Broken State Finances

  • March 23, 2022
  • István
  • 24 Comments

Already last December Orbán tried to bury our state budget secretly ►HU. As usual late in the evening, just before Christmas he cut down the 2022 budget for about 1 % of the GDP. Only a few pet projects of the regime were affected, as the stadium in Pécs was stopped and purchase of Budapest airport was postponed. Reducing health care and other not directly visible measures were introduced. State’s spending on presents for the voters and in election propaganda was not limited at all.

While the tax income through VAT rose dramatically in January 2022 compared to 2021 the income tax was damaged through declaring young adults tax free and refunding the entire income tax of 2021 to families with children in most cases, most cases means limiting on 800 000 Ft (nearly 3 000 €) per parent. Now minister of finance Mihály Varga declared that after the elections there would be needed a complete re-written budget ►HU. Of course he declared this would not be result of the irresponsible spending of FIDESZ to win the elections, but reason would be the war, a war he talked about without mentioning Russia as usual in regime statements. Jobbik concluded that “the Hungarian public finances would be adjusted to the economic difficulties and damage caused by the war” means that FIDESZ wants to pay the Hungarians the price of the war and that the NER system of theft should be maintained. They want Orbán to speak out loud what he wants to do before the elections ►HU.

Orbán, who before 2010 was extremely critical concerning credit financing, succeeded to have a state dept in relation to the GDP as high as on the top of the worldwide banking crisis. Of course the absolute numbers exploded. The backslide of GDP in 2020 has been more than recovered in 2021 already. While he ruled in a decade of economic growth and did not do like in Western Europe help small and medium enterprises to survive in corona lock downs and did not fund employment with short-time allowance, as the EU suggested and sustained. Instead he wasted the state property in foundation to ensure the top of FIDESZ having a carefree future and to keep the extremist ideology alive, mainly in our education system ►HU, even if the elections would get lost. In the end together with all secret debt as through the stolen pension funds and debt hidden in state owned banks the situation today is way worse than in 2010.

This anti-debt Orbán, who made many people really believe that Hungary would have no debt any more when he re-financed the IMF credit against a more expensive loan, is now desperately searching money. In the corona Recovery and Resilience Facility of the EU, the RRF funds, the EU wants to help the economy of the member states, for a part in grants, for another with interest-free credits. At the same time the state debt agency has raised the tax-free interest rate to 6.6 % for 5 years state obligations recently and still these papers don’t sell well.

And while Orbán declared on May 12th, 2021 that he would not accept EU sponsored credits at the most favourable rates to avoid getting into debt ►HU, he now wants exactly this credit. The grants, Hungary’s share alone is about 7.2 billion Euro, Orbán very much wants to get since nearly a year now as free money, just it is not paid unconditionally. It must be used for future projects, something Orbán could adapt to. But it must be spent seriously, not in corrupt projects made only for feeding the NER oligarchs. Hungary must assure that crimes connected to the RRF will be prosecuted effectively, not by some warm words, but by creating legal facts. Something what Orbán refuses and this made the grants remaining in Brussels up to now. The credit facility is even larger than the grant, 43 % of the RRF are planned as grants, and 57 % are available as loans. Of course the rules are the same. Despite his earlier refusal Orbán now wants the loan ►HU. The spokesman of the PM’s office confirmed that the EU has been asked for it in the meanwhile ►HU.

Officially for financing the refugees from Ukraine. Something up to now nearly completely NGOs and local governments have financed, just 2 days ago the 1st facility on state expense has been opened. And giving shelter for a few nights and several meals are not the relevant costs. It changes if these refugees remain in Hungary, but among those Ukrainians arriving in Hungary up to now only 1.5 % started the procedure to stay. This however is needed to get more than just a place to sleep and food. Where elsewhere long lines of applicants are found in Hungary not even 4 500 applicants were done within 4 weeks. Could it be that refugees bombed by Putin out of Ukraine want the same as those bombed by Putin out of Syria? Just further to a country where they feel safe and are welcome? While the EU pays countries taking refugees for every single aided person Orbán says he needs the money from the corona funds. Just to put it into a context: Even if every single Ukrainian citizen would come to Hungary and would apply for the benefits for an adult for the longest allowed time the available credit would be still way higher!

Ákos Péter Bod, economist, former minister, and now adviser of Unity for Hungary, questions this set very much. “There was another sudden turn in the Hungarian government’s tactics, after reality knocked on the window,” he commented. Up the end of February already half of the planned state deficit has been reached, so Orbán really needs fresh money. But why EU commission and European parliament should agree with he doesn’t understand. At least not as long as Orbán does not agree to join the European public prosecutor’s office ►HU. We just discussed why Orbán with all means wants to avoid this.

Of course Orbán might try wearing down the EU’s insistence on following the basic rules. But there is an even larger danger. On the occasion of the campaign start Orbán has clearly put his conditions to let Hungary remain within the EU. Since a couple of weeks he claims that the EU would not help with refugees, what is definitely not true. Not only help in form of money is given, but there are also calls to redistribute refugees again, and this time Hungary would be among the countries that would receive help. Not to forget how much the regime is fighting against just discussing Hungary’s energy purchases from Russia within the propaganda media. I understand that stopping imports immediately would mean a serious threat to ourselves, but a strategy how to get out of this trap is definitely needed. And since now the EU is at least expected to tell Orbán about the rules of the RRF again I regard this effort to be able to tell the less informed part of the population that being member of the EU is just against our interest. Either money or valuable arguments for the propaganda machine. A win-win situation for Orbán, which means as so often a huge disadvantage for Hungary.

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Wolfi7777
Wolfi7777
March 23, 2022 11:58

O1G’ position re the EU hasntreally changed:
We’re only in it for the money!!!

Theestampe
Theestampe
March 24, 2022 09:42
Reply to  Wolfi7777

Except, money seems to be running out. Orbán’s decision to ask for EU recovery funds doesn’t bode well for the coming months and years in Hungary.

Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 15:57

First of all I was glad to see Wolfi’s short post on the blog, I hope to see more from you in the days to come. Secondly just a few hours ago NATO Secretary General Jens Stoltenberg held a press conference that is being widely reported in the world media.

According to the NATO website https://www.nato.int/cps/en/natohq/news_193630.htm?selectedLocale=en Stoltenberg is quoted directly as saying: “At the Summit tomorrow, we will make further decisions.
I expect leaders will agree to strengthen NATO’s posture in all domains.
With major increases to our forces in the eastern part of the Alliance.
On land, in the air, and at sea.
The first step is the deployment of four new NATO battlegroups.
In Bulgaria, Hungary, Romania, and Slovakia.
Along with our existing forces in the Baltic countries and Poland, this means that we will have eight multinational NATO battlegroups all along the eastern flank.
From the Baltic to the Black Sea.
We face a new reality for our security.
So we must reset our deterrence and defense for the longer-term.”

Magyar Nemzet not long ago reported this statement from Stoltenberg without indicating any objection to putting a NATO battlegroup inside of Hungary. This is a radical departure from the position Hungary has publicly made that it could defend itself from any threats from Ukraine by Russian forces. As I posted on this blog a few days ago the existing Hungarian Army deployment along the Ukraine border is not adequate to defend Hungary from even a relatively light Russian incursion across the border.

I have no idea what sort of intelligence was provided to Orban about Russian potential military deployments in western Ukraine closer to the Hungarian border that would cause such an immediate change in the Fidesz government’s opposition to having a larger NATO presence in Hungary. My own daughter a US Army officer is still in Poland now, well beyond a month, and she is not discussing coming home any time soon. Her employer a Colorado University has been made aware she is on extended service in Europe too. My understanding is additional US ground forces will be going to Europe and will remain in Europe for the forceable future.

Last edited 2 years ago by Istvan (Chicago)
Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 18:19
Reply to  István

That statement did not apparently contradict statements made by Fidesz saying Hungary could defend itself and made consistently by Orban and that additional NATO troops were not needed to defend Hungary. Really it was only on March 21st based on my reading of articles from the website https://honvedelem.hu/ that Hungary began to make a pretty radical turn to cooperative defense at a meeting of the Alliance of the Visegrad Four which held talks with Germany on the issues of current defense policy and military cooperation, as well as on Russia’s aggressive war against Ukraine on 21 March in Brussels.

I am unclear about what happened but I suspect Christine Lambrecht, the German federal government’s defense minister, gave them so pretty alarming intelligence relating to Russia and its war in Ukraine. If one goes back to March 13 one still reads Tibor Benkő following the Orban line to some degree stating: “The soldiers of the Hungarian Armed Forces are prepared for any eventuality and are able to react immediately if necessary in order to keep the armed conflict away from Hungary, because Hungary cannot drift into this war, as this is in the interest of the Hungarian people.” (see https://honvedelem.hu/hirek/egyre-agresszivebb-es-kiterjedtebb-az-orosz-haboru.html ).

It was Ágnes Vadai, deputy group leader of the Democratic Coalition, told an online press conference on that Tibor Benkő’s remarks, made at a residents’ forum way back in July of 2021, were in sharp contrast with Prime Minister Viktor Orbán’s position that the Hungarian military was able to ensure Hungary’s security without NATO’s assistance. So I suspect that Tibor Benkő understood the Hungarian military could not defend the border even against a relatively small attack by Russian forces, but he was in caught in a trap between reality and Orban’s bullshit to be honest.

Theestampe
Theestampe
March 24, 2022 09:44

Orbán always has this double talk. He wants to show himself as a strong leader in Hungary but on the European scene, he’s week and always gives in and it doesn’t matter because pro-FIDESZ media will always spin this as a victory.

jan
jan
March 24, 2022 10:40
Reply to  Theestampe

Sometimes he blocks, in the case described in this Politico article even against peace.
https://www.politico.eu/article/borrell-calls-for-israeli-palestinian-ceasefire-as-hungary-blocks-joint-eu-position/

Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 16:29

Russian Foreign Minister Sergey Lavrov a short while ago made comments during a meeting with students and lecturers at the Moscow State Institute of International Relations on the upcoming NATO meeting. He did not comment on the additional deployments of NATO battle groups to front line NATO nations, including Hungary. He did however make it pretty clear that if NATO allows any troops to enter Ukraine to act as “peace keepers” it will lead to “a direct clash between the Russian and NATO armed forces, which everyone not only wanted to avoid but said that it should never take place in principle.” I take that to mean the Russians will engage those troops with opposing military force. I am not including links to Russian sources for Lavrov’s comments at the request of our blog host, but the framing of his comments implied it could lead to an eventual nuclear war.

There is also an article appearing in the Russian media, again which I will not link to at the request of our host, stating Ukraine’s Deputy Prime Minister Irina Vereshchuk has questioned, what she has described as, Hungary’s “pro-Russian” rhetoric, suggesting that the desire for “cheap Russian gas” or even a potential land grab could be behind Budapest’s policy over the conflict between Moscow and Kiev. Supposedly Vereshchuk’s comments were made on Facebook, but I have not as yet been able to locate those comments. If anyone finds her statement relating to Hungary please post a link.

Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 16:47

I managed to open the Vereshckuk Facebook post cited in the Russian media. It reads as follows: “Not even all Russian satellites from the former Soviet Union behave the way the official management of Hungary does now.
All this causes an unpleasant surprise first in Ukrainian Hungarians, many of whom I know personally.
Sanctions are not in favor of it. Weapons are not only not given, but also not allowed through their territory to supply weapons from other countries. In fact, they say no to everything. A little more – and the rhetoric of the official Budapest will be openly pro Russian.
What is this? Want some cheap Russian gas? Or, maybe, do you want our Transcarpathia?
And the people of Hungary really want the role of those who try to stab us in the back in a difficult time for us? For the sake of what? For the sake of handouts from the Russians?
In this civilized confrontation Hungary is unlikely to be able to marrow with the Russians and also slowly feed on the problems of the neighbor.
You just have to calmly stand on the side of the civilized world. Do not repeat the mistakes of the Second World War when Hungary made the wrong choice. Yes, the right choice is always hard at first, but it is therefore the right one which is easy with it afterwards.
#StopRussia #StopWar #StandWithUkraine
________________________________
By the way the official Hungarian leadership is treating Ukraine lately is worse than even that of some of the Russian satellite states from the former Soviet Union.
It is sure to be an unpleasant surprise, especially for the Hungarian Ukrainians, many of whom I know personally.
Hungary does not support the sanctions. They don’t provide weapons. They don’t allow transit of weapon supplies from other countries. They say “no” to virtually everything. Very little differentiates the rhetorics of the official Budapest from the openly pro-Russian position.
Why? Is that because they want Russian gas with a discount? Or maybe that is because they silently dream of our Transcarpathia?
What about the people of Hungary? Do they want to be the ones who are trying to stab us in the back while we are in plight? Why? For a bit of the Russian handout?
In this civilizational clash, Hungary is unlikely to be able to hanky-panky with the Russians and prey on the war at the same time.
Hungary should just take the right side, the one of the civilized world. No mistakes of the World War II when Hungary made the wrong choice. Yes, the right choice is always hard at first, but it is easy to live by in the future. That is exactly why that choice is right.”

Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 16:49

By the way Vereshckuk was once not all that long ago really very pro-Putin and is now clearly no longer in the Putin camp.

Don Kichote
Don Kichote
March 23, 2022 17:40

Thus, Orbán’s wet Trianon dreams are known to the Ukrainians, the other neighbors can think about whether a stadium is worth selling themselves. I read somewhere Russia wants to have its oil paid for in rubles in the future. That would appreciate the ruble and undermine the sanctions. Would be funny if Hungary could continue to pay in euros, Orbán is getting more and more problems.

Don Kichote
Don Kichote
March 23, 2022 18:07
Reply to  Don Kichote
Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 18:51
Reply to  Don Kichote

Yes that is big news here in the USA too. On my investment news page I have already read this: Italy, the biggest buyer of Russian gas after Germany, said it wasn’t inclined to pay for Russia gas in rubles because it could help Putin weaken Europe’s sanction regime. “My view is is that we pay in euros because paying in rubles would be a way to avoid sanctions, so I think we keep paying in euros,” Prime Minister Mario Draghi’s economic adviser Francesco Giavazzi said at the Bloomberg Capital Market Forum in Milan.

Putin also said this: “At the same time, I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices and pricing mechanisms set forth in the existing contracts.” Since there are many existing contracts that require payments in Euros the immediate impact of al of this is confusing to me Don.

Don Kichote
Don Kichote
March 23, 2022 21:46
Reply to  István

István you are the economist if a state on an “isolated” foreign exchange market buys large amounts of rubles would strengthen the ruble , wouldn’t it?

jan
jan
March 24, 2022 11:07

This is the answer of the Hungarian ambassador in Ukraine.
https://hvg.hu/itthon/20220324_orosz_ukran_haboru_irina_verescsuk_kijevi_magyar_nagykovetseg
Mentioning Ukraine many times but not Russia, just talking about “aggressor”. Now that is pathetic.
And lying about the number of refugees in Hungary.
https://data2.unhcr.org/en/situations/ukraine

Istvan (Chicago)
Istvan (Chicago)
March 23, 2022 18:33

As I have stated, probably too often, I have a real fear of nuclear war. Last night on CNN Putin’s guy Dmitry Peskov was interviewed, of course my own fears of nuclear was were not calmed by what I heard.  

Christiane Amanpour questioned Peskov about the possibility of the Russian president using nuclear weapons amid increased global tensions around Russia’s invasion of Ukraine.

“I need to ask you this, because the world is afraid, and I want to know whether Putin intends the world to be afraid of the nuclear option, would he use it?” Ms Amanpour asked.

Mr Peskov, however, repeatedly refused to rule out that Russia would consider using nuclear weapons and said that Moscow had expressed “concerns” over Ukraine for decades, but the “anti-Russia” west did not listen.“Mr Putin intends to make the world listen to our concerns,” Mr Peskov said. “We have been trying to convey our concerns to the world, to Europe, to United States, for couple of decades, but no one would listen to us.”

Peskov said “And before it was too late, it was a decision to launch a special military operation to get rid of the anti-Russia that was created next to our border,” Mr Peskov added that Ukraine was “formed by the western countries” as “anti-Russia”.

When Ms Amanpour pressed the Russian official on whether he feels convinced that Mr Putin will not use the nuclear weapons, he said: “Well, we have a concept of domestic security, and, well, it’s public.”
“You can read all the reasons for nuclear arms to be used. So, if it is an existential threat for our country, then it can be used, in accordance with our concept,” he told Ms Amanpour. Nothing I heard was reassuring my own fears are delusional.

jan
jan
March 23, 2022 19:15

This article describes nicely how desperate the Viktor must be.
https://hvg.hu/eurologus/20220323_Orban_level_helyreallitasi_alap_eu
Yesterday I wrote an email to ” my CSU MEP” who voted against Sargentini in 2018 about the Viktors´ letter and the lies in it.
His answer was: “Die Probleme in Ungarn mit Rechtsstaatlichkeit, Vetternwirtschaft und Korruption sind fundamentaler Natur und müssen grundsätzlich gelöst werden. Ich halte deswegen nichts davon wegen des Kriegs in der Ukraine und um die europäische Einheit nicht zu gefährden, nun beide Augen zuzudrücken. Damit würde die Europäische Kommission ein sehr problematisches Signal aussenden.
Ich werde im Rahmen meiner Möglichkeiten entsprechend weiterhin dafür werben, dass die Kommission bei ihrer bisherigen Linie bleibt und die Mittel an Polen und Ungarn erst dann auszahlt, wenn die Rechtsstaatlichkeitsbedenken ausgeräumt sind.”
OT, what is amazing to me, is that any party can get votes with such a negative campaign. Driving through Bp, and the countryside the majority of the Fidesz posters are referring to the opposition being puppets of Gyurcsány and lies about MZP (against which he is complaining at the courts) The other part is the Viktor being so experienced, that makes us feel “safe”. I just wonder why they went after Kadar in the old days, he was even more experienced wasn´t he? How in goodness’ sake can one get votes with just bashing the other side, cheating and lying everywhere it goes, never taking any responsibility, but spreading the big lie that we are going forward.
I mean, people must get fed up with only able to eat the products with frozen prices. They must recognise that normal food gets unaffordable.

Don Kichote
Don Kichote
March 23, 2022 19:47
Reply to  jan

Der Lieblingsautokrat von CDU und CSU 06.2020
ist noch nicht lange her … wenn solche Worte kommen wie ich strenge mich an ich glaube ich werde oder würde könnte müsste … dann muss ich 😀

jan
jan
March 23, 2022 21:51
Reply to  Don Kichote

Dann lache. Vielleicht haben die doch was gemerkt.

Don Kichote
Don Kichote
March 24, 2022 00:32
Reply to  jan

Vielleicht eventuell allenfalls womöglich anscheinend voraussichtlich mutmaßlich höchstwarscheinlich bestenfalls ausnahmsweise möglich.

jan
jan
March 24, 2022 10:36
Reply to  Don Kichote

Aber sie sind unter “kritischer Beobachtung” (:

tappanch
tappanch
March 23, 2022 20:14

Q: Which Ukrainian region (oblasty) has the most monasteries belonging to the Moscow Patriarchate of the Ukrainian Orthodox Church?

A: Za-Karpatia, bordering Hungary.

https://monasteries.org.ua/objects/map/?lang=en