 billion (EUR 9.1bn) credit line of the EU’s recovery package, and only requested the grants, arguing that it did not intend to get further into debt.Continue reading

The aim is to keep Hungary on a growth path and preserve the economic achievements of the past years, Varga said. “The crisis made it clear that the good governments are the ones that are the quickest to react, and that is what the Hungarian government did,” he said.

Varga said Hungary had been one of the fastest growing economies prior to the outbreak of the pandemic. The country’s annual growth rate averaged 4.1 percent between 2014 and 2019, while the European Union average growth rate was 2.1 percent. Hungary had a balanced budget and the public debt was reduced from 80 percent to 65 percent of GDP, he said.

Varga noted that Hungary’s economy grew by 4.6 percent in 2019. In the second quarter of 2021, growth exceeded pre-pandemic levels, the minister said, noting that only six EU countries had accomplished this feat. Industrial output was up 17 percent in the first half of the year, Varga said, adding that investments were continuously on the rise.

Featured photo by Zoltán Máthé/MTI