picture of Mihály Varga

According to Finance Minister Mihály Varga, the large sums of money being spent by the government lately have nothing to do with the Parliamentary elections next year.

Speaking at the German-Hungarian Chamber of Industry and Commerce, the minister said that the Hungarian government had learned from the previous economic crisis as well as the faser recovery now being seen in the US that spending helps jumpstart the economy.

Mihály Varga mentioned two elements in this regard. One is the spectacular difference between the recovery of the American and European economies, explained by the fact that the US has pursued a much stronger policy for stimulating demand. The minister said that it was worth keeping in mind that there was a slow recovery following the crisis of 2008-2009, when fiscal authority measures were introduced.

Therefore, he believes that recent government spending is not about the elections at all.

In any case, these stimulus packages are significant, with the government expected to make transfers over 1 trillion Ft. (US $3.1 billion), most of it before the parliamentary elections in April. The tax refund for families with children alone is costing the state over 600 billion Ft. (US $1.9 billion)

However, the Hungarian central bank, led by György Matolcsy, has recently disagreed with the government on this matter. Matolcsy claims that the economy has already restarted, and that further stimulus money will cause more harm than good.

[HVG]

By Steven N.

Steven is the editor-in-chief of Hungarian Politics. He has been following the political scene in Hungary and the Central European region more or less since 1994.