Hungary is restarting
The most important decisions made so far in one place
This is how the Orbán plan restarts Hungary
The largest economic protection program of all time is being implemented in Hungary in order to allow economic life to resume as soon as possible. Under the leadership of Prime Minister Viktor Orbán, the Hungarian government and the key institutions of the Hungarian economy have taken a number of important measures to end the transition period for families and companies as soon as possible. We have gathered everything we can know about the Orbán plan to restart Hungary.
Due to the appearance of the new coronavirus in Hungary, the government declared a national emergency on 11 March. Viktor Orbán has already made it clear that a comprehensive action plan must be drawn up to preserve the achievements of the Hungarian economy, for which the government expects the cooperation of economic sectors. Almost immediately after the declaration of the emergency, the Prime Minister announced the first measures to reduce the economic impact of the epidemic. These have since been followed by a number of others. We show how government decisions to make a quick restart after an epidemic build on each other.
The Orbán plan begins
On March 18, the prime minister announced the first economic protection decisions. These offset the primary economic effects of the epidemic, both for businesses, families and individuals.
The first measures:
- The obligation to pay principal and interest on loans taken out by individuals and businesses until 18 March will be suspended until the end of the year.
- Short-term business loans will be extended until June 30.
- The total APR on new consumer loans taken out from 19 March will be maximized.
- Employers do not have to pay contributions in the hospitality, entertainment, sports and cultural services and passenger transport sectors, ie in the most severely affected sectors. It is not possible to increase rents and terminate contracts in the aforementioned sectors.
- Employees' contributions are significantly reduced, no pension contributions are paid, and health insurance premiums are reduced to a minimum. The payment moratorium will last until June 30.
Until then, no tourism development contribution has to be paid.
- According to the kata, the flat-rate taxation of some taxpayers will also be suspended until June 30.
- It has been decided to make employment rules more flexible in order to make it easier for employers and employees to agree.
Less than a week later, the Prime Minister announced new points in the Orbán Plan.
- Entitlement to health care and family support benefits for the care and upbringing of a child is extended until the end of the emergency.
- The tax relief for catastrophes has been extended and extended, bringing the number of small businesses that receive tax exemptions for a certain period to more than 81,000.
- Payment of tax debts becomes due only after the emergency, and companies in other sectors have received significant relief in the payment of contributions in order to preserve jobs.
- They have found themselves in a difficult position to defend themselves, and judicial executions and evictions have also been suspended.
- From the epidemiological fund set up by the government, all health care workers will receive a gross supplement of half a million forints until the end of the year.
- These timely measures were intended to provide immediate relief to businesses and families in difficulty due to the epidemic.
However, Viktor Orbán announced at the end of March that these measures would be followed by further, comprehensive economic recovery steps, through which the government and economic institutions would ensure that life in Hungary could return to its original shape shortly after the epidemic. The goal is to create as many jobs as the virus destroys. "
- said Viktor Orbán when he announced the new elements of the economic protection and recovery program created due to the coronavirus epidemic. The measures announced in early April to preserve jobs, protect families and relaunch the economy after the epidemic can be measured on a historical scale in terms of scale and expected impact.
Thus, the Orbán Plan is the largest-scale action plan in the history of Hungary for a quick recovery from an emergency caused by an external circumstance.
The Orbán plan will be implemented in three phases, the three phases together will move 18-22 percent of the Hungarian GDP together with the central bank programs.
This means more than HUF 9,200 billion.
The government is also redesigning this year’s and 2021 budgets for implementation, adjusting the 2020 deficit target to 2.7 percent from the previous 1 percent.
In addition to the measures already introduced, in the second phase of the economic protection action plan, Viktor Orbán announced five programs. The first is to preserve jobs, the second is to create jobs. The third focuses on the rapid relaunch of key sectors of national economic importance, the fourth on corporate finance, and the fifth on the protection of families and retirees.
On the financial background of the Economic Protection Action Plan
Minister of Finance Mihály Varga explained that three financial funds will be established to control the epidemic, in the total amount of HUF 2,000 billion. The HUF 633 billion of the Epidemic Protection Fund consists of, among other things, 50 percent of the state support of the parties, the tax of multinational companies and the contribution of banks.
A significant part of the 1,345 billion resources of the Economic Protection Fund comes from the ministries, through redeployments and savings.
This amount will be used to protect and restart Hungarian jobs, the Hungarian economy,
that is, they are used to implement the Economic Protection Action Plan. The third fund could be targeted funding from the European Union.
Another important means of restarting the economy is the total amount of about HUF 3,000 billion provided to the economy by the Magyar Nemzeti Bank. György Matolcsy, Governor of the Central Bank, described the MNB's economic recovery measures and said that the Growth Loan Program, called FGS Hair, would be relaunched with HUF 1,000 billion.
The central bank will improve the liquidity of the banking system by about HUF 1,500 billion, which will help the issuance of government securities, and - temporarily - the banks' required reserve ratio will be reduced to zero. This means billions more to be released that can be spent on revitalizing the economy. György Matolcsy said that the rate of central bank, economic support and stimulus measures totals about 6 percent of GDP.
Job retention with wage subsidies
Following the announcement by the Prime Minister, Minister of Innovation and Technology László Palkovics first spoke about the government's wage subsidy in the form of wage takeover to preserve jobs. In the extended program
the employer undertakes not to terminate the employee’s employment and pays wages for the employee’s reduced working hours and individual development time.
The program affects employers and employees who have been forced to reduce their working hours by at least 15 percent but no more than 75 percent due to the viral situation, ie the employee is employed for at least 2 hours a day.
While the employee agrees to work and is available to the employer during individual development,
therefore, in return, the state compensates the employee by reimbursing 70 percent of the lost wages.
In addition to the wage subsidy, companies also have the option of taking out a 2-year job-retaining loan with an interest rate of 0.1 percent, which can be used to finance employees' 9-month wages. Wage subsidies cover working time workers, teleworking and working from home, temporary employment agencies, and those associations and NGOs that do not receive budget support.
Minister of Finance Mihály Varga confirmed that in addition to the new economic protection measures due to the coronavirus epidemic, the government also wants to preserve some previous decisions. From 1 July this year, the rate of the social contribution tax will be reduced by two percentage points - from 17.5 per cent to 15.5 per cent - which will leave HUF 160 billion to enterprises in six months.
Creating new jobs, facilitating businesses
The government will spend more than 1,200 billion forints this year to protect jobs and support the creation of new ones, László Palkovics and Mihály Varga explained. Interest- and guarantee-subsidized loans will be provided to finance companies this year, so Hungarian companies will have a total of more than HUF 2,000 billion available this year, with a state guarantee worth more than HUF 500 billion.
An important element of the Orbán plan is the support of investments in job creation, the amount of which will reach HUF 450 billion this year. Among the economic recovery steps, the promotion of competitiveness has become a priority. Pursuant to the relevant decree, companies operating in certain sectors and sizes may also apply for non-refundable cash support until 31 December 2020, for which a budget of HUF 50 billion is available.
Faster tax refunds, extended deadlines, administrative simplifications
From January 1, 2021, the small business tax rate will decrease from 12 percent to 11 percent.
This will leave extra money for about 51,000 businesses next year.
For about 600,000 companies and organizations, the deadline for submitting individual reports and returns and paying the tax burden will be changed to 30 September.
Those who get into trouble due to the coronavirus epidemic can take advantage of another, special, free payment allowance.
For example, given the situation of companies working in tourism, until 31 December 2020, guests will not have to pay tourist tax. To facilitate the liquidity of companies, the tax office is also speeding up VAT refunds.
The Orbán plan provides a budget of HUF 600 billion for the protection of tourism and hospitality. Until June 30, the SZÉP card's social contribution tax will be reduced to 4 percent and the budget will also be increased. The corporate sector is supported by loan guarantees and equity programs.
As part of the epidemiological control, one of the first economic provisions was that, at the initiative of the Magyar Nemzeti Bank, the amount limit for bank card payments without entering a PIN code was raised to HUF 15,000. This provision remains in force, thus protecting customers from otherwise having to avoid directly touching bank terminals with their hands.
In addition to corporate loan programs, adult education student loans will be launched
Central to the Orbán plan is that those who are now losing their jobs because of the crisis can get back to work as soon as possible. Therefore, the government supports workers to train themselves as needed for their better labor market opportunities.
The student loan for adult education helps workers in the labor market.
In addition to higher education students, 18-55 year olds in adult education can also apply for the free-to-use, interest-free Student Loan Plus available from May. The new student loan will be available to higher education students in the amount of up to HUF 500,000, while those participating in adult education specified by the Minister of Innovation and Technology will receive a maximum of HUF 1.2 million.
As part of family support
at the birth of the second child, the government releases half of the mother’s student loan;
and after the third child, the entire student loan debt.
The government also increased the monthly budget for free student loans from August.
László György, Secretary of State for Economic Strategy and Regulation, summarized the most important measures for Origo.
1. The government will take over 70 percent of the lost wages for 3 months.
2. The government will take over 40 percent of the salaries of graduates working in research, development and innovation for 3 months because the work of well-trained engineers is much needed by others when the economy is restarted.
3. Hungarian micro, small and medium-sized enterprises may apply for efficiency-enhancing subsidies from 1 to 250 people, provided that they retain at least 90 percent of their employees. They can receive HUF 1 million for 1-10 people, HUF 750,000 for 11-50 people, and HUF 500,000 per employee for 51-250 people.
4. Hungarian companies can take out a preferential loan with an interest rate of 0.1 percent for their 9-month labor costs.
5. The government is launching a capital program to protect Hungarian businesses from hostile takeovers.
László György recently spoke about the announcement of new economic protection measures coming soon, among which he mentioned in advance particularly favorable corporate loan constructions and non-repayable subsidies.
The 13-month pension will return and support for families will be strengthened
In order to recover as quickly as possible after the epidemic, the government has taken measures to protect families as well as those who are no longer active.
There will be a 13-month pension again
Therefore, as part of the Orbán plan, the government will rebuild the 13-month pension in four steps. Retirees will first receive a benefit at this title in February 2021, then they will receive a quarterly amount. As the amount of the pension paid in one month is currently around HUF 280 billion, it can be stated that the pensioners will receive about HUF 70 billion when paying the first quarterly installment.
There are special rules to protect families
Katalin Novák, EMMI's Secretary of State for Family and Youth, explained that as part of family protection measures, such as baby waiting support, children born during an emergency due to a coronavirus epidemic can be claimed in arrears after two months after the emergency.
The Secretary of State also said that
the age limits for the family home allowance (chocolate) and the baby waiting allowance have also been extended to 30 days after the emergency.
Among the facilitations, he also mentioned that the moratorium on loan repayments also applies to chocolate loans and baby waiting support. The moratorium on loan repayment, as we wrote at the beginning of our article, was announced as part of the Orbán Plan, among the first measures to protect economic performance and families.
Preparing for life after the epidemic: facilitated graduation, free traffic and language exam for expectant mothers
As the coronavirus epidemic subsides, everyone is needed to start the economy. The Orbán Plan also takes this into account, therefore the government has adopted additional measures to alleviate the situation of the citizens. Thus, for example, due to an emergency situation, all higher education students receive their degree even in the absence of a language exam, regardless of how many language exams are required by higher education legislation for that particular program. The provision also applies to anyone who passes and passes the final exam by 31 August 2020.
From July 1, mothers who are in a trance, a trap and a treasure will also be able to take advantage of the refund for the language exam, the traffic test course and the traffic test.
The provision is intended to help mothers find a job later, creating a better chance for those raising young children in the labor market.
Since the declaration of the state of emergency, there has been a rule of great relief to citizens, according to which all official documents expiring after 12 March remain valid for 15 days after the end of the state of emergency.