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“Hungary’s 2021 budget is the budget of economy protection, which while also maintaining the epidemiological state of readiness includes the resources required for supporting families who are raising children, valuing pensioners, preserving workplaces, and the creation of new jobs”, Minister of Finance Mihály Varga said on Monday in Parliament.

In his opening speech during the general debate on next year’s budget, Mr. Varga said it was a victory for the whole of Hungarian society that Hungary was able to immediately introduce the necessary measures in the epidemic situation, and has essentially won the battle against the virus. “Even given this, we express our deepest condolences to the families of the victims”, he added. He said the next task is rebuild the rate of growth of the Hungarian economy to its pre-epidemic level as quickly as possible.

“For 2021, the government is calculating with dynamic growth of 4.8 percent of GDP, a moderate, 3 percent rate of inflation, and a target deficit to GDP ratio of 2.9 percent that remains below the Maastricht reference value, with a security reserve that exceeds half a percent of the gross national product, while realising the continued reduction of sovereign debt”, the Minister stated.
“Protecting families, assuring the country’s opportunities for economic development, and guaranteeing Hungary’s security occupy prominent places in next year’s budget, which is built on a Health Assurance and Epidemiological Fund, and on an Economy Protection Fund”, he emphasised.

“In 2021, all highlighted areas will have more funding at their disposal, and for instance some 2295 billion forints (EUR 6.67 billion) will be available next year for supporting families, which is 67 billion forints more (EUR 194.7 million) than this year”, he highlighted.

“The Family Protection Action Plan will continue next year: the family tax system and the funding towards the first successful language examination and the highway code training course will be maintained, the home care fee will be increased, the number of nursery school and kindergarten places will be increased, and the financing of meals for children will continue to be treated as a priority”, he stated.

“Next year’s budget includes the resources necessary to enable the appreciation of pensioners; expenditure for pension services has been set at 3907 billion forints (EUR 11.355 billion) for 2021, which is 327 billion forints (EUR 950.5 million) more than this year. The sum required for the reintroduction of the 13th monthly pension is also available”, Mr. Varga announced.

“In 2021, the government is earmarking 2229 billion forints (EUR 6.478 billion) for education, which is 78 billion forints (EUR 226.7 million) more than this year, while the healthcare budget will by 2115 billion forints (EUR 6.147 billion), which means 156 billion forints (EUR 453.4 million) in additional funding compared to 2020”, the Finance Minister explained.

Mr. Varga said one of the government’s priority tasks is to assure the protection of the borders and public safety, indicating that a budget of 705 billion forints (EUR 2.05 billion) will be available for defence, which is 154 billion forints (EUR 447.6 million) more than this year, while 953 billion forints (EUR 2.77 billion) in funding will be available for developing law enforcement, which is 93 billion forints (EUR 270.3 million) more than in 2020.

He also mentioned that the budget for social security and welfare services, which includes amongst others sick leave payments, the family allowance and unemployment benefits, will be increasing by 541 billion forints (EUR 1.572 billion) to 6500 billion forints (EUR 18.892 billion) next year.
He confirmed that the government remains against a basic income that can be acquired without work, and will instead be providing a higher level of traditional welfare services.

Mr. Varga also reported on the fact that next year a budget of 4477 billion forints (EUR 13 billion) will be provided for the salaries of public sector employees, which is 387 billion forints (EUR 1.125 billion) more than this year, in addition to which the budget for the public work scheme will also be significantly increased to 165 billion forints (EUR 479.5 million) to enable the handling of the effects of the pandemic.

With relation to the Economy Protection Fund, the Minister highlighted: “We have drawn up the largest economy protection program in Hungary’s history, as a result of which in 2021 a budget of over 2550 billion forints (EUR 7.411 billion) will be available for preserving jobs, facilitating the creation of new workplaces, reinforcing key sectors, financing the liquidity of enterprises, supporting families and protecting pensioners”.

“The Health Assurance and Anti-Epidemic Fund includes some 3000 billion forints (EUR 8.719 billion) in resources for protecting against the epidemic and assuring the functioning of the healthcare system”, he stated. “138 billion forints (EUR 401 million) in additional funding is being made available for the financing of treatment and prevention services, which will also assure a pay increase for healthcare workers and health visitors”, he added.

“The Healthy Budapest Program will also be continuing next year, with a budget of almost 30 billion forints (EUR 87.2 million)”, he stated.
With relation to EU funding, the Minister said: “In 2021, the Hungarian budget is prepared to realise a level of pre-financing that will subsidize a significant proportion of EU funding”.

In reaction to the debate of the financing of local governments, Mr. Varga underlined: “A budget of over 857 billion forints (EUR 2.49 billion) will be available for local governments in 2021, which is 16 percent, 118 billion forints (EUR 343 million) more than this year”. “Not counting sources of credit, local governments will have almost 3000 billion forints (EUR 8.72 billion) in funding available next year”, he said, adding that the business tax revenues of settlements have increased by 50 percent over the past 5 years, and accordingly this source of income is expected to continue to increase in future.

He also reported on the fact that a credit line of 200 billion forints (EUR 581.3 million) is also being made available to local governments for investment projects, in addition to which the Modern Cities and Modern Village programs will also be continuing, and local governments will also be able to spend money from EU programs on their development projects.

“However, everyone must pay their part of the costs associated with protecting against the epidemic, and this is precisely the aim of the solidarity contribution payable by local governments: richer local governments are paying money to poorer municipalities”, the Minister announced. “In contrast to some news reports, this is not a new deduction on the part of the government, but has already been operating in recent years; what is perhaps unusual is that the leadership of the Municipality of Budapest does not want to participate in this solidarity”, he noted.

“The 2021 budget shows that the government is handling the crisis situation by providing assistance, not through the introduction of austerity measures”, Mr. Varga said in summary.