Employer social security contributions to be reduced by 2 percent
April 7, 2020
“In addition to the new economy protection measures being introduced because of the coronavirus epidemic, the government would also like to retain some of its previous decisions, including the fact that the level of employer social contribution tax will be reduced by 2 percent”, Minister of Finance Mihály Varga said on Kossuth Radio's “Good Morning, Hungary!” show on Tuesday.
The Minister said the value of the Economic Protection Action Plan developed by the government is around 18-20 percent of the gross national product (GDP). The program developed because of the coronavirus epidemic is in its second phase and can be further expanded if necessary. “If we feel the current phase is insufficient in the interests of job creation, the government will have to introduce further measures”, he stated. He also said a 634-billion-forint (EUR 1.74 billion) protection fund and a 1345-billion-forint (EUR 3.69 billion) economy protection fund will be established within this year's budget. “This means that some 2 trillion forints will be reallocated within the budget”, he added.
Mr. Varga pointed out that there is a third fund that manages the resources arriving from the European Union (EU), but this is empty for the moment in view of the fact that, contrary to the pieces of fake news being spread, no funding for protecting against the coronavirus pandemic has arrived to date from the EU. “The EU would like to bring ahead resources that would have been due to the country anyway, such as the funding available within the cohesion fund”, he explained.
“The problem with this is that Hungary has already published the tenders and a significant proportion of the funding has already been agreed upon, meaning that with respect to liquidity and financial assistance all this means is that they will be bringing forward payments that would have occurred later; in itself, this does not represent any additional funding whatsoever”, he emphasised.
The Minister also said that in recent years Hungary has established disciplined public finances enabling the deficit to remain below 3 percent; it was 2 percent last year. Parallel to this, the level of sovereign debt has been continuously decreasing, falling from over 80 percent in 2010 to 66 percent last year.
He added that it has now been decided that in view of the coronavirus pandemic the deficit will be “liberated” somewhat, but the government will continue to attempt to keep it below 3 percent. “A deficit of 2.7 percent will enable an addition room for manoeuvre of almost one trillion forints (EUR 2.75 billion)”, he explained.
In reply to a question from the press, Mr. Varga also stated that the government is not planning on taking on any foreign credit. “In recent years, Hungary has set itself on a stable financial trajectory that enables it to create an opportunity for the economy protection programme required because of the coronavirus epidemic out of its own resources”, the Minister declared.