Hungary’s newly appointed Prime Minister Peter Magyar has accused his predecessor, Viktor Orban, of a significant surge in spending during his final days in office, which could cause this year’s budget deficit targets to be missed.
Final budget calculations project a deficit of 6.8% of gross domestic product for this year. This compares to an initial official target of 3.9%, later revised to 5%. “We received a government decree which shows that the outgoing Orban cabinet intends to completely empty the state treasury,” Magyar said in a social media post on Tuesday.
His party, is set to take power this weekend, and Magyar has pledged to restore fiscal discipline. Hungary’s currency and bonds have rallied this year on expectations that Magyar will initiate an economic policy reset, which is expected to unlock billions of euros in European Union funds.
Fitch Ratings has warned of a series of budgetary and economic challenges that the new administration will face this year.
Reaction and Calls for Fiscal Discipline
Gergely Gulyas, who headed the Prime Minister’s Office under Orban, responded to Magyar‘s post by stating that the outgoing cabinet had suspended new budget commitments after the April elections, and any expenditures were for essential services.
Hungarian Central Bank Governor Mihaly Varga urged the government to control spending at an event in Budapest on Tuesday, just as Magyar‘s comments became public.
Varga noted at the [NAME_2] conference that this year’s economic stimulus measures would lead to a further increase in the primary budget deficit, which excludes interest expenses. Maintaining control over the primary deficit, he said, “will be crucial for sustainable growth and inflation targeting.”
The Hungarian Economy Ministry did not immediately respond to a request for comment on the budget deficit forecast.
Source: Bloomberg Politics
