Minister of National Economy Mihály Varga summarised in four points all the things the Hungarian government can do to keep domestic economic growth above the European average. He did not mention a lot of new things; it was more about setting the focus. Especially since the audience to which the minister transferred his knowledge was not indifferent.
The quartet of points to fulfil the Orbán government’s aspirations to fine-tune economic policy were announced by Varga in Győr: European Union funding, handing out credits, a flexible labour market and investments. His audience was the first Hungarian-German Vocational Training Conference organised by the German-Hungarian Chamber of Commerce (DUIHK) and Audi Hungaria Motor Kft.
Point 1: Intensify the use of EU funds
As the first point to revive boom times the Minister named intensifying the use of available funds both from the Hungarian and the EU budget. All tenders must be announced by the middle of 2017, especially those that result in enhanced capacities and strengthen employment.
However, this is not all of it, since the applications for tenders must be assessed in a much faster way than up until now. Keeping it real, Hungary can’t revive the boom this way; the best thing that can happen would be slowing down the threatening decline.
Since in the past years the Orbán government has already intensified handing out the EU billions from the budget cycle 2007-2013, all these funds were gone by the 31st of December. It’s another question how effectively these funds have been distributed, however one thing is a fact, namely that the money-distributing machine operated by the Prime Minister’s Office under the leadership of János Lázár managed to speed up so much that even distributing HUF 150 billion in a month was a piece of cake for them.
However, it was exactly Lázár who admitted recently that “in order for the GDP to grow clearly over 2% in 2016 still, about HUF 1,500-2,000 billion would be needed from EU funds”, but in reality much less is available.
Point 2: Finally find solution for the credit crunch
According to Minister Varga the second area of growth in the coming months would be stimulating credit activities. This will be helped by the fact that the special tax for banks will be reduced to half after January 1, 2016 and further decreased in 2017.
The Hungarian National Bank is also supposed to help, with its credit program for growth supposedly running out by the end of this year. The Matolcsy house has not given any indication as of yet if they are willing to continue, but according to the opinion of the leader of the economic department a slower ending phase would be more helpful.
On the other hand, the economic policy is responsible for breaking down the barriers of extending loans, and according to Varga they are looking for solutions to make loans extended in riskier sectors more secure.
Point 3: Make the labour market even more flexible
It was a little disappointing for the companies that Varga only mentioned expanding the results of the successful public employment program, when speaking about setting up a more flexible labour market. The program called “income instead of social benefit” activated 150,000 people each year, however the return to the primary labour market must be further facilitated in the future. In addition vocational training must be adjusted to meet the needs of the economy.
Point 4: Build an investment fund in 2016
The fourth point of the economic stimulus program is stimulating investments. The minister announced that there will be an investment fund set up in 2016 for this reason. Since the state budget is already approved for next year, we can only think that the investment fund to be set up as announced recently frequently by government-side politicians as a speculation.
Apparently this is not the same as that fund, which the government is planning to set up based on the proceedings of the sale of state farmland, which will be finished in November. As to that point Lázár made it clear that the state wealth will be managed and multiplied carefully.