Economy Protection Action Plan
On March 19, the new economy protection action plan of the Hungarian government was announced by Prime Minister Viktor Orbán. The first phase of the action plan contains five programs. The government imposed a moratorium on all loan repayments for individuals and companies until the end of this year. Secondly, short-term business loans will be extended until June 30. Thirdly, the interest rate on all new consumer loan interest rates will be capped at the central bank’s base rate plus 5 percent maximum. With the base rate currently at 0.9 that puts the maximum interest rate at 5.9 percent. The government is also introducing measures to support those sectors of the economy hardest hit by the pandemic, specifically tourism, hospitality, entertainment, culture, sports and transportation. Employers in these sectors will be exempt from paying payroll taxes until June 30. Employees will also see a reduction in their required contributions. Finally, the fifth measure introduces new regulations that will make employment laws more flexible.
On April 6, the Prime Minister announced the second phase of the economy protection action plan that contains five new programs focusing on protecting Hungary’s economy. The economy protection action plan will restructure 18-20 % of Hungary’s GDP and the government deficit goal will be increased from 1% to 2.7 %.
The first program focuses on preserving jobs: the government will take over a portion of wage payments from firms that had to shorten working hours due to the coronavirus epidemic. As a second step, the government will devote 1.23 billion EUR in investments for job creation. The third step is to provide support for hard-hit economic sectors, such as tourism and hospitality. The economic package’s fourth measure makes HUF 2,000 billion worth of preferential, government-backed loans available to Hungarian companies. The name of the fifth initiative is Family and Pensioner Protection Program.
