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Government sees EU funds as important but not vital

June 8th, 2023

While the competent cabinet minister says Hungary must learn to live without EU transfers in the long run anyway, a left-wing commentator believes that those funds could solve the country’s most burning financial problems.

An interview with Világgazdaság, Márton Nagy, the Minister of Economic Development vows that Hungary will avoid recession this year and bring inflation back below 10%. He explains, meanwhile, that the new 13 % tax on financial investment returns and interest is meant to channel savings towards government bonds to help bring down the deficit in public finances. He describes the decision of the European Commission to freeze most financial transfers to Hungary as painful but adds that as Hungary catches up with average European levels in terms of per capita GDP, it will not be entitled to such funds anyway in the medium and long-term and must therefore get accustomed to living without them.

In Népszava, Zsolt Papp admits that channelling savings towards government bonds could be a legitimate exercise in itself but believes that imposing a new tax for this purpose is too drastic a measure. What’s more, he continues, the European funds that are being withheld from Hungary because of rule of law concerns could offset most of the current budget deficit. Therefore, he suggests, instead of imposing new levies on the population, the government should fulfil the conditions set by the European Commission to release financial transfers to Hungary. The government is trying to solve a problem that it created itself, he suggests, by what he sees as the dismantling of the rule of law and the market economy.

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