Some HUF 1,400 billion ($6.47 billion) in direct subsidies -- much of it from a restructuring of EU funding -- will be available to Hungarian companies in the next two years, National Development and Economy Minster Gordon Bajnai said at an economic summit in Parliament on Thursday.
HUF 500 billion will be available to companies under the New Hungary Development Plan and another HUF 400 billion will be available under the New Hungary Rural Development Program in 2009-2010, Bajnai said.
Both programs function as frameworks for paying out EU development funding. Some 2,300 exporting SMEs could benefit from the funding, in the form of direct subsidies, loan guarantees and interest subsidies, he said. The EU development funding translates as HUF 1,800 billion in orders for Hungary’s construction industry, he noted.
Steps must be taken to counter the effects of the global economic crisis; companies must be given incentives to keep jobs and the market must be stimulated, Bajnai said. The government will set up regional crisis funds for this purpose, drawing on EU monies as well as from the Workforce Fund. Companies that maintain their staff numbers will get discounts on payroll taxes, and new incentives will be introduced for labor-intensive businesses.
The government has already made a micro-loan program and a loan guarantee program available to businesses, and the resources of the Hungarian Development Bank (MFB) are being used to boost banks’ financing for lending, especially for SME loans, Bajnai said. Interest subsidies will also be available with the restructuring of the EU funding, he added.
The government is increasing the intensity of paying out subsidies, Bajnai said. Subsidies cover up to 70% of the cost of investments in disadvantage regions, and companies are eligible for a 40% advance. Less is also being demanded of applicants.
The government has started a program to reduce bureaucracy which affects employment, acquiring permits and the system for applying for subsidies too, Bajnai said. From the middle of next year, state and local government offices will be required to pay interest on money they fail to pay to companies on time.
Ways to make Hungary’s environment for doing business more competitive must be considered, and progress must be made in cracking down on the shadow economy, Bajnai said. An important step to take against corruption has to do with party financing, he added.
The government could cut taxes in the mid-term, if state spending is cut, the tax system is restructured and labor costs are reduced, Bajnai said. It is important to reach an agreement on the plan for adopting the euro, he added. (MTI-Eco)