Budapest: The 2025 budget has been characterized as a budget for new opportunities, economic policy, and peace, as stated by Finance Minister Mihály Varga during the ceremonial handing over of the budget bill in Parliament. Varga emphasized the need for adjustments in the budget submission due to the post-pandemic period, ongoing war conflicts, and uncertain international environment, which is why its submission was delayed. Despite these challenges, Varga expressed optimism about global movements towards peace influenced by the results of the American elections.
According to KDNP, Varga highlighted that economic growth has resumed this year, with expectations for the Hungarian economy’s performance to increase significantly in 2024. He predicted that in 2025, Hungary would be at the forefront of the EU in terms of economic performance. The government has set clear goals to restore the economy’s growth path, increase wages, and ensure financial stability for families and small and medium enterprises (SMEs).
The minister outlined five key elements of the plan: support for families, strengthening businesses, protecting utility reductions, preserving pension values, and guaranteeing the country’s physical security. The 2025 budget is projected to be based on a GDP growth of 3.4 percent, with an inflation rate of 3.2 percent, and a deficit target of 3.7 percent. Gross interest expenses are expected to be 3.8 percent of GDP. The Budget Council has expressed agreement with these figures, confirming compliance with the basic law.
The budget will see an increase in defense expenditures to meet NATO commitments, with national defense spending reaching 2 percent of GDP. Border protection and law enforcement costs are also set to rise. Families will benefit from increased support, with 3,574 billion forints allocated, and pensions will see a rise to 7,200 billion forints, maintaining the thirteenth monthly pension. The education and health sectors will also receive significant budget increases.
Special taxes on airlines,
pharmaceutical manufacturers, and telecommunications will be phased out starting January, with the advertising tax suspended for another year. The budget reserves will be set at 100 billion forints, with increased limits deemed sufficient for 2025.
Varga contrasted the current government’s fiscal management with that of the previous left-wing government, highlighting reduced national debt and a controlled budget deficit despite challenges such as war and the pandemic. János Latorcai, KDNP vice-president of Parliament, mentioned that the proposal would be discussed over a 30-hour timeframe, with a final vote expected on December 20. Plans are underway to reinvigorate American economic relations and reintroduce the convention on the avoidance of double taxation following the inauguration of the American president. The budget does not have a specific exchange rate target, but it was planned using a technical figure of HUF 397.5.
