As part of its action plan to relaunch the economy after the coronavirus pandemic, the Hungarian government has decided to introduce a new interest-free loan to help SMEs, the Prime Minister announced on Thursday. Viktor Orbán also claimed that the action plan to relaunch the economy would have three phases.
SMEs can raise an interest-free loan with ten-year maturity of up to 10 million forints (EUR 28,000), with repayments deferred by three years, Orbán told the annual opening meeting of the Hungarian Chamber of Commerce and Industry.
The Hungarian economy was breaking records before the pandemic, Orbán said. Although the economic fallout rocked the economy, it managed to stay on its feet, he said.
The government’s action plan to protect the economy has succeeded in its primary goal of preserving jobs, Orbán said.
The number of jobholders reached pre-pandemic levels in December, rebounding to 4.5 million, with the country’s jobless rate being the third in the European Union, he said.
The government introduced a loan moratorium and a wage support scheme to support particularly hard-hit sectors, Orbán noted. To bolster vulnerable players, the social contributions were scrapped and the business tax slashed by half, he said.
The investment support scheme has helped 1,434 companies so far, helping preserve 280,000 jobs while creating tens of thousands of new ones, he added.
The government “resisted the temptation to revert to a subsidy-based economy,” Orbán said.
Orbán said the action plan to relaunch the economy would have three phases. The first already began on Jan. 1, he said, and would conclude on April 1, with VAT on new home constructions slashed to 5 percent, a 6 million forint loan for home renovations half of which is a non-refundable, and the phasing in of the 13th month pension. The government has also decided to exempt people below the age of 25 from paying a personal income tax from 2022.
The aim of the home construction programme is for 40,000 homes to be built each year, he said.
The second phase will take place from April 1 to July 1, focusing on higher education, he said. Finance Minister Mihály Varga has allocated 1,500 billion forints for developments, Orbán said, adding that “hopefully, that can go up to 2,000 billion.” Universities that indicate their intention to take part in the transformation will have enough time to take that step by April 1, he said.
The third phase between July and October will be a period of “big developments” focusing on green energy, developing a circular economy and full digitalisation, Orbán said.
According to Orbán, Hungary was at loggerheads with the European Union regarding certain issues, including traditional family values and migration, but they were the closest of allies regarding others, such as the green economy and digitalisation.
He said that launching the first tenders in connection with Hungary’s agriculture and rural development strategy was an important part of the plan to restart the economy.
The government is competing with others to attract foreign investments and has launched a robust investment promotion scheme, Orbán said.
Hungary wants to preserve its significant position in the region when it comes to the switchover from conventional to electric cars, he added.
Meanwhile, Orbán said Hungary’s economic recession in 2020 was expected to be closer to 5 percent than 6 percent.
He also spoke of the development of Hungarian ownership in the economy, noting that Hungarian ownership in the energy sector has increased from 29 percent in 2010 to 59 percent, in the banking sector from 40 percent to 57 percent, and in media from 34 percent to 55 percent. He added that a breakthrough had not taken place in the retail sector, and this situation needed to change.
Finance Minister Mihály Varga, PM Orbán and Chairman of the Hungarian Chamber of Commerce and Industry László Parragh. Image by Facebook
“We’d like to see ownership above 50 percent Hungarian in the infocommunications sector, in building material production and in rolling stock production, too,” he added.
Finance minister: Economic growth to be based on investment in upcoming years
Economic growth in the upcoming years will be the based on keeping the investment rate high, Finance Minister Mihály Varga said on Thursday.
Hungary’s economy protection measures during the epidemic primarily focused on keeping the rate of national economy and state investments at a high level, Varga told the year opening forum of the Hungarian Chamber of Commerce and Industry.
This has given considerable impetus to growth in the past year, he added.
In European comparison during the first three quarters of 2020, Hungary was at second place in terms of national economy investment and at first place in terms of state investment, Varga said.
The second quarter of this year will be a turning point, with economic growth expected to reach double digits, he added.
featured image via Viktor Orbán- Facebook