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The government projects 4-5 percent economic growth in 2021 thanks to support to be paid for economic recovery this year, Finance Minister Mihály Varga said on Sunday.

Varga told pro-govt public Kossuth Rádió, that the government’s action plan for reopening the economy includes 10 million forint (EUR 28,000), interest-free loans offered to SMEs in the most vulnerable sectors, with repayments deferred by three years in order to allow time for the sector to recover.

He said that during the first two months of last year, growth was around 4 percent as planned, and this was followed by large recession from March. Hungary’s economic policy reacted without delay, partly thanks to an economic protection action plan launched in the summer of 2019, he added. The government took it very seriously that even after the start of the virus, investments should not stop and therefore provided around 4,000 billion forints to help modernisation and capacity expansion in various industries, he said. These investments will yield results this year and the years ahead, he added.

Additionally, he said the cabinet had reduced taxes and contribution payments. He cited reducing burdens in some of the most vulnerable sectors and further reducing the social contribution tax, which he said could continue in the future.

The government had projected around 1 percent, or 400,000 billion forints, budget deficit for 2020 but it increased to 8-9 percent as a result of the coronavirus pandemic.

In terms of economic performance, Hungary is in mid-field among European Union countries, with a recession of around 5-6 percent, Varga said. The recession was “brutal” in some countries, he said, citing 11 percent in Spain and above 8 percent in France.

featured image via Lajos Soós/MTI