Hungary's Finance Minister submits 2025 'peace budget' amid recession concerns

Budapest (The Uttam Hindu): Hungarian Finance Minister Mihaly Varga submitted the government's 2025 budget proposal to Parliament, branding it 'the peacetime budget.' The draft aims to counter recessionary pressures and support growth. "We will restore the Hungarian economy to the high growth trajectory seen in the past decade," Varga said on Monday in a video statement shared on Facebook. He said there is a "good chance" for the world to move toward peace based on the results of the United States elections. Varga emphasised the need for "economic neutrality" and a comprehensive action plan. The proposed budget includes increased funding to support families, strengthen businesses, safeguard utility cost reductions, and maintain the value of pensions.

Hungary has adopted a policy of "economic neutrality," aiming to maintain balanced trade relations with Western nations and Eastern countries like China and Russia. Prime Minister Viktor Orban has criticised the European Union's proposed tariffs on Chinese electric vehicles, warning that such measures could lead to an "economic Cold War" detrimental to the EU's economy. Similarly, Minister for National Economy Marton Nagy emphasised that only economic neutrality can foster Hungary's development, underscoring the importance of a balanced economic policy.

"The 2025 budget introduces a new economic policy, focusing on construction and growth. We are building the budget on a projected 3.4 per cent economic growth," Varga said. The proposal arrives as Hungary faces economic challenges, including a 0.7 per cent year-on-year gross domestic product (GDP) contraction in the third quarter of 2024, according to data from the Central Statistics Office (KSH). This marks two consecutive quarters of decline, signalling a return to recessionary conditions last seen during the 2022 energy crisis.

Varga acknowledged the ongoing economic difficulties but expressed optimism about the government's fiscal strategy. "Following this year's 4.5 per cent deficit, we are aiming for a 3.7 per cent deficit target next year, with hopes of achieving a deficit below 3 per cent by 2026," he concluded. Parliament will debate the budget proposal from November 27-29, with a final vote expected on December 20, according to Deputy Speaker Janos Latorcai.