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Government announces new ‘economy protection plan’

June 3rd, 2019

Economic analysts give basically positive assessments of the government’s economic action plan which is intended to prolong fast growth. Some do not expect it to produce significant novelties.

On Thursday, Minister of Finance Mihály Varga announced a 14-point plan meant to reinforce long-term economic growth. The conundrum the government seeks to solve is how to keep its target of maintaining Hungary’s GDP growth at least two percentage points higher than the EU average. The planned measures include tax cuts, as well as the issue of a new government bond with a gradually rising interest rate. 

Magyar Nemzet’s Gergely Kiss welcomes the ‘economy protection’ plan. The pro-government commentator believes that the planned measures will prolong fast growth in Hungary even if European economies slow down. He recalls that the public deficit in Hungary is lower than in France, Belgium and Italy, while the economy is strengthening quickly.

Portfolio, the leading online business media outlet points out that the planned measures are only minor adjustments to the government’s current roadmap for the economy.  Portfolio thinks that lower taxes and other targeted incentives will improve prospects in some sectors but are unlikely to have a major impact on the national economy as a whole.

Index.hu’s Gergely Brückner ponders the benefits of the government’s future retail bond. The liberal pundit acknowledges that the scheme also offers bonds to Hungarian citizens whose savings are modest, which will help the government to further reduce the external debt. He also points out that the new bonds will pay higher interest rates for small investors than current market rates. Brückner finds it controversial however that individual savers are offered higher interest rates than institutional investors. As for the broader implications, Brückner suspects that the new bond scheme offering a higher yield is intended to cool down the overheating economy without increasing the base rate.

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