2018. 03. 08.
Over the last eight years since Viktor Orbán and the Fidesz-Christian Democrat alliance formed a government in the spring of 2010, Hungary has seen a dynamic period of change. Here are just a few examples, drawn from a list published recently in Magyar Idők of the accomplishments of these Orbán Governments:
Shortly after the Fidesz-KDNP victory in 2010, a catastrophe at the Ajka alumina plant flooded neighboring Hungarian villages with red toxic sludge. The new government cleaned up the spill, repaired the damage and renovated those houses that could be salvaged.
Inheriting an economy that was teetering on the edge of insolvency, the government introduced crisis taxes in October 2010, which targeted certain sectors of the economy, to restore some balance to the country’s finances. It also brought in a flat tax, lowered personal income taxes and raised tax benefits for families while increasing tax on consumption. Inheritance taxes were also repealed. The objective was to shift the tax burden away from working Hungarian households .
The Orbán Government also extended maternity leave to last until the child turns three and new tax credits were introduced for mothers returning to work, for families having children, and for pensioners.
Apart from the job protection plan, numerous measurements were taken to boost employment. The youth guarantee program created incentives to hire young people. Women became eligible to retire after 40 years, and time on maternity leave now counts toward cumulative period of employment. Those who have been unemployed for longer periods were given the option of entering the public work program. Today, some 750,000 more people are working than in 2010, and the unemployment rate stands at a record low 3.8 percent.
The government created the Erzsébet Program, a voucher benefit to provide holiday opportunities for hundreds of thousands. School kids began receiving free meals in schools and textbooks. Over the course of three steps, the government cut household utility prices, including gas, electricity, water and waste removal. Costs of sewage disposal, propane gas and chimney sweeping also have become cheaper.
The Orbán Government has restored fiscal discipline to the state budget, which led to the lifting of the EU’s excessive deficit procedure. Public debt and the amount of debt held in foreign currency is falling steadily. Family allowances increased significantly, to a level of GDP that puts them among the highest in the EU.
Monetary policies took a turn as well. Hungary’s prime rate has sunk to historic lows and banks turned to bond markets. The Hungarian National Bank no longer works at a loss, and being profitable, supports economic performance. The fiscal time bomb was successfully deactivated, and with the help of the central bank, foreign exchange-denominated mortgages were converted to Hungarian forints. Debtors received assistance to pay off loans at a discount and also had the help of exchange rate limits and family bankruptcy protection.
In addition to fiscal stimulation, the government has made a point of processing EU funds more quickly. Hungary’s GDP growth rate now far exceeds the EU average and ranks among the leaders. Not only has minimum wage increased, but salaries in the private sector have grown, real incomes have risen by double-digit percentages and inflation remains low. The government negotiated a six-year wage agreement with associations of employers and workers. It has also begun to work on the reduction of payroll taxes like social security contributions and introduced new salary scales for those employed in education, defense and law enforcement.
The government paid off early the debts to the International Monetary Fund and the World Bank, loans that were inherited from the previous Socialist-led government. The inflow of foreign capital is setting new records, and the development of greenfield investments continues to grow. Slashing the corporate tax to nine percent – the lowest in the EU – has given a huge boost to the country’s competitiveness.
Foreign tourists are returning to the country in record numbers, enjoying, among many of the country’s attractions, public safety and security. In fact, tourism has become a major contributor to the economy, growing at rates similar to the construction industry, which has increased with the Family Housing Support Program. To support families buying homes, the state provides 10 million HUF (32,000 EUR) in grants and another 10 million HUF in discounted loans toward purchase. VAT in the construction industry has been temporarily reduced to five percent, similar to previous reductions for certain food products, accommodations and internet services.
It’s also worth mentioning that the government payed off the debts of local municipalities, hospitals, universities, the Hungarian State Railways (MÁV), and the Centre for Budapest Transport (BKK), all while increasing public funding. Since 2010, the investment in the new metro line in Budapest, Metro 4, has been completed, and the renovation of Metro 3 has begun, a project that never even made it to the agenda of the previous (liberal) municipal administration.
Major reforms in public administration and cutting bureaucratic red tape have made basic government services more efficient. State certification exams for languages and the highway code will also soon be provided free of charge.
Numerous hospitals in the countryside have been modernized, providing renovations and upgrades to both buildings and medical equipment. The Healthy Budapest program envisages the development of 25 hospitals and seven independent clinics throughout Pest county and the capital, with a budget of 700 billion HUF (2.2 billion EUR). In the central region of Hungary, 33 billion HUF will be spent on hospital development. The acquisition of medical equipment, new ambulance cars and a 65 percent wage increase between 2016-2019 is also underway. Hungary has not seen such major investment in the healthcare sector, like the construction of South Buda Center Hospital, for more than a century.
Hungarians living outside the country can now apply for citizenship and more than a million have done so since 2010.
On top all of this, the government has also made a priority of tending to the country’s cultural heritage. Sites such as the Castle Garden Bazaar, Margaret Island, Kossuth Square, Erkel Theatre, and several castles and museums have undergone extensive renovations. The government returned to Hungary the priceless Seuso Treasures, which date from the late 4th or early 5th century AD. Numerous sport facilities have been built – soccer stadiums, handball arenas and swimming pools. Because of this new infrastructure, Hungary can now play host to major, international sporting events like last year’s FINA World Aquatics Championships.
It has been a busy and fruitful eight years.