Hungary does not back EU's plan of a joint borrowing scheme - minister
Trump
Gulyás said that the government had talked about the [Russia-Ukraine] war, where there is a new situation, as NATO is taking an active role, but for the time being only with financial assistance and training of Ukrainian soldiers. According to Gulyás, the government fears a direct NATO-Russian conflict, but thinks that Hungary must stay out of the war and it does not want to participate in NATO missions, so it will not send weapons or allow them to pass through Hungarian territory, he said.
He said that if we want peace, we need to root for an outcome that promotes peace in the US presidential election on 5 November. He referred to the government's rooting for the re-election of former US President Donald Trump.
Why is the adoption of the budget dependent on the US presidential election?
Breaking with years of early budget drafting, which by the way entailed several subsequent modifications and obviously did not work, the government has recently decided to adopt the 2025 budget in autumn instead of spring/summer. They specifically said that the draft would be conceived after 5 November, i.e. the day when the results of the US presidential election are to be announced. When asked what's the idea behind this, Gulyás said today:
"It's a different kind of budget if you think that there will be a war all next year or that it will end soon,."
Asked about Trump's alleged backing of a $61 billion aid to Ukraine, Gulyás replied that the former president communicates consistently and that a different budget deal could be struck from within the opposition and government.
NATO should not intervene in another Member State
NATO is a defence alliance, which makes it unnatural for any of its operation should take place in a non-NATO member state. In those places where there is no need for a decision-making consensus in NATO, member states should be allowed to opt out, he said.
Stay out of the NATO mission
We made the right decision when we joined NATO, but now we see that there is a NATO mission in which Hungary does not want to participate, so it can go against the [other] members. A solution must be found to keep Hungary out of such a mission. Gulyás said that there is more willingness for dissent in NATO than in the EU.
Fuel price freeze
We are paying the price of the wars in petrol prices, said Gulyás, referring to high domestic fuel prices. He said he wouldn't go into the details, as they were announced yesterday by Minister Márton Nagy. Gulyás said that it is expected that the price of fuel should be the average price in the region. If traders do not comply, the government will be forced to take action.
Why not cut taxes on fuel?
If the fuel retailers comply with the request and the price of fuel is in line with the regional average, then the government does not need to intervene. Asked why there will be no tax cut on fuel, Gulyás said that the Hungarian tax burden on fuel is the fifth lowest in the EU and the government cannot forego additional tax revenues when the aim is to reduce the deficit anyway.
As we have pointed out in a recent analysis, the European Commission's data on which its statistics are based rely on the tax content reported by individual countries, while the domestic authority only includes the three major tax rates, VAT, excise duty and the stockpiling fee, in the tax burden.
However, it does not include the Energy Efficiency Obligation Scheme (EKR) fee and the special retail sales tax, which are paid only by Hungarian fuel retailers and represent a total increase of HUF 27 in the retail price of petrol at current prices.
But the really interesting thing about the tax rates is that the tax rate adjusted for the EKR fee and the retail surcharge is not too high compared to the neighbouring countries, with the 49.1% tax rate calculated from the Hungarian Petroleum Association (MÁSZ) data source almost exactly the same as the regional average. The domestic situation is slightly less favourable for diesel, where the tax rate for Hungarian fuel is 47.2%, compared to the average of 45.2%.
We are constantly monitoring petrol prices
"We were constantly monitoring petrol prices and when we had to intervene, we did," said Gulyás. What is now expected is that regional prices should be taken as a benchmark by petrol stations.
What steps could be taken to influence fuel prices?
The minister did not answer the question on what alternative action is being prepared if the voluntary fuel price cuts by retailers do not take place. Gulyás Gergely said that "concrete steps will be presented" if they are necessary.
The amendment of the Fundamental Law was discussed
The amendment to the Constitution (i.e. the Fundamental Law) was also discussed by the government, said Gulyás. The President [of the Republic] cannot pardon anyone who has been involved in any way in the commission of a sexual offence against children.
The government also wants changes on two other important issues: it believes that a bad process has started in the EU, namely that the transformation of the EU into a credit union has become the intention of many who want a "United State of Europe". This was accepted as a one-off solution in the coronavirus crisis and is seen as a dangerous move, so the government will only agree to such a common borrowing arrangement if two thirds of parliament supports it, and this will be included in the amendment to the Constitution.
In addition, the Defence Forces Act will also be amended in relation to troop movements.
The Fundamental Law, which Prime Minister Viktor Orbán described to be "as solid as granite" upon its inception, was amended for the 11th time on 20 July 2022.
Possible infringement procedure was also discussed
The government does not expect the European Commission to launch a new infringement procedure in the case of the constitutional amendments on paedophile offences, as it did in 2022 in the case of the Child Protection Act, said Gulyás.
Visit by Chinese President was also discussed
The Chinese President will arrive in Budapest between 8 and 10 May. "It is in Hungary's interest to cultivate good relations with as many countries as possible," Gulyás said. China is one of the leading powers in the world economy, which is already stronger than the EU, Gulyás said, adding that it is not worth putting up ideological barriers in economic relations. Preparations for the meeting are already underway, Foreign Minister Szijjártó will provide more information.
Spar to be taken to court on defamation charges
Legal action will be taken against Spar, presumably for reputational damage, and when the case is opened, the public will be informed.
The company's Austrian CEO said in an interview that businessmen close to the Hungarian government wanted to buy the company and called the retail tax a blackmail tool.
Competition law amendment postponed due to dispute
The government was originally going to decide on the basis of the competition laws already in force in the EU to amend the powers of competition watchdog GVH, but the amendment is being postponed because of a number of objections to the draft law raised by economic operators. They feel that the debate on the amendment cannot be closed just yet, said Gergely Gulyás.
The government was to introduce the concept of "companies of essential importance" in the new draft law. Under the proposal, the GVH would be able to determine who falls into this category based on sector inquiries.
But the proposal would also have given the GVH enormous powers.
If the authority determines that a company of essential importance is unable to carry out its activities or that security of supply is threatened, the GVH could oblige
- the owners of the company concerned to sell all or part of their shareholding in the company;
- the company to transfer its assets for operation at a cost-based fee;
- the company to replace or appoint members of its management board;
- the company to suspend or transfer voting rights to other owners;
- the company to convene a board meeting and take certain decisions.
3.0% of GDP budget gap to be reached in three years
Gergely Gulyás said that the government has already taken steps to bring this year's budget deficit below 4.5% of GDP. He said that decisions already taken - such as the postponement of HUF 675 billion worth of public investment projects - will help to bring the primary balance to 0% this year. And they will bring the deficit below 3% within three years.
Agreement on airport acquisition reached
There is absolute agreement between the parties, but it is a multi-stakeholder issue and everyone has some kind of protocol that could take days, weeks, months to complete. But we are confident that we are only days away from the announcement. The details will be known then, but there is full agreement on the purchase of the airport, said Gulyás.
Investments linked to the airport are essential
Asked how much the airport-related development (railway, highway reconstruction) could cost, Gulyás said that it would require a significant investment worth several hundred billion forints. External funding will be needed, and negotiations are underway. Some of this could be done on a market basis, for example in the case of the railways, and negotiations are under way on this issue as well, he added.
In days, weeks, very soon, really shortly, almost there...
It is right if our only really serious international airport is in Hungarian hands therefore it is right to buy it back, and the economy is strong enough for us to do that. The transaction can be concluded at any moment,
Orbán said on 19 October 2021.
The owners of Budapest Airport have entered into a due diligence process with the Hungarian government, its majority shareholder said on Monday, potentially the first step towards a sale of the asset to the state, Reuters reported in mid-November.
Following his meeting with French President Emmanuel Macron and leaders of the Visegrad Four countries in mid-December, Hungary's Prime Minister Viktor Orbán said the state should not acquire Budapest Airport before the 2022 parliamentary election, considering high inflation and the volatility of international money markets. Shortly after the announcement, the due diligence process was called off.
Last September, Hungary submitted a formal bid to acquire a majority stake in Budapest Airport through a state-controlled investment company.
It was reported in mid-September 2023 that the Hungarian government would join forces with France's Vinci Airports to buy the Budapest Airport.
Bloomberg reported in November that Hungary was working with French infrastructure giant Vinci SA on a plan to buy Budapest Airport Zrt, The Hungarian government has long been working to acquire the rapidly expanding airport, and several potential partners have been mentioned in the past.
The Hungarian government is trying to bring on board the Qatar Investment Authority as a member of a new consortium to purchase Budapest Airport, Minister of Economic Development Márton Nagy told Bloomberg in mid-December. The politician also said that if the airport is acquired, it would be expanded with a third terminal.
The European Commission approved the acquisition of joint control of Budapest Airport Holding by Hungary's state-owned Corvinus International Investment Zrt. and France's VINCI Airports.
The Hungarian state decided to sell its 25% stake in Yettel and use the proceeds to finance the purchase of the Budapest Airport. A government decree published in January stipulated that the Ministry of National Economy could exceed one of this year's budget spending lines by HUF 450 billion, which suggested that the government was readying funding for the airport purchase.
Hungary's two large state-owned banks, EXIM and the Hungarian Development Bank (MFB), are also expected to play a major role in the purchase of Budapest Airport, with one third of the purchase being financed by their loans, said Economy Minister Márton Nagy in early February, estimating that the deal could be closed by the end of the month.
The Hungarian state and France's Vinci Airports could buy the shares of Budapest Airport's operator in a 80%-20% split. The state has already earmarked the funds for the acquisition, news portal 24.hu reported on 8 February. Later, however, they could involve Qatari investors, with the state's ownership shrinking to 51%.
Based on the EUR 4 billion purchase price calculated by Bloomberg, and assuming that the former privatisation price of the airport also requires a loan of about HUF 1.5 billion, the total purchase price for the entire share package could be around EUR 2.5 billion, of which 80% would be EUR 2 billion, or about HUF 785 billion forints at the current exchange rate.
Will the government not veto the next EU sanctions package against Russia?
The EU wants to adopt the 14th package of sanctions against Russia, and preparations are underway. It would include the ban on Russian liquefied natural gas. Hungary did not veto the sanctions when no direct Hungarian interests were threatened, and in this package no Hungarian interests are at stake, so we will not veto the package just because of that, but there are other elements of this package as well, said Gulyás.
No importance attached to the new US report
Gergely Gulyás has reacted to a highly critical report by the United States, saying that the new report condemning Hungary is of little importance.
More to follow!
