Hungary Sets New Economic Policy Path to Cut Deficit, Target Euro by 2030
Hungary’s New Government Charts Course for Economic Reform and Euro Adoption
By Gergely Szakacs
Background: Political Shift and Economic Challenges
BUDAPEST, May 12 (Reuters) - Finance Minister Andras Karman on Tuesday pledged to rebuild policy predictability marred by years of ad hoc changes and to lay down a four-year path of deficit and debt reduction putting Hungary on track to meet the criteria for euro adoption by 2030.
Prime Minister Peter Magyar ousted nationalist Viktor Orban in an April 12 election, inheriting a surging budget deficit and an economy which has barely clambered out of stagnation and is facing new headwinds from the Middle East conflict.
Government Transition and EU Relations
Magyar's centre-right government, which has pledged to put Hungary on a pro-European course to secure the release of billions of European Union funds suspended due to Orban's reforms seen as harming democracy, will be sworn in on Tuesday.
Policy Overhaul: New Direction for Hungary
"Hungarian economic policy needs not a simple adjustment, but an entirely new direction," Karman told a parliamentary confirmation hearing, which endorsed his nomination.
Budget Planning and Fiscal Targets
Karman said the new government will need a month and a half to have full clarity on the 2026 budget, which originally set a shortfall of 5% of output, some 70% of which was racked up by April amid heavy pre-election spending under former leader Orban.
Reviving Growth and Ensuring Fiscal Stability
Magyar's government will aim to revive economic growth after three years of stagnation if it secures the release of EU funding, Karman said, adding that fiscal adjustment measures alone would not be sufficient to shore up Hungary's finances.
He said once there's sufficient clarity, the government would present an overhauled 2026 budget, forming the basis of next year's budget and a credible four-year plan to cut Hungary's deficit towards the EU's 3% of output limit.
Structural Reforms and Business Environment
Given a shortage of labour, Karman said Hungary's economy should be geared much more towards productivity gains, investments generating more added value and more skilled jobs instead of large-scale employment on factory assembly lines.
Karman said the cabinet would make the business environment more predictable, end retroactive legislation, restore fair competition and eliminate overpriced public procurement, which he said pushed up the deficit and distorted the economy.
Reporting
(Reporting by Gergely Szakacs; Editing by Keith Weir)
