The prime minister said banks, insurance companies, large distribution chains, energy and trading companies, telecommunications companies and airlines would be obliged to pay "a large part of their excess profits."Continue reading
The government decided to make a readjustment of 10 percent – nearly HUF 568 billion – in the 2022 budget spending, according to a recent resolution, HVG reports.
The decision is not surprising though, as Hungary recently posted a 2.892 trillion forint (EUR 7.21 billion) budget deficit in January-June.
Earlier, the Hungarian government had already announced new windfall taxes worth 800 billion forints on “extra profits” earned by banks, energy companies, and other firms to plug the budget deficit. Subsequently, the government also indicated that the central budget expenditure would have to be slashed drastically.
Under a new government resolution signed by Prime Minister Viktor Orbán and published on July 11th, various items in this year’s budget will be cut for a total of HUF 152.5 billion.
The largest item includes the Paks Nuclear Plant Expansion, as the capital increase of its project company (Paks II Ltd.) has been reduced by HUF 100 billion. (Originally, HUF 270 billion was earmarked for this purpose).
In addition, more than 416 billion forints (EUR 1.02 billion) of the planned spending of ministries has been blocked. This brings the total amount of frozen assets to HUF 568 billion, which means the government has cut spending in this year’s budget by roughly 10 percent.
The biggest cuts will have to be made by the Ministry of Technology and Industry, the Prime Minister’s Office, and the Interior Ministry. The exceptions are the pension insurance fund, the public utility protection fund, and the defense fund, which will not be reduced.
The freeze means that if the government does end up with extra money, the funds now taken away can in principle be reclaimed by the affected ministries.
Featured photo illustration by Attila Kovács/MTI