A slew of social and welfare programs are coming next year, and the government seems to have no brains to apply the parking brake. Parliament will vote on the 2022 budget on Tuesday.
If the pandemic can be curbed on a global scale, economic growth is expected to significantly exceed analysts’ expectations, which will increase the government’s budgetary room for maneuver, Arpad Kovacs, head of the Budget Council (KT), told World Economy. As a faster-than-expected recovery and increased growth prospects gradually improve fiscal positions, the big question is what the Cabinet will spend on additional revenue from the growth surplus. And with the outlook for next year improving, he noted, we wouldn’t be surprised if a wage increase was decided in the near future.
Parliament will vote on the 2022 budget on Tuesday.
Next year’s budget, with a 5.2 percent increase in GDP, was calculated by the cabinet’s deficit of 5.9 percent. Although it can be argued that the deficit is relatively high compared to levels of about 3 per cent, but – as indicated by Finance Minister Mihaly Varga at the World Economic Conference – the Hungarian deficit is not at all outstanding in regional terms.
Stabilization and convergence programs sent to the European Commission at the end of April showed that Hungary and Poland could return to the Maastricht 3% standard as soon as possible, but the Czech Republic, for example, does not plan to do so in the foreseeable future. future.
Photo: MTI/Bruzák Noémi
In the case of Hungary, the situation is significantly different from the crisis of 2008/2009, when the fiscal government, as a result of pro-cyclical economic policy, had no choice but to radically reduce the deficit. Disciplined fiscal policy and a 15 percentage point cut in public debt have greatly expanded government options, but the Cabinet is also trying to take advantage of the room for maneuvering created by the suspension of EU rules, which could make fiscal consolidation much slower than in the past. time.
The Prime Minister’s announcement last week regarding income tax refunds also confirms this ذلك
The government will take matters into its own hands more loosely, and the investment tax payment alone will cost the budget more than 550 billion.
Another notable spending item is the salary increase for healthcare workers, which could budget 458 billion Swiss francs next year. In addition, the government has decided on a number of welfare measures, including the return of the 13-month pension, the income tax allowance for those under 25 years of age, the reduction of value-added tax on new housing, and the extension of other housing subsidies.
Together, these represent HUF 920 billion in the 2022 budget. Wage developments in the public sector can also be put on hold. It is true that the government was one of the first countries to raise teacher salaries in 2013, but the pay explosion that has occurred since then, particularly the massive increase in the minimum wage and the guaranteed minimum wage, has practically eroded. their wages. It is certainly an indication that the Prime Minister promised in the Teacher’s Day greeting to increase “the appreciation of the work of teachers”, so it is not excluded that this will also take place in the next stage of wage development.
This time around, the Cabinet will not use the extra revenue from growth to bridge the deficit and debt.
For this reason, the Supreme Committee warned, in its opinion regarding next year’s budget, that the economy will witness a state of excessive exhaustion, stressing that it would be good to avoid these risks and gradually reduce financial balance indicators at a stronger pace than planned. On the other hand, Arpad Kovacs said it is always our duty to think about what we should spend on the benefits of growth, adding that these are all dilemmas that give us hope.
