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It turned out to be part of the government’s economic protection program to rename existing plans and largely existing resources; the MNB helped the economy with the largest rescue package; Municipalities can be the big losers. This is the weekly economic summary of hvg.hu.
The government has announced four times in a few days that it will launch a major economic protection program and will be informed of the details at some point. Gergely Gulyás stood out for the first time last Saturday by reallocating 1,345 million HUF. Then on Monday Viktor Orbán promised to reallocate 18-20 percent of GDP, Péter Szijjártó said a few small details, saying there would be a big announcement later, and then László Palkovics promised tax exemptions and new loan programs. However, the details of the decisions are very slow, and even then not always precisely, the Minister of Innovation and Technology, for example, when calling a radio program, explained that the salary supplement will not be exactly as his words could have meant.
If a company is forced to send more employees to part-time work, the state will support 70 percent of the difference between the wage cost of part-time work and full-time work for 3 months. On Thursday, after negotiations with the government, the president of the League Unions told hvg.hu more details about the salary supplement. Among other things, Melinda Mészáros spoke about the fact that the money will not be received by the employer, but by the employee.
Butcher Melinda
© Ákos Stiller
Research and development will also receive salary subsidies, grant interest rate loans and guarantee subsidies to Hungarian companies worth more than HUF 2 trillion, award titles to those who do not have a language exam, and provide assistance to some key sectors to restart. And there will be a 13-month pension, but since it will be granted to those affected in four installments, it is more precise to call 53 weeks.
What we know for sure so far is that part of the resources for expenses are taken from municipalities, parties, commercial companies and banks, the government does not want to spend a lot of extra money. Sound plans are largely not even based on redeployments, but rather renaming existing programs. Also, many plans don’t have coverage either.
This week’s biggest announcements were made by Magyar Nemzeti Bank, and they made a specific program instead of crumbs of information. Central bank leaders have announced that they will boost the economy with HUF 3 billion and a hidden increase in interest rates.
The MNB had already saved the forint once a week, when the forint exchange rate dropped from 369 to 363 by announcing the launch of the weeklong deposit tender. Help was also needed during the week: After markets were disappointed that concrete was missing from Viktor Orbán’s ads, the exchange rate dropped from 362 to 366 in an hour. After the government decision, the fact that something happened was already rewarded, and after the MNB press conference, the exchange rate increased to 356.
One of the biggest losers in government plans could be local governments. Last Saturday, the car tax deduction was announced, on Sunday, parking was free, and on Tuesday, the government announced an exemption from the tourist tax, depriving settlements of a significant portion of their income.
The auto tax deduction means HUF 34 trillion. It could be even more painful, according to the president of the National Association of Local Governments, if only a fraction of the business tax is paid due to the crisis. According to Jenő Schmidt, this will occur in 300 settlements, where the amount of approximately HUF 1 billion will be raised. According to him, “local governments should stop defenseless defenses because it is the task of the state.”
Image of the week: Viktor Orbán at the Korányi Institute
© Facebook / Orbán Viktor
Work is underway around the world not only to find a solution to protect against the virus, but also to minimize economic damage. Following the € 100 billion labor protection program, the European Commission has even announced a € 1 billion guarantee for loans to SMEs. In the United States, there are plans to raise money for the necessary crisis management packages by issuing new types of bonds. The problems there are exacerbated by the fact that the social safety net is extremely weak, making it crucial that the nearly 17 million people who have lost their jobs in three weeks get a job quickly, but if the economy collapses rebooting too soon can also cost lives.
The epidemic situation in Britain is worsening, with Prime Minister Boris Johnson in the intensive care unit. Therefore, the chaos in decision-making also increased and the Brexit negotiations were paralyzed. At least one million people in the country have already lost their jobs due to the epidemic.
“Many people have been bankrupt in the past few days and are still bankrupt, we don’t know what to do with them.” This was answered by László Parragh, President of the Hungarian Chamber of Commerce and Industry, when asked on ATV what could happen to those who are now being sent from their jobs. He added: based on the comments of more than 15,000 companies, he says there is a strong demand in construction, in agriculture, who was a chef, could go to a baker, “he needs training.”
Ákos Péter Bod assessed the situation: the Hungarian government does not help where it should be most. The prime minister had just referred to managing the social situation, while many people live on low incomes, he recalled. And Melinda Mészáros, president of the League, said to our question that the direction is good, but more crisis management measures are needed. They would perfect the salary supplement and increase the amount and time of the allowance for job applicants.
More and more companies and sectors are feeling the big problem. In the music industry, for example, the livelihoods of 36,000 people are estimated to be at risk. The Bond Brigade also had payment difficulties, although the founder said they were only “asking for justice and deferral for less than 100 members.” Production also stopped at Sramos. State-owned companies could also get into trouble, MÁV has already indicated that it would survive until mid-summer without ownership intervention if the crisis persisted. Mol has announced that it will retain its post-2019 dividend and begin major spending cuts.
The crisis has also brought what was unthinkable for a decade: we have to save money on Hungarian football by cutting wages and cutting expenses. Many clubs are still waiting, but now it may be counterproductive that the sport has benefited greatly from public money for years. Also, what many have said years ago is coming true: Beautiful stadiums must be maintained for hundreds of millions of forints a year, even if no one enters the field.
When we started preparing the last hvg.hu subsection dealing with sustainability, Zhvg, we would not have believed that there would be such a crisis in the world and in Hungary at launch. Awareness and solutions are key to climate protection, and we are now seeing the need for them in the context of the epidemic.
Of course, in such a special situation, what we think of the green idea also changes, like abandoning the packaging, but a sustainable lifestyle is a great advantage. We also have to figure out how not to further destroy wildlife, the epidemic has only reinforced this. But at least you can go to the market intact.
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