Debt Financing Among Biggest Risks for 2023


The opposition Socialist Party says it expects debt financing to be one of the biggest risk areas of the 2023 fiscal year, and that they hope the government was going into next year with a “comprehensible budget”. Zoltán Vajda, the head of parliament’s budgetary committee, said the body on Tuesday discussed the final accounts of 2021 as well as next year’s state budget with the participation of finance ministry state secretary Péter Benő Banai.


Vajda said it had been “foolish” to approve next year’s budget in the summer, arguing that it assumed an inflation rate of 5.2% and an economic growth rate of 4.1%. “With inflation, the only question is whether it will be twice, three times or four times the assumed rate, and in terms of growth we have to hope that it won’t be negative,” he said. Vajda said the state secretary “didn’t give a clear answer as to when Hungary would have a comprehensible budget” for 2023. If there is a change in the macro path, a new budget law is needed, which needs to be submitted to parliament again, he said. Vajda speculated that the government could amend next year’s budget by issuing decrees. Vajda identified debt service as one of the biggest risks to the 2023 budget. He argued that inflation was high and that debt financing would become more expensive due to high country-specific risks.


Concerning the 2021 final accounts, Vajda insisted that VAT revenues had been significantly higher than anticipated, but the government had spent it on “prestige investments” instead of “supporting families and SMEs to the extent that they should have”.


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