Orbán’s “incomprehensibly” large stimulus package turns out to be rather slim – Hungarian Spectrum

by Kevin | Last Updated: April 4, 2020


Thanks to the timely reporting of Reuters, newspapers and internet sites learned this morning that Hungary is planning to create a $2 billion anti-coronavirus fund, which, in the opinion of most experts, is inadequate. But before we take a look at the details of this package, which is being heralded as the largest and best in the history of Hungary, I would like to turn to Prime Minister Viktor Orbán’s regular Friday morning “interview” of yesterday.

The prime minister spent relatively little time on economic matters, but he indicated that he will not change course as a result of the economic disaster that is gripping the world in the throes of the pandemic. He will march ahead on the road to success, which is full employment and no “free” money, because “aid, alms means a beggar’s life.” As far as Orbán is concerned, “there is no such thing as money as a gift without any effort. It is something that is unheard of.” The government is planning no change in the paltry unemployment insurance benefits that can be collected for only three months and no increase in the allowance to families with children. And certainly, no direct payments from the government to individual Hungarians. In brief, the Hungarian prime minister, who speaks so often about Christian values, doesn’t care what happens to people who just lost their jobs and don’t have enough money to survive for more than a month.

The government’s first priority is the “preservation of jobs” and “the creation of new jobs.” Orbán has no intention of “resorting to loans, which mostly come from abroad,” since “the IMF and financial speculators of the George Soros variety are waiting for us at the end of the road.” We know, he said, that “there are opponents of Hungary who want to plunder and grab the resources of this country.”

Details of the economic package that is supposed to allow the Hungarian economy to continue on the road mapped out by the Fidesz administration will be revealed on Wednesday, but today we got a preliminary glimpse of what Viktor Orbán has in mind. Some of the measures were announced by Gergely Gulyás, head of the prime minister’s office. The government will allocate $2 billion to an anti-coronavirus action fund. Banks will have to contribute $163 million to this effort and multinational retailers, $106 million.

The somber announcement of the stimulus package by the government spokesperson and Gergely Gulyás

There is nothing surprising about this announcement since the Orbán government employed this method once already, shortly after Fidesz won the election in 2010. But what is new are the financial measures leveled against municipalities and political parties.

All municipalities are supposed to hand over their total income from motor vehicle taxes, to the tune of $100 million, to the central government. So, if appointing central government “commissars” over the municipalities didn’t pan out, why not fleece them? It’s a typical Fidesz way of getting even.

Perhaps the most shameful part of the package is halving the central government’s financial support of parliamentary parties, amounting to $3.5 million. I’m sure the government would insist that the decision also hurts Fidesz, but everybody knows that the division between Fidesz coffers and the government budget is blurred. Fidesz campaigning, ever since 2014, has been done on government money. Hungarian taxpayers, even those who despise Fidesz and Viktor Orbán, have been paying for Fidesz’s supermajority.

The government, perhaps fearing a backlash, made one exception to Viktor Orbán’s refusal to help out individuals. People working in the healthcare sector will each receive a one-time “gift” of 500,000 forints ($1,475), and, starting in November, they will receive a 20% raise. I should add that the salaries of nurses are so low that most people believe that only by doubling their salaries could one keep these people in the country.

Gulyás talked about the “incomprehensible” amount of money the government and the central bank will sink into the economy, although, in relation to the planned budget, the fiscal stimulus program is not so unfathomable as Gulyás tried to make out. The 1,345 forint billion package is only 6% of the Hungarian budget, whereas the recently enacted $2 trillion stimulus program in the United States is about 45% of the country’s budget. No wonder that HVG called the package “slender.”

Although all opposition parties oppose the government’s program, it was only the Demokratikus Koalíció that came forth with a comprehensive stimulus package that would double the amount of money currently planned by the government. Here are some of the provisions Ferenc Gyurcsány described in a video message on the party’s website. (An abbreviated version is available in 24.hu.) DK would raise the duration of unemployment insurance benefits from three months to six. The amount of the family allowance, which hasn’t been changed in the last ten years, would be doubled. Employees who are forced to stay with their children during school closings should receive a “virus leave” of 80% of their wages. DK suggests a 100% salary raise for employees in the healthcare and social sectors. Employers with fewer than five employees should receive 80% of their average income before the pandemic. Companies that lost at least 25% of their income should be provided with 20-40% of their payroll by the government. Members of the police force and the Hungarian Army should get an additional 500,000 forints. Finally, the party suggests the establishment of a 500 billion forint social fund.

Of course, the newly elected mayors of Budapest, representing opposition parties, are up in arms. They prepared a joint statement against the latest measures, which they fear might remain in force even after the pandemic is over. Most likely, Fidesz mayors in the capital are unhappy too, but they don’t dare to protest because their positions depend on the good will of “the boss,” as apparently Orbán is called among government and Fidesz leaders. I assume that, soon enough, opposition mayors of larger cities will join the protest against these new measures. Party leaders are also organizing and preparing a common platform in which they will outline alternatives to the draconian measures Viktor Orbán has in mind.

But, one way or another, Orbán is determined to use the pandemic to his political advantage. He wants to crush his opponents and strip municipalities of their independence. In brief, he wants to be the undisputed head of a government that controls everything in Hungary.

April 4, 2020


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