Gen Gov't Deficit to Reach 6.1% of GDP in 2022 - Varga

Analysis

Mihály Varga

Image by Alexandros Michailidis / Shutterstock.com

Hungary's general government deficit, relative to GDP, is set to reach 6.1% this year as the result of the procurement of a "significant volume" of additional gas, Finance Minister Mihály Varga said at a conference of economists on Friday, according to a report by state news wire MTI.

Varga noted that the general government deficit target, calculated according to the European Union's accrual-based accounting rules, was earlier 4.9% of GDP.

He suggested amendments would have to be made to next year's budget and said 2022 and 2023 would be "a difficult period", but added that Hungary's economy could return to its earlier growth path from 2024.

Varga said disputes with the European Union over disbursals of Hungary's Recovery and Resilience Facility (RRF) funding could be resolved by mid-November. He added that debates "rooted in politics" are "significantly influencing" Hungary's economic policy measures.

He said the decade ahead is "not easy", noting high inflation, energy and commodities prices, as well as drought and migration, adding that those crises point to an "unprecedented" debt and financing crisis on the horizon.

"Every country with a big debt could be in trouble," he said.

Varga said energy and food are the two most important factors to weigh when assessing a country's economic vulnerability, adding that "we're much more vulnerable with regard to energy".

He said the government is focusing on both SMEs and big companies when taking steps to manage the energy crisis, warning that if Hungary's big companies "drop out of the value chain", the resulting losses will be bigger than any subsidy offered by the government.

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