Gulyas: the foundations of the “stable, solid” economy
The foundations of the Hungarian economy are “stable and solid” despite “the difficulties reflected by the markets or the rate of the forint”, Gergely Gulyas, head of the Prime Minister’s Office, said Thursday at a weekly press conference. Gulyas said Hungary’s industrial output was 9.4% higher in May than in the same month last year. He added that the country had reached full employment, government revenue had increased and “much of it is likely to turn out to be under-planned”.
He insisted that the government had taken all measures to ensure the stability of the budget and that the deficit targets could be met both this year and in 2023.
Gulyas said the forint’s exchange rate was heavily influenced by energy prices, mainly the price of gas, adding that the euro had also weakened against the dollar. “All of this is caused by the war and the sanctions (against Russia) that all of Europe is suffering from,” he said, noting that even Germany’s trade balance was in the red.
On inflation, Gulyas said Hungary was “doing a bit better” than other countries in the region, but added that the national currency’s exchange rate was “a bit worse”.
On another topic, Gulyas said the government had made progress in talks with the European Commission regarding Hungary’s access to EU recovery funds and adopted EC positions in four areas.
The government will reduce the ratio of public procurement with a single bidder below 15% and guarantee legal recourse in court against the prosecutor’s decision in corruption cases, Gulyas said.
The government will also ensure broader social consultations before submitting bills to parliament and reduce the number of fast-track legislative procedures, he said.
The government has agreed to devote a significant portion of EU funds to efforts to increase Hungary’s energy independence, Gulyas said. Once there is an agreement on stimulus funding, Hungary could also apply for an EU loan before August next year, which could be entirely devoted to building energy independence, said he declared. The government aims to “reach an early agreement by adopting the recommendations of the commission”, Gulyas added.
The minister criticized Hungary’s leftist MEPs for “intensely lobbying” to prevent a deal on the recovery fund, and insisted that Wednesday’s European Parliament resolution on Hungary was evidence of such efforts. He insisted that left-wing parties “would prevent the country from accessing funds to increase the salaries of teachers or health care workers”. “This, in a war situation, is unprecedented irresponsibility,” he said.
The government is considering ways to reduce energy dependence, such as restarting now defunct blocks at the Matra plant, Gulyas said, adding that three new gas turbines could be built over the next 2-3 years, while the government will also propose to increase the service life. extent of the former nuclear blocks of Paks.
The government plans to increase domestic gas extraction from the current 1.5 billion cubic meters to 2 billion, Gulyas said. He said rising gas prices are now making it profitable to extract shale gas in Mako, southern Hungary. The current capacity of Hungary’s 3 gigawatt solar power plant could also be doubled before the end of next year, the minister added.
The government will draft a bill to set up a special force of “boundary hunters” within the police, Gulyas said.
Border chasers will be ready to end violence along borders, “and laws will have to be changed accordingly if necessary”, he said, adding that the Home Office will look at the tools the contingent will be able to use, he said.
Initially, the contingent should number 4,000 soldiers, he said, with 2,200 men recruited during the first campaign.
Border hunter officers will be ready to serve from September, after brief training, he said.
Unlike the police, border hunters will not need a high school leaving exam, Gulyas said.
This will relieve the army and more people will protect Hungary’s borders, he added.
The resources will be provided from the defense allocation, he said.
Since Hungary built a border fence in 2015, the European Union has financed less than 5% of border protection costs, “despite the fact that we protect the external borders of the Schengen area and Europe as well than ours,” Gulyas said.
Although “we cannot rely on Brussels when it comes to the border fence”, it will need to be developed further so that it is more difficult to climb with ladders, he said.
In addition to a recent increase in attempts to violate borders, violators have acted more aggressively than before, he said. He cited an armed conflict on the Serbian side of the border that claimed lives and added that armed migrants had repeatedly tried to cross the border fence.
On talks with the EU, Gulyas said an agreement was expected in the fall.
He insisted that the main obstacle to a deal was the European Parliament, where “Hungarian left-wing MEPs and their Western comrades” did everything they could to deprive Hungary of funds allocated for salary increases for teachers and workers in education. health.
The EP also ‘attaches completely unrelated issues’ when it took a stand not to sign a deal on Hungary’s stimulus funding if the country continues to block the global minimum corporate tax, a step that , according to Gulyas, “does not respect the European treaties”. ”.
Responding to questions about the weakening of the forint over the past few weeks, Gulyas said Hungary’s exposure to foreign energy resources is significant, although declining. Government debt is also higher than that of other countries in the non-euro area region, despite declining trends, he said. Changes in the exchange rate reflected both of these factors, he said.
The currency is determined by public debt and energy dependence, and Hungary’s public debt is higher than the regional average despite the fact that it has fallen and that of other countries has increased over the past decade, he said. -he declares.
The forint is the weakest among the regional currencies, but Hungary’s inflation rate is the lowest among the Visegrad countries, thanks to the “price cap limiting inflation by 6 percentage points”.
The main factor for the weakening of the forint is the price of gas, Gulyas said. Energy independence and long-term supply chain security will calm markets, he said.
A deal on EU funds should strengthen the forint but “we shouldn’t expect miracles from a deal either,” Gulyas said. He added that Hungary does not have financing difficulties, “and this is also evident for the financial market”.
“There is no argument that the war is the cause of what is happening with inflation and the exchange rate,” he said. “We cannot stop these developments, only curb them.” Halting the rise in petrol prices could “calm inflation”, but the Hungarian economy is stable and the government will maintain the deficit target in any case, he said.
Regarding energy supply, Gulyas said domestic gas storage facilities are 35% full and should hopefully be full by October.
On the issue of a Russian gas embargo, Gulyas said that “the EU cannot circumvent Hungary”. He said “peace is usually born at the negotiating table” if two warring countries cannot win on the battlefield. The root of the problems in many Western countries is that sanctions against Russia have been extended to include energy resources, he said. Hungary’s fuel supply would be at risk without Russian oil, he added.
In response to a question about whether a pay rise was planned in the public sector, Gulyas said “we are trying to protect what we have achieved”. He added that “when better times come and the war is over”, the government will want to maintain the pace of increases implemented over the past ten years.
On additional resources to be given to the health sector, he said the sector had a budget surplus of 86 billion forints last year and “the surplus could be less” this year. The current economic situation is changing much faster than in past decades, he added. “As a result, we cannot speak of further wage increases,” he said, adding that the aim was to protect the country “from a situation caused by war and a wrong European response.”
Raising the salaries of teachers and members of the armed forces would be particularly important, he said.
Commenting on news reports that Justice Minister Judit Varga spoke of ‘significant austerity’ at a closed meeting of the national judicial council, Gulyas said Varga had referred to cuts to ministries , showing that the government was cutting its own spending. Austerity is a measure that is part of the left’s toolbox, he added.
Commenting on a recent proposal by the opposition DK to offer utility fee caps only to those who need them, he said the left wing had always opposed utility fee cuts. The government’s aim is to extend family support, protect jobs, pensions and utility cost caps next year, “no matter how difficult the year we face”, it said. he declared.
In response to a question about the increase in the budget of the Hungarian secret service, he said that “we are in a situation of war and our borders are much more threatened than before, which requires a reinforcement of the secret service”.
In response to a question about the reintroduction of conscription like Latvia, he said that no such proposal had been made at the Council of Ministers since he had been a member.
Gulyas said only estimates were available on how many people fleeing the war in Ukraine remained in Hungary, but more than 50,000 were ethnic Hungarians from Transcarpathia and a lower number were Ukrainians.
In response to a question whether Prime Minister Viktor Orban had accepted an invitation from the Ukrainian President to Kyiv, he said no decision had been made so far.
Commenting on the recent increase in coronavirus infections, he said the increase was so small that no precautionary measures were planned.