Hungarian billionaire says Hungary desperately needs EU funds

Sándor Csányi, CEO of renowned Hungarian bank OTP, said the government had done everything possible to access EU funds at a conference in Szeged. At the same event, Péter Benő Banai, Secretary of State for Public Finance, said that the responses to the economic challenges due to the war in Ukraine could be the same as the remedies for the Covid-related economic crisis.

Hungary needs EU money

Mr. Csányi called high inflation and an unbalanced labor market major problems in the economy. The situation has only worsened due to the ongoing war in Ukraine. However, it is good news that some sort of turnaround is apparent in energy and food prices. He added that the Hungarian economy is deeply integrated into the European Union and that we share its fate. Therefore, we badly need EU funds, because these funds significantly affect the Hungarian economy, Privátbankár reported.

Furthermore, Mr. Csányi added that given the figures, he did not understand why it was worth it for some banks to continue operating in Hungary. He also castigated the government’s decision to extend the freeze on mortgage rates for individuals, which is a handicap to competitiveness.

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Tackling wartime economic downturn ‘biggest challenge’

While after the pandemic the Hungarian economy rebounded faster than the EU average, external challenges this time around like rising gas prices are more acute, he said, adding that Securing European Union funds would be “essential”, Péter Benő Banai, declared the Secretary of State for Public Finances at the same conference. Many investments can be financed using EU money without increasing the budget deficit, he said. With soaring energy prices combined with a severe deterioration in the current account balance, EU funds are also needed to maintain external financing capacity, he said.

Let’s hope that significant funds will arrive soon thanks to an agreement with the EU, he added, noting that many investments are pre-financed using public funds.

Banai said an active economic policy was needed to resolve current challenges. Public spending has been severely reduced as a result of the war, and public investment has been the main casualty, he said. The cuts were designed to preserve fiscal stability while taking into account the current balance of payments, he said. The aim was to avoid stifling growth while mitigating inflation as much as possible, he added.

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While the withdrawal of state investment helps fight inflation, pessimistic sentiment has grown over the past six months, so economic policy cannot “lean back”, a- he argued.

Energy prices have a massive impact on spending by state institutions, and the state has taken on the added burden of subsidizing household energy bills, he noted.

Detailed fiscal data for the first eight months will be released on Friday, Banai noted. While VAT is expected to increase by 990 billion HUF (2.15 billion euros) compared to last year, interest financing “is a serious challenge”, he said, adding that the inflation and energy prices had a strong impact on the real economy and the budget. .

Banai noted that many European countries have provided support to households and businesses to offset the energy crisis, and the European Commission has also relaxed rules on state subsidies. But the difficulty of finding resources to support the worst-hit businesses while reducing the deficit was serious, he added.

The secretary of state said war-related sanctions were unlikely to be dropped if, for example, the war ended tomorrow. Overall, 2023 does not look promising based on current information, Banai concluded.