Next Year’s Defense Budget to Allocate 2% of GDP, Achieving a Long-Awaited Goal
Hungary Implements Economic Protection Measures: Price Cap on Electricity and Tax Relief for Pharmaceutical Companies
Budapest, Hungary – The Hungarian government has introduced an economic protection action plan, which includes measures such as a price cap on electricity in certain sectors and tax relief for pharmaceutical companies, according to Gergely Gulyás, Minister of the Prime Minister’s Office. He disclosed this information during the Government Information Meeting on Monday.
Under the price cap scheme, the ceiling for electricity prices will be set at €200 per megawatt-hour net starting from 1 July. This price restriction will apply to sectors such as manufacturing, accommodation, storage, and transport, which have a significant impact on the economy and inflation due to their productive activities. In return for the price cap, the government expects these businesses to increase their production capacity without further raising prices throughout the year. The Hungarian Chamber of Commerce and Industry will monitor compliance with these conditions. Gulyás stated that over 5,000 businesses will be affected by this measure, which will have a budgetary cost of HUF 40 billion.
Gulyás emphasized that the surge in energy prices caused by the ongoing conflict has been detrimental to the country’s economy and burdensome for businesses. He highlighted the Hungarian government’s concern over the rising cost of energy, including electricity, which prompted consultations with the Chamber of Commerce and Industry. Gulyás noted that last year, due to fears of skyrocketing prices, 81% of businesses signed fixed-price contracts. However, currently, around one-third of these companies are paying over €320 per megawatt-hour for electricity.
Regarding Hungary’s defense forces, Gulyás confirmed that the country will allocate 2 percent of its GDP for defense expenses, as mandated by NATO. This allocation will mark the first time since the fall of communism that Hungary will fulfill its commitments to the military alliance.
The minister also addressed Hungary’s stance on the war in Ukraine, emphasizing the country’s call for an immediate ceasefire and peace negotiations. Gulyás voiced concern over the escalating conflict and the increasing number of casualties. He stated that Hungary’s pro-peace position faces criticism from some quarters in the European Union, but the government believes it is the morally correct stance to support immediate peace talks.
Furthermore, Gulyás criticized the European Union’s decision on migrant quotas, calling it unacceptable and dangerous. He argued that the decision serves as an invitation for individuals seeking entry into Europe. Gulyás expressed concerns over the potential burden on Hungary, stating that it would be disadvantaged by allocating resources to accommodate these migrants.
In terms of Hungarian access to EU funds, Gulyás described it as a political decision for the European Commission to disburse the funds. He noted that Hungary has met the necessary conditions set by the Commission and is waiting for the disbursement to be issued promptly.
Finally, Gulyás addressed the recent transfer of former Ukrainian prisoners of war to Hungary from Transcarpathia. He clarified that Hungary acted in line with international law, as it was not legally bound to notify Ukraine about the transfer. Gulyás emphasized that these individuals are not being monitored and are free to move, with non-Hungarian citizens having been granted refugee status.
As for Prime Minister Viktor Orbán’s visit to Ukraine, Gulyás mentioned that it would depend on whether substantial progress could be made on important issues. If such progress occurs, negotiations at the highest level would be necessary, and Hungary is prepared for this visit if it proves meaningful.
Overall, Hungary’s economic protection action plan aims to alleviate the impact of rising energy prices and ensure compliance with defense spending commitments, while also maintaining a pro-peace stance in the ongoing conflict in Ukraine. The government remains critical of the EU’s migrant quotas and expects prompt disbursements of EU funds.
