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Orbán Reaffirms Gov't Commitment to Market Financing

Government

Image by Szilárd Koszticsák/MTI

Hungary's government has no wish to change its strong commitment to market financing and private equity, Prime Minister Viktor Orbán said at an economic policy forum organized by the Hungarian Chamber of Commerce and Industry (MKIK) on Thursday, according to a report by state news wire MTI.

The government is intervening, by making up for the funding shortfall at "feasible rates", only until market financing recovers, Orbán said. The measure is part of the government's crisis management and does not signal a policy shift: Without market financing, Hungary cannot achieve its goals, he added.

The PM told the business leaders that the government's focus in 2022-2026 is the economy. He added that the government's ministries and ministers show the cabinet is "focused on the economy".

Orbán said Hungary will need 500,000 new workers in the next 1-2 years, adding that stress would be placed on "mobilizing internal reserves". He pointed to a "geographical reserve" and said it is not by chance that big industrial developments are focused on the east of the country. Labor could also be sourced from ethnic Hungarian communities in neighboring countries, he said, noting EU policies supporting regional cooperation.

Foreigners may not enjoy an advantage over Hungarians on the labor market, he said. Only if reserves are exhausted can there be talk of guest workers, he added.

Orbán added that linking universities to the actual operation of the economy remains a "key issue". Even though changes have been made to the makeup of boards of trustees of foundation universities, institutions of higher education must become an "integral part" of economic development, he added.

Summing up, Orbán said Hungary must "stay out" of the war in Ukraine, adding that the government is "strong enough" to achieve that endeavor. He added that the government will continue to veto sanctions that hurt Hungary's interests. 

He said Hungary will continue to be supplied with energy from Russia.

Orbán argued that the government will be capable of financing the regulated household utilities price scheme. He added that it will protect the 4.7 million workplaces in the country as well as create more.

The government will continue to support SMEs with special programs, even if the central bank base rate remains high, he said. Investment incentives will remain and energy capacity will be built up, he added.

The government will maintain an export-oriented growth strategy, and it will "break" inflation, he added.

Economic Development Minister Márton Nagy told the forum that half of SME credit is subsidized, which is "necessary in the current circumstances" but otherwise "not normal". He added that corporate lending penetration in Hungary is "significantly" behind compared to the rest of the EU.

Finance Minister Mihály Varga told the business leaders that the government has already started and will soon launch programs to increase energy efficiency in which local companies can participate as suppliers.

He flagged further fiscal consolidation and said the general government deficit will be reduced from a targeted 3.9% of GDP this year to 2.5% next year, but added that measures necessary to cut the gap have not yet been taken by the government.

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