Finance Minister: EU budget talks are pointless now

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Hungary should postpone any negotiations with Brussels regarding the budget for the 2021-27 cycle until after the EP elections, Hungarian Finance Minister Mihály Varga has said.

During an interview with, the minister said there is a good chance that the next head of the Commission will not be Juncker and that the next Commission should be given the opportunity to oversee its own budget.

A fair budget distribution should remain based on offering more support to economically lagging regions. The idea to take these funds away from Central and Eastern Europe and redistribute them to the Mediterranean is unacceptable, as is the plan to take money away from European taxpayers and increase funding for migrants and their accommodation.

But the main focus of the interview was the performance of the Hungarian economy, about which Varga said that the government’s GDP growth target of four percent was realistic and the final figure may even be higher.

GDP growth in the first half of 2018 was 4.5 percent, putting Hungary among the three best performers in the European Union. The figure that exceeded analysts’ expectations was primarily due to the last high investment rate, Varga said.

“The trend will remain for the coming months as services, retail trade and construction will continue to put in a good performance. The growth in salaries also points toward further (economic) expansion,” Varga said.

Negative impacts on the economy could only come from outside and there are several things Hungarian economic policy should pay attention to, such as the effect of the Fed rate hike, steps taken by the European Central Bank and the trade and tariff wars that can have an impact on Hungary. The effects of these wars, however, have yet to show in Hungarian industrial output and export indicators.

Varga added that Hungary was now better prepared to weather any negative outside effects. Debt financing is stable, the foreign trade balance has been positive for years and the budget still has ample reserves for this year, which will be even higher next year.

The debt-to-GDP ratio has dropped to 73 percent from 83 percent and the ratio of foreign currency debt has fallen below 20 percent from the earlier 50 percent.



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