Gov't Submits 2024 Budget Bill to Lawmakers

The bill targets a 2.9%-of-GDP fiscal deficit and a year-end state debt-to-GDP ratio of 66.7%, down from an anticipated 69.7% at end-2023. It assumes average annual inflation of 6% and GDP growth of 4%.

The bill targets revenue of HUF 38.261 trillion and expenditures of HUF 40.776 tln The deficit target is approximately HUF 2.515 tln. 

It would allocate HUF 1.319 tln for the National Defense Fund. In the 2023 budget, HUF 842 bln is earmarked for the fund to bolster the country's defense capabilities.

The expenditure target in the bill for a fund established to maintain the regulated utility price scheme for households is HUF 1.361 tln. The fund's expenditures are set at HUF 2.58 tln in the 2023 budget. Central budget support for the fund is set at HUF 488.5 bln in the bill, while payments, contributions, and windfall profit taxes from companies in the energy, mining, telecommunications, aviation, and pharmaceutical sectors would cover the rest of the fund's expenditures.

Expenditures of the pension insurance fund are set at HUF 6.02 tln in the bill, up from HUF 5.555 tln in the 2023 budget act. 

Expenditures on state investments are targeted at HUF 555.4 bln in the bill, down from HUF 580 bln in the 2023 budget act.

The bill targets HUF 3.881 tln of spending on European Union-funded developments.

Expenditures on debt servicing are targeted at HUF 3.145 tln in the bill, up from HUF 2.541 tln in the 2023 budget act.

In the reasoning for the bill, submitted by Finance Minister Mihaly Varga, the government called next year's budget a "defense budget" that addresses the challenges posed by "the negative consequences of the instable global economic environment, Brussels' failed sanctions policy and the prolonged war".

The government pointed to the need for a budget that "ensures the physical and economic security of the country, protects Hungarian families, workplaces and pensions, and maintains a utilities price protection system without peer in Europe". 

Budget Calculates With Risk of "Drawn out War" in Ukraine

Presenting the bill to House Speaker Lászlo Kövér in parliament, Varga said the government was sticking to its practice of submitting the following year's budget in the summer. The 2024 budget bill calculates with known risks, of which the biggest is the drawn out war, he added.

He said the final vote on the budget bill could be taken on July 7.

Varga said Hungary's defence spending was targeted at HUF 1.796 tln for next year, HUF 401 bln more than the allocation for 2023 and over the equivalent of 2% of GDP.

He said family subsidies would add up to HUF 3.307 tln next year. Spending on education will climb HUF 629 bln to HUF 3.434 tln and healthcare expenditures will rise by HUF 424 bln to HUF 3.225 tln, he added.

He reiterated that the government would start to phase out windfall profit taxes from 2024. Tax burdens for banks, pharmaceutical companies and energy companies will be halved next year, he added.

The government expects to submit amendments to tax laws to parliament in a week, he said.

Budget reserves will come to HUF 220 bln, he added.

Kövér said MPs could debate the budget bill on June 13-15 and 20-23, and submit a modified proposal on July 2. The final vote, on Friday, July 7, will mark the end of the summer session, he added.

Fielding questions, Varga noted that the expected losses of the National Bank of Hungary (MNB) next year would be determined after consultations with central bank experts.