Economy 22 September 2022, 8:57am

Hungarian PM Orbán reveals size of SME bailout package

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Hungary's Prime Minister Viktor Orbán expects that the Russian-Ukrainian war will continue next year, according to leaked reports from the Fidesz-KDNP parliamentary group meeting that started on Wednesday. At the event, the Prime Minister also spoke about what the most important task of the governing parties will be in the near future in the shadow of the war.

The government needs to secure energy supplies, protect families and jobs, said Orbán, and he also called for the sanctions to be lifted:

According to daily newspaper Magyar Nemzet, Orbán said that

families will be protected by the reduced overheads, a firewood programme and a brown coal programme, while
businesses will be helped with three things.

The action plan for businesses was announced by Gergely Gulyás, the PM's chief of staff, on Saturday after a government meeting. Further details of one of its elements were released this week by officials from the Ministry of Economic Development. The action plan consists of several sections:

a programme of more than 200 billion forints to help energy-intensive small and medium-sized enterprises, supporting productive companies by covering part of their energy costs and supporting investments that save energy,
a factory rescue programme, and
a new action plan for the service sector to protect jobs.

The information about the size of the first bailout programme, worth HUF 200 billion, is news. So far, it was only known that 9,000 to 10,000 Hungarian SMEs could be affected, and the government has not yet disclosed the budgetary impact.

It also means that the cost of helping energy-intensive firms will be this high for the three months between October and December this year. On average, this bail-out could mean an average of HUF 20 million per firm, while significantly increasing the government's expenditure.

Especially in light of the fact that this package is only for three months and the latest indications are that the budget is extremely stretched, it is interesting to see how the government will be able to finance these new programmes.

Another significant new feature is that the job protection action plan is aimed at the service sector, meaning that the government sees that the hospitality sector, hotels and spas - which employ large numbers of people - are in serious trouble because of the surge in energy prices.