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Parliament passes 2015 budget

Telco

While union members were staging road blockages to oppose the plan, Parliament passed its proposed budget for 2015 today, according to reports.

The 2015 budget bill reportedly figures on revenue of HUF 16.3129 trillion and expenditures of HUF 17.1903 trillion, with a deficit of HUF 877.4 bln. Several thousand marched in the street to oppose the plan on Sunday, and road blockages against the plan were taking place yesterday. Opponents have said the new budget helps certain interests, but its overall impact will be to increase the growing number of people who fall below the poverty line in Hungary. 

The bill involves slight optimism on the part of the government regarding revenues, but the projected macroeconomic course is sustainable, K&H analyst Dávid Németh said in November after the budget was first proposed. Another analyst interviewed by BBJ after the bill was proposed in November, OTP's Szilárd Kondora, said that the 2.5% growth target is “higher than our 2% projection, but the same as the IMF’s forecast and analysts’ consensus.”

The budget bill was supposed to target a deficit of 2.4%, calculated in line with EU methodology, which is lower than this year’s 2.9% target, according to reports. The government has said it developed the bill on a forecast of a 0.9-percentage-point reduction in public debt to 75.4% of GDP, GDP growth of 2.5%, and a 2.6% rise in household consumption.

The draft budget assumes a 1.3% increase in employment, 1.8% average annual inflation and an external financing capacity of 8.4% of GDP. The government expects a 5.2% increase in VAT revenues to more than HUF 3 trillion driven by household consumption. Within that increase, both volumes and the inflation component would grow. In addition, the bill counts on the whitening of the economy, thanks to various government measures such as the implementation of online cash registers. Sectoral taxes would remain in place in 2015.

Parliament voted to approve the budget with 131 votes in favor and 62 against. Some 23 MPs were not at the session. Hungary’s governing party Fidesz has a two third majority, with 116 MPs, allowing the party to pass laws even if all other members of Parliament oppose those laws.

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