Hungary Introduces New Economic Measures, Promising Tax Changes Ahead
Minister of National Economy Márton Nagy Highlights 2025 as a Year for Families and SMEs Amidst Government Reorganization
In a strategic move to enhance economic efficiency and foster growth, Hungary's Minister of National Economy, Márton Nagy, announced significant governmental reorganization and outlined ambitious economic goals for 2025, declaring it 'the year of families and small and medium-sized enterprises (SMEs).' The announcement was made during a press conference held on Tuesday.
A notable change involves the merger of the Ministry of National Economy with the Ministry of Finance, resulting in a streamlined administrative structure.
The combined ministry will operate with fewer state secretaries—now reduced to three under the Ministry of Finance—following the merger.
This consolidation is expected to improve the administrative workflow and strengthen the decision-making processes.
Highlighting the restructuring, Nagy confirmed that additional organizational changes are anticipated, despite the current system's stability.
Notably, a leadership change is scheduled at the State Debt Management Center (ÁKK), with Mihály Hoffman stepping in as the new CEO following Zoltán Kurali's departure.
Moreover, the government's economic cabinet will now function as a fiscal working group, both chaired by Nagy.
This strategic realignment will see the budgetary working group primarily reviewing the decisions made by the strategic cabinet moving forward.
Emphasizing fiscal discipline, Nagy outlined the current and future economic priorities, noting a shift in the handling of ministerial expenditure structures with a stronger economic orientation.
He also clarified that the role of the Finance Minister now extends beyond accounting duties to encompass broader economic policymaking.
The government forecasts a 3.4% economic growth this year with a budget deficit of 3.7%.
Recognizing an anticipated reduction in the deficit from 2023 to 2024, there is a mild increase in the national debt, estimated to reach a GDP ratio of 73.9%-74%, slightly up from 73.4% in 2023.
Discussion of the central bank's dynamics emerged as Nagy remarked on the transparent and cooperative relationship expected with the recent entry of Mihály Varga.
While acknowledging the validity of disputes between the National Bank of Hungary (MNB) and the government, he stressed that such debates should not occur publicly.
The prime minister, Viktor Orbán, has previously promised a robust start in 2025, which Nagy supports, predicting continuous GDP growth quarter over quarter.
The economy saw an estimated GDP growth of 0.5-0.6% last year.
Nagy identified noticeable improvements for families starting September, with employment, salaries, retail, credit markets, and real estate sectors being key indicators to observe.
Nonetheless, the SME sector remains a concern, requiring coordinated efforts from the central bank, government, and banks to stimulate loans.
The Demján Sándor Program has initiated investments, though the sector's overall credit growth has been modest at 3.2%, against household credit growth of 9%.
The Széchenyi Card Program (SZKP) has been pivotal, encompassing 45% of the total loan market in 2024.
To further bolster SMEs, the government aims to elevate VAT exemption caps and adjust thresholds for other tax incentives.
Stressing the importance of a supportive regulatory environment, Nagy highlighted that agencies, such as the National Tax and Customs Administration, may adopt more flexible fiscal policies.
Despite overtly positive economic indicators, public sentiment has been cautiously optimistic, with inflationary pressures previously impacting household income.
Nagy emphasized the necessity for continued improvements in consumer trust and purchasing power, backed by strategic wage agreements.
As Hungary approaches a fiscally tight pre-election period, the focus on economic growth remains unwavering.
Budgetary discipline is crucial, yet Nagy is committed to reshaping ministerial spending structures while maintaining financial prudence.
The convergence of market dynamics and government policy, with an eye on the broader European economic landscape, particularly Germany, will guide Hungary's economic trajectory.
Amid ongoing discussions with the banking sector, Hungary remains poised to harness domestic investment opportunities, seeking a balanced recovery post-pandemic.
A notable change involves the merger of the Ministry of National Economy with the Ministry of Finance, resulting in a streamlined administrative structure.
The combined ministry will operate with fewer state secretaries—now reduced to three under the Ministry of Finance—following the merger.
This consolidation is expected to improve the administrative workflow and strengthen the decision-making processes.
Highlighting the restructuring, Nagy confirmed that additional organizational changes are anticipated, despite the current system's stability.
Notably, a leadership change is scheduled at the State Debt Management Center (ÁKK), with Mihály Hoffman stepping in as the new CEO following Zoltán Kurali's departure.
Moreover, the government's economic cabinet will now function as a fiscal working group, both chaired by Nagy.
This strategic realignment will see the budgetary working group primarily reviewing the decisions made by the strategic cabinet moving forward.
Emphasizing fiscal discipline, Nagy outlined the current and future economic priorities, noting a shift in the handling of ministerial expenditure structures with a stronger economic orientation.
He also clarified that the role of the Finance Minister now extends beyond accounting duties to encompass broader economic policymaking.
The government forecasts a 3.4% economic growth this year with a budget deficit of 3.7%.
Recognizing an anticipated reduction in the deficit from 2023 to 2024, there is a mild increase in the national debt, estimated to reach a GDP ratio of 73.9%-74%, slightly up from 73.4% in 2023.
Discussion of the central bank's dynamics emerged as Nagy remarked on the transparent and cooperative relationship expected with the recent entry of Mihály Varga.
While acknowledging the validity of disputes between the National Bank of Hungary (MNB) and the government, he stressed that such debates should not occur publicly.
The prime minister, Viktor Orbán, has previously promised a robust start in 2025, which Nagy supports, predicting continuous GDP growth quarter over quarter.
The economy saw an estimated GDP growth of 0.5-0.6% last year.
Nagy identified noticeable improvements for families starting September, with employment, salaries, retail, credit markets, and real estate sectors being key indicators to observe.
Nonetheless, the SME sector remains a concern, requiring coordinated efforts from the central bank, government, and banks to stimulate loans.
The Demján Sándor Program has initiated investments, though the sector's overall credit growth has been modest at 3.2%, against household credit growth of 9%.
The Széchenyi Card Program (SZKP) has been pivotal, encompassing 45% of the total loan market in 2024.
To further bolster SMEs, the government aims to elevate VAT exemption caps and adjust thresholds for other tax incentives.
Stressing the importance of a supportive regulatory environment, Nagy highlighted that agencies, such as the National Tax and Customs Administration, may adopt more flexible fiscal policies.
Despite overtly positive economic indicators, public sentiment has been cautiously optimistic, with inflationary pressures previously impacting household income.
Nagy emphasized the necessity for continued improvements in consumer trust and purchasing power, backed by strategic wage agreements.
As Hungary approaches a fiscally tight pre-election period, the focus on economic growth remains unwavering.
Budgetary discipline is crucial, yet Nagy is committed to reshaping ministerial spending structures while maintaining financial prudence.
The convergence of market dynamics and government policy, with an eye on the broader European economic landscape, particularly Germany, will guide Hungary's economic trajectory.
Amid ongoing discussions with the banking sector, Hungary remains poised to harness domestic investment opportunities, seeking a balanced recovery post-pandemic.
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