Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
Russia's biggest demonstrations since 2011 in protest of Navalny jailing
Opposition activist Navalny's call for mass protests a success as thousands take to the streets across Russia
Russia's National Welfare Fund accounts for almost 12% of GDP
Police arresting activists ahead of Saturday’s demonstration in support of Navalny
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
Private finance mobilised by development banks up 9% to $175bn in 2019
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
The Hungarian government on April 4 announced the launch of a HUF663bn (€1.8bn) fund to combat the novel coronavirus (COVID-19) epidemic in addition to a HUF1.3 trillion fund aimed at protecting and restarting the economy.
Prime Minister Viktor Orban is expected to announce a broader economic stimulus on Monday or Tuesday, termed as the largest ever economic stimulus in the history of the country, which could total HUF8 trillion-10 trillion in total, including measures announced on Saturday.
In comparison, Hungary's 2020 budget was drafted with a HUF21.4 trillion revenue target (€58.6bn) and expenditures of HUF21.8 trillion, producing a deficit of HUF367bn, or 1% of the GDP. The government is planning to overhaul the 2020 budget and let the deficit rise to 3%, but analysts say it could be forced to relax tight fiscal policies further to finance the recovery.
Cabinet chief minister Gergely Gulyas announced on Saturday that contributions to the epidemic response fund will come from the special tax levied on banks and multinational retailers, and by diverting vehicle tax from local governments. In value, this is HUF55bn, HUF36bn, and HUF34bn respectively. The government will also channel HUF378bn from the reserves to the fund.
Political parties will be compelled to chip in with HUF1.2bn each independent of their budgetary financing, which political analysts say will hurt smaller opposition parties. The HUF10bn contribution makes up only 0.5% of the HUF2 trillion fund.
The economic recovery fund will include HUF992bn diverted from ministry budgets and HUF423bn from the National Employment Fund.
Opposition parties condemned the funding cuts for local governments, which are at the forefront of coronavirus response efforts, at a time when they expect shortfalls in local business tax due to the slump in business activity and rising social welfare costs.
To make matters worse for them, Orban announced he will make parking free across the country in a decree issued on Sunday. Hungary's right-wing strongman is using his powers to tighten the grip on local governments by cutting off funding from them, analysts noted. The measure was specifically targeted at the liberal leadership of Budapest, which hesitated to make parking free.
In his regular Friday morning interview Orban also announced a one-time HUF500,000 bonus for all healthcare workers after calls by unions and opposition parties to raise wages. The leftist-liberal Dialogue party said instead of one-off payments, the cabinet should double wages immediately.
The Socialists proposed the government take over 75-80% of wage payments for business sector employees, introduce a moratorium on lay-offs and fix the prices of food and protective gear.
Green party LMP wants to suspend the large-scale museum quarter project in Budapest and the reconstruction of the Budapest-Belgrade railway line financed from Chinese capital.
Orban has repeatedly rejected calls to provide a basic income for people laid off and it remains to be seen whether the grand economic stimulus will include supplementing wages of employees.
Luca Visentini, general secretary of the European Trade Union Confederation (ETUC), has criticised the Hungarian government for relaxing the labour code to favour businesses. In a reply, the prime minister promised that his government will create as many jobs as are going to be lost due to the coronavirus epidemic
Government targets retailers and banks
The government announced on Saturday it will slap extra taxes on banks and retailers to fund the coronavirus crisis fund. The move comes as no surprise given that foreign ownership in these sectors remain high and the conservative-nationalist government has plenty of experience in levying special taxes on multinational companies.
Consultancy firms warned just last week that banks and retailers could come under pressure again as the government is scrambling to find new sources of revenue to fill in the budget shortfalls.
The Orban government introduced windfall taxes for retailers, energy and finance firms to meet the deficit targets after its first landslide victory in 2010. The Court of Justice of the European Union (CJEU) last month ruled that progressive, turnover-based taxes on retailers and telcos in Hungary were compatible with European Union rules.
After the ruling, the emboldened finance ministry said that large companies will not be able to object in the future to paying proportionally more taxes than small businesses with significantly lower economic potential.
No details emerged on the base of the tax for retailers, but the government is targeting HUF36bn in revenue, which is dwarfed in comparison to the entire size of the rescue funds. Analysts said the government is sending a message to these firms.
The 11 largest retail chains in Hungary had a total gross turnover of HUF4.6tn last year. Tesco is the largest player on the market with sales revenue of HUF622bn. The special tax could have an impact on future investment and wage policies of retailers, local media commented.
Hungarian banks will be slapped with HUF55bn and OTP, as the largest lender in Hungary, is expected to pay the largest chunk of that. The levy on banks comes as no surprise in light of the sector’s record profit of close to HUF700bn and following recommendations by the Hungarian Chamber of Commerce and Industry (MKIK) to set up a crisis fund from one-off payments by multinationals.
OTP accounted for 60% of the sector’s net earnings with a consolidated profit of HUF413bn, half of which came from foreign units. The bank's total assets of HUF20.2 trillion at the end of 2019 was 40% of the sector total HUF49.8 trillion. Excluding foreign units, OTP’s share was 20.5%.
Local media calculates that OTP is expected to pay between HUF11bn-33bn depending on various scenarios. The tax could be levied on total assets or profit, including or excluding foreign-units of OTP .
The impact on the bank’s earnings would be in the range of HUF10bn-30bn, or HUF37-106 per share, analysts estimated.
In a poll by Reuters, the median forecast for OTP's 2020 earnings was HUF410bn with one analyst projecting HUF272bn in profit. OTP could pay some 10% of its earnings in a worst-case scenario.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at email@example.com
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: